Life | Motivation

Six Dumb Financial Decisions I’ve Made

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Dumb financial decisions

Unfortunately, people are not born financial geniuses. Growing up I hardly learned much in school about certain things such as credit card debt. I made quite a few bad financial decisions in my early to mid-twenties. I’m glad I finally wised up a bit. Below are six dumb financial decisions that I’ve made over the years. I share them with you so that you won’t have to go through them.

I used my credit card for leisure when I didn’t have the cash on me

Everyone makes mistakes when they are young. I know I did. Using my credit card when I didn’t have the money is one of the worst financial decisions that I have done. I can remember numerous times using my credit card to buy drinks at the bar for my friends and me. At the time, I thought it was fun and cool, but now I realize that it was stupid. I intended my credit card to be used for emergencies. Getting drunk with my friends was not an emergency.

I should have some more discipline and only used cash. If you just got a credit card, don’t make the same mistake that I did. Only use it for emergencies.

I purchased a used car without having a mechanic look at it first

I knew nothing about cars when I purchased my first one in the summer of 2007. The only thing that I knew was that I needed a car. My roommate who I used to ride to work with was moving off-campus. I went to a used car dealer in Savannah, GA (I was still a student at the time) and saw a 2000 Chevy Malibu for $5800. It only had 84,000 miles on it at the time. I had a friend at the dealership with me, but he didn’t know much about cars either. We took the car for a test drive. Everything seemed fine.  I put some money down and made the purchase. I was excited to have my first car.

About a week later, I  was planning to go to Atlanta to show the car to my family. I was about a third of the way there when the car died on me. I sat on the side of the road for a minute and it eventually started back up. The bad thing was that if the car went over 50 miles per hour it would cut off. That was the longest ride ever to Atlanta. I got home and thought things would be fine so I tried to drive it again the next day. I was cruising on I-75 going downtown when the car died on me again. Man, I could not believe that that was happening again. I ended up leaving the car on the side of the road. I had to take the Greyhound bus back to school.

My aunt had the car towed to a mechanic. The car had a bad fuel pump. They said it would cost over $700 to fix. I was extremely pissed. I did get lucky, though. The used car dealership actually paid for it to get fixed. That usually never happens especially when you buy a used car as is. I definitely learned my lesson. When my Malibu finally died on me for good in 2013, I purchased my next car from a mechanic.

Buying a vehicle is an important decisions. When buying a used car, make sure that you have a mechanic or a friend that knows something about cars with you.

Sallie Mae

Sallie Mae is hands down the worst lender to get a student loan with. They don’t care if you are having an economic hardship or anything after you graduate. They just want their money. Unfortunately, I made the mistake of borrowing from them in school. Having to deal with multiple phone calls a day where people are asking you to pay is not fun. I wouldn’t wish that on anybody. If you’re still in school, please STAY AWAY from Sallie Mae. I don’t want to be on your list of dumb financial decisions.

Luckily, I was able to refinance my Sallie Mae loan with another lender, Earnest. I was able to get a lower interest rate and a smaller payment as well. For more information on refinancing your student loan, click the link below.

Get $200 to refinance with Earnest here.

Not paying off small loans quicker.

We are on my fourth thing on the list of dumb financial decisions. I had a couple of small loans where I took about a year and a half to pay off. After I had received my final statement from the companies I saw that I paid over $100 in interest for both loans. If you have small loans, just pay them. The interest was not a joke. I wasn’t doing as many side hustles as I’m doing now back then. If I was, those smaller loans would have been eliminated in a few short months.

Not always knowing what’s in my checking account

I didn’t always use my check register to balance my bank account. A few years ago I used to estimate what I had in my account. That was a dumb ass move. Then, I would try not to go over that amount. That clearly was not smart. I would forget purchases and check my account to see overdraft fees. All that could have been avoided if I had just buckled down and balanced my books. After a while, you will get tired of paying those fees. I know I was. Those fees were adding up. I am happy to say I haven’t had an overdraft fee in almost three years. I use a check register to help me with my account. If you don’t want to do that, you can use a program like Personal Capital. You can see all of your money transactions on the platform and more.  The good thing about Personal Capital is that it’s free.

Sign up for Personal Capital here

Not facing my debt earlier

I knew I was in debt the moment I was out of college. It really didn’t hit me how much until I got that first statement from Sallie Mae in November 2008. Instead of actively coming up with a plan to pay it off, I just paid when I felt like it. I also only paid a small amount. Please learn from my mistake and make a plan to pay that sh!t off. You might have to sacrifice some things now, but it will be well worth it. You won’t be looking at having to repay student loans 10 years after you graduated from college.

