What Are the Dumbest Financial Decisions You Have Ever Made?

[Kelly592]

In 2017 from about October to December, invested in cryptocurrency coins now referred to as “shitcoins.” My wallet grew from an initial investment of about 20k to over 120k. Was waiting for just the right moment to cash out but that moment never came.

In 2018 the bubble popped and that 120k wallet dwindled to about 15k. Cashed out 10k and left 5 worth of coins still there. Now I cant even get access to the wallet.

Lesson learned: Don't get greedy. Control emotions and always have a profit-taking plan when it comes to trading.

 

[MJ DeMarco]

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

Robinhood Trader May Face $800,000 Tax Bill

A Robinhood newbie is facing a potential tax bill of $800,000 despite only making $45,000 in net trading profits. The case should serve as a loud warning for the new crop of do-it-yourself investors.

www.forbes.com

Robinhood day trader looking at $800,000 tax bill even though he only made $45,000 trading stocks. Yes, this can really happen.

It does not sound possible, but we're not talking math or logic here, we're talking the tax code, and with the tax code, "2 + 2" can sometimes equal "you're hosed."

notthebee.com

Ignorance of wash sales washes guy out...

 

[Guest-5ty5s4]

I think that my entire life I was doing huge financial mistakes. I do not even want to rank them.

9. When I was a kid (2005-2012), I wasted over 5000€ on playing Yu-Gi-Oh.

8. When I wanted to pursue a bachelor's degree (2011-2014), I chose physics because my chemistry teacher told me to do so. Instead, I should have studied computer science from the beginning but I have listened to my mother who told me that I would do badly in CS because I do not know how to program. This lead me to depression due to 100 hour long workweeks in physics and my jobs would be also paid badly since knowledge about physics is not very practical. In the end, I switched majors when pursuing my master's degree.

7. I was studying computer science in Germany so I did not have to pay the fees. In 2015, I owned around 8k€ that I did not invest because I did not know that I could do so.

6. In 2018, I finished my studies and had around 25k€ in savings. I was familiar with Bitcoin at that point but did not want to invest the money because I did not know about the halvings.

5. At the end of 2018 I decided to buy a house on mortgage because the rents were going up consistently. Now, instead of paying 550€ per month for rent, I have to worry about paying 1100€ per month because if I do not pay the mortgage off in 15 years, the bank can increase the interest rate from 2% to any value. So even rates like 18% and more per year are possible.

4. In January 2020 I invested some of my money into the stock market. Then the coronavirus spread out so I panicked believing that the markets will crash for a long time. One of my younger colleagues advised me to buy more but I did not follow his advice.

3. In August 2020 I wasted 1200€ on a driver's licence for trailers. Why? No idea.

2. In October 2020 I finally learned about the Bitcoin halvings and invested around 39k€ when a BTC was at 13k. My assets went up to 45k€ in a month. Then, I was thinking that XRP was going up more quickly and reallocated my Bitcoins to XRP when one Ripple went 0.59€ per coin. Unfortunately, XRP went down to 0.51€ so I panic sold my assets. Then, XRP went down to 0.07€ per coin and what was I doing? Bingo, I was crying too much and instead of buying more crypto, I did not invest my 39k€ for two more months. Well, then BTC went up to 28k€ per coin.

1. One month ago, while having a job as an app developer (I program using React, GraphQL, REST, Typescript and Python) that earns me 75k€ per year at the age of 28, I listened to a 19-year old influencer that told me to go into business. She told me that she earns lots of thousands of dollars per month and she recommended me to read several books. Out of those, I have read "Think and Grow Rich" by Napoleon Hill, "Rich Dad, Poor Dad" by Robert Kiyosaki and TMF by MJ DeMarco. Later, I also read UNSCRIPTED on my own. I was annoyed as hell because I do so many things incorrectly and literally every teenager could have done less mistakes than me. Being completely bored out at my job as a software developer at which I work 1 hour a day ouf of 8 productively, I was asking my boss whether he can give me more challenging tasks like working as a software architect - which he refused. I was searching for more challenging projects as well - but he refused again because he wanted me to help his company and not the customer of his company. Disagreeing with him completely, I have decided and told my boss that I will quit my project in December. I have to wait this long due to German laws.

