Good evening, everyone! My boyfriend and I recently returned from a 3,100 mile week-long road trip and I am worn out! The main purpose of the trip was to attend a college friend’s wedding in Kentucky, but we added a few other pit stops along the way. It was an amazing weekend full of catching up with friends so the sleep deprivation was worth it.
I try not to dwell too much on negative past events or regrets, because it truly does no good. I do, however, believe it can be healthy to reflect on things in the past that maybe didn’t go so well so you can understand the lessons those events taught you and grow as a person. I’ve been thinking about some of the financial mistakes I’ve made in years past and wanted to share them with you.
- Buying a brand new vehicle. When I was 22, I bought myself a brand new 2015 Ford Escape on Black Friday. I traded in my used car from college for about $5,000 and took out a loan for the rest. I really thought of this as a status symbol of being an adult and having a “real” job. I loved the look and feel of the vehicle, and it was the first vehicle I owned that I felt could truly be considered reliable. With this vehicle came a four year loan and roughly $350 monthly payments. While I could afford the monthly payments (my other expenses were minimal; my apartment was $450 per month with most utilities included and my net income every month was roughly $2,200), I now realize that brand new vehicles are not the best investment. I made payments on my Escape for about nine months before a massive hail storm totaled my vehicle on Labor Day. It was literally covered in golf ball-size dents – all doors, the roof, and the hood. The windshield was full of spiderwebs and nearly caved in from the damage. My insurance company estimated the damage at about $17,000, which was just barely enough to cover what I still owed on it.
- Buying a second brand new vehicle. Yeah, oops. When my Escape was totaled, I had the option of keeping the vehicle and having it nearly paid off from the insurance payout, but I decided to let it go back to the insurance company. Sure, I could have paid to replace the windshield and pop out as many of the dents in the body as possible to make it not look so horrible, but I decided to cut my losses. Five months before the hail storm (April Fools’ Day), someone backed into my vehicle in the parking lot and the vehicle repair cost about $750. It felt like a bad luck charm – bought on Black Friday, backed into on April Fools’ Day, and totaled on Labor Day. I definitely lost money by the time you factored in the payments I had made for 10 months and that I had no trade-in when going to buy my next vehicle. My Escape was front wheel drive, which just did not cut it during the South Dakota winters. I decided to buy an all-wheel drive 2016 Honda HR-V. I had wanted a Honda all along, but when I bought the Escape, the HR-Vs were not for sale yet. Overall, I really like my Honda and I’m happy with my purchase, but my car payment is $403/month on a 5-year loan. Yikes. I’ve been prioritizing paying it down and now I owe less than $10,000 on it. I plan to drive it for several more years after it’s paid off, and hopefully it still has a good trade-in value when I go to buy a different vehicle in the future. I vow to do better vehicle research before my next purchase and I plan to have a sizable amount saved up for it (paying for it in cash would be even better).
- Not starting sooner. This is probably everyone’s regret. We’ve all seen the calculators that show how more rapidly you build wealth when you invest in retirement beginning at age 22 versus 35, when time is on your side. I am so impressed by the strides I’ve made in paying off my debt and increasing my net worth that I wish I would have started when I was fresh out of high school. I can only imagine where I would be now if that was the case. I spent money on such frivolous things, and I would love to have even a fraction of that money back in my pocket (or, let’s be honest, my retirement fund or my high-yield savings account). But, starting at 25 is better than 55, so at least I have that going for me.
- Buying a home. Generally speaking, real estate is an investment, but when you don’t plan to stay in an area for long, it can be a dangerous gamble. I desperately wanted out of my $450/month apartment after living there for three years. I lived on the top floor of an older home divided into three apartments, and one of my coworkers who was about the same age as me moved into the apartment directly below me. Talk about awkward, because he was almost always home and I often bumped into him in the yard or garage. My apartment really was a steal and I was looking to pay at least $750/month to rent a different apartment, most of which did not accept pets (a deal breaker for me). I decided to buy a house. I toured only two homes before making an offer on one, and the rest is history. My house payment (including homeowners’ insurance and property taxes) is only $930/month, so it’s not awful, but now I feel tied down and have a lesser ability to up and move should a great job opportunity arise in another area. I don’t like the town I live in, so moving in the future is inevitable. My next home-buying decision will certainly not be made in such a rush and I now know the qualities I will look for and avoid – for example, my home is situated on one of the busiest streets in my town, so I’m afraid that may make it more difficult to sell (granted, I live in a town of 13,000 people, so it’s not like my front yard is the 405 Freeway, but it’s all relative). For now, I’m focusing on completing small home improvement projects as I have time and funds to hopefully increase the resale value and enjoy it for as long as I’m here.
- Having too many credit cards. This was a young and dumb college move where I opened up store cards with every retailer I frequented and added a few general credit cards for good measure. I thank my lucky stars constantly that I was responsible enough with my credit cards to not rack up debt on them (to this day I have never paid a penny of interest on my cards), but now they’re a liability. I have to monitor them regularly to ensure no fraudulent purchases are made, and I try to use each card at least once a year so the issuer doesn’t close my account. I don’t want to close them because of the account age. If I could go back in time, I would have been much more selective with the cards I opened. I’m not a Dave Ramsey extremist who believes credit cards are inherently evil (I truly believe that they can be an asset as long as you pay off the statement balance every month), but there is literally no reason for me to have ten different credit cards.
What are some financial mistakes you’ve regretted making?