These are six dumb financial decisions that I don’t want you to make. If you’ve already made them realize that your world is not over. You can fix them by taking control right now and coming up with a plan. If you need more motivation, you can check out Brooks Conkle to get some more ideas on how to fox your financial future.

What dumb financial decisions did you make when you were younger? Did you learn from them?

 

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31 Comments

  1. I suppose I am fortunate that I learned to pay off debt early. I was thrilled years ago when I paid off my student loans.

    What I need to learn is that it is OK to spend money. I grew up in a very thrifty household. Also, that is OK to make mistakes when spending – not very purchase, even if researched a bit, is a stellar one.

  2. Hi Jason: I didn’t make any financial mistakes when I was young (fortunately), but the biggest financial mistake I’ve ever made was buying a timeshare. Stay away from those salesmen (and women)! They really ARE ruthless and don’t care at all about your individual situation.

    1. I’ve always heard about that, to stay away from time shares no matter how tempting of an offer they are presented to you.

  3. Thanks for your honest appraisal of some very common financial mistakes. EVERYONE can use this information! I paid off my substantial credit card debt a few years ago and now I NEVER keep a balance. Even if I have to dip into my savings to pay off the December (Christmas) bill, I do it, then I am very careful for a few months and replenish my savings.

  4. I was raised by a German father… debt was the worst swear word in our house! I do use credit cards, but only to accrue miles for travel. I know my limits and pay my balance every month. It took some getting used to, as I only spent when I had the cash. You might want t try there though…only spend what you have cash for. As to Sallie Mae? What can I say without appearing to partisan??? It’s run by the government…that makes me suspicious from the get-go!

    1. I didn’t know Sallie Mae was run by the government. That makes a lot of difference why they are horrible 🙂

  5. Good post! Thank you for sharing your mistakes on financial situations. Financial education is so helpful!

  6. I’m mostly fortunate when it comes to finances, but my husband and I laugh when we think about the first car we bought years ago. We were so concerned about keeping the monthly payment down that we didn’t even ask what the interest rate was. It was something like 14%. The dealership saw us coming from a mile away.

  7. I have made many of these financial mistakes as well. Thank goodness I learned from them. You would be amazed at how many people I know that still continue to live like this. It’s important that you see your mistakes and do better and you have done just that.

    1. You’re right. I have definitely learned from my mistakes.

  8. Hi Jason, I think we have all made some of these mistakes (maybe all) in our early years. The fact is, we do a very poor job of training our kids on how to handle their finances in a responsible way. Part of that training should include the results of not following good common sense in these matters. The best news for you (and I) is you have figured it out and are on your way to a better place. Bravo.

  9. I’ve managed to miss most of these financial pitfalls but my husband and I did manage to buy quite the clunker of a car when we were first married. I won’t get into the details, but by the time the car was accidentally run over by a crane truck we were relieved.

  10. Buying a timeshare was my most regretted financial mistake.

  11. Look like we have a same mistake especially about the used car. They might be cheaper when you first bought them but after a few months, you might need to repair some thing. The cost for repair can be very high and it can be a burden for your monthly budget.

  12. Being financially genius is a gift and not all of us are born with it. That’s why some of our decisions in handling our business fails. There were lots of help and advises we can find online to make our mistakes straight.

  13. All of the above. Sallie Mae was the last debt I paid off. I will never buy a car with a loan (or without getting it checked out first) again. And I will do my best to encourage people to not take on more debt. Oh by the way I watch my checking account like a hawk.

    You are awesome for recognizing these pitfalls in your financial life. You’re already way ahead of most people.

  14. Very nervous about making the same mistake as you on the second hand car front. I need to buy a second hand car as well but don’t know any mechanics. What am I supposed to do?

    1. My suggestion would be to take it to a mechanic shop and get a diagnostic done before you purchase.

  15. I think my biggest financial regret is specific to making money. I wish I had gotten serious during college when it comes to making money online. I could have been years ahead of where I’m at if I had done that.

  16. Your story reminded me of that time I bought my first car. Walked in the dealership with my cash and immediately bought the car I loved that I could afford. I ended up paying almost double in repairs after a month of use. The car’s engine was really worn out but I didn’t know because all I saw was the looks. That was really stupid of me.

    1. It happens. We all make mistakes. The good thing is that we learn from them.

    2. This is something really to keep in mind when making large purchases, especially! Yikes, scary! I need to befriend a certified mechanic that can check out my next vehicle before purchasing it.

  17. Thanks for sharing! Now other people can learn these lessons, without having to learn them the hard way!

    I wouldn’t characterize them as “dumb” decisions, though. You were just young and inexperienced. This illustrates why I support a nationwide curriculum on personal finance.

    It would be a lot more practically useful than learning biographical criticism of Shakespeare, or the date of the Battle of Antietam! 😀

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