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GOLD! What Are the Dumbest Financial Decisions You Have Ever Made?

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JScott

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Not dumb, because it was the right decision at the time, but...

In 2006, my friend and I both got job offers at Facebook. I would have basically been his boss.

He took the job. I took a different job.

Six years later, he retired with a little over $50M.

I didn't make $50M at the job I took... :rofl:
 
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steve schweitzer

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By far and away the worst financial decision I ever made was relying on eBay as a selling platform. When I sold my auto repair and restoration business in 2004 I started selling vintage used car parts on eBay full time.

This was basically like printing money as everything I listed (it was auctions only in those days) got sold, usually on multiple bids, for top dollar. Keep in mind I had been in the vintage car business for 20 years at this point and was well versed on the value and target market for these items.

Fast forward a couple years and everything is going great, making excellent sales and very very profitable.
I decided I needed more inventory and I was able to buy a HUGE inventory (like a 30 year collection). This was a very expensive purchase and I borrowed the money for this.

I also had purchased over 100 vintage parts cars (on borrowed money) and had a small salvage yard to pull parts from.

I also added 2 people to the staff, including a person dedicated to making ebay listings and a dedicated packaging and shipping guy.

I was relying on eBay almost exclusively and this was a REALLY bad move. Only a couple months after I get this inventory eBay sales pretty much died. Also at pretty much the same time eBay made us take our phone number out of our listings and this greatly affected our sales. We went from the phone sales being 10 - 20 items per day to basically nothing.

I found out through the sellers forums and other blogs that eBay had changed their algorithm to basically hide small sellers favoring the big boys (Diamond Sellers). The combination of these 2 thing spelled disaster and I was forced to let everyone go and do everything myself as there just was not enough sales to have staff.

I am STILL paying for the huge loan I took out and figure this "adventure" cost me well in excess of 1.5M, including my lost time as I worked for basically free for years to just pay this loan.

I am just now starting to get back on my feet with another business but that eBay adventure was an absolute disaster financially.

The lesson is NEVER EVER give up control of your sales process (the commandment of control) to a 3rd party or you are just basically their employee and they can shut you down (fire you) on a whim.

I am now back to the business of restoring and repairing vintage musclecars and am SO GLAD to be done with eBay.
 

monfii

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I will start.

1. I sank 80% of my net worth into stocks in May 2019, and sold when they bottomed in March 2020, 2 or 3 days before the Fed rolled out QE. Then I bought options with the remaining money I had left, and lost everything.
Lesson: read about the financial products you are buying, about the psychology of investing, and learn how the economy works, the relationship between central banks, governments, stock markets, and the value of currencies. Don't get financial advice from Reddit.
Ultimately, losing all of that money taught me a bunch. I was happy to make the mistake at 24 as I will not make it again.

2. I bought a bunch of stocks and other assets (BTC, Tesla, Fiverr, Xiaomi...) between 2017-2019 when they were cheap and sold them after 2-3 months every time because "tHeY wErE gOiNg NoWhErE".
Lesson: same as above + be patient and don't invest rent money + contrarian investing works (if people talk about it, it's already too late. Look for what no one speaks about).

3. I didn't work during the first 3 years of my bachelor's because I had to learn a foreign language and go drop resumes, which I was both too scared and lazy to do. I did get a job eventually, as a waiter, and was fired after two weeks. I didn't pursue further.
Lesson: you only get out of something as much as you are willing to invest + not earning money kills self-esteem.

4. I bought around a dozen of plane tickets without checking the dates properly and had to pay to change them/cancel and buy new ones.
Lesson: check better and focus.

5. I negotiated my salary...down. I felt the rate I was earning was too high and put too much pressure on me to deliver quality I wasn't sure I could deliver. I negotiated my salary from 11 euros/hour to 9 euros/hour. I was 17.
Not to brag, but as it turned out, I ended up being the best student the manager ever had in 20 years and remains the only one he ever gave a bonus to (20 euros).
Lesson: you grow when you are under pressure and required to get out of your comfort zone and do something you have never done. Making mistakes is ok even when you get paid. Don't solicit salary based on your assurance, but based on what the market is willing to pay you and the size of the problem you solve.

6. I bought a bunch of stuff under an emotional state (Gary Halbert, I think, talks about not making decisions when you are angry, hungry, lonely, or sad) that I ultimately regretted buying. One of them was a ski-trip for 500 euros that I managed to resell to someone else eventually, but what a hassle has it been.
Lesson: don't buy a bunch of stuff in an emotional state, and make your financial decisions in the morning, not at 1AM.

