When I turned thirty last month, I wrote out my thirty financial successes that had gotten me to this point in life, but I promised I would follow that post up with the flip side of that coin – the financial mistakes that also happened along the way.
Unlike some financial bloggers, I won’t tell you that I bought a fancy new car out of college or racked up thousands of dollars of credit card debt, because I didn’t (my parents would only pay a portion of my college tuition if I didn’t open a credit card – though I’d like to think I would have been responsible and not ended up in that hole regardless). Even so, there are plenty of missteps and lost opportunities that I kick myself about from time to time.
I tend to focus on the positives because I believe it’s important to focus on the successes and good things in your life, but that doesn’t mean I haven’t had plenty screw ups. In order to be real and transparent on this blog, I wanted to share my financial missteps over the years, because there have been plenty. If I could go back in time and let my 15 year old self know what mistakes to avoid, though, they would be these:
1. Not setting up at Roth IRA in my teens.
Even $10/week would have some serious returns in 15 years. Using the Bank Rate ROI Calculator, that $10/week from age 15 to 30 would now be worth somewhere around $12,443 based on just a 7% rate of return. Alas, I did not set one up so I do not have an additional $12,000 in my Roth accounts.
2. Spending most of what I earned through age 21.
I earned a bit of money through middle and high school, and I had temporary jobs during my college summers. While they didn’t make me a ton of money (and I did use that income to cover my books / sorority fees / random expenses during college), I didn’t save nearly as much of what I made as I could have. While this probably wasn’t a huge number in the scheme of things, since I did at least cash flow the college incidentals instead of rolling them into my student loans, I would have done better to invest even a small fraction of that money.
3. Buying a car at 19.
I did buy it in cash for $3,500, but I really didn’t need a car in college and could have held off until moving to South Carolina after graduation, so this was two years of car ownership that I really didn’t need. Between repairs and maintenance and gas, this cost me at least another $5,000 on top of the cost of the car itself. Granted, that car lasted me 7.5 years and a trip across the country and back, so maybe this one isn’t fair to be listed here.
4. Accepting the first job I found to supplement my post college internship.
When I made the decision to move across the country after graduation to be with my now husband, I luckily had gotten hired as a naturalist intern before I made the move, but it paid very little and was a temporary position. In order to afford rent and my student loan minimums, I needed to pick up a weekend job as well.
As this was 2009 and I was now living in a small town, job opportunities were few and far between. Feeling pressured, I took the first job offered. While working at Petsmart was by no means terrible, it paid just $8.50/hour. Looking back now, I’m almost certain I could have continued applying to jobs and found something with better pay. I only expected to be in the area for a year, so I didn’t make the effort, but it definitely cost me.
5. Not refinancing my student loans.
The interest rate on my student loans was 8.5%. It goes without saying I paid thousands of dollars and interest over what I could have had I refinanced them to a lower rate.
6. Never negotiating a starting salary.
Again, starting my career during the Great Recession where job opportunities were scarce meant that I felt I could never negotiate a starting salary. Women are also much less likely to negotiate a salary, and I have to admit some of this apprehension factored in as well.
7. Letting off the gas once my student loans were paid off.
I’ve talked about this a little bit before, but honestly this feels like one of my biggest financial mistakes. I did an incredible job of paying off close to $30,000 of student loan‘s in 3 1/2 years on a much lower salary and I have today. If I had kept up that momentum afterward, we would have a LOT more saved by now. I try not to beat myself up too much here, but the fact of the matter is that I’ve left tens of thousands of dollars on the table by easing up after my loans were paid off.
8. Barely contributing to an IRA.
My park ranger job is the only one I’ve had that offered any form of retirement account. I did contribute to that one, but because it was a lower paying job and I only worked it full-time for one summer, the total amount saved in that retirement account was not huge.
My current company has no 401(k), and I have been really lax about sending money to my IRA account. Tax reduction was a little bit of a motivator, but it was always too little, too late for the year. That and the money was sent to Edward Jones for far too many years. At least I now finally have a Vanguard account set up.
9. Succumbing to lifestyle inflation.
This one goes hand-in-hand with letting up after paying off my student loans. Once I didn’t have the direct incentive of avoiding high interest, I let myself feel like we had a ton more play money. I don’t necessarily have an issue spending more money than the absolute bare necessities, but I can honestly say a lot of that inflation was on things that didn’t really give us near the value that they cost. Since starting the no spend month back in November, we have slashed our expenses like crazy, but I don’t feel like we are any less happy. If anything, there is more contentment in reducing our needs and a definite satisfaction with the amount of money we are now able to divert to savings.
10. Not taking full advantage of my time before I had a kid.
Before we became parents, we honestly had so much time available in our days. Time that we could have used to cook more meals, do more car repairs ourselves, and generally find frugal analogs to many of our day to day expenses.
