What is the Worst Financial Decision/Mistake You Have Made?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
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smectym
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by smectym »

Kenkat wrote: Fri Dec 18, 2020 12:15 pm Do you mean besides having kids? :wink:
Hahaha, and we’re still paying for that. But worth it. Wish we’d made more such financial mistakes
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backofbeyond
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by backofbeyond »

In 1996 bought 120 acres of property outside of Phoenix for $800 an acre. In 2007 an acre was selling for $30k an acre. Did I sell any? Nope.

In 2009 it was back to almost nothing. A RE agent I called at that time, to ask the market value, said I couldn't give that property away. Meanwhile, property taxes for the 120 acres went up from $300 a year to $20k a year. Dropped down to $18K after the property market crash. Held on to it until 2018, gave up and unloaded it for $4,000 an acre. In 2020, it was back up to $22K an acre. I won't even dare look to see what it's going for now. :oops:

The silver lining was that I held most of the money from the sale in cash and dumped it into the market during the Covid Crash in 2020. So while I"m a long ways from what I would have had in 2007, I'm not going to be eating kitty food under a bridge in retirement...I hope.
The question isn't at what age I want to retire, it is at what income. - George Foreman
stoptothink
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by stoptothink »

sschoe2 wrote: Tue Dec 21, 2021 9:01 pm
KRP wrote: Mon Dec 21, 2020 8:43 pm . What a struggle at the time...turns out harder majors have no correlation with better pay. Lesson cost me 3 years more in school and not working at whatI was better at. sigh
Definitely the case with science. Struggle through organic chemistry, quantum mechanics, thermodynamic, to be offered $15 an hour temp no benefits.
I did all the same, but I make several times $15/hr (with a PhD). Don't regret it because I make far more than enough to support our family and legitimately enjoy my job...of course my wife made more than me in tech sales before she had a college degree at all.
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Orangutan
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I made a horrible mistake. Major financial loss. How to proceed?

Post by Orangutan »

[Merged into existing thread on the topic - Moderator Misenplace]
Happy New Year Bogleheads,

I recently made the biggest investing mistake of my life as I approach 30 years old. I planned to hide my investment loss from this community and pretend it never happened - but I want to put it in writing and have it serve as a lesson for my future self and others.

I live and breathe Bogleheads. I have a quantitative master's in finance from a top school and work in the industry. I understand the theory, adhere to index funds, and others know me to be generally logical and analytical. I have spent thousands of hours reading through the forum over the years before joining last year.


With that said, a few months ago I decided to divert $430,000 from my portfolio and invest it in a single stock. It was a moment of weakness and I had just broken up with my girlfriend. I decided I "knew what I was doing" and had "done my research". Recently realizing my idiocy, I took a realized loss of $140,000. I have moved the remainder back into a more appropriate allocation. As someone who is still renting, the $140,000 would have a made a wonderful downpayment in the future.

If any others have made a similar mistake in the past, and would like to share any advice from their mistake, I would love to hear. I am very much ready to be bashed endlessly from contributors. Feeling like quite the village idiot at the moment.


Thank you in advance!
blueberrypi
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by blueberrypi »

The fact that you had 430k to play with means you are a million miles ahead of me, at the same age. Congratulations. :beer
Last edited by blueberrypi on Sat Jan 08, 2022 2:13 pm, edited 1 time in total.
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Toons
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by Toons »

Experience is only applied failure for lack of a better word.
It's dollars and cents you can replace it learn laugh move on 😉
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
brian91480
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by brian91480 »

Everyone on this forum, myself included, has done stupid things that lost money. I commend you for having the courage to post. 👍👍

--- Brian
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quantAndHold
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by quantAndHold »

More of us than would like to admit it became Bogleheads because of similar mistakes. I know I did, the dotcom implosion didn’t completely wipe me out, but it did its damage.

The good news is that you’re young enough to recover from it. As long as you take it as he learning experience that it is and don’t try to double down on your mistakes, you’ve got the time to recover just fine.
lazynovice
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by lazynovice »

There have been a lot of threads over the years where people share their mistakes. Here is one:

viewtopic.php?f=2&t=333095

You’ll probably make more mistakes, but I bet you never make this one again.
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Picasso
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by Picasso »

Applaud your willingness to share - that 140k will come back to you and you'll win the game regardless!
gougou
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by gougou »

So what did you buy?
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Picasso
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by Picasso »

gougou wrote: Sat Jan 08, 2022 2:38 pm So what did you buy?
+1
randybobandy
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by randybobandy »

Why did you plan to hide your loss from this community?