7. @Bekit's story made me think that I also did the same with bikes. I bought random bikes thinking I'd flip them, while I had no bike repair training lol. I ended up selling them after 2 years or so, for the same price I had bought them at.
Lesson: learn how flipping works before doing it.


I certainly made more. I'll add them as I go.
 

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Bekit

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I was at a yard sale back in 2015 and they happened to have a car for sale. It was a really clean Toyota Camry for $3,000. I forget the exact year and mileage, but it was something like a 1999 with under 100,000 miles. I was like "OH WOW! That's an AMAZING DEAL! I'm going to flip this car and sell it for $4,500!"

I didn't have a clue about how to flip cars.
I didn't have a mechanic look at it.
I don't personally have ANY knowledge about how to evaluate a car.
I didn't even do any online research on vehicles of a similar make, model, year, and mileage to see what the "going rate" was.
All I did was drive the car around the block.

I went to the bank and withdrew $3,000 and handed it to the people and they signed the title over to me. Woo hoo! This was going to be amazing!

The next day, I took some beautiful photos of the car and posted the ad on craigslist.

The day after that, the driver's side window rolled down and wouldn't roll back up. Fortunately, I had a garage where I could keep the car when it rained. Fixing the window cost like $150.

There was also a problem where the car made a sort of thumping sound at higher speeds. Someone told me that the tires had flat spots on them from where the car was sitting so long. Hmmmm....

I showed the car to a few people and they all brought a mechanic with them to check it out. (I started thinking, Oh. It seems like people always do this when they buy cars. Maybe I should've. )

People would ask me hard questions like "How long have you owned it" and "Why are you selling it" and I ended up looking super sketchy because I didn't want to admit that I had bought it solely to flip it. But I had obviously owned it for less than a month because it still had temporary tags on it.

Then, a few people reported the craigslist ad as a scam and my ad got taken down. I didn't understand why this had happened, but now I didn't have any more leads to look at the car.

I ended up selling the car to the last guy who looked at it. He offered me $2800 and I took it. By that time, it was a relief to just have it gone.

So that was a failure. I chalked it up to a $350 lesson in why you should at least do a little bit of research and know what you're doing before you go and try to do something like flip a car. And as a girl who is mechanically clueless, I concluded, "Why bother? I'll just focus on making money in areas that I understand." LOL
 

thechosen1

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Probably when I ordered 200 units of a product I had a "hunch" would sell well.
I've sold about 20 of them, but it's been 2 years. The rest are in my parents' garage ...
 

MJ DeMarco

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Oh boy, I have a good story -- one that happened quite recently.

I'm still in the middle of verifying it was, in fact, a dumb decision.

Will share next week...
 

Private Witt

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When I first heard of this magical coin that would make it easier to deposit to play poker in 2011. Remember buying my first BTC when under 5 bucks and started to poker on Seals with Clubs. Quite a few $200 to $500 dollar pots were played, never would imagine those 100 coin pots would be worth north of 5 million, but never thought twice it was an investment those early days, just an easy way to play some poker.
 

MJ DeMarco

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Well I avoided a pretty big mistake here in launching this service...


In doing research for a service provider to handle this project, I researched several firms -- the first one a joined I spent $1,400 on only to learn that it did not fit my needs at all -- it was more suitable for a local restaurant who wanted to message customer's about free drinks or discounted pizzas.

Luckily I was able to get a refund on it once I learned it would have cost me $65,000 a year to do what I wanted to do.

:jawdrop:
 

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Ing

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I don’t like to admit that.
But in 2011 my 10 year old son was exited by a new thing called Bitcoin. I refused to see that legit, but as a father / son project I bought 5000 Bitcoins at ONE €.
In 2012 I sold them at a profit of 500%.

I d like to cry....
 

JScott

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He got $50M working for facebook? Did they give him stocks?

Yes, employees receive stock options. Because he started relatively early at the company (long before they went public), he got a lot of options at a very low strike price. When they went public, his options were worth a lot of money.
 

steve schweitzer

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This would make another great thread like @monfii said.

I think the other important lesson here is something akin to "don't test the depth of a river with both feet."

The business was going phenomenally well, but maybe the huge 1.5M move was just a bit too much. If it is possible to do something like this in chunks, one step at a time, that's better.
Hello and thank you for the reply.

Just to clairfy, I did not take out a 1.5M loan. The loans for everything totaled a little over 500K and at that point I had been in business close to 3 years with great sales and over 60% margins so I was not just "testing the water".

The 1M additional I referred to was my lost time for close to 10 years of this disaster.

I could not just "walk away" from this as a stupidly pledged my home, property, tools and most other assets as collateral for this loan.

