Money mistakes I have made

I think it is good to discuss money mistakes as it shows that our past mistakes do not define us…so here are some of my money mistakes:

First off, I was a much less frugal guy in my single days. So a few of these are mistakes surrounding erroneous travel.

We cashed out my wife’s 401K when we moved to Argentina in 2010.

Direct cost $15,000 but if you had potential earnings over the last 6 years, likely much more. 

Bought a home in 2008 for $200K.

Sold it in 2011 for $200K. Lost maybe 20K on the entire process through commissions and maintenance. I consider this a loss because if I had held on to it I could now sell it for $391,000 based on Zillow Estimates. The area was booming but I did not want to be a landlord. Hindsight is 20/20 but this decision will haunt me (and my wife). Cost of potential losses ($191,000 in earnings and $20,000 in commissions, etc= $211,000.

Bought a house in 2013 thinking we would be living in New Orleans for many years for $559,000.

Sold it in 2016 for only a few thousand more. Commission, etc. cost me about $20,000. So total loss, $20,000.

I did not start investing in IRAs until 2014.

I have been earning an income since 2005 and arguably even before that with part time work. Cost of mistake is 9 years x $5,500 = $49,500 plus potential earnings and losses.

I did not start investing in my wife’s IRAs until 2014.

I met her in 2007. So let’s say I should have been doing this from 2007 to 2014. That is 7 years at $5,500 = $38,500. 

Changing my 401K contributions from 5% to 3% in 2011 and 2012.

This occurred once again when I moved to Argentina. I was cash strapped and made the decision to decrease my contributions. I still received the full employer match, but missed out on potential savings. This likely cost me $6,000 total.

Spent way too much on a wedding.

Let’s just say this is my second embarrassing financial move (after selling my house). We easily spent a year’s salary on a wedding. So as I am too embarrassed to put the number spent, lets just put the cost at $50K. For the record, it was more my decision then my wifes…and still quite the mistake. Was it fun? Hell yes! Was it worth a down payment on a house? No!

There are a bunch of other little things.

Like flying out to hang with girls I met at weddings (never works out well). Spending way too much money on booze and nights out (this was particularly dangerous when my friends and I would go to Vegas), and spending lots of money at restaurants that were over priced and did not add to my happiness. These expenses are a “Death by a thousand cuts” (an ancient Chinese Torture method you can read about on Wilkipedia here) and probably cost me in the tens of thousands of dollars. So lets calculate this at $30,000 though it may be much more. 

Total costs

So total costs of stupid mistakes = $420,000 since 2005 or approximately $38,181 dollars a year. Considering I made between $50,000 to 60,000 for 7 of those years as a trainee this is pretty bad. Conservatively we remove the potential earnings from the home if I had not sold it ($421,000 – $211,000 = $209,000 which equates to $19,000 a year). Still pretty bad.

I did not make all of the high money decisions my colleagues made. For instance, I did not buy expensive cars or lease them every 2-3 years. I do not buy expensive clothes that do not add to my happiness. Flashy items used to keep up with the Joneses (albeit my current house was expensive) don’t interest me. I made that purchase for the view more than the home and it provides me a great deal of happiness. We always look for good deals before buying furniture, toys, etc. 

Luckily now as a high earner I can make up for prior stupid mistakes. The key is not to make any going forward. So what stupid financial mistakes have you made? How do you correct it? 

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DadsDollarsDebts

I am a Dad and Doctor trying to find financial freedom by owning my dollars and debts. Helping dads with their finances so they can focus on the family.

10 thoughts on “Money mistakes I have made

  • October 31, 2017 at 11:50 pm
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    I don’t think you should count selling your previous home as a loss of $191k. Presumably, selling it provided you liquidity or additional leverage on acquiring some other asset, e.g. the home you subsequently purchased or stock market investments. Also you didn’t invest in the IRAs but you retained the money to invest elsewhere if you so chose, so those don’t count as losses?

    I diversified out of an asset over the years that would today be worth $250 million if I had held onto all of it. Ouch! All the other million dollar mistakes I’ve made (and there have been a lot!) don’t come close.

    I would even count investing in real estate at the bottom of the market in 2012 as a mistake. I tripled my money on those investments, but assets I sold to purchase the real estate have increased by 12x in the same timeframe.

    Reply
    • November 1, 2017 at 7:26 am
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      Interesting perspective Joe…Funny how looking at things in a different way can change your understanding of the situation. $250 million!!! That is incredible. I think that maybe we should just look forward to the future as I hear the mistakes we both made! Thanks for sharing your story!

      Reply
  • May 20, 2017 at 9:08 am
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    We all wish we could’ve save more no doubt……Didn’t / doesn’t have to IRAs or other qualified accounts. They are no panacea. The have advantages and disadvantages as every financial product does. Can be a tool but not a complete plan.

    Reply
    • May 20, 2017 at 1:52 pm
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      Fair enough. Nothing is quite complete. It is important to figure your tolerance and desires and go from there.

      Reply
  • April 13, 2017 at 4:52 pm
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    Glad and sorry to see I wasn’t the only late bloomer financially speaking. The past is the past. We are doing better now looking to the future and a higher income certainly helps.

    Tom @HIP

    Reply
    • April 13, 2017 at 8:59 pm
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      I am sure there are many of us late bloomers out there. Let’s focus on the future together! And as your name says, being a high income parent makes it much easier.

      Reply
  • March 1, 2017 at 7:04 pm
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    Good post.

    I’ve done so many dumb things with money
    That I think if I totaled the actual cost like you did,
    it would be too depressing. 😉

    Reply
  • February 22, 2017 at 8:02 pm
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    Not putting my own financial interests first! Long story, but it’s cost me a lot in $$.

    Reply
    • February 23, 2017 at 4:39 am
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      Thats definitely a mistake many of us make! The benefit is that past mistakes don’t have to dictate future decisions! Thanks for checking out the site.
      _EJ

      Reply

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