This also means we had more time to put into our careers, and me to my side hustle. Even an extra 10 hours a week could have been used more productively. I’ve never been a huge television watcher, but the hours I did watch could have been used to earn more income or reduce expenses.
Honestly, we felt so busy most of the time, but we had much more of it to ourselves than we realized. This is not to lessen the busy lives of people without children, but a reflection of our personal experience.
11. Spending way too much money in the first year of my son’s life.
The first year of being a parent was honestly pretty overwhelming for both of us. Adjusting to our new normal took a lot of effort – much more than we anticipated – so we spent quite a bit of money making life easier. This includes ordering things off Amazon, getting a lot of take out, and buying doubles of things so they wouldn’t get left at the wrong house (one of the very few downsides of having so much family support). I don’t regret spending extra money that first year because it really did make life easier.
Once we adjusted to life with a child though, we had also adjusted to all the little lifestyle inflations that had come with it. We ordered dinner out multiple times a week, I bought coffee and lunch almost every work day, and we went out to eat every weekend.
Life has settled down but we also just excepted the extra spending that went with it. If I were to do it over again, I would have filled our freezer with tons of premade dinners, and I would have jumped headfirst into mom meet ups instead of spending money at coffee shops and stores just to get out of the house. Once we got into the habit of spending so freely, it was a very, very hard habit to break. Even now, it is so easy to slip into our old standby of spending way too much money on food and drink. It would have been much better to have been more prepared and not go down that rabbit hole to begin with. But, like everyone always says, you can never be fully ready for kids.
12. Not purchasing a rental in the bottom of the housing market.
Buying our house in 2011 in the very bottom of the Seattle housing market was one of the best financial decisions we’ve made thus far. We were not in a position to buy another property right away, but we likely could have a year or two later. There were condos selling in our area for $60,00-$80,000 that would have been an absolute steal had we bought one then. Even if we decided we didn’t want to be property managers ourselves, we could have sold it now for some serious profit.
At the point properties come down significantly again, I’d love to get the chance to purchase a rental (I think). Though I doubt we will see quite the opportunities we did in this past downturn because of the combination of low prices and the lowest ever historical interst rates.
1. Choosing to finish high school instead of getting my associate’s degree.
My younger siblings choose to do what is called Running Start around here for their junior and senior years of high school, and they graduated high school with a dual AA degree. The cost has gone up a bit since we were in school, but in Washington State you can now be reimbursed up to $7,459.38 for the 2017-2018 school year.
I took the more traditional route and stayed at my high school the entire time, and while I did pass 7 Advanced Placement classes, I had to take three years to graduate instead of just two. While this is still ahead of most, it definitely cost me considerably more than if I’d cut out another year. I can’t fully regret this though, because I was able to experience a real freshman year at college, I joined a sorority, played on the varsity softball team, and all around had a very full college experience. Had I come in as a transfer student and a junior, I would have missed out on much of what made my college years so wonderful.
2. I chose a private liberal arts college to attend instead of an in state school.
I probably could have graduated close to debt free had I chosen a public, in state school. However, I would never have played softball or joined a sorority, or gotten all of the positive experiences a very small school (and very small class sizes) provided for me. Had I graduated with $50,000 – $80,000 of student loan debt like many of my peers, I probably would feel differently, but since I kept things reasonable, I’m very glad I went to the school that I did.
3. Not picking a high earning career (not a doctor, lawyer, tech, engineer)
Some of these careers start out with a higher entry salary than I do now, most of a decade into my job. However, I also love my job and don’t plan to quit once I hit financial independence – something that many of these high earning careers seem to be missing. I’d rather enjoy my 20s and 30s in a career that I find fulfilling and meaningful, rather than waiting until I retire early for my life to start.
4. Getting pregnant at 26.
Pretty obviously, having a child is expensive, no matter what way you look at it. Getting pregnant in my mid-20s has seriously impacted my career and life – but I wouldn’t change it for the world. I love that my son has such a strong bond with his grandmothers and great grandmother, and that they are all healthy and able to care for him every week. If we waited another 10 years, that may not be true. Plus, we’ll be empty nesters at 45, which is pretty freaking awesome, if you ask me.
5. Cutting back my hours
Like #4, cutting back my hours to spend more time with my son has a very high cost to our net worth and total earning potential – more than any one of the mistakes I’ve listed above. It is also one I have not regretted one day since I made the switch.
It may be a little frustrating looking at my mistakes over the years, but I realize we’ve mostly made some really right decisions. The fact that our incomes are not in the six figures and we can’t turn around our spending and reach FI in 3 years sometimes feels like we’re being left behind, but I don’t regret the big choices we’ve made, because they make up the life we have.