Financially speaking we all have made mistakes. Even me! I made some whoppers. I'm still human, and from time to time react with emotion instead of logic regarding my favorite green paper.
I'm going to share four of those whopper mistakes I made early on. My hope is that you will avoid these too.
The problem with money mistakes is that they last a lot longer than we think.
Here are the 4 things I did that made me poorer:
1. Buying new cars. I talked about why I'm not buying a new car anytime soon in a previous article. I bought new cars because I foolishly thought that repairs would cost me more. Plus I didn't want to break down somewhere. A new car has more cost than just the payment. Which can make you poorer to begin with. There's higher insurance and taxes too. Buying a new car had other ramification, depreciation was the biggest. I'm more interested in getting a solid used car now with reasonable mileage. Of course buying it outright!
2. Not making savings a priority. Early in my adult life I felt like I was just making ends meet. I didn't feel like I could save any money. Boy did that decision make me poorer. The reason was that I was overspending, using credit cards too much and buying expensive new cars! It was not a priority. I've since learned that cash reserves, retirement and all other goals should be allocated before all spending. I now do it automatically. The decision is made for me before I get a chance to think too much. Savings needs to be a priority. Save your money and one day it will return the favor.
3. Credit cards. Yep, I was a credit crackhead! I loved using the little plastic devils! I would use them because I didn't have the money to buy what I wanted. Why was that? Because I overspent and didn't save any money. Seeing a theme here? Going into debt with credit cards is way too easy. One way to avoid this issue is get a card that requires you to pay off the entire balance every month. Remember, in the old days people actually paid with cash? There's something about watching real greenbacks leave your wallet, that helps with overspending. It's tangible not funny money.
4. Overspending. Gosh where do I start. Overspending from credit cards and buying new cars took me down the path of not saving money. I was spending too much. I no longer try to keep up with the Jones'. In fact, my wife sometimes accuses me of being too Scrooge-like. I'm not an advocate of strict budgets to combat overspending. I don't think they work. I prefer using percentages for budget categories. Limit certain categories to a fixed dollar amount instead. Stop buying stuff just because it's a deal or on sale.
So those were my whopper mistakes. It cost me a lot of the green paper. Now I do make savings a huge priority and I don't buy new cars. In fact, I haven't had a new car in 10 years. I still struggle with overspending with a family. Families always need something. I'm sure you will agree.
Careful with these four dumb things...they will make you poorer. If you like this article, read more here.