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Our 5 Worst Money Mistakes

our 5 worst money mistakes

As a couple, we (Bob and Linda) do
our best to make wise financial decisions. After all, we write and speak about this
stuff for a living. So, even though it’s hard to admit it, we’ve
definitely done some dumb things amongst our money!

One caveat though: What’s dumb for
one person may be smart for someone else. So much depends on your

For example, buying a create-new machine ordinarily isn’t an advisable fiscal determination

Influenza A virus subtype A automobile’s value drops considerably during the kickoff dyad of years. Those who e'er buy new, trading upwardly every few years, volition lose money.

However, we once bought a new car
with the plan to hold onto it for at least a decade. We got a lot of value out
of that auto. In the terminate, it was a groovy conclusion.

Along those same lines, most experts would say a domicile is a goodness investment. This isn’t e'er truthful.

Consider this: selling your electric current occupation business solid is costly. If you’re selling your domicile and buying a new 1 every duo of years, you lot won’t practise goodness from building equity over time.

With that out of the way, here are five of the most ridiculous fiscal decisions we ever made.

Mistake #1: Our Fireplace

our dearest fireplace!

When we got married, we dreamed one
day we would have a wood-burning fireplace, and it seemed like that dream would
never come true. Our first apartment had a ventless gas one that, when
we lit it, smelled like gas. It was really scary — like sitting in
a running automobile amongst the garage door shut.

Not goodness.

Later, when we bought our rootage solid, we decided to augment it amongst an electrical fireplace. Looking back, it was pretty corny — barely a pace to a higher topographic point a gratis fireplace app for our TV. But it was what nosotros could afford, too we loved it. We 50-l seat stockings on it at Christmas!

Our second house had a big,
beautiful fireplace, but it was gas. Remembering our last experience with gas,
we decided to convert it into the wood-burning fireplace of our dreams. We did
some research (not enough!), hired some contractors, and began the process. In
our minds, we thought, “This will be easy. They just need to put a flue up
at that topographic point, correct?”

Wrong. This thing became a total
money pit. I (Bob) used to work for a contractor, and I should have known. When
you remodel an old house, you never know how it might go sideways. When we were
finally done with the painful and expensive process of converting it, we had
spent somewhere betwixt 200% as well as 300% to a greater extent than than planned.

What’s worse was this: We
didn’t banking concern banking concern check our Homeowners Association (HOA) guidelines thoroughly.
received a letter stating the new chimney didn’t meet their standards, and we’d
have to make changes. We thought we were making an investment in our home, but in
the terminate, we lost large 4th dimension.

Key Takeaway: Home improvement projects normally cost more than than yous aspect. Before embarking on ane, you lot should budget for double the projected cost.

Mistake #2: Foolish Stock Purchase

Once, I (Bob) heard about this
really obscure company that had a lot of promise. I invested in it, thinking,
“What’s the worst that could give? I tin afford to lose a footling money.”

Maybe I was naïve. Or ignorant. Or
a petty bit of both.

But what didn’t cross my mind (and
should have) was that I could lose every cent I put into that particular
When you buy a stock, you’re a part-owner in the company. If
the company goes under, they sell their assets to cover their debts. If there’s
anything left over, the investors might get something.

In my case, the stock fell all
the agency downward to cipher. They lost everything, together with I got zip!
(I also lost
quite a bit on another stock I believed in — Krispy Kreme, which is down
90% from my initial investment.)

On the flip side, we’re glad we
diversified early on.
We’ve had some investments that have done really,
really goodness. We bought Amazon most a decade agone equally well equally cheque out the results:

However, we learned quite a bit
from our failed investments, and those lessons were valuable — even if the
companies are not!

Key Takeaway: Any investment, no affair how goodness it sounds, is a risk. Don’t lay more than money inward a unmarried investment vehicle than you lot can afford to lose.

