Your Biggest Money Mistake

Your Biggest Money Mistake

All of us have made mistakes. I’ll hazard a guess that most of us have made some money mistakes.

Whether it’s a lack of budgeting (been there), spending more than one makes (been there, too) or poor investments (ahem), you’re probably not alone in having had some red on your ledger.

FishBoy13 asked me about the stock market crash today. That led to a conversation about investments and speculative financing. Of course, the topic of our rental house came up. It probably ranks very near the top, if not the pinnacle of financial mistakes we’ve made over the years. And we’ve made plenty of them. It’s the one that continues to hound us.

While I would advise most people against investing in rental property, there are probably plenty of people who do really well in that business. More power to you!

That has not been our experience. There have been a series of tenants over the years who have flaked on paying rent, trashed the house, stolen the appliances, and otherwise left us with thousands of dollars in clean up and repairs. When the court won’t enforce a ruling, there’s really nothing you can do. Especially when said person skips town.

If you rent, I recommend that you not assume your landlord is sitting pretty. That certainly has not been the case for us. We have lost money on this property every year since we bought it in 2005. If it wasn’t a bad tenant, it was something breaking or a roof that needed to be repaired. Currently, we owe more than the house is worth. Once the market and our mortgage match up, we’re selling as soon as you can say, “How much?”

That said, I’m thankful that we have (mostly) gotten our finances in order. God has been very gracious. We only invested in one measly rental property, instead of the dozen that we once dreamed of. One headache, not twelve. I’m sooooooo very thankful for that.

I can manage this, as much as it stinks. I can do this. We have a good management company, our personal finances are in order, and we’ve got a plan to fix this mistake as soon as possible. It still stinks, but it’s doable.

Have you got a money mistake to share?

No judging allowed. Just a chance to know you’re not alone. Tell us your biggest money mistake. If you solved it in a great way, share that with us, too. We can always use a good redemption story!

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This is Frugal Friday. In an effort to make these weekly financial discussions more interactive, I’m no longer posting a link-up. Feel free to leave a link in the comments. But better yet, chat with us on today’s topic.

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Comments

  1. My top money mistake was taking out loans for my master’s degree. I will pay off my student loans in under 4 years and I use my degree every day, but it’s definitely not smart to start a career and a marriage in debt.

  2. Funny, I *just* posted about a recent stupendously stupid mistake: http://www.chieffamilyofficer.com/2014/01/my-completely-stupid-totally-avoidable-140-mistake-and-how-im-making-sure-i-never-make-the-same-mistake-again/

    It’s not my worst mistake ever, but it’s been a few months and I’m *still* so irritated with myself!

  3. My husband and I foolishly bought a timeshare when we were on our honeymoon. 11 years later, we are still trying to get out of it! We have wasted thousands of dollars on ever-increasing maintenance fees. Yes, we have been able to trade in our week for wonderful vacations at other nice properties but I have heart palpitations each time I have to write a check for another maintenance fee. Hopefully 2014 is the year we can get rid of it! DO NOT BUY A TIMESHARE!

    • Meagan,

      I hope you and your husband are able to sell your timeshare this year!! I know a couple who is trying to sell their timshare as well. I hear it’s a huge headache!

  4. Hi Jessica. One of the worst money mistakes I almost made and caught was my math being off in the checkbook by $800. I had always used Microsoft Money as a second resource that double checked our figures. We had a few months that we didn’t have Microsoft Money, as they phased it out, and we were looking for another source to double check our checkbook (basically have an online checkbook) since we don’t trust the bank statements to tell us exactly how much money we truly have in the checking account and how much we have spent. God was gracious to have me find the mistake, but YIKES! Always double check your numbers.

  5. My biggest money mistake is taking out student loans. I feel like I will be paying on those for the rest of my life, and I’m a stay at home mom now, so I have never even used my degree. Definately a huge mistake, I definately regret that, and I advise all high school kids, Never get a student loan, it may seem like easy money, but its not worth it in 10 years.

    • i’m so sorry for your financial reality. i want my daughters to get out of college student loan free so they have options after graduation. it’s very hard work but we’re cashflowing one semester at a time in state schools and community colleges – depending on the kid and their skills.

      a few years ago when i was in between part time jobs i sold our toys on ebay, $10 at a time. some fetched upwards of $100 though too.

      can you reach out to your friends and offer to sell their stuff on ebay and keep half of the profits? it’s time consuming but being at home full time offers you the flexibility to go as fast or as slow as you need to.