Now, I try to become an influencer that talks about finance and IT. On TikTok, this did not work out - I do not even get any feedback due to dry and boring content. On Instagram, I got 1,3k views on a video within an hour, but my account got banned by Facebook and I do not know why. YouTube seems more promising but again, productocracy takes its time and I really hate that the audience wants to get "get-rich-quickly" results instead of complex advice. Still, I have created a habit of producing daily videos on TikTok during the last two weeks. Most likely, this will be the biggest financial mistake that I have done. But I go on failing.

What I noticed most about your post is that, despite each small setback, over time you grew and became more successful.

You went from "I chose physics instead of CS for my degree" to "having a job as an app developer" (!!!).

You went from being broke and in debt to having $39,000 to invest in crypto!!!

You've made significant amounts of progress, and you are being too hard on yourself.

Just keep going!!

 

[AFMKelvin]

Bought a brand new motorcycle for $16k when I didn't have the money. Crashed it 3 months later and lost my down payment and whatever I had payed up to that point.

 

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[Ocean Man]

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.

 

[Mike Stoian]

Does being broke count? I didn't even have any money to lose most of my life xD

 

[JunkBoxJoey_JBJ]

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.

 

[Deleted78083]

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.....

 

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[CareCPA]

@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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[garyfritz]

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.

This.

I am no financial dummy -- I ran a very successful commodity fund with $10M in client money back in 2000. And yet my return in my stock accounts is NEGATIVE. I can't seem to buy something and leave it alone -- I've always been more of the "trader" mentality, and that doesn't always work out so great.

Thank God for real estate, which is TOO HARD to sell, so I hang onto it for decades. That's where all my net worth came from.

 

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[sambreaker20]

During the amazon fba craze about 4 years ago I opened up 4 credit cards with a limit of about 20k total and a pay pal working credit of about 10k. When on a crazy fba shopping spree, lots of prices tanked and was stuck with about 18k in credit card debt. Set my flipping back about 3 years and killed my credit. Total idiot will never do that again.

 

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[Antifragile]

What I noticed most about your post is that, despite each small setback, over time you grew and became more successful.

You went from "I chose physics instead of CS for my degree" to "having a job as an app developer" (!!!).

You went from being broke and in debt to having $39,000 to invest in crypto!!!

You've made significant amounts of progress, and you are being too hard on yourself.

Just keep going!!

This book comes to mind…

 

[Mathew Verble]

Oh Gosh. A series of codependent terrible relationships that I chose over the last 6 years to attempt to make work because I felt I couldn't parent my kids alone.

After my divorce I had two young kids and no idea how to parent and work full time. Working even fuller time to support even larger families so that my kids could have a mother figure and I could have help seemed like my broken idea of my only option.

This feburary I will have been working and parenting all on my own for an entire year (with some help in before school time with my parents)

Every morning at 430am I pick up my sleeping kids put them in a car drive them to my mom's, drop them off asleep. Work ten hours. Get them after school, go home and do the parenting and get them to bed and have a few hours to myself before I crash out around midnight. And without a doubt the sense of autonomy of doing it without the begrudged codependent relationships fuels me to keep going.

The idea of breaking codependency in economic relationships fuels my after bed time hours and work break study sessions even further.

It's been pretty wonderful so far and I don't regret the lessons maybe just wish I learned them a little sooner.

 

[Kasimir]

Oh wow, so I don't have that many stories. But I also did some stupid investing around March/April 2020. I could cover all my loses with my Bitcoin gains but still I was just stupid and naive. And traded with too many emotions.
Lesion: Emotions are bad! Okay maybe not , but just do enough research before doing something that you're missing experience in.

 

[Guest-5ty5s4]

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.

