It is true that you learn from your mistakes, eventually. Sometimes it takes a bit longer. Sometimes you make the same mistakes several times before you finally realize the errors of your ways.

In business a personal reflections helps explain who you are. These stories may reflect experiences, feelings, or events. Writing this blog has allowed me to reflect on many of my different experiences with money. It has shown me the mistakes I have made. Experiences that I have learned greatly from.

I am writing some of the mistakes so that I can reflect on them in more detail. While I have made decisions that had changed my path in life, I will only highlight the financial mistakes I have made.

Leasing My First Vehicle

While leasing is not entirely a bad decision. It can benefit you if you intend to drive less or if the lease payments are lower than the loan payments. This makes sense in some of the more reliable models. Leasing my first vehicle was a terrible idea.

At the time, my vehicle was my father’s old Nissan Maxima with over 150k miles on it. The transmission was starting to fail and I was putting more money into it per month than what I would be paying for a car payment.

When I went to purchase a new vehicle I settled on a Toyota Tacoma with a $350 a month lease. The problem was that the company I worked for did not have fleet vehicles and I ended up driving it quite a bit for work. This was also another mistake as I should never have agreed to use my own personal vehicle as a work truck without some sort of compensation but this was my first real job out of college.

Within two years of owning the truck, I had already put 60k miles on it. I eventually refinanced it and had to pay more than the original payment but quickly caught up on what it was ultimately worth. The total mistake cost me an additional $10k over the price.

Upside Down on Vehicle

Keeping with the trend of vehicles. The worst purchase I made was a Dodge Caravan. We had just started an in-home daycare. Something that was fairly lucrative and my wife needed a larger car for transportation.

We were already upside down in our current vehicle. When we traded it in we had to take a hit on the loan. Then a new model came out and we lost another $8k overnight. All because of the stow-and-go seating.

When things made a turn for the worse with my wife’s health it led us to trade in the vehicle once again for a larger, shall we say impulse purchase. Trading up in an upside-down vehicle just crushed any type of equity we would have at any time in the ownership.

This was ultimately fixed when we declared bankruptcy, which sad to say is not one of the mistakes on this list.

Moving Before Basement Was Completed

There are a few things under this heading that caused a major financial mistake. First, we had originally decided to finish our basement to accommodate the needed space for the daycare. We were working with a contractor that also had children that needed daycare. Working out a deal on payment was a bonus.

The problem was that the daycare fell apart as soon as my wife’s illness started. Then we were left with an unfinished basement and no money to pay for the work. I did the best I could with the last of the work but decided to move out of state and never completed it.

With the unfinished basement and the fact that we moved out of state, we secured a realtor that knew it was being sold as-is. The neighborhood was still hot and so we thought we had no problem selling. Of course, our realtor was terrible and ended up scamming us for six months.

Not Trusting a Family Friend to Sell the House

Not only was this mistake hurtful to the feelings of our friend, but it could have also saved us money and led to the husband, who was a contractor, to help finish the basement.

We decided to use a local realtor which as I mentioned ended up scamming us, so we lost out on both situations. Quick info on the scam, he purposely withheld showing it and sold it to his partner at a lower cost. While I could not prove any wrongdoing, this was told to me by a reliable source.

We ended up breaking even on the sale, but it took us six months to sell while we paid two mortgages and left us with less money. Within a year the house doubled in price. This was a hard lesson to learn and one that I will not repeat.

Cashing in 401(k) to Pay For Mortgage

With the house not selling and my wife not working and a mountain of debt accruing we decided to cash in what little we had in the 401(k) to keep paying the mortgage.

Cashing in lost me my investments, cost me ten percent up front, and then an increase in our tax burden. Yes, we were able to keep and sell the house but the next year at tax season we put the amount owed on the credit card. This started the downward spiral of debt.

Within a few years we would have accrued $50k in credit card debt mostly in medical bills. It would have been easier to take a loan out of the 401(k) and pay back that amount, or even just avoid taking it out at all. We lost out on years of compound interest with that one mistake.

