My Dumbest Purchase Ever And Lessons Learned

Last week DebtKid, shared his dumbest purchase and offered his Nintendo DS Lite as a contest prize to one lucky winner. Everyone who shares their story has a chance to win the Nintendo DS Lite. Well, I am going to join in for the opportunity to win this little gadget. But more importantly, it’s a story I’ve been thinking about sharing anyway.

Nintendo DS Lite

I briefly touched on this story when I shared my best and worst financial decisions, but I didn’t share the details. I am going to do that in this post, but more importantly, the valuable lessons I have learned from that experience.

Free Seminar and Limited Time Opportunity

When I graduated from college, I didn’t get into medical school as I had hoped, and I felt lost. To make it worse, I didn’t have a real job to keep me busy. I was officially in a career limbo. As a result, I was on the prowl for opportunities, and found myself at a free business seminar one night. The presenters were from a company called Silent Sales Force. The presenters weaved together a very convincing 2-hour show and at the end offered all attendees a one time only opportunity to purchase their bulk candy vending machines at a deep discount. In my haste, I jumped right at the chance and bought 2 dozen units.

The Anatomy Of A Bad Decision

Let’s do a play by play look at this bad decision:

  • No business plan – I am sure you’ve heard it before: “He who fails to plan, plans to fail.” I went into the seminar cold. I didn’t know anything about bulk candy vending machines, or the business model that makes it work. Everything I knew about the business and these machines were what they told me that night.
  • No due diligence – I didn’t use my enthusiasm to do additional research on my on term. Is this a sound business model? Do I want to work with this company, or is there a better alternative? Are these machines the ones I need? Who are my competitors? Are local businesses willing to place my machine on their premises?
  • Impulse buy – No business plan, no due diligence, and I fell for one of the oldest sales gimmicks. I rushed into buying because the presentation made it sounds like a sure thing, and I was afraid of losing the opportunity to buy at a great discount. I let my emotion made the decision for me.
  • No self awareness – I was blinded by the promise of easy money. I didn’t consider my personality, or passion to be in this type of business. Do I really want to go around and ask other people if I can use the store space for bulk candy vending machine? Do I want to go around collecting money quarters, refill machines, and repair them?
  • No follow through – By the time I got these machines, the excitement wore off and I got a full-time job to fill the void. I let them sit in my house instead of doing something with them. I wasn’t motivated to follow through at that point.
  • No exit strategy or recovery plan – I was so sure this was going to work that I didn’t consider what to do if it didn’t. Since I bought these machines on “special promotion,” the company won’t take them back. I could have sold individual unit and get them out of my house (I did sell a few at a loss). Unfortunately, most of them sat in storage for nearly a decade before finding their way to the dumpster.

Lessons Learned

Overall, this experience taught me a few things:

  • When it’s important, start with a plan
  • Do your due diligence and seek independent source of information
  • Don’t rely on your emotion, or gut instinct
  • Be aware of your capability and respect your passion
  • Every endeavor requires discipline, commitment, and persistence
  • Always have an exit strategy and a recovery plan

In retrospective, I am glad I made this mistake early on. The experience taught me many things that helped me quite a bit over the past few years, and they will continue to benefit me for the rest of my life. I hope you enjoyed this story, the analysis, and the retrospection.

If you like reading about bloggers admitting their dumbest purchases, here are a few:

About the Author

By , on Mar 11, 2008
Pinyo
Pinyo is the owner of Moolanomy Personal Finance. He is a licensed Realtor specializing in residential homes in the Northern Virginia area. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, and financial literacy author.

Leave Your Comment (12 Comments)

  1. Pinyo says:

    Ah, MLM. I was seriously tempted too. Talking about the rich get richer scheme.

  2. Adfecto says:

    Live and learn. I still have credit card debt from my awful decision to try out Multi-Level Marketing. MLM can work for some people but I should have realize that it is nearly impossible to sell something when the target demographic is wealth 40+ women and I am a male in my 20’s. I had no credibility with my customers because of who I am so sales were very difficult (and I think I’m a pretty good salesman). If I’d done a proper business plan before jumping in I’m sure I would have realized this too. It cost me pretty big, but at least I can say that I learned a lot from my experience. Thanks for sharing.

  3. Pinyo says:

    Yep. Always better to learn from other people’s mistakes.

  4. Amanda says:

    Wow, I’m glad you posted this. Everybody makes mistakes – live and learn. Hopefully putting some of these things out there will help other people avoid (or at least think through) things before shelling out the cash!

  5. Pinyo says:

    @PT – Thank you. Let me know when it’s up. I’d like to read it.

    @Mike – No problem.

  6. Mike says:

    Good write-up on not what you did, but how you learned something from it ;)

    And thanks for the mention!

    Mike

  7. PT says:

    Great way to present this Pinyo. I plan on sharing my story soon.

  8. Pinyo says:

    @Mike – I rather not say, but it was a lot. I would have been better off with some BRK-B shares.

    @Kyle – I am not saying that buying the vending machines was a bad purchase. What made it bad was the fact that I have no plan, did no due diligence, didn’t follow through, etc.

  9. DebtKid says:

    Live and learn, right Pinyo? I’ll bet every time you see a vending machine you go “arrrghh…”

  10. Kyle says:

    Mike, I was wondering the same thing. Vending machines look like gold mines if placed in the right location. Why was this a bad purchase?

  11. Mrs. Micah says:

    You should have bought one big vending machines that sells vending machines. Set that up and leave it. ;)

  12. FourPillars says:

    Wow, that’s a good one.

    So how much did the machines cost?? (Inquiring minds want to know).

    Mike

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