Worst financial mistake?
I often read The Wallet at the Wall Street Journal. A recent article asked the question, What was your biggest financial blunder? I started to think through that question and I could not come up with the answer right away. But I thought through several possibilities:
Purchasing our house
My housing struggles are well-documented on this blog, but I don’t think that was our biggest financial blunder. We purchased the house for a competitive price, we spent some money fixing it up and if we still lived in it, I don’t think we would be having any problems keeping up with the mortgage. A bigger financial blunder might have been when we moved three states away . . .
This is a common answer to a question about the “worst financial decision” for many people. I earned my way through college and have very few loans – less that $2,000 remaining. My wife, however, graduated with around $20,000 in school debt . . . so maybe my worst financial decision was in marrying her. Maybe, I said maybe!
I sure hope she does not read Gather Little by Little. ;)
Using credit cards
Credit card debt has not been a problem for us. We use credit cards often, but we always pay off the balance every month. Our rewards credit cards have really been a boost to our budget. There are also certain budget categories where we do not allow ourselves to use plastic. So far, we have been able to stay out of trouble.
Purchasing Whole Life Insurance
I was once talked into a “whole life” type insurance policy, but I cancelled it after paying the $120 premium for three months. I lost my initial $360 investment and that was unfortunate. Whole Life Insurance was a luxury that I could not afford, but boy, some of those prospectus projections looked really good . . .
Not pressing for a bargain
This is a mistake I have made on several occasions, the most notably was when we purchased windows for our home. We badly need thermal windows for our house after we moved in. Our part of the country regularly saw temperatures in the -20’s F and the existing windows had been installed in the 1930’s. Our mistake was that we only heard a pitch from one salesman and then we purchased the windows for his first offer. Dumb, dumb, dumb! I often think about that day with regret, I really believe that I could have talked him down another $1,000 at least.
I learned my lesson when it came time to replace our roof, the winning bid on our roof was 38% of the highest bid! I believe that you can talk down almost any price, especially in this economy. Vendors are so desperate to make a sale that the last thing they want you to do is walk out the door.
Purchasing a minivan
Purchasing a minivan was not a mistake in the long run, but when our first child was born, we immediately ran out and purchased a minivan without stopping to think about whether or not we really needed one. In hindsight, the four-door compact car that we were using at the time would have been perfectly adequate for at least another four years – until our third child was born. A minivan was not necessary to haul around two car seats, but we bought into the cultural pressure that told us “parents need a minivan”. Furthermore, the car was just about paid off and we took on a loan for the minivan. Aaargh!
Hey, at least we did not purchase an Sports Utility Vehicle. But I know what some of you are thinking: Three kids in four years?! THAT was your worst financial mistake!
Photo by thomas pix