My Biggest Money Mistake
It’s pretty common for personal finance and FIRE bloggers to discuss their biggest financial mistakes. I think that’s a great thing. For one, it’s good to own up to things. It makes you more human, and the transparency builds trust.
For someone out there who’s new on their journey to financial independence, hearing horrid stories of massive amounts of consumer debt or poor financial choices can surely help by making them feel they’re not alone.
And when a FIRE blogger goes on a podcast and details how they went from huge debt to a million in net worth, it gives hope to others that they can change too.
Oh Behave
If you’re a regular reader of my blog, you know I write a lot about the behavioral traits that guide money decisions. I find it far more complex and fascinating than the nuts and bolts of budgets and investing. After all, the formula to build wealth is simple, but executing it isn’t.
Our behaviors – which are linked to our health, relationships, and basically our complete life story – are the things we need to focus on to build wealth. Minor nuances in different index funds or tax strategies don’t matter if you’re not saving money in the first place because you’re depressed and hate your job.
My theory to reach financial independence could be summed up as “get the financial basics down, but focus on your life and your behaviors to execute them successfully”.
Even after this market downturn my net worth is way way more than my FI number. So you might think I have things all figured out. Far from it. I struggle with lots of the behavioral aspects of money, and I’m sure I always will. I’m prone to cave into retail therapy when I’m feeling down like anyone else.
Discipline can’t sleep.
A little while back I posted about the best financial decision I ever made. But one specific behavior in my past led to my biggest money mistake…
Get To It
So what was my biggest money mistake? Unlike many others it wasn’t a single thing like buying a ridiculous house or car.
For me it was alcohol.
I posted about my functional alcoholic past, and that past slowed my journey to financial independence, by a lot. Buying a stupid expensive car or a 5,000 sq foot house are big financial mistakes for sure, and they’ll probably show up on a chart of someone’s net worth as a dip.
My biggest mistake, however, was thousands and thousands of cuts in the form of small purchases over a very long period of time.
A typical Saturday night in my 20’s would start with $100 cash in my wallet. By the next morning, which often started at 11:00 a.m. in a miserably hungover state, I’d be scared to look in my wallet. When I eventually did, I’d often see $4 or $5 left. What the fu…..
I was almost always with my two best friends at the time, usually crashing on one of their couches. The groggy head-pounding conversations that followed always went something like this:
Me: “dude, shit… I’ve got like $4 left”
Friend: “yeah, I’ve got $6”
Me: “how much did we drink? what the fuck…”
Friend: “do you remember going to Sisson’s at the end of the night? I think you bought shots…”
Me: “ugh”
Friend: “and then we went to Denny’s at 3-ish… your toast had mold on it, but you ate it anyway”
Me: “great… ”
Friend: “the waitress was flirting with you until she realized how drunk you were”
Me: “wonderful…”
Ahhh… the good old days.
It’s impossible for me to know how much money I spent on alcohol in this period of my life, but I know it’s a really large number. Had I not succumbed to that lifestyle and invested that money instead, I would have reached financial independence many years earlier, I’m positive.
It’s definitely my biggest money mistake, hands down.
Regrets
I think I remember this guy from back in the day
Do I regret my functional alcoholic past? Partly. In one way, it made me who I am today, and to be frank I’m terribly rich and successful 🙂 So I understand the line of thought that you have to accept the life events that got you to where you are now, warts and all. Our stories make us who we are, all chapters are necessary.
But part of me wonders what would have happened had I not gone through that time in my life. That would of course demand the cause of my drinking, specifically my childhood trauma, to be erased from the books as well.
So it’s not really worth thinking about too much. What’s done is done and I’m happy in the here and now.
I came out stronger and infinitely healthier from my drinking days, and the moldy toast didn’t kill me either.
Your turn – What’s your biggest money mistake?
I’ve so many money mistakes, it’s hard to know where to begin. Alcohol was definitely one of my big mistakes. I threw away a lot of money on alcohol and wish I hadn’t. It’s also mistake that I have trouble accepting about myself… because it was just so darn foolish!