--Randy Bo Bandy
Grammar and spelling matter. | Quoting the OP isn't a necessity.
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jason2459
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by jason2459 »

gougou wrote: Sat Jan 08, 2022 2:38 pm So what did you buy?
I'm curious as well. The mistake may have been to take a realized loss.
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
slickwillie
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by slickwillie »

It's also possible not breaking up with the gf might have eventually cost you way more than 140k.
exodusNH
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by exodusNH »

Orangutan wrote: Sat Jan 08, 2022 2:09 pm Happy New Year Bogleheads,

I recently made the biggest investing mistake of my life as I approach 30 years old. I planned to hide my investment loss from this community and pretend it never happened - but I want to put it in writing and have it serve as a lesson for my future self and others.

I live and breathe Bogleheads. I have a quantitative master's in finance from a top school and work in the industry. I understand the theory, adhere to index funds, and others know me to be generally logical and analytical. I have spent thousands of hours reading through the forum over the years before joining last year.


With that said, a few months ago I decided to divert $430,000 from my portfolio and invest it in a single stock. It was a moment of weakness and I had just broken up with my girlfriend. I decided I "knew what I was doing" and had "done my research". Recently realizing my idiocy, I took a realized loss of $140,000. I have moved the remainder back into a more appropriate allocation. As someone who is still renting, the $140,000 would have a made a wonderful downpayment in the future.

If any others have made a similar mistake in the past, and would like to share any advice from their mistake, I would love to hear. I am very much ready to be bashed endlessly from contributors. Feeling like quite the village idiot at the moment.


Thank you in advance!
Thank you for sharing. Having $430k taxable at 30 is mind-boggling to me -- I think you'll recover for this and now have $140k of carry-forward losses.
Misenplace
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Misenplace »

Hi orangutan, I merged your thread into an existing active thread on the same topic.

You are most definitely not alone!

Moderator Misenplace
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Orangutan
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by Orangutan »

jason2459 wrote: Sat Jan 08, 2022 2:42 pm
gougou wrote: Sat Jan 08, 2022 2:38 pm So what did you buy?
I'm curious as well. The mistake may have been to take a realized loss.
Roku.
Marseille07
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by Marseille07 »

Orangutan wrote: Sat Jan 08, 2022 2:09 pm [Merged into existing thread on the topic - Moderator Misenplace]
Happy New Year Bogleheads,

I recently made the biggest investing mistake of my life as I approach 30 years old. I planned to hide my investment loss from this community and pretend it never happened - but I want to put it in writing and have it serve as a lesson for my future self and others.

I live and breathe Bogleheads. I have a quantitative master's in finance from a top school and work in the industry. I understand the theory, adhere to index funds, and others know me to be generally logical and analytical. I have spent thousands of hours reading through the forum over the years before joining last year.


With that said, a few months ago I decided to divert $430,000 from my portfolio and invest it in a single stock. It was a moment of weakness and I had just broken up with my girlfriend. I decided I "knew what I was doing" and had "done my research". Recently realizing my idiocy, I took a realized loss of $140,000. I have moved the remainder back into a more appropriate allocation. As someone who is still renting, the $140,000 would have a made a wonderful downpayment in the future.

If any others have made a similar mistake in the past, and would like to share any advice from their mistake, I would love to hear. I am very much ready to be bashed endlessly from contributors. Feeling like quite the village idiot at the moment.


Thank you in advance!
Stuff happens. My advice is to cap the exposure at 5% of your AA for single-stock plays. It's not forbidden, but funny money should be capped small so that if you're good then you can grow it, if you're bad then your loss is limited.
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Orangutan
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by Orangutan »

randybobandy wrote: Sat Jan 08, 2022 2:41 pm Why did you plan to hide your loss from this community?

--Randy Bo Bandy
Shame. Was I ever really a Boglehead if I invested nearly half a million in a single stock?
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jason2459
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by jason2459 »

Orangutan wrote: Sat Jan 08, 2022 2:58 pm
jason2459 wrote: Sat Jan 08, 2022 2:42 pm
gougou wrote: Sat Jan 08, 2022 2:38 pm So what did you buy?
I'm curious as well. The mistake may have been to take a realized loss.
Roku.
Ah, hit it's peak last year with the stay at home boom. Lesson learned. It's getting more negative press recently too. Not a good time to sell but is a good time to buy when a good company is getting dragged down by current market news.
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
capran
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by capran »

Orangutan wrote: Sat Jan 08, 2022 2:09 pm [Merged into existing thread on the topic - Moderator Misenplace]
Happy New Year Bogleheads,

I recently made the biggest investing mistake of my life as I approach 30 years old. I planned to hide my investment loss from this community and pretend it never happened - but I want to put it in writing and have it serve as a lesson for my future self and others.

