If you’ve read my About page, you’ll see that I do not claim to be a wise person. I also do not claim to be a financial genius since some financial writers don’t seem to know what they’re talking about.. On the other hand, I believe I’ve learned a great deal from my many mistakes and I hope that I can share these with my readers with the hope that they can avoid those same mistakes. To that end, I’ve compiled a short list of dumb decisions that cost me over $1,000. If I set the bar any lower, we would be here all day. There was a period of time in my life that I lived on the corner of Dumb and Stupid.
I let my health insurance lapse between jobs and it cost me over $2,500 when my wife had to have emergency surgery one day before my new health insurance kicked in. It would’ve cost me much more than that as I mentioned in this post, but a kind, though mysterious person stepped in and paid $10,000 towards our hospital bill (but not the doctor’s bill). I thought I couldn’t afford to keep health insurance between jobs because it was “too expensive.” It would have cost me much less than the $2,500+ in doctor’s bills.
I quit college too early and didn’t finish my degree but still had $20,000 in debt. I managed to get that paid off, but went BACK to school and paid an additional $15,000 to finish. When I started back in 1984, tuition was $594 per semester. When I finally finished, it was $300 per hour. Most courses were 3 hours and it took me another year and a half to get finished. Later, I went on to get my MBA.
I sold a Buick Century that my wife had when we got married. After a few years, it was running very poorly and I couldn’t figure out why. In good condition, its book value was around $3,000 but I had too much pride to ask friends or family to help me figure out why it was running so badly. I listed it in the newspaper for $1,100 and got a bite from a guy who wanted to see it immediately. He cranked it up and listened. Then he offered me $1,000 and I took it immediately, getting the paperwork and signing it as fast as I could. He thanked me and continued to tinker on the engine. He popped off the distributor cap and said, “Hey, the rotor is hitting some of these contacts twice.” He took a screwdriver and bent the contacts, put the cap back on and started the engine up. It ran perfectly. Then one of the guys with him quietly told me that the buyer was from Michigan and worked on the assembly line that built Buick Centuries. I lost at least $2,000.
My credit had further deteriorated several years later and I had to buy a new vehicle for my wife. I bought a used minivan but had to get the dealership to cosign with me. They added all kinds of credit insurance and fees that cost me an additional $1,400 over the cost of the vehicle. They also charged me 18% interest on the vehicle and I paid for it over 60 months. Loss of at least $1,400.
My credit had improved quite a lot by the time I bought our second minivan, but I was still desperate. The old one needed several thousand in repairs so I traded it in. The contract was for 60 months and was at 12.5%. I balked and the finance manager lowered it to 11% on the spot. When I signed the contract, the finance manager said his printer was not working correctly but he wanted to “get this deal done.” So, I signed a contract that was not lined up properly and thought that was it. A day later, my wife went out of town in the new vehicle and the finance manager called me saying that the financing company rejected the contract because of its alignment and that I needed to sign a new one. He had changed the interest rate back to the higher rate and I didn’t catch it until the payment book came in. By then, it was too late and thanks in part to a crooked finance manager at Susan Schein Chevrolet, I was stuck paying more because I was in a hurry and didn’t read the fine print! Loss of $1,100 over 5 years.
Another vehicle instance that cost me a great deal of money was when I bought a Ford Bronco for $5,350 just because I liked it. I overpaid because I just liked it. Three and a half years later, I sold it for only $1,500 because I just didn’t like it (or want it) anymore and it needed some engine work. Loss of about $2,500.
Three years after I got married, I started a shaved ice business and spent about $20,000 to get it up and going. It made a lot of cash profit ($100 to $300 per day), but I somehow used that money just to live on and generally just blew it on eating out, and on other poor financial decisions. At the end of the season, I sold the business for only $5,000 and the tax consequences ate my lunch, and breakfast, and supper, and snacks. I really couldn’t put a price on how much this dumb decision cost me.
After the birth of my first child, my wife and I decided that we needed more room than our two bedroom apartment had so we decided to rent a house. Our rent was only $335 per month and we moved into a house that rented for $440. The house was farther away from my work and the rest of my family so my fuel expense was higher as well. Over the next year and a half, it cost me in excess of $1,500.
Revealing these dumb actions is one thing, but it’s more important to examine the conditions that got me in these bad positions in the first place.
- Pride. This is probably the number one problem that forces people to make dumb decisions. I had too much pride to ask for help, too much pride to live in an apartment when my friends were living in houses, too much pride to ask for help when I was duped by the car dealer. Back then, I would have never sought advice on selling a vehicle. I thought I knew what I was doing in every circumstance. Today, I know better.
- Selfishness. I wanted to acquire things for no other reason than I just wanted them. Buying the Bronco, blowing the cash from the shaved ice business, buying those vehicles even though I was getting taken to the woodshed.
- Impatience. I was impatient in finishing school and wanted to get out and make some real money. Impatience caused me to abandon school in favor of working at a job I really didn’t like. I was too impatient to wait it out, put my nose to the grindstone, and work to finish what I started. If I had learned delayed gratification, I would have been so much better off.
- Ignorance. I was completely unprepared for the issues surrounding the need to continue medical insurance. I was completely ignorant on how just a few points in interest could cost me so much money (pride kept me from admitting it).
The first step toward making financial progress is admitting that you need the help in the first place and, although I can admit it today, back then pride, impatience, selfishness, and ignorance ruled my day. I hope that I have learned something and I believe I have. The truth is, these are just the short list! I could literally go on and on, but the important thing is to recognize the underlying reasons we make poor decisions in the first place. If you don’t correct those, you’ll make the same bad decisions over and over again.
Thanks for reading.