Free Money Finance has a post up on Stacy Johnson’s 10 dumbest money moves. I thought I’d share my take.
Here are the mistakes:
1. Not having a goal
2. Not having a spending plan
3. Attempting to derive self-esteem from possessions
4. Doing what everyone else is doing
5. Starting to save large and late rather than small and soon
6. Paying interest to buy things that drop in value
7. Turning down free money
8. Buying a new car
9. Buying more house than you need or can afford.
10. Not protecting your good credit
Here is my response(and a test: Orthogonal Monkey Silicon Beam)
:
1. For most of the last 15 years, I didn’t have much for financial goals. “Get more money” isn’t specific enough to be a goal, and our spending precluded the possibility, anyway. Right now, my financial goal is simple: Get out of debt. I’m down to about $61,000.
2. We have a budget, even if it’s been partially ignored for the last couple of months. If it weren’t for my side-hustles, we would have come out negative last month.
3. We struggle with this one a lot. “Keeping up with the Joneses” is an issue in our house. My wife’s closest family is 10 years older than we are, and has more stuff, which makes it hard to visit without making comparisons. We both know it’s irrational, but it’s the way it is.
4. We are fighting this one as well. The fight is going better than #3. We’ve stopped using new debt, which shocked our friends, and I’m working on launching a new business, to break more bonds.
5. Is 30 late? We’re saving small while he fight debt, but I think we started early enough to make the rest of our lives easier.
6. We pay far too much in interest each month, but there has been absolutely no new debt since April 2009.
7. I got into my company’s retirement plan to get the match, but that ends next month. My wife’s employer killed the match 5 years ago. There’s no free money to turn down anymore.
8. We bought a new truck, as part of our debt-accumulation, in 2001. In 2005, we instead bought a car as it came off a lease. It had 11,000 miles on it and that saved us $10,000.
9. We bought our house in 1998. It sits on 1/8 of an acre. sometimes space is tight, but we’ve watched so many people trade up and find themselves in severe trouble. I’m happy we’ve stayed here.
10. This is one we’ve always guarded. No matter how much debt we’ve had, we’ve made every payment. We’re hugging the underside of an 800 FICO score. Thankfully, we’re closing in on the point where FICO no longer matters, because we’re paying in cash.
What are your biggest money mistakes?
Our biggest money mistake was investing in a friend’s business without doing our due diligence…we ended up losing $15,000. That stunk.
Other than that, I think our biggest money mistake hasn’t happened yet…I’m thinking about taking a HUGE pay cut for happiness. It’s financially stupid but I think life will be more fun.
A few months after my son(11) was born, I took a 40% paycut–not counting the overtime at the job I left–because I was sick of working 12 hour graveyard shifts and never seeing my wife and kid. Short-term and financially, it was a bad decision.
Emotionally, it was great.
Long-term, the new job enabled me to work my way through college and get a much better job, but I didn’t know that would happen when I took the job.
I am with you on all 10. For me its #5. What if you wait till 50 to start doing it right. Well, that was my problem. I’m trying to catch up but seems hopeless. I’ll probably be a greater at Walmart when I’m 90. Thanks great post.
I’m with you on #9 – we also bought our (small) house back in ’98. We called it our “starter” house.
Who knows if or when we’ll ever trade up, but it’s been very nice the last couple of years living our staid little lives and paying our easily managed mortgage.
There is definitely something to be said for being content with the perfectly-good things you have.