I live and breathe Bogleheads. I have a quantitative master's in finance from a top school and work in the industry. I understand the theory, adhere to index funds, and others know me to be generally logical and analytical. I have spent thousands of hours reading through the forum over the years before joining last year.


With that said, a few months ago I decided to divert $430,000 from my portfolio and invest it in a single stock. It was a moment of weakness and I had just broken up with my girlfriend. I decided I "knew what I was doing" and had "done my research". Recently realizing my idiocy, I took a realized loss of $140,000. I have moved the remainder back into a more appropriate allocation. As someone who is still renting, the $140,000 would have a made a wonderful downpayment in the future.

If any others have made a similar mistake in the past, and would like to share any advice from their mistake, I would love to hear. I am very much ready to be bashed endlessly from contributors. Feeling like quite the village idiot at the moment.


Thank you in advance!
You are not alone, and way ahead of me in willingness to share the details of your mistake. Suffice it to say that in my effort to avoid potential loss, I missed out on about a million dollars in gains. At this point I consider it non recoverable or unfixable, and I will continue to beat myself up over it. "It is what it is", as the saying goes. And who would have ever thought the real estate market would ignite to near booster-rocket levels? PS In 1982 I turned 30 years old. By 1988 (age 36) was the first year I started looking at net worth. In 88 I had a house paid for (34,000), 10,000 in checking and savings and 35,958 in a retirement account. (and I had just bought with cash a boat for 8,000 two years before). You are way ahead in life's monopoly game! All you can do is live your life.
gougou
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by gougou »

Sold TSLA after it went 3x in early 2020
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Orangutan
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by Orangutan »

jason2459 wrote: Sat Jan 08, 2022 3:05 pm
Orangutan wrote: Sat Jan 08, 2022 2:58 pm
jason2459 wrote: Sat Jan 08, 2022 2:42 pm
gougou wrote: Sat Jan 08, 2022 2:38 pm So what did you buy?
I'm curious as well. The mistake may have been to take a realized loss.
Roku.
Ah, hit it's peak last year with the stay at home boom. Lesson learned. It's getting more negative press recently too. Not a good time to sell but is a good time to buy when a good company is getting dragged down by current market news.
It’s tough. You do your research, hold a thesis, and tell yourself you will hold through thick and thin. But my oh my is it different in practice. Negative press, declining stock price, and a senior member of management leaving - and I jumped ship. I think I made the proper decision even if I kick myself in x years. Single stocks aren’t for me.
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Orangutan
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by Orangutan »

capran wrote: Sat Jan 08, 2022 3:23 pm
Orangutan wrote: Sat Jan 08, 2022 2:09 pm [Merged into existing thread on the topic - Moderator Misenplace]
Happy New Year Bogleheads,

I recently made the biggest investing mistake of my life as I approach 30 years old. I planned to hide my investment loss from this community and pretend it never happened - but I want to put it in writing and have it serve as a lesson for my future self and others.

I live and breathe Bogleheads. I have a quantitative master's in finance from a top school and work in the industry. I understand the theory, adhere to index funds, and others know me to be generally logical and analytical. I have spent thousands of hours reading through the forum over the years before joining last year.


With that said, a few months ago I decided to divert $430,000 from my portfolio and invest it in a single stock. It was a moment of weakness and I had just broken up with my girlfriend. I decided I "knew what I was doing" and had "done my research". Recently realizing my idiocy, I took a realized loss of $140,000. I have moved the remainder back into a more appropriate allocation. As someone who is still renting, the $140,000 would have a made a wonderful downpayment in the future.

If any others have made a similar mistake in the past, and would like to share any advice from their mistake, I would love to hear. I am very much ready to be bashed endlessly from contributors. Feeling like quite the village idiot at the moment.


Thank you in advance!
You are not alone, and way ahead of me in willingness to share the details of your mistake. Suffice it to say that in my effort to avoid potential loss, I missed out on about a million dollars in gains. At this point I consider it non recoverable or unfixable, and I will continue to beat myself up over it. "It is what it is", as the saying goes. And who would have ever thought the real estate market would ignite to near booster-rocket levels? PS In 1982 I turned 30 years old. By 1988 (age 36) was the first year I started looking at net worth. In 88 I had a house paid for (34,000), 10,000 in checking and savings and 35,958 in a retirement account. (and I had just bought with cash a boat for 8,000 two years before). You are way ahead in life's monopoly game! All you can do is live your life.
Thanks this makes me feel better. Not in a sense of comparison, but for some perspective.
Just_For_Jenna
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Just_For_Jenna »

Lost $30k in a Bitconnect scam 4 years ago. I strayed from my plan and learned an expensive lesson. Thankfully it was money I could stand to lose and I’ve done very well for myself, and am still only 38. It could have been so much worse. More info here: viewtopic.php?f=1&t=238661&p=3731722#p3731722