This is so sad but I encouraged my dad to buy GME like 2 years ago, it absolutely took a nosedive and stayed there for 2 years, then I taught him about covered calls, he sold one on it, got assigned, and it literally mooned the next week lolol

I have stopped giving investment advice. Only do my own. Truth be told, the CC was a good move and he got out of a bad stock for a good price. Nobody knows the future (or what Reddit will do next)

 

[Matt Sun]

I bought btc in 2017 with my parents money, Like $6300 that went to $8600 and then evaporated to like 1800$... I didn't sell tought and now that same crypto is worth like $15500 . I havent sold yet but definately don't want to be the one holding the bag again.

mm also, studying literature in college lol.

 

[Deleted78083]

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.

Who the hell would pay 65 000 a year to message people about free drinks and discounted pizza lmao

 

[WJK]

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.

I had a similar experience on a smaller scale -- I had a side gig where I made jewelry for etsy and my little office area with the espresso bar. When they went public, that whole source of sales on etsy died instantly. I sold off the materials this last year at a dead loss, and I quit doing any jewelry. I didn't need the side business, but it was fun for a hot minute. Again, it was a control issue.
(Oh, and the virus shut down the espresso business, so now I have a very comfortable office that has a nice, big espresso machine.)

 

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[MJ DeMarco]

Who the hell would pay 65 000 a year to message people about free drinks and discounted pizza lmao

The service is quite affordable if you have 1000 customers who are messaged a few times per month...

Not for 50,000 customers who might get messages 4X a week.

 

[garyfritz]

When I was a baby engineer, 7 years out of college, I had racked up $100k in company stock. The market kept going higher and higher. This was the mid 80's, and the market had traded in a range for my entire adult life. The only way to make any money was to sell when it got too high, and buy in again when it dropped. So in 1986 I sold the whole thing and put the money into other ""investments,"" which pretty much all tanked. I was still scared to put the money back into the market because it was "too high." So I missed the entire 1400-to-10,000 runup in the DJIA, the biggest bull market in history. Finally I said "This is crazy, I'm missing out on all this profit," so I dumped all my money back into the market. In January of 2000. Just before the dot-com bubble popped.

Most of my other mistakes I can mostly blame on my ex-wife. Like buying a Mexican timeshare (couldn't talk her out of it) and "investing" in other hot ideas like oil leases &etc.

 

[TSM]

Enjoying this post a lot. My worst was not buying back into property in 2009/10 after selling around the first top in 2007. I made a lot during the GFC but then didn't switch my view in 2009 when things turned around. I had been so excited by what I thought was a great ability to time the market, that I held on to my doom and gloom view, not realising that the economy had become almost irrelevant as we were now living in QE times.

BUT I made it much worse by then trying to get my money back by .... day trading.

My question is, how have you got past losses? It seems to me that if you don't process the experience you keep repeating it.

I got stuck in regret and getting angry at myself. A friend of mine lost 38Mill in the GFC and then went on rebuild almost straight away and now financially free again.

 

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[James_17]

Mine, I bought a stock at the same time index funds with my mom's money when I was a fresh graduate out of college. Hold it for the long term and not taking any single peso of it. The stock went up to 30% and this year -40%. I still hold them waiting to rebound.

Lesson learned: Put yourself in the driver's seat, liquidity is greater than paper gains.

I was sold by the fake gurus conducting seminars who have no definite applications about what they are teaching and at the end of the presentation, they are promoting a system that costs 50,000 bucks. Attended board games to get rich and then after the game, "what to do next?"

Lesson Learned: Invest in learning to those teachers who eat their own recipe, teachers who are walking the talk.

Now, I started investing in my own efforts, set myself as a lifetime student of the game of being rich, maximizing my time grit, and the grind as a realtor for the rich people and businesses looking for expansions here in the Philippines and not relying on any financial institutions and the government.

 

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[James007Hill]

Ouch. Binary options are the devil's work!! I think they have been banned now. Here's my story of 'trading' if you'd like to read it Hope Dies Last. You will probably recognise a lot of the thinking processes. I, too, started trading to try and undo a previous mistake and that is why I am now very curious about how people process losses.

