I’ve come a long way in my financial journey. From a debt-ridden college grad who struggled to pay her bills to a homeowner who’s financially stable enough to start her own business, it’s been quite a ride.
Learn from your financial mistakes 
Along the way, I’ve had my fair share of mistakes (and then some!). But I wouldn’t change too many things. Sure, if I hadn’t made these mistakes I’d most likely have a lot more money now, but I’ve always said that I’m happy because if I had to make financial mistakes, thank goodness I did so at a young age.
In making these mistakes over the years, I’ve learned so much about myself, about money and about the psychology behind financial decisions. I’ve also learned how to budget, why it’s important to save for retirement and how to gain control over emotional spending.
With each mistake I make, I take time to analyze my mishaps to the best of my ability. I try to figure out the who, what, when, where and why in an effort to avoid making the same mistake(s) in the future. After all, if you’re not learning from your mistakes and aren’t changing your behaviors, what’s the point in analyzing anything?
Big financial mistakes I’ve made
If I were to list all of the mistakes I’ve made with money over the years, I’m quite certain this list would be way too long. Instead, I’ll focus on the biggest ones that have had the largest impact on my financial present and future:
I put my head in the sand
When I was struggling with ballooning credit card balances, I made a horrible error by trying to ignore the situation. Despite how I joke about becoming the Princess of Interest and Queen of the Shredder, I shudder to think about how I used to behave. If only I’d faced the situation head-on earlier, I’d probably have saved myself thousands by not spending mindless and recklessly.
I shopped away stress
Accumulating all of my past credit card debt (Yep, over $14K) didn’t happen overnight. It was a product of my misaligned tendency to shop when I was stressed, angry, bored or wanting to feel social. I viewed shopping as an outlet rather than a necessity for finding the things I need at a great price. I was all about the want when I really should have focused on the need. I also, for a brief period of time, defined myself and self worth by the things I had and the money I could spend…ugh…ick…blech.
I struggled in silence
Not once did I reach out to family or friends about my financial situation. Why? Because deep down, I was ashamed, embarrassed and felt guilty. Instead of asking for help or soliciting advice from those I trusted, I continued to shop my way into oblivion. It wasn’t until I discovered the MSN Money boards that I found some much-needed inspiration and support to tackle my financial demons.
What are the biggest financial mistakes you’ve made?
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My biggest mistake is probably spending tens of thousands of dollars on clothes every year. UGH
It's amazing how quickly it all adds up! I've been "shopping" my closet in an effort to not spend any more money on clothes…I seriously don't need a damn thing at this point!
The biggest mistake I made was loaning money to someone I was only dating. Needless to say, we broke up and she refused to pay back the $5k. Its ironic because I ended the relationship after realizing she wasn't the kind of person that would honor her debts. I knew the money was gone, but it was worth it.
Oh wow, that's the worst!! I'm glad to know you're not in that situation anymore–you're right; worth every penny to keep toxic people like that out of your life. Onward & upward, eh?
I bought frivolous items that I didn't need and it cost me dearly. I also funded my business on a credit card.
My recent post **Rant Alert** – An Online Business is NOT a Passive Income Source
I know the ramifications of frivolous purchases all too well…I cringe thinking about the money I've frittered away over the years!
My biggest mistake was buying my first property without doing my homework about the neighborhood. It was really terrible and I had a hard time selling.
My recent post Buying a house cash: being truly at home
I lucked out with my purchase, even though my first-floor neighbor was a nightmare for a while. I advocate that people visit their potential neighbors and the area at least four different times (weekday, weeknight, weekend day, weekend night). A little research goes a long way!
Sorry you had to go through that though–I know how stressful it can be!
I've never made any credit card blunders but my big mistake is co signing on a student loan for my then husband. It's a tough spot to be in. He begged me to and I wasn't comfortable with it but didn't feel I had a choice. Since being divorced it's that one thing hanging over my head. BOO!! Oh well. Such is life.
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Oy! Sorry you're still attached to that…co-signing is the worst. Good luck with finally kicking it to the curb!
Our biggest financial mistake was actually not SPENDING some money! When my husband was in school, we put every penny into paying his tuition. We didn't date, didn't travel, didn't spend any money on ourselves. And by the end of six years (yep, that's how long it took him to finally finish school), we were walking on a dangerous edge in our relationships. We since became a lot closer again. But I wish we would invest a little more money in us and nourish our marriage. No matter why you try to save money (paying debt, invest etc. etc.), never forget about things in life that are a lot more important than a bank account.
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Thank you so much for sharing this!!! It's so important to have this kind of balance in life–even if it does cost a bit of money. Money well, well spent!
Does it have to be just one financial mistake?!
I think for me it was funding several vacations entirely with credit cards. Sure, it they were fun when they lasted but I spent years paying those needless vacations off.
Hahaha….you're preaching to the choir here!
I did the same with vacations…good experiences but too high of a price!