Best decision by far was finding this place 10+ years ago and took the time to read the wikis, books and follow the forum.
lubi403
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by lubi403 »

As a foreigner, for many years I really had no idea how to invest and made numerous mistakes.
I worked for a public state university from 2012 and didn't realize my 401k would be a kind of "pension" by default (too lazy....), which means an employee has to work for the university for 20 years at least in order to fully receive it. Of course I couldn't work there for ever as a low-paid postdoc.
Eventually I realized it was a huge mistake and started to invest with TIAA . Yes, I can choose TIAA. It is just not the default plan.
So I lost 4-years employer's match totally (10% annually).
In 2017 I left from the university and didn't roll over my 401k into IRA account since the document of rollover needs to be notarized and I was so lazy and just kept postponing to do it(surprisingly, I'm a hard worker). According to the school's policy, all my money just parked in money market until the end of 2020 when I finally transferred it into Fidelity. ...so for almost 3 years, no any investment, just cash....
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unclescrooge
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by unclescrooge »

FlatSix wrote: Sat Dec 19, 2020 4:56 pm
Aged Maduro wrote: Sat Dec 19, 2020 1:06 pm The worst financial decision i ever made was to become a real estate agent after college. I did both commercial and residential sales and leasing. Like many, i had delusions of making lots of money and "being by own boss". Realtors are independent contractors who pay self employment taxes while having to pay endless fees and dues to their broker and the real estate association. They split up to 50% of every commission with said broker. They have to pay for the suits, the lunches and the fancy leased car. They get no benefits whatsoever, so they have to fund their own retirement plan and health insurance. According to the National Association of Realtors (who typically overinflate everything) the average Realtor in the United States makes about $40,000 a year. Keep in mind that these are the people who actually MADE it and have a lasting career in the business. Most don't even get that far. When you factor in the mentioned expenses, the typical agent is flat broke. In most markets there are only a handful of people who are making any real money and most are people whose dad owned a real estate company. The desperation and cut-throat tactics i saw turned me off to that business. Most agents never get off the hamster wheel, believing their own b.s. and forever chasing the next sale. Divorce and alcoholism is rampant. Fortunately, i was able to parlay my experience into a real estate related government career and becoming a property investor myself. So it wasn't all for naught, but it certiainly set my earnings back a few years.
Wow, that's really illuminating. I had no idea it's so tough to make it as a real estate agent. I have a high school friend who seems to post about selling or finding a new home for her clients about once a week in a medium to high COL area. I assumed she was probably killing it just thinking about her 3% share of commissions (I guess 1.5% after splitting with her broker), maybe I'm underestimating some of the downsides you mentioned above. Glad you're on a better track now.
I know someone who makes $350k+ in a hcol area. He's a hustler and works very hard at his real estate business.
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ccf
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by ccf »

rabalanced during the COVID crash by dumping the entirety of my taxable bonds into the market. it happened to be the day after the rock bottom

when it doubled, I took all my winnings - about 200k after taxes - and put them in hot pandemic investments. after accounting for 2021 taxes (because I was actively trading), it's all gone. I held all the way down.

now I have less money and much less fixed income in taxable
Last edited by ccf on Sat May 21, 2022 2:42 pm, edited 8 times in total.
iraconfused
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by iraconfused »

Getting married and combining finances. The divorce was bad enough but her having access to every account and ALL day to take money from them while I was working really hurt. Set me back about 15 years.
carloslando
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Re: I made a horrible mistake. Major financial loss. How to proceed?

Post by carloslando »

Orangutan wrote: Sat Jan 08, 2022 2:58 pm
jason2459 wrote: Sat Jan 08, 2022 2:42 pm
gougou wrote: Sat Jan 08, 2022 2:38 pm So what did you buy?
I'm curious as well. The mistake may have been to take a realized loss.
Roku.
Roku is down 60% from that time, and VTI is down about 20%. So great move to diversify when you did.

I have a similar lesson on some stock holdings (big-tech RSU) which I held on to, but now wish I had diversified. Planning to VTI/VTSAX all future vests, and also use this drop in price to sell tax-lots which are at about break-even now, and move them to VTI.

My worst financial decisions have been:
1. Renting (in the bay area) for 10+ years instead of buying right when we moved here, in a good school district.
2. Passing up a couple of startup opportunities that would have added an extra 0 to our net-worth today. And to rub it in, taking one up that in 5 years went nowhere, sheer waste of time, energy, family-happiness and health with nothing to show (other than a lesson learnt).
3. Not taking up a big-tech job much, much earlier.

