I’ve made a number of dumb, bad, financial decisions over my 50+ years of life. But the single, dumbest, financial mistake EVER… was buying a set of encyclopedias. I know what you’re thinking. Oh, that’s not that bad. At least encyclopedias are educational and you can get a lot of use of them! Yes. Yes, but…
Except for the fact that I was in my early 20’s, newly married, we had NO other furniture except for a bed, and the rest of the apartment was 100% empty. Why did I buy them? Because it came with a “free” TV, and I didn’t have one. And I bought these from a door-to-door salesman at an apartment complex. I spent around $1000-$1500 for them.
How bad can it be?
$1000-$1500 is a lot of money all by itself. To make matters worse, had I invested that money in the S&P 500, and re-invested the dividends every year, that $1000-$1500 alone would have grown too… wait for it… $20,000-$30,000 today.
So in the end, as of today, I spent $20,000-$30,000 on a set of encyclopedias… and a TV.
A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them.
John C. Maxwell
Financial mistakes are dumb now. Compounding makes them worse.
Mr. Hobo Millionaire
Minimize the financial mistakes you make over your lifetime. Don’t beat yourself up, but understand, financial mistakes compound. The money you lose from a bad financial decision is gone forever, and so is the compounding of that money. You must limit these bad decisions.
One other tip
One other tip that will save you way more than it hurts you is don’t answer the door if you’re not expecting someone, and don’t pick up the phone if you don’t recognize who’s calling you. This one decision will save you more than any “missed” opportunities. Sometimes what you don’t know can’t hurt you.
What about you?
What was one of the dumbest financial decisions you ever made? I’ll be outlining my full list in a future post.