My Best and Worst Financial Decisions
By Pinyo • Oct 8th, 2007 • Category: Personal FinanceThis is our first group writing project from members of the M-Network. I this writing project we share with our readers our best financial decisions and worst financial mistakes. Why make your own mistakes when you can learn from ours? After you finish reading this post, please visit other M-Network blogs to read about their best and worst financial decisions.
Best Financial Decisions
1. I bought a house in 1998
I think this was the only time that good timing worked for me. Normally, I have the tendency to buy investments at the worst possible time. As Lady Luck would have it, I bought my house at the end of 1998 — right before one of the biggest housing price boom ever.
Data from Housing Bubble, NYC Metropolitan Area House Prices
The chart above represents NYC housing prices that very closely resemble the value of my house. My house essentially tripled in value between 1998 and now. If I’d waited much longer, I wouldn’t have been able to afford the house.
2. I bought a smaller house with $185,000 mortgage instead of the bigger one with $245,000 mortgage
When we were shopping for a house in 1998, my dad and I really wanted a bigger house. Luckily, my mom insisted (overruled actually) that we buy the smaller one. With the bigger house, my monthly mortgage payment would be $1,508 instead of $1,139. Not having to pay that bigger mortgage turned out to be a good thing because:
- I didn’t have to worry about not having enough money because I spent it all on mortgage
- I gave me the flexibility to invest more in my 401k and IRA
3. Took advantage of tuition reimbursement from work to get a Master Degree
I think this was another great financial move. After I failed to get into medical school, I could have gone back for my graduate degree right away. Instead, I decided to join the work force to earn some money and gain life experience. This allowed me to pay of the student loans and mature a little more. A few years later, I was ready to go back to school by taking advantage of the tuition reimbursement program offered by my company. In the end, I saved $36,400.
Worst Financial Decisions
1. Went to expensive college instead of taking the full scholarship to a very good state school
I made a several mistakes with respect to college as I per my post “7 Mistakes I Made When I Went to College.” As mentioned in the post if I went to the less expensive school I would have saved my parents about $20,000 a year. If we took that money and invested in the stock market, it might be worth about $265,000 today (at a modest 8% CAGR).
2. Didn’t having well-defined financial goals sooner
Since I started this blog, I developed better financial goals such as building $1 million investment portfolio by 2017 and saving $250,000 for our son’s college by 2024. Without good financial goals, I was prone to make mistakes as I have written in my guest post “12 Investing Mistakes I’ve Made (and How You Can Learn From Them)” at Get Rich Slowly.
3. Spent money on gets rich quick schemes and unrealistic businesses
In my quest to become richer, I bought several get rich quick packages like the one that tells you how to sell the get rich quick book to other suckers like me, or the one that tells you how to flip foreclosures with no money down. Although flipping foreclosures could be practical business for people who are industry insiders, it wasn’t realistic for a 21 years old guy with student loans.
I also made a rash decision and bought some candy vending machines. I went to the seminar, got all pumped up, and left my common sense at home.
I hope you enjoyed this post.
Here are the rest of the stories from the M-Network:
- My Financial Decisions: The Good and the Bad @ Single Guy Money
- One good financial decision and a whole lotta bad ones @ DebtFREE Revolution
- my least bad and least good financial decisions @ Plonkee Money
- 6 Financial Decisions - Don’t Learn The Hard Way @ Gather Little By Little
- My Best and Worst Financial Decisions: They Might Surprise You @ Being Frugal
- Best and Worst Financial Decisions: From the Trenches @ I’ve Paid For The Twice Already…
- My Best and Worst Financial Decisions @ ChristianPF
- My Best and Worst Financial Decisions @ The Dough Roller
From around the web:
- Best and Worst Financial Decisions @ The In-Debt Net
- Financial Decisions: The Good, The Bad, and The Ugly @ Rather-Be-Shopping.com Blog
- My Best And Worst Financial Decisions @ Finding Financial Peace
- Bad decisions I’ve made in investing @ MyInvestingBlog.com
- My Money Decisions: The Good, The Bad, and The Ugly @ Aspire 2 Wealth
Carnivals:
- This article was featured in the Carnival of Money Stories #30 hosted by Free Money Finance. For more information please visit the Carnival of Money Stories.
All posts by Pinyo
What is it about moms?
I think they just keep things in perspective. That’s what my mom always says about big houses… bigger mortgage, more property tax, more heating costs, more furnishings, more vacuuming!
Great post! We’ve also made the mistake of not having good financial goals. We’re finally coming around, though.
Candy vending machines?
At least it’d make a good story.
Congrats on getting your house at such a good time!
@mariam - until very recently, I was still complaining about missing the opportunity to own a million dollar home. But with the baby on the way, I am really appreciating her foresight.
@Lynnae - I think your post is great too. Looks like we made similar mistake with regard to school. Oh well.
@Mrs. Micah - Yeah, embarrassing isn’t it.
I wish I could’ve gone the “tuition reimbursement” route for my M.S. Sadly, a couple months after I joined the organization, they did away with tuition reimbursement. That cost me about $17,000 or so. Oh well, at least I didn’t let it get me down. I got the degree on my own, and two weeks later left that organization for a better one!
@Kev - that’s not a bad route either if you can get a better job right away. Doing it my way, I was obligated to stay with the same company for at least 3 years — but I got several promotions through the years so it was worth it.
I went to state school for both undergrad and grad school. Best decisions I ever made. Saved me a tremendous amount in financial aid and I still received the education I needed.
I’m very glad I didn’t buy a house last year…the housing market is very bad in my area..and I don’t foresee a rebound for 2-3 years
Thanks for information about advantage of tuition reimbursement from work to get a Master Degree.
I just can’t believe how much University cost in the USA. Here in Australia for example, my wife finished here 4 year double degree (Commerce & Information System) at a cost of $20,000 (total) a few years ago and with further qualification (CPA) paid by her employer. Not only that, but she didn’t even have to pay the $20,000 upfront, a % being taken out only once she started full time employment (with an interest rate equal to inflation only). The cost of saving these huge sums for your children’s education is really noble, hopefully they will be better options at this time (or like someone said, they will be able to get a scholarship).
@Jon - Australia just sounds better and better every day. I have a friend who left the U.S. about 4 years ago and plan to permanently stay in Australia. I agree, we are paying ridiculous amount of money here.
I think my best financial decision was buying our house when the market was still reletively low back in 2001, it has more than doubled in value. Worst financial move was probably not placing my savings in a higher interest account
I’m looking at doing some vending machines myself. Curious why it didn’t work out? What kind of machines did you do?
@Andy — I am referring to small candy vending machine. I didn’t do proper market research to see if stores within my neighborhood already have machines or not, and I didn’t assess if they would be receptive to having a machine there.
That’s the same thing I’m thinking of doing. I was going to find out the cost of the machines and only purchase one if the store agreed to do it. The only way I could see you losing money would be if you purchased the machines up front. Or I guess if the kids don’t buy candy.
There is a coin operated laundry near by that I’m hoping will go for it. I noticed the parents frustrated with the children and nothing for the kids to do. I was originally thinking an arcade machine, but decided against it for various reasons. I figure the parents should have a bunch of quarters handy this way too
Do you think I’m wrong about this? Thanks for the fast response btw. Love these ideas and advice I’m finding.
@Andy — If you already have a route scoped out and stores agree to place your candy machine, I think you should go for it.
“kids don’t buy candy” — that’s low risk.