    • I get you on the loans. I do not want my kids to go that route.

      However, I don’t want any mom to think that her education doesn’t have value, especially stay-at-home moms. Your education may not be “used” in a measurable way (I’m a French major, I get this!) but the skills that you acquired and the perseverance you displayed in going to college, those serve you in your day to day, maybe just not directly. I know that my schooling has helped craft my personality and my life as mom. I bet it has for you, too.

    • So true!!! When I was young and newly married I worked full-time and went to school part-time. I took out student loans every year like I was a full-time student. I used my bachelors degree only one year but because it took me years longer to graduate than the typical student I was burnt out in the profession and quit. I regret those loans every time I think about it.

      On a positive note……I’ve started a college fund investment for my 2 kids several years ago. It’s not much but hopefully it will help when the time comes for them to go to college. I never expected (and quite frankly it never crossed my mind) that my folks would pay for my college and with 5 kids it would’ve been impossible. I just don’t want my kids to make the same VERY bad mistake that I did.

  6. I have made several big mistakes over the years. My biggest one was when I was 17. I lived on my own and I was in college. I had ZERO furniture. I worked a pretty good job, but not great. Instead of buying used furniture, or going on craigslist I went to a rent-to-own place because I HAD to have something new. Ugh. A tv, bed, and sofa cost me “$3500″ but really with interest over FOUR YEARS I paid over 8 grand for it!!!! I tried to pay it off early once I had they money, but the penalties and fines in the contract for doing so made it not even worth it….

    I learned to ALWAYS read the small print after that. Since then I have probably saved the hubs and I hundreds of dollars by going over EVERY bill and contract so that we don’t get nickled and dimed

  7. There are so many to choose from! The biggest one was probably using credit cards when we were first married to buy anything and everything we wanted. I guess we thought we needed to live at our parent’s standard of living even though we were still in college and so very young. We racked up about $20k in credit card debt before we woke up and got a grip. We paid everything off before my daughter was born and then we discovered Dave Ramsey and paid off everything else but the house. Now we are debt free (except our home) and I will NEVER go back in debt again. There is nothing that I want bad enough to borrow money for it. Lesson learned.

  8. I have a ‘young adult’ and a current one for you

    When I lived in Manhattan many moons ago, I had to take my basset hound to the vet. In case you couldn’t guess, most cabs are unhappy to take a wet basset hound in their car [it was raining] so I grabbed a bunch of cash and tied him to a stop sign while I hailed a cab. They cannot reject you once you open the door, so I opened the door and went to untie my dog while the driver complained.

    I was stressed already and counted out money for the ride – I had my big wad of cash in one hand and cab fare in the other . . . and mixed them up when I left the cab without checking, distracted by rain and basset. I must have paid 300 for that 10 dollar cab ride.! AUGH!

    But as a real adult – yes, similarly a rental is our biggest mistake and money hole – DH invested some money and signed a mortgage with a friend and the friend’s friend . . . and it has required us to pay in every single year to cover the mortgage – I budget for it – but it drives me nuts, no one will buy it [who would?] and we’re stuck – fortunately it’s not too big a hit considering how our income has grown – but it’s still aggravating.

  9. I’m so glad you posted about this. We are in the same situation with a rental property, and trying to sell it while tenants are in place.

    I think my biggest money mistakes are always related to men. I had a long-term (co-hab) boyfriend many years ago who didn’t pay for a single thing, and when we split, I was left paying for 6 months of rent, and $10K of debt I accrued while with him. I also did it with my ex-husband…ended up walking away paying for everything, when he was the one with the job. But like you said, a court order doesn’t actually make the money land in your lap. My take-away is never invest too much of yourself (or your money) into any relationship, LOL!

    • AGREED. I didn’t post about my personal relationship-financial failings…. but I was also in two relationship where afterwards I was left with a big pile of debt to crawl out from under. It took me working 2-3 jobs while in college and eventually sitting out of school a few semesters to pay it off. I’m sooo sorry that it happened to you

      From that I learned to ALWAYS have separate checking accounts. The husband and I each have a personal one and we have one joint one that all bills get paid out of. It took me four years to get to this point, but we both have the others information for the personal account in case of some weird emergency, but we would (hopefully) never spend each others money….

