This post is by staff writer, Kayla.
Even though I’m a personal finance blogger, I’ve made some financial mistakes. I think we all have and sometimes they are even pretty recent ones.
Sharing them, as my friend Alexa did here, just makes us seem more human to those who read our blog. They know that even though we act like we have our stuff together financially, we still make mistakes from time to time.
In fact, I’m still paying for some of mine. Here are 4 financial mistakes I’ve made in the past and what I learned from them.
Mistake #1: Buying a House Before I Was Ready
I’ve talked on my own blog about the reason I ended up buying a house even though I wasn’t financially ready, but basically it was out necessity since there were no suitable rental options in my hometown.
At the time I bought my house I had barely $100 in my accounts and no money saved up for closing costs or a down-payment. I ended up with a 100% loan on my house and my parents were kind enough to pay for the closing costs.
Even though I love my house, this is still a financial mistake in mind because I wasn’t financially ready to buy a house and all the associated costs of home-ownership that come alongside the monthly mortgage payment.
What I Learned
If I could do it over again I might have still bought a house, but I definitely would have shopped around a little longer to find one with a more affordable house payment and one that wasn’t so big. I definitely bought too much house. After all, what single person needs a 4 bedroom house?
Mistake #2: Coping With Emotions By Shopping
Just a couple of years before my house buying debacle, I went through a divorce. This is something I haven’t talked about too much on the World Wide Web because it was a difficult time in my life. At the time I thought I was just fine and I never really had an emotional meltdown to deal with my feelings. Now when I look back on that time I can see that instead of crying myself to sleep and eating a tub of ice cream (ok, the ice cream thing totally happened), I coped with my feelings by going shopping.
It started off pretty slowly with one new shirt here and a pair of shoes there, but by the time I graduated college I had no money and a credit card balance that kept growing.
What I Learned
Next time, stick to the ice cream! Next time I go through something tough in my life I need to find a healthy way to deal with it instead of creating a financially destructive habit that I’m still paying for today.
Mistake #3: Continuing to Shop When I Had No Money
Shortly after buying my house, I realized I was in trouble. I was putting everything, including groceries and gas, on my credit cards because I had no money in my checking account to pay the bills and to pay for the things I needed.
Even though I knew this and it kept me up at night for days on end, I kept shopping. I kept racking up debt for new clothes and pretty things for my house instead of cracking down and fixing my financial mess.
What I Learned
This one is still a work-in-progress for me. I still struggle with shopping when I don’t really need anything, and I’m still paying off debt from those purchases a few years ago. I’d like to say I’m cured, but really I’m just in remission. I have to remind myself of my financial priorities every day and it’s still hard to avoid shopping sometimes.
Mistake #4: Not Telling My Friends and Family About My Financial Priorities
Sometimes I get frustrated when I’m with friends and family and I see them buying things they don’t need. But it’s especially frustrating when they encourage me to go along with them and buy things I don’t need. I’m working really hard to get out of debt and I definitely don’t need any extra temptations #thankyouverymuch.
At the same time, I can’t really blame my friends and family for encouraging me to buy something that would seemingly bring me joy or be helpful to my life since they have no idea that I’m trying not shop. (Trying is the key word there.)
What I Learned
Even though money is still a taboo topic, I need to do my best to be open with my friends and family about my financial situation. For everyone else, I need to be confident enough to politely tell them “No thanks” or a casual “It’s not in my budget right now”. This is definitely easier said than done.
Have you made any financial mistakes? What did you learn from them?
26 responses to “4 Financial Mistakes I’ve Made and What I Learned From Them”
When I felt so much stress before, I immediately went out for shopping and when I arrived at home, it was too late that I noticed that I don’t really need it. I’m proud to say that I changed a lot, I know now how to control my emotions and to avoid shopping whenever I felt sad or stress.
That’s great Clarisse! For me, shopping has turned into more of a habit than anything else after using it deal with emotions for so long.
Buying a house is a huge commitment and so many people jump in without doing their research as pointed out on my blog today. I bought my first house at the age of 21 and my second at 24 but I was ready with savings in the bank and I knew how much I could afford. There is always risk as a single home buyer as opposed to having 2 incomes which is also risky but you have the option to buy on one income like my wife and I did. We are now mortgage free because we didn’t get that big house. There will always be mistakes in life but as long as we learn from them we won’t make them a second time.