Reading or listening to the works of Seneca and Marcus Aurelius resets my perspective when these thoughts get me into a funk.
Comparison is the killer of all joy.
Vanguard User
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Vanguard User »

Investing with EJ.
Annikins
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Annikins »

Investing with a financial advisor for 10 years.... but worse continually noticing that our 401k in vanguard index funds always seemed to outperform, yet didn't put 2 and 2 together.... ugh.
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Candor
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Candor »

Refused the GI Bill in 1985 when I signed up for the army. I knew at age 17 I would never go to college plus I had to contribute $100 a month for 12 months and I think my salary was $7000-$8000 a year or something like that. If I had paid the $1200 I would have received $25k for college.

Fast forward 4 years and I was leaving the military and had now decided to go to college and luckily they still offered me the ability to make a one time payment of $1200 and I would receive $10k from the GI Bill if I remember correctly. An extra $15k would have been huge to me during school at that time but overall I don't think the difference had much of an impact on my future financial position.
The fool, with all his other faults, has this also - he is always getting ready to live. - Seneca Epistles < c. 65AD
Mr. Buzzkill
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Mr. Buzzkill »

Biggest financial mistake?

Loaning a little money to a good and dear friend when he and his family were about to evicted. A months rent turned into multiple months rent and I allowed my own good fortune and planning to make me feel guilty.

Then i saw him make bad decisions out of desperation and his ego which I had never before seen. He used my generosity for things other than what he persuaded me that he needed; not luxuries but instead of necessities like getting his car fixed so he could get a new job, he spent money (my money!), out of guilt on private school tuition to keep his kids in a school they liked instead of withdrawing them in favor of free public school. Then asking me for more money!

When I loaned him the original and subsequent funds, I always mentally wrote it off as a loss so I could only be pleasantly surprised to be repaid someday.

But someday never came. He died in middle age without telling his wife and kids what I’m owed. Though I’ve documented the loan amounts and have an email trail, I can’t bring myself to ask his adult children and widow for repayment. They’ve had a hard enough life.

I’m out low-mid five figures plus interest plus opportunity cost of use of the money.

It’s an expensive lesson but it taught me no more unsecured personal loans to anyone except maybe immediate family. And the spigot still gets turned off the first time I’m lied to.

The lesson saved me years later from loaning to another friend to save his business. He found another lender but his business still went under. So I’m break even on the lesson learned, so to speak.
A strategy that works only in bull markets isn’t much of a strategy. Anyway, four dollars a pound.
Base Hit
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Base Hit »

Also selling AAPL in the 90s after watching an FNN TV panel discuss Apple's certain upcoming demise. I mean, they were all experts so....
Pu239
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Pu239 »

Drinking alcohol instead of water.
Between the idea And the reality...Between the motion And the act...Falls the Shadow - T. S. Eliot
invest2bfree
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by invest2bfree »

Mr. Buzzkill wrote: Sat May 21, 2022 7:15 pm Biggest financial mistake?

Loaning a little money to a good and dear friend when he and his family were about to evicted. A months rent turned into multiple months rent and I allowed my own good fortune and planning to make me feel guilty.

Then i saw him make bad decisions out of desperation and his ego which I had never before seen. He used my generosity for things other than what he persuaded me that he needed; not luxuries but instead of necessities like getting his car fixed so he could get a new job, he spent money (my money!), out of guilt on private school tuition to keep his kids in a school they liked instead of withdrawing them in favor of free public school. Then asking me for more money!

When I loaned him the original and subsequent funds, I always mentally wrote it off as a loss so I could only be pleasantly surprised to be repaid someday.

But someday never came. He died in middle age without telling his wife and kids what I’m owed. Though I’ve documented the loan amounts and have an email trail, I can’t bring myself to ask his adult children and widow for repayment. They’ve had a hard enough life.

I’m out low-mid five figures plus interest plus opportunity cost of use of the money.

It’s an expensive lesson but it taught me no more unsecured personal loans to anyone except maybe immediate family. And the spigot still gets turned off the first time I’m lied to.

The lesson saved me years later from loaning to another friend to save his business. He found another lender but his business still went under. So I’m break even on the lesson learned, so to speak.
Sorry, Loaning a friend who is down and out is not an expensive mistake.

If you are in his shoes then you want your friends to help you.

Think of it as Good Karma you have earned and will be recycled back to you in some other ways.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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K72
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by K72 »

Annikins wrote: Sat May 21, 2022 6:22 pm Investing with a financial advisor for 10 years.... but worse continually noticing that our 401k in vanguard index funds always seemed to outperform, yet didn't put 2 and 2 together.... ugh.
+1, only in my case it was 15 years. 2nd biggest mistake was going through all my past statements to compute the CAGR, which turned out to be around 3%.
All we want are the facts...
Ependytis
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Ependytis »

My worst financial decisions/mistakes ever are below.

