My Best and Worst Financial Decisions

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By Pinyo, on October 8, 2007

This 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.

NYC House Prices

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.

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Pinyo
Pinyo is the brain behind Moolanomy personal finance blog and a few other web sites. If you like this article, please subscribe for free daily email updates.

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15 Comments

  1. gravatar
    mariam
    October 8, 2007, 9:26

    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!

  2. gravatar
    Mrs. Micah
    October 8, 2007, 12:40

    Candy vending machines?

    At least it’d make a good story.

    Congrats on getting your house at such a good time! :-)

  3. gravatar
    Lynnae @ Being Frugal
    October 8, 2007, 10:59

    Great post! We’ve also made the mistake of not having good financial goals. We’re finally coming around, though.

  4. gravatar
    Pinyo
    October 8, 2007, 12:53

    @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.

  5. gravatar
    kev
    October 8, 2007, 15:43

    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!

  6. gravatar
    Pinyo
    October 8, 2007, 15:48

    @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.

  7. gravatar
    Raymond
    October 8, 2007, 21:50

    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

  8. gravatar
    Kassy
    February 5, 2008, 2:35

    Thanks for information about advantage of tuition reimbursement from work to get a Master Degree.

  9. gravatar
    Jon
    March 5, 2008, 23:13

    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).

  10. gravatar
    Pinyo
    March 6, 2008, 17:17

    @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.

  11. gravatar
    Make Friends, Earn Money
    May 26, 2008, 3:11

    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

  12. gravatar
    Andy
    October 22, 2008, 1:15

    I’m looking at doing some vending machines myself. Curious why it didn’t work out? What kind of machines did you do?

  13. gravatar
    Pinyo
    October 22, 2008, 9:58

    @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.

  14. gravatar
    Andy
    October 22, 2008, 22:51

    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.

  15. gravatar
    Pinyo
    October 23, 2008, 8:17

    @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.

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