They really are! Yes, I think you can still trade them in certain countries but UK based companies are definitely banned from providing them now. I'm not sure if you can still access them through a company not based in the UK though, but as you can imagine, I don't want to find out!

Thanks for sharing your post. A lot of it definitely resonates, such as the classic addict's downward spiral. My story in a nutshell was one of slowly transitioning from investing, to trading, and finally to outright gambling, and because the lines that separate them are thin and blurry, I barely even realised I was gambling like a degenerate by the time I was! I still thought I was just "trading", which was probably also one of those "justifying my behaviour" type things you talk about in your post. I started investing in about 2008 but it was 2011 when I fell into the Binary Options trap - same year you started your trading journey! By 2015 I was sleeping in my car...thankfully I have bounced back well. Completely recovered, debt free, never trade or anything remotely like that, have recently bought a house for cash (with my brother so only joint owned) and pursuing my entrepreneurial ambitions

 

[Deleted78083]

Ouch. Binary options are the devil's work!! I think they have been banned now. Here's my story of 'trading' if you'd like to read it Hope Dies Last. You will probably recognise a lot of the thinking processes. I, too, started trading to try and undo a previous mistake and that is why I am now very curious about how people process losses.

How have things been for you since then?

I think the fundamental issue at stake here is education. People watch "the big short" and download robinhood during the end credits. The nexy day, thay are gambling their house with puts on Tesla.

I think if you take the time to observe the market, read the intelligent investor, become aware of your emotions and stay off WSB....you ll already be better than the average retail trader out there.

 

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[Phil Yu]

I liked car since i was a kid. So when i had a chance to get into the car hobby after moving to the state. i jumped on it.

I spent alot of money and time on cars. all of them are down the drain at this point.

The biggest mistake of them all was buying an used BMW M3 for $7000 that was raced on track day every month. When the engine blew, i entrusted it with the wrong friend to fix it for me, friend pretty much stole the remaining engine, transmission, car computer and returned an empty shell to me. At the end, sold the car shell for $1.4K and kept all the lessons i learnt.

 

[SaharaSnow]

1. Getting married! Biggest financial mistake.

2. Getting talked into a business partnership when my online portal was doing well.

PS: Maybe I just don't play well with others.

 

[Private Witt]

#1 - Quitting job with Pepsi in late 90s after 4.5 years in, when stocks vested at 5 years, many people who stayed at the same job are millionaires from the stock as they did not touch it and just let it build

#2 - Passing up to join a startup on a job offer with equity at early stage and 6 months later it brought in 85 million in funding for a near unicorn valuation

#3 - Pissing away 100s of BTC through poker and wallet mismanagement from 2012 - 2017

#4 - Gambling addiction from age 12 to 48, lost so much of my life earnings, quitting gambling was the best move I ever made as watching the leaks being plugged is unreal and I have so many options today that I did not have before.

 

[SPM_ENT]

Spending about 80k creating a hair loss product (like Hims) in which I didn't know exactly how it worked, then creating a brand and branding, website, paying an advertiser 5k a month + ad spend without knowing what he was doing. In the end I ended up with some great-looking bottles that no one bought and ended up putting all of them in the trash...except for one I keep next to my desk for a reminder .

Also, I spent way too much time flipping cars justifying that I was making money off them when it was a huge time suck and when I should have been investing that money into real estate. Dealing with low ball offers will grind you down. Buy the car if you must, finance it, and use the cheap money to make money elsewhere.

Plus many more but they're all lessons I needed to "pay to learn" I suppose.

 

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[Deleted78083]

studying literature in college lol.

Man I feel you

I guess I'm telling you that even bad decisions can be made right sometimes. If nothing else, you learn from them.

Yes, and often, you don't know until 10 years later.

Lettimg an ex have free reign with credit cards and bank accounts, to the point where I had to file Chapter 7. I regret it.

Ouch.

 

[plutownium]

The worst financial mistake I made was deciding to become a music producer at 22. It was a waste of 6 years of my life.

It might have been okay if I hadn't used university & working on music as an excuse to not have a full time job.