1. Not marrying someone that was similar to me both in income and savings.

2. Not reducing expenses sooner. About 25 years ago stared saving $50 per month or $600 per year by eliminating unnecessary things. Every year I have been able to hit this target and then some.

3. Delayed investing due to the 1987 crash.

4. Delayed deferring money to a 401(k).

5. Delayed deferring money to an HSA.


Oh, I feel much better after listing these items. A special thanks to the original OP.
stoptothink
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by stoptothink »

invest2bfree wrote: Sun May 22, 2022 9:43 am
Mr. Buzzkill wrote: Sat May 21, 2022 7:15 pm Biggest financial mistake?

Loaning a little money to a good and dear friend when he and his family were about to evicted. A months rent turned into multiple months rent and I allowed my own good fortune and planning to make me feel guilty.

Then i saw him make bad decisions out of desperation and his ego which I had never before seen. He used my generosity for things other than what he persuaded me that he needed; not luxuries but instead of necessities like getting his car fixed so he could get a new job, he spent money (my money!), out of guilt on private school tuition to keep his kids in a school they liked instead of withdrawing them in favor of free public school. Then asking me for more money!

When I loaned him the original and subsequent funds, I always mentally wrote it off as a loss so I could only be pleasantly surprised to be repaid someday.

But someday never came. He died in middle age without telling his wife and kids what I’m owed. Though I’ve documented the loan amounts and have an email trail, I can’t bring myself to ask his adult children and widow for repayment. They’ve had a hard enough life.

I’m out low-mid five figures plus interest plus opportunity cost of use of the money.

It’s an expensive lesson but it taught me no more unsecured personal loans to anyone except maybe immediate family. And the spigot still gets turned off the first time I’m lied to.

The lesson saved me years later from loaning to another friend to save his business. He found another lender but his business still went under. So I’m break even on the lesson learned, so to speak.
Sorry, Loaning a friend who is down and out is not an expensive mistake.

If you are in his shoes then you want your friends to help you.

Think of it as Good Karma you have earned and will be recycled back to you in some other ways.
I am/was in the same situation with two of my "friends", in both cases mid 5-figures (originally loaned in '08 and '09). Both have at least somewhat financially recovered and (while they have brought it up) never made any effort to pay so much as a penny back. While I don't list it as my worst financial mistake and it's pretty much behind me, it was a valuable lesson learned early that I don't think of as Good Karma. It was a mistake; philosophically, I have a hard time reconciling the idea that a mistake I made will be "recycled back to me". I have made decisions my entire adult life which allow me to never have to ask anybody else for money, regardless of what happens; I felt bad for both of my "friends" then, but it's pretty clear now that they put themselves in that position with poor decisions (which they didn't really stop making) and took advantage of me. Wife and I are in total agreement that we will never do something like that again, even for relatives (offer roof over their head - yes - but not money).
Last edited by stoptothink on Sun May 22, 2022 12:25 pm, edited 1 time in total.
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9-5 Suited
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by 9-5 Suited »

Ependytis wrote: Sun May 22, 2022 12:11 pm 1. Not marrying someone that was similar to me both in income and savings.
I assume you mean more like not having the same attitudes and goals about money and savings as your spouse, right? I don’t think it’s at all necessary for spouses to have similar incomes. There are millions of happy couples where one stays at home, one is a teacher the other a doctor/lawyer/etc. I would advise pretty strongly against “income matching” in partner seeking. That would be a really bad idea especially early in life when people are pairing up but incomes aren’t well known. If incomes do begin to deviate, that’s where the “our money” attitude and shared values become even more critical.
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Nummerkins »

One that comes to mind for me was buying Everbank Icelandic Krona CDs in the late 2000s. Of course, Iceland's banking system collapsed in 2008, shaving off 50% of my deposits. The silver lining was the super high interest rate which returned back half of my loss, settling out at a nice 25% total hit.
Today's high is tomorrow's low.
egri
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by egri »

Pu239 wrote: Sat May 21, 2022 10:46 pm Drinking alcohol instead of water.
The cause of, and solution to, all of life's problems! :sharebeer
egri
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by egri »

Do I have to pick just one? :oops:

1.) Trying to pick stocks, instead of just buying an index fund. With the exception of BRK.B, they all underperformed the market, and I missed out on most of the 2009-2020 bull market that way. I ended up selling them at a loss in 2019.

2.) Delaying starting an IRA because it seemed like a hassle, and I couldn't see the point in socking away money for several decades that I couldn't touch.