Now, I haven’t touched a drop of the stuff in over 7 years, and have no desire to ever drink again. I won’t be fun at parties anymore, but clean living is worth it to me!
Foolish is a great word for it, and good for you for quitting completely. I still enjoy a drink now and then but don’t have any problems with it.
Interesting read, thanks for sharing! I can’t imagine how much I spent on alcohol and food out with friends over the last 10 years. Way too much probably. If I’m being fully honest, I’ve had my fair share of free drinks (being a woman and all), but even with that I know I spent far more than I should. Couldn’t imagine being in the traditional dating world as a man where he feels obliged to pay for things or the woman expects him to cover all costs. Glad you were able to recognize this pattern and make a change!
Yeah I never got a free drink in my life, unless it was a buddy buying of course. But that’s okay, it is what it is. Thanks for stopping by Liz!
For me, it was the same thing. Being a functional Alcoholic. But I was actually a really sick co-dependent in the late stages of my disease, living with a full blown alcoholic, so it was even worse. Since I was not really an alcoholic, I never drank everyday, but every week, I would go get a 6 pack of 16 ounce beers and for a little girt like myself, that was enough to put me down. It also made me do really stupid and dangerous things (which usually ended up getting me hurt somehow), but mostly it was the feeling sorry for myself that hurt me the most. And the worst part was that I was the one causing all my own pain. I also think of all the really great and healthy things I could have done when I was not drinking
I get that now. I don’t drink, EVER and the alcoholic (the real one) is gone. I now run every morning and spend the rest of the day doing constructive things. Awareness is the biggest key and I love it. I still have shitty days, but I don’t wallow in it and things get better pretty quickly. Life was not picking on me. It picks on everybody. I was just making it worse by feeling sorry for myself and thinking alcohol would make it better.
Cheers 🙂
Wow thanks for the great comment Sara, I appreciate your honesty too! Excess drinking is a negative spiral that kills your money, health, and mental state. And life does pick on everybody, what a great line…
Thanks so much for sharing your experience!
As you probably know I made a ton of mistakes (that’s how I started out my blog with a 5 part series on how I made every mistake in the book) capped off with my biggest mistake, agreeing to an arranged marriage that ended up in a brutal divorce 7 years later. I totaled up my mistakes and came up with a $2M hit! ($1M just from the bad marriage).
What impresses me most about your story is not the financial turnaround but the physical one. I have met you in person and also from your stories of biking and mountain climbing can easily tell you are in great physical condition. Most alcoholics really damage their body and cannot achieve anywhere near the levels of activity you can do.
Yep, I know about your mistakes, you wrote about them before I did mine 🙂
And thanks for the compliment Doc. I’m counting on the amazing ability of the body to heal itself as my savior. I know I did lots of damage but I hope my healthy living now heals it. Time will tell.
Great post! Thank you for your sharing your vulnerability! So true re: the behavioral stuff really leading to the ‘big picture’. I literally choked on my water/coffee 😂 when reading of accepting (my) warts and all, accepting all chapters😂 (perhaps I have a little more work to do! 😂). My biggest financial mistakes, it seems were relational. Unfortunately pairing with some one who was on a totally different page, me thinking he’d change, and me overextending, caretaking, ‘showing the way’. Ooops. Has been very costly…. thankfully have been recovering, hopefully am back on track. I’ve sure learned a lot along the way and take heart always hearing of the amazing journey yourself and some others have been on! Much love, light, peace to all.
Thanks for sharing your experience K, and glad to hear you’re back on track. Love, light, and peace to you as well!
My biggest money mistake revolves around investing. By coincidence, it’s scheduled to post tomorrow! I was curious if ours might be in a similar area, but nope!
So, what do you think really got you out of the repetitive behavior of nickel and diming yourself to death especially when drinking?
What got me out? A combination of my friends growing up and drinking less, thus trying to straighten me out. And the slow process of healing from childhood stuff, which continues and I suspect will always continue.
Happy to hear that amigo. It’s hard to break out of those routines and relationships…
It is indeed, thanks for the comment!
