3 of My Biggest Financial Mistakes and What I Learned From Them

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Unlike many others who simply prefer to brag about their victories, I also like to brag about my defeats. We are all human, we all make errors that we learn from.

My mother warned me with facts, but I ignored her. With her notepad, pen, calculator in hand, she’s constantly on top of things and can give you the lowdown on what to expect. Coming from a country where such benefits are not available, you can “own” almost anything you want by signing a piece of paper, it appears like you are living the American dream. Unknowingly, you’re tying your time to the foot of someone or the bank.

I’m going to tell you straight up what I did wrong before I started my FI adventure plus what I learned from them:

Prioritizing The Needs Of Others

First, Cosigning a mortgage

This was my one of the worst nightmares. My friend had the financial resources. I had the credit needed for the mortgage approval. I didn’t hesitate to cosign with him because I knew he had always been a man of his words.

After 2 years of being a cosigner, the goal was to refinance then remove my name from the loan. Well, things didn’t go as planned. In that same year, he was seeking a new job. I recall him telling me about it. Again, my emotions got the best of me. I rationalized that he must be dealing with more serious issues than I am, so I’ll let this one go.

Now going on 6 years, I started getting phone calls, emails from the lender indicating that I have an outstanding balance. It’s been 120 plus days since my last payments. The first time I ever saw the word “delinquent” on my credit report.

Anyway, 10 years later; we relocated from the city to the suburbs The Wife began to put pressure on me to buy a house we could call our own and stop spending our hard-earned money on rent. I needed the mental push. That’s when I had a serious discussion with my friend. As result, I’m now mortgage-free.

Second, using my Credit card

To help a coworker purchase a keytar was my first credit card lesson. That piano-keyboard combo cost me around $800 from GuitarCenter, it was the most expensive purchase I’d made on my first credit card, which I paid off precisely 17 years later last month. He simply reimbursed me only $100 and left the job two months later. I haven’t heard from him since.

Lesson Learned, never cosign anything financial for anyone, no matter how close you are to them, because no one can forecast their financial destiny. It will also have a significant impact on your financial situation. For example, other loans you seek for may or may not be approved. If you do, they will have a high interest rate. Most of the time, you’ll wind up hurting yourself, ruining valuable friendships, and possibly losing your family.

Overall, don’t be one of those people. Listen and learn from anyone with a proven track record, rather than waiting 11 years as I did to get out of this problem.

Purchasing A Brand New Car

Before buying a new vehicle, I wish I was introduced in the FIRE community. I understand that this is one of the most typical financial follies made by young people and others who are not financially knowledgeable. Oh, my gawd! That $19400 VW Jetta from 2006 comes to mind. I’d go months without eating out, make my own coffee, pack my lunches from home in order to save up enough money for that car. It took me over a year to save that much money. I was still in college and living with my parents at the time. Oh, yeah! I’ve also terminated my gym membership.

My transmission failed four years later. I wasn’t concerned because I assumed I was still covered under the manufacturer’s warranty at the time. Unfortunately, it had already passed its expiration date a year before. At the time, I was quoted $4500 for the transmission alone, plus up to $1500 for labor, not including tax.

Lesson Learned, Now that I think about it, I’m glad I had to go through such a terrible financial lesson in order to learn the value and contrasts between asset and liability. Consider what would have happened if I had put that money into Apple [ticker: $AAPL] stocks 15 years ago.

I’d be sitting on a $1,457,959.16 [34.28%] profit.  I’m not saying I’ll never make the sacrifice of buying a new car, but it’s not going to happen anytime soon.

Returning To School

I could have put this at the top, but I didn’t since I never turn down the opportunity to learn new skills; yet, I regret doing so to please my parents. If I could go back in time, I would not have taken out a loan for a graduate degree that I never finished and am still paying for today – at least not right now, because student loan repayment has been suspended until January 31, 2022.

Lesson learned, you will reach a point in your life when you must determine what you want to do with the remainder of your life. A college diploma is no longer the only means to make a decent living. There are so many side hustles that don’t cost much to start but can pay off handsomely if you put in the effort.

Related: 10 Ways For Paying Off Student Loans Quickly

In Conclusion, I Do Not Regret My Financial Mistakes.

If I had just listened to my mother, I could have avoided these financial disasters. It’s critical to focus primarily on the numbers and to keep emotions in check.

I no longer regard them to be honest mistakes, but rather life lessons. I’m glad that many of them are only temporary downturns.

Voilà! The top three financial mistakes I made. Have you done any? I would like to hear your stories.

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