3.) Delaying starting to invest with the TSP, because I didn't understand it and I was going to do 20 and get a pension, so I didn't need it. The bright side is I wised up in time to opt in to the new system, with a reduced pension but a match
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by invest2bfree »

stoptothink wrote: Sun May 22, 2022 12:23 pm
invest2bfree wrote: Sun May 22, 2022 9:43 am
Mr. Buzzkill wrote: Sat May 21, 2022 7:15 pm Biggest financial mistake?

Loaning a little money to a good and dear friend when he and his family were about to evicted. A months rent turned into multiple months rent and I allowed my own good fortune and planning to make me feel guilty.

Then i saw him make bad decisions out of desperation and his ego which I had never before seen. He used my generosity for things other than what he persuaded me that he needed; not luxuries but instead of necessities like getting his car fixed so he could get a new job, he spent money (my money!), out of guilt on private school tuition to keep his kids in a school they liked instead of withdrawing them in favor of free public school. Then asking me for more money!

When I loaned him the original and subsequent funds, I always mentally wrote it off as a loss so I could only be pleasantly surprised to be repaid someday.

But someday never came. He died in middle age without telling his wife and kids what I’m owed. Though I’ve documented the loan amounts and have an email trail, I can’t bring myself to ask his adult children and widow for repayment. They’ve had a hard enough life.

I’m out low-mid five figures plus interest plus opportunity cost of use of the money.

It’s an expensive lesson but it taught me no more unsecured personal loans to anyone except maybe immediate family. And the spigot still gets turned off the first time I’m lied to.

The lesson saved me years later from loaning to another friend to save his business. He found another lender but his business still went under. So I’m break even on the lesson learned, so to speak.
Sorry, Loaning a friend who is down and out is not an expensive mistake.

If you are in his shoes then you want your friends to help you.

Think of it as Good Karma you have earned and will be recycled back to you in some other ways.
I am/was in the same situation with two of my "friends", in both cases mid 5-figures (originally loaned in '08 and '09). Both have at least somewhat financially recovered and (while they have brought it up) never made any effort to pay so much as a penny back. While I don't list it as my worst financial mistake and it's pretty much behind me, it was a valuable lesson learned early that I don't think of as Good Karma. It was a mistake; philosophically, I have a hard time reconciling the idea that a mistake I made will be "recycled back to me". I have made decisions my entire adult life which allow me to never have to ask anybody else for money, regardless of what happens; I felt bad for both of my "friends" then, but it's pretty clear now that they put themselves in that position with poor decisions (which they didn't really stop making) and took advantage of me. Wife and I are in total agreement that we will never do something like that again, even for relatives (offer roof over their head - yes - but not money).
Again if they recovered and still did not pay you then life will extract a bigger toll on them.

What I consider a biggest financial mistake is something you cannot recover from or has meaningfully changed my life.

But to each his own, I have seen people who lose sleep over $100 dollars and some who wont bat an eye for $100,000.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
ROIGuy
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by ROIGuy »

invest2bfree wrote: Sun May 22, 2022 3:53 pm
stoptothink wrote: Sun May 22, 2022 12:23 pm
invest2bfree wrote: Sun May 22, 2022 9:43 am
Mr. Buzzkill wrote: Sat May 21, 2022 7:15 pm Biggest financial mistake?

Loaning a little money to a good and dear friend when he and his family were about to evicted. A months rent turned into multiple months rent and I allowed my own good fortune and planning to make me feel guilty.

Then i saw him make bad decisions out of desperation and his ego which I had never before seen. He used my generosity for things other than what he persuaded me that he needed; not luxuries but instead of necessities like getting his car fixed so he could get a new job, he spent money (my money!), out of guilt on private school tuition to keep his kids in a school they liked instead of withdrawing them in favor of free public school. Then asking me for more money!

When I loaned him the original and subsequent funds, I always mentally wrote it off as a loss so I could only be pleasantly surprised to be repaid someday.

But someday never came. He died in middle age without telling his wife and kids what I’m owed. Though I’ve documented the loan amounts and have an email trail, I can’t bring myself to ask his adult children and widow for repayment. They’ve had a hard enough life.

I’m out low-mid five figures plus interest plus opportunity cost of use of the money.

It’s an expensive lesson but it taught me no more unsecured personal loans to anyone except maybe immediate family. And the spigot still gets turned off the first time I’m lied to.

The lesson saved me years later from loaning to another friend to save his business. He found another lender but his business still went under. So I’m break even on the lesson learned, so to speak.
Sorry, Loaning a friend who is down and out is not an expensive mistake.

If you are in his shoes then you want your friends to help you.