Thanks so much for sharing the insights. I think at some point we’ve all some sort of money mistake. It’s only when we look at hindsight do we realize we could have / should have done something differently.
The hardest part to me is convincing ourselves that we’re going down a bad road and need to dig ourselves out.
Digging out can be a bitch. Thankfully I did still save quite a bit while I was wasting money on beer at the same time. I wasn’t totally messing things up.
Alcohol – the cause of and solution of all life’s problems! Homer Simpson
My biggest financial mistake was loaning a friend $65,000 to start a business. Business still running, but monthly payments not so much. He seems to have money for other things and I do have a contract, but hate to sue a friend.
Ha, Homer is a wise man. And wow, sounds like you might have some problems to deal with, hopefully you can get him on track without legal action.
i swear the stories from spending all our jack in our 20’s are better than the doing at the time. i wouldn’t trade them for anything. funny story: i’m a slow eater and all those late nights at denny’s i would have a table full of drunken buddies staring at me waiting for me to finish my laxative burger. good times.
i swear if i quit drinking wine we could live on about 15,000/year.
$15k a year would still be twice what Jacob from ERE does, but still about a quarter of what most people do. And shit that’s a lot of wine!
And “laxative burger” is golden, you should trademark that.
My biggest mistake was taking out a liar’s loan right before the housing crash. Luckily we were unable to buy a house or we would have gone bankrupt for sure.
Oh man, those fraudulent loans set the country back for along time. Let’s hope nothing like that ever comes to pass again.
Other than the “standard” mistakes all of us made my biggest one is not investing until I had a certain amount of money. I thought investing was for the big boys and there is no point in doing it before I have a few hundred thousands. Seriously, that’s what I thought in my early 20s.
Thankfully I discovered MMM along the way and snapped out of it.
Wow, glad you broke out of that thinking. It wasn’t all that long ago that you had to have 10k or so to open an account and buy mutual funds. Thankfully those days are gone
I think not taking risks was the biggest mistake for me. Its good to get a couple books on investing, but getting 20 books and not investing a single dime is taking things too far. Opportunity cost is a real danger!
Yeah ya gotta take action, but for many it’s a risky step, thanks for the comment!
This is an interesting topic . My biggest money mistake is try to forecast stock.
I spend a lot of money and time to study Technical Analysis , and I find return on investment is low after 7 years.
I gave up on picking stocks about 20 years ago. Too much work, and time is money. Many who are getting better results than the market average are not counting the time they spend on it, which probably takes the advantage away in most cases. Indexing is the way to go, simple and easy.
I’ve generally been good with money, lived within my means, and avoided any costly habits. But the biggest mistake I’ve made — twice ! — is the result of quitting unfulfilling jobs and taking extended leaves from the workforce. I don’t consider that a mistake in and of itself, although I can understand seeing it as such as I wasn’t actively adding to my net worth during those periods. But I had to draw down reserves that could have gone to more productive uses, namely cashing out my retirement investments to extend my “vacations,” which I truly regret.
They weren’t huge sums at the time, but it was 20 and 25 years ago. I can only imagine how much I’d have in personal wealth right now had I not done that. Oh well … Live and learn.
Well if you had a good time during those periods away from work then maybe it was worth it. It’s all a balancing game anyway, right? Thanks for the comment!
While I put away a ridonkulous amount of hooch back in the day, I was fortunate in that I was always in clubs playing or with others who were, so it was free or dirt cheap. However, my wallet was systematically decimated by my nicotine addiction.
Somewhere around a pack a day for a period that I still won’t admit to myself. I never did the math before, but it’s well over $30K. I’m less concerned about that than the future consequences. That said, I tell people I’m probably the only person who ever quit smoking and got super thin. Why? Because when you love strenuous outdoor activities and have better health and lung capacity you can really bring it.
Smoking was not only the worst financial decision I ever made, it the worst decision of any kind I ever made.
Yeah both alcohol and cigarettes are toxic – for the bank account and the body. I guess being in a punk band you were kinda required to smoke. Let’s hope both of our bodies can repair the damage.
