This post comes courtesy of Eric J. Nisall, who writes about pretty much anything he feels like in the areas of personal finance, small business and entrepreneurship over at DollarVersity. So, if you don’t like it, BLAME HIM! 😀
Money mistakes. Everybody makes them. Some people prefer to keep theirs hidden from the world so as to not have to admit to them. Me? I will openly share mine. I don’t worry about how someone will react at my tale of woe. I’ve made mistakes, plenty in fact, and the chances are great that I will do so again. Hey, I’m human so it’s bound to happen. You can’t go through life worrying about what happened last week, last year, or a decade ago; you need to use it as a learning experience and move forward.
If mistakes are supposed to be learning experiences, then I should be a freakin’ genius by now. Why do I say that? Well, to be honest my twenties were basically one giant money mistake. I pretty much committed every cardinal sin of financial management, and some multiple times. I’m not proud of what I did, or the situation it got me into, but at the same time, I’m not ashamed either. It helped me get to the point in my life I am currently at.
I’m not sure how it all started, but once it did, boy did it keep going. I was loose with my cash–very loose. Every other weekend myself and my friends would go to our favorite pool hall and simply go crazy. The waitresses loved me., and not in a good way, mind you. They loved me because I didn’t care about money. I tossed it around like I was some big shot, like the guys today who you hear about going to the strip clubs and “making it rain”. I wasn’t that out of my mind, but pretty close. I would buy entire trays of those test-tube shots. I’d order tons of food. I would buy the random people drinks (ok, it was only the attractive women). And, as for the reason the waitresses loved me–I would leave huge tips. It wasn’t the most economical way to have a good time, huh?
My home life wasn’t much different. I rented an apartment with a friend who was kind of homely. He was very quiet and unassuming, and pretty much kept to himself. I, on the other hand was the opposite: loud and very much out there. When I first moved in, the place was very sparsely furnished. I went out and purchased a 1,000 watt stereo receiver. Then I got a 400-disc DVD changer (like anyone needs to have access to that many movies at one time). I stocked the pantry with tons of snacks and junk. I basically tried to convert the apartment into a mini-club. When the lease was up, I didn’t brink that stuff with us to the new place. I put it up on eBay, and started fresh with updated versions of the things I had just sold off. After all, a new place was deserving of new toys (or so I figured).
That was all nothing compared to the last thing I did before I gained some common sense–not to mention some self-control. I wanted a flashy car! No, it’s not what you are thinking, I didn’t buy a high-end import with all the bells and whistles in it. I went with a Pontiac Gran-Am, but I just had to have the sun roof, spoiler, 17-inch chrome rims and leather. It didn’t end there, though. I had black-out tint on the rise and ripped out the stock stereo head unit just to replace it with a stylin’ Alpine multi-disc changer with motorized screen and text (back then this was the only model on the market). I dropped $800 just on the head unit. I have to say, that car was the most fun vehicle I have ever owned.
How did I manage to pay for all of that stuff? Was I a rich kid spending mommy and daddy’s hard-earned cash? Nope. Did I have some connection that got me a high-paying job that would afford me this life of luxury? Nope. I committed one of the biggest sins of smart money management: I put it all on plastic. Even worse, I didn’t pay more than the minimum each month so that I would have plenty of cash to spend on other things.
Was it worth it? At the time, I would say abso-freakin-lutely! Now, however, looking back at the trouble it got me into as far as credit card debt I would say no. But it teach me a valuable lesson and it’s certainly a mistake I never plan on making again.
What were your biggest money mistakes?
My biggest mistakes were very similar to yours. Even though I saw people around me make stupid financial mistakes, I ended up doing the same thing…albeit in different ways.
Arrogance of youth, I suppose.
Arrogance or blatant ignorance as I like to call it, it all works out the same way. It was probably more of the pent-up desire to see what it was like to have all the toys and be a spender since I was never like that prior to that time.
That’s a crazy story. Glad you learned your lesson. I’ve been lucky not to make too many mistakes. Not investing in my retirement early enough.
Yeah, I learned my lesson the hard way, but I’m better for it, unlike the people who keep perpetuating the same cycle over and over again. The funny thing is, I’ve heard of way worse and those people never got to the point where they tired of it and never learning a single thing from their experiences.
I love the PF blogosphere because it sounds like a lot of us have similar backgrounds.
I did exactly the same thing you did, however I did have a high-paying job right after quitting college. I still lived in the college town and my roommates were still going to school, but I was “the rich kid” (because I was the only one that had an income) and paid for all of my broke friends to have a good time.
At least you learned from the mistakes!
I was the opposite before that–my friends are the ones that came from money and had everything paid for by their parents. I can pretty much say with a good deal of certainty that that was the driving force behind my actions back then. I wanted to see what it would be like to do and buy whatever I wanted.