Think of it as Good Karma you have earned and will be recycled back to you in some other ways.
I am/was in the same situation with two of my "friends", in both cases mid 5-figures (originally loaned in '08 and '09). Both have at least somewhat financially recovered and (while they have brought it up) never made any effort to pay so much as a penny back. While I don't list it as my worst financial mistake and it's pretty much behind me, it was a valuable lesson learned early that I don't think of as Good Karma. It was a mistake; philosophically, I have a hard time reconciling the idea that a mistake I made will be "recycled back to me". I have made decisions my entire adult life which allow me to never have to ask anybody else for money, regardless of what happens; I felt bad for both of my "friends" then, but it's pretty clear now that they put themselves in that position with poor decisions (which they didn't really stop making) and took advantage of me. Wife and I are in total agreement that we will never do something like that again, even for relatives (offer roof over their head - yes - but not money).
Again if they recovered and still did not pay you then life will extract a bigger toll on them.

What I consider a biggest financial mistake is something you cannot recover from or has meaningfully changed my life.

But to each his own, I have seen people who lose sleep over $100 dollars and some who wont bat an eye for $100,000.
"Life is 10% of what happens to you, and 90% how you react to it."
Carol88888
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Carol88888 »

Bought a closed end fund that used leverage. Didn't understand how bad it would get in a bad a market. The thing went to 1.
stoptothink
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by stoptothink »

invest2bfree wrote: Sun May 22, 2022 3:53 pm
stoptothink wrote: Sun May 22, 2022 12:23 pm
invest2bfree wrote: Sun May 22, 2022 9:43 am
Mr. Buzzkill wrote: Sat May 21, 2022 7:15 pm Biggest financial mistake?

Loaning a little money to a good and dear friend when he and his family were about to evicted. A months rent turned into multiple months rent and I allowed my own good fortune and planning to make me feel guilty.

Then i saw him make bad decisions out of desperation and his ego which I had never before seen. He used my generosity for things other than what he persuaded me that he needed; not luxuries but instead of necessities like getting his car fixed so he could get a new job, he spent money (my money!), out of guilt on private school tuition to keep his kids in a school they liked instead of withdrawing them in favor of free public school. Then asking me for more money!

When I loaned him the original and subsequent funds, I always mentally wrote it off as a loss so I could only be pleasantly surprised to be repaid someday.

But someday never came. He died in middle age without telling his wife and kids what I’m owed. Though I’ve documented the loan amounts and have an email trail, I can’t bring myself to ask his adult children and widow for repayment. They’ve had a hard enough life.

I’m out low-mid five figures plus interest plus opportunity cost of use of the money.

It’s an expensive lesson but it taught me no more unsecured personal loans to anyone except maybe immediate family. And the spigot still gets turned off the first time I’m lied to.

The lesson saved me years later from loaning to another friend to save his business. He found another lender but his business still went under. So I’m break even on the lesson learned, so to speak.
Sorry, Loaning a friend who is down and out is not an expensive mistake.

If you are in his shoes then you want your friends to help you.

Think of it as Good Karma you have earned and will be recycled back to you in some other ways.
I am/was in the same situation with two of my "friends", in both cases mid 5-figures (originally loaned in '08 and '09). Both have at least somewhat financially recovered and (while they have brought it up) never made any effort to pay so much as a penny back. While I don't list it as my worst financial mistake and it's pretty much behind me, it was a valuable lesson learned early that I don't think of as Good Karma. It was a mistake; philosophically, I have a hard time reconciling the idea that a mistake I made will be "recycled back to me". I have made decisions my entire adult life which allow me to never have to ask anybody else for money, regardless of what happens; I felt bad for both of my "friends" then, but it's pretty clear now that they put themselves in that position with poor decisions (which they didn't really stop making) and took advantage of me. Wife and I are in total agreement that we will never do something like that again, even for relatives (offer roof over their head - yes - but not money).
Again if they recovered and still did not pay you then life will extract a bigger toll on them.

What I consider a biggest financial mistake is something you cannot recover from or has meaningfully changed my life.

But to each his own, I have seen people who lose sleep over $100 dollars and some who wont bat an eye for $100,000.
Clearly stated that it wasn't the worst financial mistake in my life (and I did completely recover from the worst, and it is totally behind me), but I do find it kind of hokey to say things like "life will extract a bigger toll on them..." These are people who I talk to on a regular basis and still see at last once a year, no hard feelings at this point (though I wouldn't be angry if next time they handed me a check). My rational mind has a hard time with karma, their only consequence (that I know of) is that I won't bail them out again. It was my mistake, I just won't ever put myself in a position to be taken advantage of (in that way) again.
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Re: What is the Worst Financial Decision/Mistake You Have Made?

Post by Harmanic »

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