      • Yes…Hubby and I have had separate accounts since day 1. He can squeeze a penny & I was quite the spender. We each have certain responsibilities and when necessary will float the other. Might sound odd but its really worked well for us AND showed me how to be fiscally responsible … my upbringing was paycheck to paycheck and spend spend spend. We moved every year most likely for nonpayment of rent. Yes my parents were “those” tenants :(

  10. Not saving more when I was single or newly married without kids! We didn’t over spend, but we didn’t save seriously either. Now, with kids aged 16 – 21, we are very frugal, which makes us realize we could have saved much more for their college educations and our retirement!

  11. My biggest mistake was lack of budgeting. My husband and I make good money, but I always wondered why we flew through our money so fast. So, for a couple of months, I tracked every single penny we spent and setup categories, so I could see exactly where all of our money is going. This has helped us tremendously. We have also discovered Dave Ramsey which had made everything so much better! It feels good to finally have control over our finances.

    • This was us too – we’ve had a nice income for a long time but didn’t really budget until about 4 years ago (we’ve been married for 15!) and discovered Dave Ramsey and did Financial Peace University a year ago. What a difference it has made! We’ve always done “fine” but this was a HUGE change and we are so grateful for that.

      Lea

  12. car loans.

    our last ever car loan was rolled into a refinanced mortgage, 2 refinances ago. we eventually got our financial house in order but i hate that we’re still ‘paying’ for that miserably overpriced, bought it used, lemon of a van and its $7,000 in credit card repairs.

    we pay cash for vehicles today. and i cringe whenever i hear friends or family complain about not being able to fund college or retirement, because there’s $1,000 in monthly car payments sitting in their driveways.

  13. A few years ago my husband and I decided to move to a new town for his “dream job.” It turned into a string of our biggest financial mistakes. 1) I left my job with just six months to go before I was vested and would have gotten double retirement benefits put into my account. 2) We listened to our realtor and didn’t do our own research and sold our house for a lot less than we could have gotten for it. On a side note, learn from my mistake, realtors just want a quick sale and will try to market your house at the lowest price they can get you to agree to, do your own research and push back if you don’t think what they’re saying is fair. 3) We bought a huge house, in a town we didn’t know b/c we were so excited for how far our money would go. When we decided we had to get out of there (the town and living far away from family was too much) we took a $50K loss on the house (OUCH!!!)

    • as i read these stories i hear a pattern….’fever’!

      car fever, house fever, experience fever. We’ve had our share of fever in our lives. we’re learning to take our time with financial decisions. not easy but the better thing to do.

  14. June Combs says:

    Oh jessica ~ dont get me started in 2000 we were going to cash stock to pay our house off but before we followed thru the stock market took a dive we lost all our money and today we still have a mortgage. Then a few years later we decided to buy a cabin in the smokey mountains which we love love love but after the rental company rents it and we pay all the bills from it we still pay about $900 per month. We are trying to sell it but its not worth what we owe on it? UGH. Those are only the big ones!

  15. We almost made a mistake this week. Our older house has had a lot of updates, but the windows are stil original and quite drafty. A salesman made his pitch and we were very tempted to sign the papers and finance new windows, but, luckily, our willpower to stay out of debt and be more intentional with our money won! I looked up some ways to temporarily fix some of the problems we have and for about $50 we should be able to make them less drafty. I feel much enter about that investment than I did investing in a finance plan!

  16. Our money mistake is getting taken advantage of. Certainly, I’m to trusting and lately its showed alot since we moved to Louisiana 1 1/2 yrs ago. I bought chickens for $25 each. Not knowing what the going rate was i bought 5 & 2 wks later i bought 5 more. Didn’t realize it until 2 months later. Last week , we had electrical work done & realized that a previous repair company we hired over charged us by $1000.00. I have other money mistakes that has happened just since moving to Louisiana but that’s just me complaining more. It’s just sad & i don’t know who i can trust. We have a new housethat needs alot of work done .

    • Kris Encarnacion says:

      Check out Angie’s List – we have found some really awesome contractors from that site. I found a great plumber (only one who was honest enough to tell me that one of the jobs I wanted to have done was something I could do myself and showed me how). I was so impressed by that, I didn’t care that he was slightly more than the others for the one job that did need to get done. I always read the reviews, negative ones too to see if I can spot a trend in what people are complaining about.