Death by a thousand paper cuts! Or by a thousand pints! For me it was eating out and to alcohol, I wouldn’t want to even calculate the cost. I still love to eat out and that gets expensive in a hurry. Problem was I put it on credit, which I couldn’t pay down. It’s taken years to undo that.
I wasn’t as bad about eating out as I was on booze. Except middle of the night Dennys and Diners
Whatever happened to pre drink before going to bars? That’s what we used to do.
My biggest mistake is probably buying and collecting movie DVDs. For some reason I thought it was a good investment.
Pre-drink? Heck when we did that it didn’t matter… I was capable of 15 – 20 beers or more in my prime. Pre-drink only made me more wasted.
And thankfully I avoided movie DVDs, I rarely watch am movie twice
Luckily, I was always too cheap to spend that kind of money on mixed drinks. Beer is good enough for me.
BTW, I got a 12 pack when the lock down started and I have more than half left. 🙂
My biggest mistake? Probably move too many times. If we stayed in our first house, it’d been paid off by now. Oh well…
That’s discipline Joe! Well played!
My biggest money mistake has been trying to save tax. In fact every bad financial decision I have ever made has had saving tax at its base. Some examples:
I got married young because in the UK you got a tax break. Big mistake
I bought a house in 1989 because of tax breaks being scrapped in the near future. Prices were rising and rising as everyone rushed in to buy and then they fell hard and stayed low for 5 long years. The only time UK house prices have fallen in my lifetime. Ouch!
In 2000 I stopped investing in the stockmarket as I thought valuations were way over the top. I was spot on. But in the UK we could invest £7000 in a tax advantaged account as long as we bought shares. So I opened one for me and my wife and promptly saw them lose half their value. I knew stocks were overpriced but bought them anyway due to the tax breaks. What an idiot!
Trying to reduce my tax bill screws up my investment judgement. I know it does it but find it so hard to stop falling into the trap.
Death and taxes right? They’re inevitable.. I think it’s good to try to optimize to play less but like everything there’s a balance. Thanks for sharing!
Ah yep the good ole days of hit the bars Friday night, wake up brutally hungover, grab some food and hang out, then repeat Saturday night/Sunday morning. That was a good portion of my early 20’s as well and sucked up a lot of money, time, and health. While I did my best to keep the spending as low as I could, I couldn’t begin to tell you how much money that sucked up, especially in college.
So you too huh? I think this is largely a dude thing although I definitely hung out with a lot of party girls who did similar. But we guys always seem to take it to the next level, probably because we’re more neanderthal…
Like you, I don’t regret my past. It has made me who I am.
Just my opinion, but I think functioning addicts/alcoholics have it the worst. People have a stereotype of what an alcoholic looks like but the bingers are just as common and destructive as the everyday drinker.
I went to a party school for college and had blast being a drummer. The parties never ended and sure we killed our bodies, but they were still great times… simply learning experiences. Hahaha. Unfortunately for me I took it too far and now can’t partake in the wonderful world of mind altering substances anymore. A sparkling water with lime and jalapeno is as hardcore as I get nowadays. But hey, the more for the rest of you!
My biggest financial mistake over the long term is probably either not maxing out my 401K earlier or not optimizing taxes. The final tally is still to be determined…
You make a great point about functioning alcoholics, it’s the hidden problem that often destroys more, because no one helps.
Sounds like you had some crazy times too, but glad to hear you are sober. Onward and upward!
Since everyone is sharing their mistakes, allow me to share mine: I caught a falling knife in 2009 aka I bought a condo when I thought we had hit the bottom of housing prices. My husband was almost immediately laid off after we closed and stayed unemployed for 1.5 years. The value of the condo further dropped from $193k to $68k (not a typo) until we finally foreclosed in December 2010. I remember thinking we had gotten a great deal on the condo too with around $25k off the original asking price lol. Thankfully the government had forgiven foreclosure debt during that time so we didn’t have a huge tax bill; just the credit score hit and a bruised/traumatized ego.
Wow from 193k to 68k, that’s HUGE. Amazing that something could be so overvalued like that. Glad you escaped mostly unharmed though!