Yeah, I definitely didn’t know what I was doing when I bought my house at age 21 and I certainly was not financially prepared either. I know I could be paying off my consumer debt a lot more quickly if I had bought a cheaper house, but at this point I won’t be selling as the market has softened somewhat and I’ve finally got my house almost how I want it. 🙂
My husband and I bought a 4 bedroom home even though we do not have children. There are so many things that you need to take into consideration when buying a house. One thing we did remember was to think long-term, down the road, when we want (need to) sell. It is probably a lot easier to sell a 4 bedroom in our neighborhood then one with fewer. We live in a suburb with a good school system and our development has a ton of families with children. Plus our house is one of the smaller models and the larger homes to tend to raise the over-all value of the homes in the area. Our former next door neighbors sold their home a year ago (four bedrooms but larger) and got full asking price after being on the market less than a month.
That is a good point. Even though it’s too much house for me, whenever I do sell it it will probably sell well.
Thanks for the mention 🙂 I think the best thing about making those mistakes (and acknowledging them) is that you learn SO much. I know that I personally learn way more from my mistakes than anything else.
I was hoping you didn’t mind me mentioning your mistake too. I agree with you, we learn so much more by making mistakes. Plus, it’s nice for readers to know that even though we blog about money, we still make mistakes with our money now and then. 🙂
I can certainly related to many of these! I will say I’m so grateful to have friends that are open to discussing finances together. A few years ago we all formed a mastermind group where we meet occasionally to discuss our goals, finances, side hustles, whatever…
It helps keep us all in check and instead of our yearly girls shopping spree, we’ve all decided that we are no longer in a place in our lives where we want to shop for fun! We shop for necessity and that’s it.
That’s great! I talk about money with my online friends (who are also PF bloggers) but I don’t talk much about money with my IRL friends.
I used to be over budget all the time and shop when I had no money. Never do it again 🙂 I guess we need to learn from our own mistakes to take our finances seriously.
That can be a tough lesson to learn, but it’s very important.
I actually was an impulsive buyer that I didn’t even think over before buying an item. That’s my money mistake. I am just glad that I corrected this mistake prior to buying our house.
I’m glad you were able to fix your impulsive behavior.
I think that sometimes mistakes are necessary to learn lesson and don’t repeat them…if i look my fiancial past before budget is full of mistakes also first period of budgeting, but now I learned a lot about finances, savings, debts, repayments & co.
I do think we learn best when we make mistakes too Giulia.
All great points here. Personally, my biggest mistake was not caring about money in my teens and early college. It led me into $206k of student loan debt, and I’ll be paying for that for a while.
Yikes! I can’t imagine that kind of student loan debt. At least you didn’t make the mistake of taking on lots of other debt too.
It blows my mind that you’re allowed to even have 100% loans in the US! There is talk to increasing the minimum required to 10% in Canada!
Yeah, I probably shouldn’t have done it. I am paying extra for PMI right now since I don’t have 20% equity but as soon as I do I’m going to try and get the PMI dropped if it doesn’t automatically get removed.
I think financial mistakes are absolutely essential in life. If you don’t make mistakes you aren’t taking enough risk to become wealthy. Now I’m not saying to go out and just gamble it away, but you have to learn and try or you will be stuck with money earning nothing in the bank and losing all your potential investing power. I can easily think of my financial mistakes, I remember them a lot more often than my financial successes.
That’s a great way to look at financial mistakes. I love that positive attitude!
I kind of understand the house thing. My in-laws were living on my MIL’s disability income of $1,200 a month. The space rent on their trailer had been hiked up to $600. So they had to stop paying their mortgage. The company gave them a year, but by the 10-month mark it was clear nothing was going to change. They were going to be homeless.
So we sucked it up and bought a house about a year before we should have. We barely had the 3% down payment for the FICA — and our house was reeaaallly cheap. Then we had to front my in-laws some money to help them move their stuff down here. And they had to pay us back very, very slowly. Meanwhile, things started breaking, as they’re wont to do in houses, and we barely kept our heads above water.
The worst part? When my FIL called the mortgage company to turn in keys, they offered another year extension. Ugh.
But in the end I’m glad we got our place. The mortgage is very affordable, though utilities are painful here in Phoenix, and my in-laws have their own space in the guest house.
That’s great that things are finally working out Abigail. I could’ve gotten a cheaper house than what I did, but then I probably still would’ve struggled that first year or so since things probably would have been more likely to need repaired and replaced. (My house is very new, so didn’t have as much to repair or replace.) There are pros and cons to every decision it seems.
Mistakes can be really painful to admit to, especially when it comes to a failed relationship. I went through that last year when I called off my engagement. It’s very rough to go through (even financially), but I think it’s made me a stronger person. My rent is killing me right now, and I’ve been thinking heavily about moving out of Chicago and redefining what “home” means to me.
I totally get this. When I went through my divorce it was a killer financially. Instead of trying to be wise with my money I made it worse by picking up a shopping habit. I could kick myself now, but I’m just trying to pay it off and move on.