I’ll admit these mistakes were brutally painful. Their isn’t a day that I wish I could have taken back the things I’ve done wrong with my finances. Rather I just have to keep moving forward and accept what I’ve done and learn from my mistakes.
So I hope you find these tips helpful and as useful as I did.
Pay Attention To Your Finances
As one of my good friends, financial blogger, and podcaster Steve Stewart from the Money Plan SOS blog would say –
Pay Attention, Not Interest
This advice makes so much sense to me because every time I wouldn’t pay attention to my finance things would get out of control fast.
Back a few years ago when I was building my new house I learned this lesson well. I thought I had everything under control and then because I got sloppy with my finances things began to slip.
Because I was so involved in building my new house I neglected to maintain my budget and as a result racked up $6500 in credit card debt, and depleted my entire emergency fund account of $20,000.
Luckily I was able to figure out a solution for this which I’m not going to get into here but if you would like to learn more about that you can check that out here.
Don’t Make Hasty Financial Decisions
Another big mistake I made was making hasty financial decisions and this one cost me big time.
It’s often times we get caught up emotionally in some sort of buying decision and we think that we need to buy that one thing right now or we’ll never get the opportunity again.
I fell for this when my wife and I were on our honeymoon. We were staying at a timeshare that was lent to us by my sister. As a result of staying there we were asked to see this timeshare presentation.
We went in with the idea that we did not want to buy a timeshare. However these sales people were trained incredibly well and knew how to play on our emotions by telling us it was a limited time offer.
As a result we lost $4500 to a timeshare that we didn’t want, and on top of that lost $1100 to the scammy timeshare resale companies that were supposedly helping us sell our timeshare.
I did manage to get back $400 back from selling my timeshare and another $600 back from one of the timeshare resale companies but I still lost out big in the end and if I wouldn’t have made that hasty financial decision it would have saved me thousands.
The final lesson I learned was that you have to keep educating yourself because when you think you know everything that’s when you will be the mostly likely to make a mistake.
In 2004 I was shown a revolutionary type of mortgage, or at least what I thought was revolutionary. This mortgage was called an Option ARM.
This mortgage was designed to give you four different payment options, a 15 year payment option, 30 year payment option, an interest only option, and a negative amortized option.
What was so great is that if I had the extra money I could make the 15 year payment, and if things were tight I could make the negative amortized payment, which was the cheapest option.
However because I failed to really educate myself I learned about two problems with this loan.
- It’s Adjustable. First I learned that once the first year of the loan was up that it could adjust to a higher interest rate. This ended up costing me a ton in interest payments.
- It Can Add To Your Balance. However the bigger problem was that this loan could add to the balance of your mortgage if you made the negative amortized payment. This is something I failed to learn and as a result added several thousand dollars to my loan.
Luckily I was able to refinance out of this loan before things got to bad but if I would have just educated myself more on this type of loan I could have saved me thousands of dollars in the long run.
What Lessons Did You Learn
Now that I’ve shared the lessons I’ve learned, what lessons did you learn, or did you make some of the same mistakes as I did? Share your thoughts and comments below.