  17. Oh man. We’ve had our share of credit card debt, will be paying off student loans forever, and can’t seem to keep anything substantial in savings.

    But, our biggest financial mistake so far is the one we’re living right now. We moved to another state so my husband could accept a job after completing his PhD. We assumed our house would sell no problem, so we rented a comparable house in our new town. 8 months later, we’ve sunk tons of money into it, and it still hasn’t sold. Plus, when it does sell, it will be for less than we owe so we’ll still have to drop more money to get rid of it. And, in order to fund all this, we cashed out my retirement savings. Big sigh.

  18. This was a couple of years ago and I took advantage of a “free” makeover at the mall. I ended up spending hundreds of dollars on an entire kit! I mean it was not a huge, huge mistake but it was a lesson on not to let people talk me into things. I ended up not even liking it!

  19. Leasing a vehicle. Huge, expensive mistake. Never again!

  20. Just last week I was paying bills online and made a huge mistake. Instead of paying the minimum payment I somehow approved a payment in full (to the tune of $3,800) which was not in my checking account. The payment could not be reversed and we had to scramble to find enough money to cover it and several overdraft charges. Now paying the rest of this month’s bills will be tricky.

  21. I think we have made every money mistake out there, pretty much ;). I think the worst one is my student loan debt to the tune of $30k. I did get my degree, but I’m still a SAHM. We did start a business last year that I work from home, and my husband works with me on the weekends. It has the potential to make a lot of money, and we have increased revenue every month since we started. We have been on Dave Ramsey’s BS2 (the debt snowball) for the last 5 years or so, and we will be on it for several more. I think a lack of organization and momentum (at times) has really not helped, but we are recognizing the problems and working to not ever have them again. We are making progress, and that is better than no progress :).

  22. Even though my husband is using his degree (optometry), taking out student loans was his biggest mistake. He graduated with 130k of debt; 9 years later, we still have 74k left. Looking back, he wishes that he’d gone into a branch of service upon entering optometry school. Then his school would have been free (even though he would give just 4 or 5 years in return working for the service).

    • Having a husband who had the military pay for his schooling… Its not as awesome as it seems.

      Although it might be “free” he would pay for it in other costs. He would not have been home several days, weeks, months or even over a year. There is a little war going on in the middle east. Then there is always the possibility that just when he had graduated, and was ready to start his practice he could be called up for a deployment.

      My husband still had to take out roughly 15,000 in student loans to cover what the VA didn’t. The paperwork for it was terrible, and he literally lived on bologna sandwiches for 6 weeks one semester while waiting for his money to come in. Remember it is run by the government ;)

      With all that said, my husband and I are both very proud of his service, and we commend anyone who joins any branch of service. But there are two sides to the “free” education story

  23. I very much regret sinking 30K into my master’s degree. While I don’t recommend student loans, I gained a lot from the true undergraduate experience and don’t regret that…but I would’ve managed my earnings from part time jobs and the loans better so I wouldn’t have needed as many loans as I took out.

  24. My biggest Money mistake cost me $2 Million dollars yes that is right 2 million!

    When I was getting divorced I believed my ex husband and it turns out it was all lies the one change of “in addition ” to ” In The Event” cost me at least 2 million dollars!

    Watch out for the FINE PRINT!!!!

  25. With those words changed after the fact poof away went all my military retirement!

  26. I know I’m coming to this comment section late, but my story is a little bit different and might need to be heard by others. My biggest money mistake was buying $10,000 worth of day care equipment without consulting my husband. I was running a small day care and looking to expand it into a much bigger endeavor but wasn’t there quite yet. I rationalized that it was “my” business and that “my” business could afford this $10K purchase and the business would be paying for it, not our personal finances. You can imagine how gut-punched my husband felt when he found out I bought out a day care that was closing and had sunk us into debt $10K. He didn’t see the difference between “my” expenses and “our” expenses. (imagine that!) Obviously, since we were married, any debt I incurred effected him also. In the end, I never expanded my business to the degree that I would need that much equipment and I ended up selling off the remainder of the equipment. I am confident that I recouped my entire $10K but since I sold it off a little at a time, it’s hard to know for certain. My husband still questions whether I ever recouped it all. However, the lesson learned was certainly not about whether it was a good deal or not a good deal or whether or not I got all my money back when I sold it all. The bottom line was I should’ve never gone behind his back with a $10K debt.

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