When I tried to get the bank to work with me they said pay the loan or loose your property. I pretty much had no choice except to just work constantly selling parts anywhere I could for whatever I could get out of them. I was also doing repairs on vintage cars to help out, although not devoting full time to this yet.

I finally was able to build up enough business in my classic musclecars restoration shop to completely stop with the parts business and devote full time to the shop.

Now I am restoring HIGH END musclecars and have a year long waiting list.
 

Kelvin Fernandez

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When I first heard of this magical coin that would make it easier to deposit to play poker in 2011. Remember buying my first BTC when under 5 bucks and started to poker on Seals with Clubs. Quite a few $200 to $500 dollar pots were played, never would imagine those 100 coin pots would be worth north of 5 million, but never thought twice it was an investment those early days, just an easy way to play some poker.
I did the same. In 2009 I had just moved to Texas and was too depressed to go to school. I remember surfing the web all day looking for ways to make money online. In one of those blogs there was mining bitcoin on the list. So I downloaded the entire bitcoin blockchain on my cheap walmart laptop and started mining it on my laptop. I was making 1 bitcoin a week mining. But I had to keep the laptop on all day and night.

I remember getting annoyed with it because they weren't worth much so I deleted the wallet from my computer. Those few bitcoins that I mined in '09 would've been worth $100k today. I don't regret it because you just didn't know at the time what exactly Bitcoin was and the potential it had. Just like the guy that spent 2000 bitcoins on a large pizza.
 
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biophase

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Hmmm... this thread forced me to try to remember a lot of stuff that I’ve forgotten.

Invested $5k in a mall franchise that sold fake celebrity jewelry, wish I could remember it’s name.

Invested $20k in what ended up to be a real estate ponzi scheme. I got lucky because I withdrew my money 2 months before it imploded. Google Radical Bunny.

Invested money into 2 residential lots in St. George Utah. Eventually sold them but lost around $30k.

Bought new construction home for $340k, when it was completed it was worth $450k but builder had a no sale clause for one year and I also didn’t want to pay the taxes so I hoped to keep it 2 years. Ended up getting foreclosed on.
 

MJ DeMarco

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Upgrade to GOLD.

Dating a 'hitchhiker' as MJ puts it in TMF, cost me £20k+

Oh no, care to tell? No worries if it is too painful.
 

ElleMg

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Oh no, care to tell? No worries if it is too painful.
It's not painful but I don't think there's much value in the story

Referencing the fastlane distinctions from the "you deserve!" chapter, this is the type of guy I was dating:
Hitchhikers assign control over their financial plans to others effectively introducing probabilities to victimhood. The Law of Victims: You can't be a victim if you don't relinquish power to someone capable of making you a victim. Responsibility owns your choices. Taking responsibility is the first step to taking the driver's seat of your life. Accountability is the final.

At some point when you love and invest in someone like this there's almost a reversal, to quote Robert Greene, "You can die from someone else’s misery—emotional states are as infectious as diseases. You may feel you are helping the drowning man but you are only precipitating your own disaster. The unfortunate sometimes draw misfortune on themselves; they will also draw it on you."

I'm glad I managed to take full responsibility and make the right decision for myself, and learn from it. It's not uncommon to hear of entrepreneurs being taken for a ride by greedy partners, I'm grateful I learnt the lesson now instead of when there's 10x or 100x the money at stake :happy:
 

CareCPA

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A good percentage of the "bad decisions" in this thread involve selling instead of holding...

Good lesson for all the younger investors out there -- the key to building wealth is time.

Buy assets and wait.

NOT buy assets and sell them.
Mine happened on the buy side....

I paid ~$24k for a "book of business" a couple years ago.
Ended up with just a couple thousand in revenue - a lot of the clients just ghosted during the transition.

This doesn't sound like a lot, until you consider that my gross revenue the year before the acquisition was only $150k.

I learned that you don't buy single-employee/owner businesses unless you're very experienced at transitioning them. Most of these are tied directly to the owner, and clients are used to dealing with that one person. Switching is painful for them, so it gives them an excuse to shop around or do the work themselves.
 

James Klymus

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1. Buying 3 bitcoin in 2015ish for around $3-400 a piece. I would have had an extra $180,000 in the bank today. Then selling at a loss a few months later, because i needed a downpayment for a car. Which brings me to...

2. Buying a new car while working at a restaurant and living with my parents. Terrible purchase that set me back years financially. I was more excited to buy the used toyota that replaced it, than I was to buy the new car itself.
 

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Brrr

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Two business ones:

1. I was buying a custom gelato cart for 5k euros to operate as a pop-up at this high-end venue. I didn't think it was worth spending 60euros to fly out and check it at any point during the build. When it arrived I quickly realised they had used terrible components that made it barely functional but drastically reduced the quality of the product. It also arrived 6 weeks late. Embarrassing for me and the brand although it looked the part at least.