Well, prior to getting into rental property for ourselves, my wife and I put at least $150k into a series of debt and equity deals with a struggling company. While it's still possible that the money could come back (and it's even possible it could become hugely profitable), it is also possible that it will be a total loss. Fortunately, we're still in our 20's and doing very well financially, so we'll chalk it up to a tuition payment to the school of investing!
Wow, that's incredible! I wish you nothing but luck with this venture–I hope it all works out in your favor!
Not likely, except for the education as I mentioned…But we've made a number of much better investments since which produce monthly cash flow, and we'll consider any return we might receive from the previous investments to be gravy (which would be reinvested). Thanks though!
You're welcome–I'm a hopeless optimist when it comes to things eventually working themselves out. But you're right, the education aspect of a situation like this is huge.
Good to hear that your other investments are working out better—cash is king!
I will have to say getting married before finishing school. I thought I could still get Pell grants and continue with school. I was advised by many people in my life that it was the best choice for the time, but I wish one person would have known about school. At the time none of the people in my life cared if I was in school, but I dropped them all to the curb not too long after that. I am glad for the mistake, because I learned a lot about finances since then. I also learned that two people making $8.50 an hour is considered livable wages and the government won't help in the slightest…
My recent post What is your Daily Survival Number?
Wow…that's unreal about the livable wages bit…how on Earth?
I'm sorry you had to go through such an ordeal with school and with those people–I hope everything has worked out for the best! You can never discount a learning experience in my opinion
The biggest mistake I made was not starting and following a budget when I became a freelancer when I was laid off. I had such a huge cushion to work with and I blew it because I was careless. In my (sort of) defense I wasn't prepared at all to become a freelancer because of the circumstances, which is what I hope to teach through my blog.
My recent post Are you living a life using all of your 5 senses?
I think it's good that you at least had a cushion! So many people aren't prepared for life's surprises. And I love that you're teaching through your blog–those are the best ones to read!
I ran up credit cards several times and I once bought a $25,000 car without having a job at the time! Thankfully, I learned from all of my mistakes and quit repeating them.
Not repeating is key. Holy moly to the car thing–not that I'm one to talk…haha
Sounds just like my experience. Happy to be back on top. 20's are some crazy years!
When I was 22 I was driving a fairly new Toyota Tundra, which had a big payment and was very inefficient on gas. I made a decision to sell it and buy a cheap used car that was more fuel efficient. Three days later I walked off of a car lot with a brand new, $21,000 Mitsubishi Lancer.
Hahaha…the mistakes of our youth, right?
I'm going to say selling the first property I ever bought as it's worth a heck of a lot more today but you live and learn I guess. I was young and just sold to buy up instead of thinking, hey I could rent this out and keep it.
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Ahhh…that's a tough one! I definitely plan on keeping my condo to rent out, but I could see where the temptation would be great to help myself buy up to a bigger/better place.
Running up credit card debt in college. Companies trip over themselves to give students credit and I made the mistake of using extra money from student loans to make the minimum payments. Big mistake. Fortunately, everything got paid off but it took forever.
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I'm right there with you!! Credit cards were the bane of my existence for far too long–so happy to have kicked that to the curb as well–well done on paying yours off, too!
Swiping those plastics here and there. Feels so good to shop but when you get your bill at the end of the month, you feel like your heart just sank. That's what you get for not learning how to manage your finances well.
My recent post How to Spend Your Tax Refund Wisely
I know what you mean all too well…so happy those days are behind me!
I have made a few financial mistakes in my life but the biggest thing I regret is not educating myself on finances until later in life. In hindsight I should have started earlier. My parents didn't teach the value of your finances. My mother had terrible spending habits she has declared bankruptcy twice so I had to learn all this stuff on my own.
My recent post Yale and Harvard Suing Their Student for Default
I'm writing about the impact parents have on the future decisions their children make about finances—please come back and visit
But it's so true…it's never too early to learn about money and how to use it well!
Yes I will. I think learning from my mom's mistakes definitely set me on the correct path. I always remember a quote my uncle used to say "Smart people learn from their mistakes a genius learns from the mistakes of others" so I try to avoid my family's mistakes.
My recent post Yale and Harvard Suing Their Student for Default
I have a couple…
1st – not filing charges against a my x-husbands sister when she stole my SS# and got some credit cards in my name. Wrote some checks on my checking account (x husband begged me not to press charges because it was his sister….)
2nd – Staying in the above relationship far to long wasting my time being put behind "but they are my family"
3rd – after finally leaving the above relationship and filing for divorce, I walked away with a nice hunk of money that I put in a money market account and moved home for a bit trying to decide what or where I was going live. My dad kept telling I should buy a place. I really just wanted to rent a nice little apartment or share a house with a friend. Only to succumb to dads wisdom of buying something. I bought a condo…it offered me the apartment living but at a huge cost.
I've been here 8 years. My property values have dumped with everyone forcloseing or short selling that my 2005 purchase of 195k was 224k in 2008 and is now 106K….still owing 137k on it. Zillow says $169K but the comps aren't there. We could rent it for 1200 to 1250…which is about the cost of the mortgage and condo fee, which includes heat and cooking. But do we (I did get remarried) really want to become landlords….sigh.