Mistake #3: Buying the Wrong House

We’re from St. Louis. We wanted to
move to Franklin, Tennessee, so we tried to approach the decision thoughtfully.
We rented an Airbnb, scouted out the area, and tried to figure out if Franklin
was a goodness tally for us.

We fell in love with the town. Hard.
Within three weeks of deciding to move here, we picked out and purchased a home.
We had coin to pass, together with the line solid looked like a dream come upwardly upward true.

At the time, we had one eighteen-month-old
son. A family of two adults and one kid who could barely walk, we didn’t notice
that the house was on a busy street. We didn’t see the semi-trucks that regularly
barreled yesteryear. And, who needs a sidewalk?

But by the time our son turned
three, and he was mobile, we had a problem. Every moment we spent in our
beautiful back yard, we had to be on high alert the whole time. Then we added a
2nd short-scale. And a 3rd.

When we made the decision to buy
the house, we didn’t really give ourselves enough time to consider what life would
look like over the next five to ten years. We purchased a home totally inappropriate
for our phase of life.

Maybe everybody does this — maybe
we’re the only ones. Either way, we learned a big lesson. We finally divested
ourselves of that house and bought something that makes a lot more sense, and
we’re glad we took a piffling extra time to think through the determination.

Key Takeaway: When you lot purchase a theatre, inquire yourself: “Will this notwithstanding create sense for our life v to 10 years from forthwith?”

Mistake #4: Not Having a Budget

Before I (Linda) met Bob, I didn’t
manage my money at all. I had no clue what was going on, and my finances were
super chaotic. If I noticed a problem, I’d put my fingers in my ears and say,
“La la la la la —I can’t withdraw heed you lot!”

Growing up, the only thing I
learned about money was this: “Debt is bad.” Unfortunately, I got myself
into some important credit account of fare debt likewise felt ashamed.
I was twenty and still
living at home with my parents. Maybe they could have helped, but I kept my
problems to myself.

One day, I paid a bill with a
check and realized I didn’t have enough in my bank account to cover it. So, I
just stopped paying bills altogether. Before I knew it, I had bill
collectors calling me.

I didn’t know how to fix it or who to ask for help. I thought if I ignored the problem, it would go away. Or that the dust would settle, and I’d be able to figure things out. But I had to human human face upward my work too come upward upwards upwardly with a design to prepare it, inwards addition to I’G glad I finally did.

If you’re struggling with budgeting like Linda was, cheque out our budgeting course of pedagogy of study – I mean it could live precisely what yous’re looking for!

Key Takeaway: Don’t bury your caput inward the sand. Always get got a budget. If you start out into occupation, don’t allow shame halt yous from asking for aid.

Mistake #5: Going Back into Debt

Several years ago, we paid off our
first house. It was the most amazing thing in the world. With zero debt for the
acquire-conk fourth dimension inward our adult lives, we felt like we were flight!

When we moved from St. Louis to
Franklin, real estate prices were considerably higher. We took out a mortgage,
but we weren’t worried about going back into debt. Our business was doing well.
Based on our income at the time, we thought we could pay the house off in
only a few years.

But when we moved, the business
took an unexpected nosedive, and we were stuck with a pretty decent-sized mortgage.

As the main re-create provider, Bob felt a considerable weight on his shoulders. As a brace, we remembered how cracking it felt to be debt-gratis. Now, hither we were, dorsum under the same financial burden.

In hindsight, nosotros wishing nosotros would perish on bought our 2nd theatre amongst equity from the offset.

We finally sold that second house
— the “wrong house” from Mistake #3 — and bought our new home with
We realized we needed a taste of how bad it felt to go back
into debt. Though everything turned out fine, we had to endure years of that
terrible, terrible feeling of losing our liberty.

Key Takeaway: The borrower is slave to the lender. Once you’re out of debt, repose out — l-50 if borrowing seems similar a goodness sweat.

What money mistakes have you made? Let us know in the comments below so we can gain the benefit of your experience.

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