I am the first to admit that I have made plenty of mistakes in my short 29 years on this earth. In fact I’ve always been the type to skip reading the directions and just try things until they work. That habit of mine tends to end up with me screwing up a few times before getting it right. I am nothing if not persisent, so eventually I seem to figure things out. BUT since this blog was created with the millennial in mind, I am going to share some of my biggest money mistakes in hopes that you can avoid making them too.
1. Buying a brand new car
Twenty two years old, just graduated from college 3 months earlier, why wouldn’t I buy a car even though I failed at finding a job (remember 2011? Ya..) I have always been a girl who knows what I want. I wanted a Chevrolet Volt. Buuuut that car was out of my budget so my dad talked me down to a Chevrolet Cruze. We stop by the dealership after lunch one day, I tell them everything I want. I definitely needed that moon roof +$2500, and larger wheels +500. And I definitely wanted new not used because I take care of my belongings better than most. That last statement is true six yearslater people still ask if my car is new, but true or not buying new is stupid. Do you know cars lose about 60% of their value in the first four years? I sure didn’t know that at 22. According to Kelly Blue Book mine lost close to 70%. Even in really good condition. I will never buy new again. Dave Ramsey believes that you should never finance something that goes down in value and guess what loses value at rapid speeds? Vehicles.
2. Living beyond my means
I just recently found old credit card bills I had filed away. Guess what was on them? Food, shelter, water purchases? Nahhhh. Clothes. Tons of them. Way out of my budget. I had developed a shopping habit that my new 30k a year income couldn’t support. I would spend $600 a month in clothing. Almost every item I bought cost upwards of $80 and trust me, my spending wasn’t helping me keep up with the wealthier of the world that I was trying to be like. It was just preventing me from saving for my future.
3. Not knowing how much money I made annually
For several years after college I worked odd hours, went to whichever business needed me (owned by family). I earned commission at one job and also worked as an independent contractor. I had no freaking clue how much money I made at the end of the year. I even got a third job for awhile. I remember sitting on my boyfriend’s couch in his nice house at 24 and wondering if I made as much money as him. I was renting a $1200/month apartment with my brother at the time and having to put any unexpected expenses on my credit card. The answer is no, I did not make more money than my extremely humble boyfriend who never pointed that out to me.
4. Not planning for taxes while earning a 1099 income
For someone that paid business taxes weekly I sure as heck had no idea what I was doing when it came to my personal taxes. I didn’t set aside any money to pay taxes on my 1099 income which usually resulted in me scrounging to find $1200+ or to dig deep for some tax write offs. Either way I just about lost my lunch seeing that figure doing my taxes.
5. Investing with my heart and not my head
I couldn’t let go of my business. I loved it and I kept putting money into it or not collecting my pay check so I could afford to pay its bills and my workers. Then I sat in my shower and bawled my eyes out because I was beyond stressed out. Had I been able to see past my love for the business I wouldn’t have kept investing my money into it and putting myself in stressful situations.
6. Trying to be more adult than I was
After college I moved back home because I didn’t have room mates to live with anymore. After about a year at home I was eager to move back out because I felt like I needed to be a grown up. What did that result in? Spending every dollar I made. Not saving a dime and again, lots of nights crying on the floor of my shower. I could have been getting ahead all of those years! My ROTH might have been opened before last year!
7. Not negotiating the price of things
I remember looking at places to rent with a friend and her mom wanted us to negotiate the rent. I was appalled. I would never do such a thing. Who negotiates rent? They are renting it for what they are renting it for. No questions asked. WOW. I still hate negotiating, but what an idiot I was. Her mom was a heck of a lot smarter than me! Negotiate every single cost you can. All they can do is tell you no!
If you forgot to negotiate your salary just like I did read about how to ask for a raise the right way.
8. Pretending like I knew it all instead of asking questions
I remember a gym member asking me about the deal I got on my car. I knew my interest rate because it was the only thing I negotiated, but I didn’t even know how long my loan was for. I knew I had put down the majority of the cost and only financed $11,000. I knew my monthly payments because I got those under $200 so I wouldn’t have any issues paying them. But not knowing the length of your loan? Isn’t that insane? But I didn’t read all of those papers. I was buying a new car and taking pictures with it and obviously baaaaallin! So much sarcasm in that last sentence. I was too prideful to ask questions and I had zero knowledge about buying a car because I had never bought one! I only admit these things now because I’ve come a long way.
9. Not setting financial or life goals
I would be married right after college to my high school sweetheart and I would make great money because I was smart and I had never not succeeded before. Right? My husband and I would obviously buy a house together, out in the country with a wrap around porch. I’d probably drive an Audi. Except, that in 2011 the markets annual return was -1.12% there wasn’t anybody buying a house straight outta college without mom and dad footing the bill. Oh and I had broken up with my high school sweetheart. Nobody to marry, no big girl job, no huge income, no clue what to do and absolutely no plan. At this point I had never even seriously considered buying a house because I never thought I would do it alone. The possibility of that didn’t hit me until about age 26 and at age 27 (when I snagged a decent job) my savings journey began. I wish I had set goals sooner. Career goals, financial goals, personal goals, anything! Perhaps I could have gotten started on them sooner instead of feeling twenty nine and terrified.
If you would like to get started with a budget check out this post:
I hope and pray that most of you have made better financial decisions than I have! If you’ll notice credit card debt or massive student loans weren’t an issue and for that I can only thank my parents. And the fact that consumer debt horror stories scared the crap out of me and I never got a credit card until 21 (and still pay it off each month). My real hope though is that someone out there reading this can learn from my mistakes and avoid making them! Live at home when you think you are too grown up, start saving for a house and retirement as young as you possibly can! Know what career path you want to take and pursue it relentlessly. Have a plan for your life and work hard to achieve that plan.
Until next time my friends