Using Credit Cards to Pay Medical Bills

To say that I had no idea what I was doing is an understatement. To say that I just reacted and did what I had to at the time may not be the best way to look at it. Reflecting on the choices I made some of the situations could have been avoided.

The biggest mistake was to constantly use credit to pay down our medical bills. When you are sitting across from the hospital administration clerk and they tell you either your wife is going to go to the state-run hospital or she can stay here for $2000 a week you just hand over your credit card.

Maybe I could have asked to be billed or found another hospital but there were not many choices for mental illness. This is a problem in our country and I will be writing about it in another post.

Prior to my financial instability, I had great credit. I was able to have an American Express card that allowed me to move the money into a monthly payment account. As I dug a deeper hole I kept pushing back the debt until eventually, they stopped me.

I was already $30k in debt just in American Express. Add on the Chase Visa, my Bank of America Visa, and all the rest of the cards I had, and that money hit $50k fairly quickly. The interest alone on these cards was all I could really afford and it kept me in debt until I declared bankruptcy.

Today I spend time negotiating with the medical providers if I cannot pay in full. Usually, I get a no-interest loan for the amount due and pay it over time. Recently I have built up my emergency account to take care of any medical events that we have.

Being Content With Mediocrity

I have written about investing in yourself previously. The most important thing you can do to increase your net worth is to increase your personal worth.

I stayed in a position for too long. I felt a sense of loyalty to a company that had no loyalty to me. Twice I went through salary decreases even though my contributions to the company increased their profits. I was making a middle-range salary for my position despite having 15 years of experience.

When I was offered an increase in salary to move to a new position in a new company I was wooed back through some smoke and mirrors. In the last few weeks of my employment, I watched some of my colleagues get laid off and more work was sent my way without an increase in pay.

The final straw was when I brought in $20 million in contracts and they still closed the office. I left to take a better job in a better organization and within the next five years, I doubled my salary.

Never settle for stability or mediocrity for a company that ultimately does not care about you.

Not Tracking My Spending

After the bankruptcy, we had a clean slate. The truck had a better rate and a lower payment. The credit cards were all closed out and canceled, and we kept all of our belongings. We were on our way to building a better financial future.

The problem is that even though we learned from our mistakes for the medical bills, we did not actually fix the underlying problem. We were spending too much and not saving anything.

I used an excel spreadsheet to keep track of my transactions but never actually created a budget to track my spending. We did not save any money during this time and years later we were right back into credit card debt. While this was not as bad as before it could have easily been avoided had we built a reasonable budget.

We ended up using credit cards again and not allowing for these transactions in our budget. We also were terrible at communicating finances and not only did this create friction in our marriage but also increased debt.

Starting my previous job I spent close to $1200 on new clothing. I bought dress shirts, slacks, and ties. All of which I put on credit. Had I budgeted or purchased it over a few months I would not have accrued more debt.

Purchasing My Latest Vehicle

I seem to have a trend in vehicles. When I started my last job I received a sizable bump in salary. I was driving a 14-year-old vehicle with 150k miles. Knowing that I would be earning a larger salary and could afford a better car I opted for one that I was interested in.

I wanted a small vehicle that I could also drive in the snow. Living in Colorado, I could have opted for a Subaru or some other used all-wheel-drive car, but I decided to check out the Mini dealer. That afternoon I was driving off the lot with a new car.

I did get an excellent rate on my loan at 1.9 percent but I also got locked into a balloon payment. While I do not drive often and keep below the miles the residual value would probably not equal what I owe at the end of the term. This has caused me to shift additional finances to pay off the car quicker.

Having this car loan and a new car is costing me $650 a month in a car payment. Utilizing the low-interest rate on a used car I could have reduced that to around $400 and saved the extra $250 per month.

Learn From Your Mistakes

Financial literacy is a necessary skill set in life. It should be taught early to avoid mistakes. However, when mistakes are made, learn from them, and change your habits. These are the financial mistakes you should avoid.

Since my financial setbacks, I have adjusted my outlook on savings. I have built a realistic budget, I track my spending and I spend less than I earn. I am still digging out of debt but I am on my way to financial freedom. I will no longer borrow from my 401(k) for any reason and have built up a reasonable emergency fund.