So I have revealed a lot on this blog about my journey to financial independence. One of the most common posts among the blogs I follow is the biggest financial mistakes post. Typically, they only post one. I have a ton of mistakes, but thought I would post two because one is just really D-U-M-B.
My Biggest Financial Mistake
The biggest mistake I made was the taking out of student loans when I didn’t need too. From my master’s degree to my Ph.D. I had all of my schooling paid for and then some. I received teaching assistantships from the universities I attended that not only paid for my tuition, but gave me a small amount of money to live upon. Money that could’ve given me a basic living. Nothing fancy, but I still could’ve made it. The problem was lifestyle inflation. I wanted the ability to go out with friends, go out to dinner, go visit my family, have money for presents, go on dates, etc. Instead of using my student loans for EDUCATION expenses I used them for LIFESTYLE expenses! I racked up a total of $76000 for this lifestyle inflation when I could’ve just worked another job or done something else to find some money. Yes stupid I know!
My Dumbest Financial Mistake
So my biggest mistake was the amount of money it cost me. You could argue that my student loans were good because they are considered good debt. Frankly, no debt is GOOD debt in my opinion. It is ALL bad. But if you have to have some debt then a little student loan debt and mortgage debt are on the bottom end of the totem pole.
My dumbest financial mistake, and I have made many, has to do with a car that I bought in 1999. In 1999 I was off to graduate school and I bought a fairly inexpensive car, a ’92 Oldsmobile Achieva. It was actually a pretty good car. Low miles, good gas mileage, and I planned to drive it into the ground for my grad school days. So I bought the car and the salesman told me to not pay it off right away so I could build my credit.
I didn’t listen to him and paid off the car in 10 months. Not bad right? Well that isn’t the stupid part. So when I took this car and was driving it while I was doing my second master’s I had paid off the loan and figured I didn’t need full coverage on the vehicle anymore only liability insurance. So on a cold December night in 2001 I called up my insurance provider and changed my insurance coverage from full to liability and promptly saved myself $300. Woo hoo!
The next morning I was late for a final and we had a storm that night that made the roads icy. My car was all fogged up. I was late, heated up the car, and got to the point where I could at least see. So as I was driving to work (less than two miles away) my car hit an ice patch and skidded into the back of another car, basically totaling mine and this poor young lady.
Thankfully no one was hurt except my pride and my car. So I realized that I had cancelled my insurance and that it probably wouldn’t cover the cost to repair it. So I raced home and tried to call my insurance company to re-instate my full coverage insurance before I filed my car claim (I had liability so I was covered for the damage to the other lady’s car). Yeah, that didn’t work! I tried to get over on the insurance company and that didn’t work.
But my mistake only grew dumber. Instead of just junking the car and getting a beater that was cheaper or whatever I had the people who towed my car to their shop REPAIR my car. The car wasn’t totally totaled and could be driven again, but it would cost. The repairs cost $3000 (more than the car’s worth), they couldn’t fix the air conditioning, and to top it all off I put all the repairs on my Discover Card!
Ironically, the repair job was pretty good. I ended up driving that car for another two years without incident until another accident occurred where my Achieve was totaled and I ended up in the hospital with a broken clavicle.
Looking back on it though how DUMB was I to take full coverage off my car, repair damages to a car that wasn’t worth the amount of repairs I put into it, and the cherry on top: put it on a CREDIT CARD!!! WHAT A MORON I am.
I have made some stupid mistakes since then and will continue to do so, but that car business was probably the dumbest i have ever made. For whatever reason I didn’t even think about trying to get a car loan (maybe because I didn’t have a down payment) or ask my dad for help or whatever.
I laugh about it now, but this is the kind of thing that has gotten me in trouble. Not totally thinking it through and making irrational decisions. What a moron I can be.
What is your biggest/dumbest financial mistake?