10 Dumb Money Mistakes

Money Talks News' Stacy Johnson recently confessed to the 10 dumbest money moves he had ever made. The list:

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's how I net out on these:

1. I've never had a specific net worth goal (other than to grow it.) But if you count the fact that I do have a retirement number, you could say that I have one.

2. I had a spending plan (aka "budget") for the first 10 or so years of our marriage. But we've gotten to the point where we control our spending and manage our finances well enough without it that we no longer bother.

3. Fortunately I never really had a problem with "status symbol" buying. Of course my wife would say that I still fall for it when I buy Nike and Under Armour items rather than the generic stuff at Walmart, but I think their stuff works better (Cold Gear, Heat Gear, etc.) Of course I do buy their t-shirts too -- but only when I can get a "deal." ;-)

4. As most of you know, I buy stocks when they go up and I buy when they go down, so I'm pretty good at filtering out the noise. But I wasn't always like that and I had to learn the hard way, unfortunately. Now I'm a solid index fund investor.

5. Yes, I did this as well -- wait too long before I started to save. It wasn't decades that I missed or anything, but I didn't really start saving until I was several years out of school -- years that I wished I had back. Why? Because time is the best way to maximize your investment return.

6. I did this once (with a car), but haven't since. I now buy my cars (and everything else) with cash.

7. Believe it or not, I once turned down free money in a 401k because I didn't know any better. I declined to invest in my company's program because I wanted to spend the money myself. A wise and thoughtful HR person took me aside and gently told me about the benefits of saving in a 401k. I decided to participate enough to get the full match and have not looked back. I'm eternally grateful to that man.

8. This is one thing I do -- buy a new car every six or seven years. I've gone over the reasons several times and I know some of you disagree but it boils down to this: I want to do it and I have the money to pay cash, so I do so (unless there's a 0% APR deal for a couple years like with our last car.)

9. I have a modest (by national standards) but nice (by local standards) home that is well below the $300,000 average price that most millionaires stay below.

10. I don't have debt, pay my bills on time, and pay off my credit cards every month, and my credit score is very good.

A few additional comments:

• This list is similar to -- though not the same -- as my list of the worst money mistakes anyone can make.
• At least the above aren't as bad as the worst money stories I've ever heard.
• I've told you my worst money move ever (saving money in a non-insured bank). What's the worst move(s) you've ever made?

Comments

[Crystal@BFS]

We seem to match up with you down the list except we still have the spending plan and I started saving in my 401k the day I was eligible - of course, we're still in the first decade of our marriage, so ask me again in 2015 if we still follow a strict budget...

[Erin]

I defaulted on my student loan.

Yes. I did it. I was immature, ignorant and completely and utterly irresponsible, and just flat out didn't make student loan payments for the first FIVE YEARS out of college.

I don't know what I THOUGHT would happen, but I do know what DID happen: My $30k loan ballooned to nearly $50k.

Stupid, Stupid, Stupid.

[J]

In 2006 we bought a house larger than we needed (and more expensive) thinking it would maximize our real estate "investment". Wrong.

We will have it paid off in 13 years and we really do enjoy it. Just about everything is more expensive with the house than I would prefer. Although I'm happy with our 3.625% 15 year loan that we are two years into since we refinanced.

In 2006, we did not want to feel like we would want to upgrade later on, but we are already talking about what our next smaller house will be like once the loan is paid and the kids are on their own.

I do almost all of the upkeep and repair to save quite a bit of money, but it does keep me busier than I would like at times.

[Everyday Tips]

One of mine would be not paying bills in time. That was back in college though, so can I blame my youth and being poor? Boy how that snowballs into some hefty fees. Learned my lesson young and never, ever repeated it.

[MBTN]

I made two of those mistakes, but I have to give credit to Mr. Johnson (the author of the original article) for making all ten of them!

[BD]

I can say I've never done any of those money mistakes. My only mistake was picking the WRONG major in college and the WRONG career, but I've told that story over and over. To me, picking the wrong career is the worst money mistake one can make, because you can LITERALLY lose millions of dollars over it. I'm middle-aged, and I think I've made around $160,000 in my ENTIRE life. Most people make that in a few years. Do the math, see how much I've lost. This is far worse than any of the 10 money mistakes listed.

[Apex]

@BD,

You must be mistaken because as we learned from the "how to pick a college" expert that was posted about here last week, it doesn't matter what major you pick. You can major in anything you want and that will serve you very well. In fact the easier the major is the better. Specifically we should not be looking at majors based on what a degree in that field is likely to earn you in the market place.

This is truly sage advice. So your facts are irrelevant. College is a big spin of the roulette wheel except in this casino, everybody wins.

[Apex]

@BD

I tried to put a tongue in cheek html tag at the end of my post but the system ate it. Just want to make sure you know that my post was in jest.