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My Dumbest Purchase Ever And Lessons Learned

March 11, 2008 by Pinyo.

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.

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:

This article was featured in:

The Carnival of Money Stories #51 hosted by Life Lessons of Military Wife. For more information please visit the Carnival of Money Stories.

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15 Comments

FourPillars, 11. March 2008, 6:35

Wow, that’s a good one.

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

Mike
Mrs. Micah, 11. March 2008, 7:53

You should have bought one big vending machines that sells vending machines. Set that up and leave it.
Fiscal Musings, 11. March 2008, 9:48

Interesting story with a lot you can learn from. Thanks for the mention as well.
Kyle @ Rather-Be-Shopping, 11. March 2008, 9:51

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?
Pinyo, 11. March 2008, 13:14

@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.
DebtKid, 11. March 2008, 15:34

Live and learn, right Pinyo? I’ll bet every time you see a vending machine you go “arrrghh…”
Pinyo, 11. March 2008, 16:17

arrrghhÃ¢â‚¬Â¦
PT, 11. March 2008, 20:34

Great way to present this Pinyo. I plan on sharing my story soon.
Mike, 11. March 2008, 21:54

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

And thanks for the mention!

Mike
Pinyo, 13. March 2008, 17:08

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

@Mike - No problem.
Amanda @ Me vs Debt, 14. March 2008, 9:10

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!
Pinyo, 14. March 2008, 9:13

Yep. Always better to learn from other people’s mistakes.
Adfecto, 18. March 2008, 15:02

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.
Pinyo, 18. March 2008, 15:45

Ah, MLM. I was seriously tempted too. Talking about the rich get richer scheme.
Veteran Military Wife at Life Lessons of a Military Wife, 19. March 2008, 5:41

This blog post has been included in the “Carnival of Money Stories #51″ at Life Lessons of a Military Wife. Hope you will drop by and read some of the many other wonderful entries received this week!