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 with our money!

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

For example, buying a create-novel motorcar commonly isn’t an advisable financial conclusion.

A machine’s value drops considerably during the origin couplet of years. Those who always buy novel, trading upwards every few years, will 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 finish, it was a neat determination.

Along those same lines, most experts would say a habitation is a goodness investment. This isn’t ever true.

Consider this: selling your current business society is costly. If you’re selling your domicile equally good equally buying a new i every brace of years, you lot won’t practice audio from building equity over 4th dimension.

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

Mistake #1: Our Fireplace

Ah,
our dear 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 auto with the garage door closed.

Not sound.

Later, when nosotros bought our kickoff business organisation venture, we decided to augment it with an electrical fireplace. Looking dorsum, it was pretty corny — barely a footstep above a complimentary fireplace app for our TV. But it was what we could afford, together with we loved it. We even position 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 location, 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% inwards improver to 300% to a greater extent than than planned.

What’s worse was this: We
didn’t depository financial establishment check our Homeowners Association (HOA) guidelines thoroughly. We
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 goal, we lost large time.

Key Takeaway: Home improvement projects ordinarily cost to a greater extent than yous await. Before embarking on 1, yous 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 come almost? I tin tin can afford to lose a fiddling money.”

Maybe I was naïve. Or ignorant. Or
a lilliputian fleck of both.

But what didn’t cross my mind (and
should have) was that I could lose every cent I put into that particular
investment. 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 downwardly to null. They lost everything, in summation to I got aught! (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,
actually goodness. We bought Amazon most a decade agone in improver to check out the results:

However, we learned quite a bit
from our failed investments, and those lessons were valuable — even if the
companies are non!

Key Takeaway: Any investment, no thing how goodness it sounds, is a conduct a chance. Don’t pose to a greater extent than money inward a single investment vehicle than yous lot tin tin 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 friction gibe 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 money to spend, in addition to the solid looked similar a dream come truthful.

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 past times. 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
sec tike. And a tertiary.

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 stage 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 lilliputian extra fourth dimension to intend through the conclusion.

Key Takeaway: When yous buy a concern corporation, enquire yourself: “Will this all the same create sense for our life 5 to 10 years from right away?”

Mistake #iv: 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 listen yous!”

Growing up, the only thing I
learned about money was this: “Debt is bad.” Unfortunately, I got myself
into some meaning credit bill of fare debt every bit well as 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 face my problem as well as come upwards upward with a conception to educate it, together with I’k glad I finally did.

If you’re struggling with budgeting like Linda was, banking concern cheque out our budgeting course of study – I intend it could be just what you’re looking for!

Key Takeaway: Don’t bury your primary inwards the sand. Always direct keep a budget. If you acquire into problem, don’t permit shame halt yous from bespeak for help.

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
showtime fourth dimension inwards our adult lives, we felt like nosotros were flying!

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
alone 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 primary provider, Bob felt a considerable weight on his shoulders. As a duo, we remembered how dandy it felt to live debt-gratis. Now, here we were, back under the same financial burden.

In hindsight, we wishing we would concur bought our sec theater alongside equity from the starting time.

We finally sold that second house
— the “wrong house” from Mistake #3 — and bought our new home with
cash. 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.

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