Luckily I was very sensible with cash in my 20’s. It was only after I bought a house and got married did I get into debt! I have more or less worked my way out of it thank goodness!
When I bought my home, my credit score was over 800, and the lady in the developers office said that I was more prepared and better suited than many of the people much older than me whom she had dealt with. I was 29 then, and much wiser than I was just a few years prior when I was running around like I was the king of the world!
So dude, what did that debt get up to? How long did you take to pay it off? I was the same way with credit cards early on. I finally got everything paid off, so my wife and me are debt-free (which feels GREAT), but man, it was rough going there for awhile.
I don’t remember the exact amount, but it was probably around $10-$12k. The strange thing was that I never had to file for bankruptcy or ever had bad credit in spite of it. Of course, I did take some time away and moved back in with my parents to get things under control and get my head on straight.
Wow… I had my fair share of “spend it if you got it” moments – not too many, but there was a time I was making a TON of cash bartending and bought quite a few bottles of Patron on my days off… Fortunately it didn’t end up as a spending or drinking addiction. I still have no idea why I did it but it was when I was 21 years old, so while I was pretty cheap, I hadn’t “seen the light” so to speak…
I’m happy I was able to do some soul searching and come to the realization of why I was doing what I was doing. After that, I decided I wasn’t going to give a crap about what anyone else did or thought; I was going to do what was best for me.
My god Eric…. you’re actually HUMAN????? NO WAY!!! Hahaha. I enjoyed reading this because it reminded me of my BF. The sucky part is that he used to be like this before he met me, and I met him at the tailend of his spending spree. Which means I didn’t get to ride in his fancy expensive car before he sold it off. He still bought rounds and rounds of shots for everyone though, and always paid for other people. He was doing it all on school loan money.
It’s funny how we all had these crazy money mistakes but we are now more sensible about it. At least you learned 🙂
What did you think, I was some sort of AI being sent to test if humans could tell the difference? 😛
I think it’s important to have experiences in which we are allowed to fail, this way we can learn from it. It helps if the trouble is kept to a minimum, and it occurs while we’re still young and have enough time to recover.
While I certainly did learn my lesson, I still stay away from travelling down the extreme opposite path of cheapness. Now, I’ve found my happy medium!
Sounds like a lot of fun! I went out and have fun often too when I was in my early 20s. Fortunately most of my friends were poor too so we didn’t spend a lot of money. 🙂
Some nights weren’t as much fun as others (namely the ones where I was drinking most of the shots), but I wouldn’t change anything. It happened, I learned, and moved on which is what making mistakes is all about. Luckily, I was already tired of the club scene by then, so I didn’t ever get into the whole VIP/bottle service rip-off. I may not have been able to dig my way out of that potential hole!
WOW a 400 disc changer?! I didn’t even know those existed!
Oh, yeah the did at one point. It was actually quite cool. It would read the data from the disc and you could actually see the titles and cover images on the tv when you were going through the catalog. It certainly helped cut down on the clutter!
I spent the early 20s partying, having fun, and living life. Somehow I managed to save up, and buy a condo by 25. Almost four years later, I’m virtually debt free, home owner, purchased a dream car, healthy saving accounts, and working towards getting into investments.
Great story Eric!
I never got the pleasure of making that sort of financial mistake as my mom bought me a new car when I was 16. A brand-new Civic. Sure, it wasn’t a Lexus…but I thought I was pretty cool. 🙂
My first car was a beat up, oxidized 1986 Pontiac Sunbird (this was in 1995). Then I had a 1993 Geo Storm (in 1997) that wouldn’t move even I was going downhill. Believe me, I would have love to get a brand new car for my first one, regardless of make!
No major ones, but definitely a few smaller regrets! The one that rankles the most is being owed nearly $1000 by my ex flatmate (http://eemusings.wordpress.com/2012/05/25/friday-five-my-worst-financial-decisions/).
I like seeing these articles before it is too late.
I bought an used (very used) car and I thought spending $1700 was not too bad for a car. But with it came probably $1500 in repairs, plus insurance, gas and maintenance, and now parking while at university. I love that car but it would be cheaper to not have her around.
My first 2 cars were the same way. The maintenance and repairs cost more than what I paid for them. Only difference was, I hated mine with a passion!
Those were costly mistakes, glad you learned and now advising others on your blog. I am born frugal I don’t spend money easily unless I am convinced. But, this raise stress in relationship as well.
I was raised to pay my own way–got a paper route when I was 12 and have been working steadily (for the most part) ever since. I really don’t view them as mistakes, since it didn’t cost me anything but money, but more as life lessons. Kind of like common sense or “street smarts”; things you can never learn from a book.