Worst financial mistake?

By Stew


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 . . .

School loans

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

22 Responses (including trackbacks) to “Worst financial mistake?”

  1. DDFD at DivorcedDadFrugalDad.com Says:

    Bad picture choice– leads one to think the kids were your worst financial mistake!

    Which leads me to my biggest financial blunder . . . my ex-wife– still paying for that one! She was, I mean, is a spending machine.

  2. Traciatim Says:

    Mine was buying my car. If it was a solid car that lasted 8 years or so with no trouble then it probably wouldn’t have been a problem . . . but my car has had a slew of problems, including blowing an engine, and a pile of suspension problems. I thought I was doing the right thing buying a 2 year old car and planning on keeping it for as long as possible. It’s only a 2002, but it sits idle in my driveway as I speak . . . broken.

    I’m not really sure if it’s a bad thing yet, but supporting my spouse to go to school and start a business hasn’t worked out yet. She’s been out of school for 2 years now and she isn’t even up to 50% of her pre-school salary. Maybe it will work out eventually, but after a year of maternity, a year of school, and 2 years of low/nearly no income I’m coming to the end of my rope.

    So far our house isn’t doing that badly. We got that one two years ago and moved from about 730 square feet for 4 people in to 1152 square feet. Since we live in a place with reasonable housing prices it was just over 100K, and right in the city within walking distance to a school, and groceries.

  3. Jeff@StretchyDollar Says:

    Ha ha – I agree with DDFD – at first it looks like you’re regretting having kids. Mine would probably be not learning anything about money or saving any up before I got married. We’re good now – but we could have been a whole lot better if I would have had my head on straight!

  4. Stew Says:

    I think I was going for the minivan … But I get your point. Should have cropped the pic differently.

    I would never regret having my kids for financial reasons – at this point, they are my retirement! ;)

  5. Miranda Says:

    Mine was definitely the three credit cards I got while in college. It got me in a habit (and after my parents taught me so well) of spending and instant gratification. I’m glad I changed my mind set and worked to pay off the debt…

  6. Greg Says:

    Getting talked into buying encyclopedias. I guess that doesn’t happen anymore

    Going with a 30 yr. mortgage and thinking I’d pay it off early.

  7. Kim Says:

    Getting married…the actual wedding was a mistake not my husband.:-P
    I still can’t believe we spent $7,000 and I barely had fun. Way too stressful, I wish we had eloped.

    Our house was a mistake at the time but luckily DH got a raise at work and it worked out. I still can’t believe the bank approved the loan at 45% of our income, thankfully we didn’t have any other payments to cover, and thankfully we didn’t have more kids until after the raise. I hear of all these foreclosure from people who were convinced they could afford their home and it could have easily been us.

  8. MoneyFunk Says:

    Marrying the wife and a bunch of kids in minimal years! LOL. My husband would probably agree with you since I, coming into the marriage, had $32K in student loans (worst financial mistake & the car i bought) and two kids. ;)

  9. Monroe on a Budget Says:

    If you’re going to have multiple kids, bunch them up.

    The older the children get, the less interested you will be in another round of diapers and bottles.

    And the longer you wait between children, the more likely your “kid stuff” such as crib and high chair will be passed on to a new home rather than stay in your storage area.

  10. Gholmes Says:

    ah well I spaced my two kids out by 15 years. It has been fun.

    Worst financial mistake was borrowing against 401a account to purchase rental property. 8 months later I was laid off and unable to pay off loan.

  11. Mitch Says:

    This one is kind of a toss-up. My wife thinks the house was our biggest financial mistake, probably because she pushed for it. I think my biggest financial mistake was buying my car, which I paid for by check in full, instead of paying off my taxes, as I’d miscalculated what I owed all those years ago. Tough call, to be sure.

  12. Carrie Says:

    Our worst financial mistake (not just one mistake, really) was overspending for the first 5 years of our marriage (we’ve been married for 8 years now). We could have saved so much money if we had tracked our spending and made better decisions. At least we’ve been on-track for the last 3 years.

  13. Gina Says:

    #1 – Paying for our wedding on a credit card (similar to Kim) – we still have that balance on the ccard – we’ve been married 9 yrs.

    #2 – Not being on a budget for our first 6 yrs of marriage (similar to Carrie). We’ve been on track since the little one arrived – she was our financial epiphany – but not out of debt yet.

  14. Margaisa Says:

    I am sure this is unusual..but let is be a warning to unwed people!
    My biggest mistake was not doing a credit/background check on my 2nd husband. He owed $75 THOUSAND to the IRS for “mis” leading the tax people…and he “forgot” to tell me upfront. Our entire marriage was spent fixing his mess… which he told me was his ex’s fault..(it was not) and I took on the burden…and when the marriage ended…I was holding the totally empty bag. I did win in court..and has to pay me “retribution” for the next 7 years…but my credit is almost beyond repair. Needless to say…before you even say yes to coffee…have him/her bring a credit report to the table…I am not joking.

  15. Diane Says:

    Okay, I must admit those last sentences “3 kids in 4 years” made me laugh out loud! I have 2 boys spaced 5 years apart and that worked quite well for me, but to each his own.

    My worst financial mistake was either marrying my ex-husband – or staying past the point of disaster when he came unglued over the failure of his business, refusing to get a job, file taxes or file bankruptcy. With $750K in business debt there weren’t many options!

    I did finally file for divorce, file bankruptcy, as I was responsible for business debt I didn’t even know about (community property state). 12 years later I’ve finally recovered.

    I’d say one of the worst financial mistakes you can make is to marry someone with a different financial pattern if you are conservative.

  16. pfincome Says:

    Purchasing a house that was way too big for our family. We can afford it just fine right now and are living comfortably. However, I cringe every time the AC kicks on in the summer and we are trying to cool 1,500 sq ft. more space than what our family needs.

  17. SailboatFamily Says:

    Mine was putting money into Prosper. I put up $3,000, and after 3 years, I’m still upside down by $200. It was my mistake, not Prospers. I shouldn’t have lent the money to even AA’s since they default at crazy rates.

  18. Jen Says:

    My biggest financial mistake was refinancing my house!! Our original mortgage was fine.. but when the housing boom hit and we had really good “equity” in our house we consolidated everything (CCs &Car loans) into one “BIG mortgage”. Now it is all tied to our house- UGH!! Right now this is OK-we can make the payments, and have no other debts and even with the houseing market dropping our house is still valued about $70,000 over the martgage. BUt IF anything happens.. and we can’t pay the mortgage– UGh!! And the interest we are paying – for 30 years of spreading out that debt!! Why? Why? Why?