Managed to barely recoup the money in the last couple of months in the season, but it's going to need replacing or improving already. Lots of lessons learnt on that one:
  • Know what you are buying
  • If you do not know, check with people that do know
  • Do not trust people if it is the first time you are working with them
  • Factor in some money wastage as "insurance" on your investment

2. Registering my business for VAT (sales tax) when starting the business when I wasn't actually legally required to. Basically I have been paying 20% of my revenue to the government for no reason for almost 3 years.

This was a big mistake, done for the right reasons. I didn't have enough money to start my business and was reliant on claiming back some of the costs of the machinery in order to do so, which I could only do by registering.

Lessons:
  • Have a good accountant
  • Have contingency money for things going over so you aren't making desperate decisions

Lots of other stupid small personal financial decisions involving buying stuff you don't need, spaffing money on nights out and losing and breaking things. I'm much better in that regard now.
 
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MJ DeMarco

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Here's one that someone posted here recently...



Ignorance of wash sales washes guy out...
 

Ocean Man

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Probably not cashing out on GME before the restriction of buying it. Could've sold for around $120k from initial investment of $20k. Back in Feb or Jan I believe? The first largest jump around $3XX.
 

JunkBoxJoey_JBJ

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Going back a ways but it sticks out as totally DUMB. Was going to try and do credit card processing sales at one time... bought a $500 watch to "look great and feel great" from a jewelry store I wanted to '"close" as their payment processor. "How could they not use me after this purchase". Riiiggghhhttt.

Sold the watch for $200 and never closed the deal. Had zero clue about a lot of things then... Erhh still? Hahahaha... this is awesome.
 

Timmy C

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Hmmm.

My most significant loss would have to be about four years ago.

I put down $40,000 on a block of land that I gave to a developer. I didn't know it at the time, but you could give them as little as $3000, and they would secure the land for you.

About six months later, when I went through a relationship break up, I lost it all as I couldn't afford to build a home on one income alone.

The developer didn't refund anything as it was written in the contract that they didn't have to.

Other than that, I haven't had any big losses.

Touch wood.
 

monfii

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By far and away the worst financial decision I ever made was relying on eBay as a selling platform. When I sold my auto repair and restoration business in 2004 I started selling vintage used car parts on eBay full time.

This was basically like printing money as everything I listed (it was auctions only in those days) got sold, usually on multiple bids, for top dollar. Keep in mind I had been in the vintage car business for 20 years at this point and was well versed on the value and target market for these items.

Fast forward a couple years and everything is going great, making excellent sales and very very profitable.
I decided I needed more inventory and I was able to buy a HUGE inventory (like a 30 year collection). This was a very expensive purchase and I borrowed the money for this.

I also had purchased over 100 vintage parts cars (on borrowed money) and had a small salvage yard to pull parts from.

I also added 2 people to the staff, including a person dedicated to making ebay listings and a dedicated packaging and shipping guy.

I was relying on eBay almost exclusively and this was a REALLY bad move. Only a couple months after I get this inventory eBay sales pretty much died. Also at pretty much the same time eBay made us take our phone number out of our listings and this greatly affected our sales. We went from the phone sales being 10 - 20 items per day to basically nothing.

I found out through the sellers forums and other blogs that eBay had changed their algorithm to basically hide small sellers favoring the big boys (Diamond Sellers). The combination of these 2 thing spelled disaster and I was forced to let everyone go and do everything myself as there just was not enough sales to have staff.

I am STILL paying for the huge loan I took out and figure this "adventure" cost me well in excess of 1.5M, including my lost time as I worked for basically free for years to just pay this loan.

I am just now starting to get back on my feet with another business but that eBay adventure was an absolute disaster financially.

The lesson is NEVER EVER give up control of your sales process (the commandment of control) to a 3rd party or you are just basically their employee and they can shut you down (fire you) on a whim.

I am now back to the business of restoring and repairing vintage musclecars and am SO GLAD to be done with eBay.
What a story, this could have been an entire thread by itself!!

I must say I am very "happy" with this thread and all that I am learning.

I thought it was the end of the world when I lost in the stock market, but then when we put things in perspective.....
 

CareCPA

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@CareCPA this is crazy... Was on the phone TONIGHT with a Baby-Boomer who is willing to sell his blue collar "One Man Band", then you had to go and post this! But this potential deal would involve a truck and equipment (two Mechanics said it's worth the price just for the truck and equipment without the book and website).
Ha, don't let me talk you out of the deal.

BUT - do make sure you do thorough due diligence, and have a plan for transitioning customers over.
 

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