Tuesday, April 7, 2009

Mistakes We Hope Not to Make Again

As I have mentioned recently, we are inching toward our financial goals. My husband and I have never been big spenders, but have often lapsed with being really careful with our resources. We have been okay with our finances since we've been married, but only got really intentional about an "on paper, on purpose" budget 18 months ago when we started going through Financial Peace University Online. It was worth EVERY penny! It was a real eye-opener and highlighted a lot of areas where we had made unwise decisions or needed to be better stewards of the resources we have. It also made us sick to think that if we would have taken this course right when we got married we could have avoided making some less-than-stellar choices than we did end up making. But we live and learn and hope to improve and gain wisdom, which often comes from making mistakes. The things on our mistake list may not be mistakes if you made the same decision, but hindsight being what it is, they were wrong for us.

Top 10 Money Mistakes
10. Cashing out investments (gifts from family..ugh!) and using much of that money to move to and establish ourselves in a city we had never seen before. This is a story for another day. Live and learn.
9. Buying a vehicle with a loan. Even though we had saved a fair amount, we went well over what we had saved when our previous car died. We could have purchased a used Civic outright with the savings at that point instead of forking over our savings AND making payments for the next 18 months (originally a 5 yr. loan). Live and learn.
8. Refinancing our first home less than a year before the move mentioned in #7. Dumb. Dumb. Dumb. Live and learn.
7. Upgrading from our modest 1000 square foot first home to a much larger home because we couldn't possibly have two kids in a 2-bedroom house. Oh, yes, we could have managed fine with two kids in that space with a can-do perspective, careful furniture selection and some rearranging of rooms. And when property taxes were adjusted on this new home, it really was not a comfortable payment anymore. Live and learn.
6. Living for many years without a savings cushion. During that time, we were seriously about 2 mortgage payments away from losing our home if something major would have happened and we did not or could not have converted retirement investments. We are working on a fully funded emergency fund now and it feels a lot less stressful. Live and learn.
5. Using Visa for purchases when our bank account was running low without a budget. We always paid off the entire balance, but in many ways we were living one month ahead of our means. Not good. Live and learn.
4. Not having a family financial mindset when we were DINKS and thinking to have kids. Choices we made before we had children are still having consequences today, and those consequences cannot be dealt with quite as quickly with one income as they can be with two. Live and learn.
3. Not taking time to soak in the gravity of a home purchase decision and what a large mortgage means and the impact that one payment every month will have on the rest of life. Live and learn.
2. Paying retail and not being careful enough with what we acquire. I have always been a sale shopper and we have always been open to cast-offs from family, but until 2 years ago I did not even consider it an option to by secondhand clothing, furniture, and household items. Even so, the more you have, the more you have to maintain and the more space you feel you need to have to store or keep it. I wish I considered simplicity more seriously early on. Live and learn.
1. Living without a written, on paper-on purpose budget for every pay period of our marriage to tell our money where to go. But I'm glad we started this in year 8 of our marriage instead of year 38!

Live and learn! There may be 10 more big money mistakes we make in the next 10 years, but they hopefully they won't be the same as the ones above.


Jenny's Vegcafe said...

I enjoyed reading this. Mistakes I would not make again:
1. Upgrading from our previous house when we moved. We had the money and the means and so we upgraded. Now we think we have slightly too much house and would rather pay our mortgage off earlier than keep up with the Joneses.
2. Buying just because it's on sale or dirt cheap. Early in our marriage my Hubby and I would entertainment shop at a salvage store and leave with a cart load of things because they were cheap. A lot of that stuff ended up getting donated or thrown away.
3. Cheaping out on the car insurance. We've been burned by this twice. Once when we only had liability and thought we could easily replace our old car. We did replace it but with a much newer car instead of buying a similar replacement. And now we don't have underinsured driver coverage and we'll end up paying OOP for some of Hubby's medical bills.

Live and learn.

Heather said...

I appreciate your wisdom on buying a larger house, or a house too soon. We rent a tiny apt, and people(family, friends, anyone) are pressuring us to buy, buy buy! We are hesitant for those very reasons, thanks for sharing!!