What Are the Dumbest Financial Decisions You Have Ever Made?

[ElleMg]

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

 

[dgr]

Just a few.

Like joining an MLM scam to recover from a previous MLM scam (Telexfree and Unetenet). Fortunately (I guess) I didn't make anyone join because it smelled bad just after joining.

Or take a 6k credit to fund me as a freelance instead of trying to sell my services before leaving my job. Add to that another 5k of credit card debt to pay the bills. (And that debt burden has mine my confidence for a long time)

Those are the worst ones by far, but there are more. It seems like I'm used to making the same mistake twice, but at least I learn the lesson after the second time

 

[Deleted78083]

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.

For me, I saw the money I lost as the price i would have paid to get the knowledge that I got.

I also thought that had i gambled my money the same way 10 years later than I did, i could have add one or two zeros to the losses

 

[TSM]

Probably when I got married, Damnnnnn...

I guess your husband or wife agrees....

 

[jpl]

My dumbest financial decision is not only about the amount of money I’ve wasted but also the place I spent it: I played an online role-playing game for years and spent a hilarious amount of 5k mostly on cosmetics (stuff that just enhances looks but has no further impact on the gameplay).

Way worse than the money I spent was the time I lost playing that game though... over 8.000 hours (that’s almost a year of my life).

Luckily that’s in the past and for over two years I didn’t either play any game or waste time to consume other media like shows or movies. I just focus on enhancing my knowledge and skills as well as working on a business idea I’m having. Few months ago I also added regular lifting to my hobby of self improvement.

 

[WJK]

My dumbest financial decision is not only about the amount of money I’ve wasted but also the place I spent it: I played an online role-playing game for years and spent a hilarious amount of 5k mostly on cosmetics (stuff that just enhances looks but has no further impact on the gameplay).

Way worse than the money I spent was the time I lost playing that game though... over 8.000 hours (that’s almost a year of my life).

Luckily that’s in the past and for over two years I didn’t either play any game or waste time to consume other media like shows or movies. I just focus on enhancing my knowledge and skills as well as working on a business idea I’m having. Few months ago I also added regular lifting to my hobby of self improvement.

It sounds to me that you learned a couple of important lessons from playing this game. You learned the money you spend must count -- and simply cosmetics are a waste. You also learned that you must get value for the time you spend. We have many seniors around us who haven't learned these two important lessons. Congrats.

 

[OleksiyRybakov]

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.

 

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[Martin.G]

Probably buy a car. It is money that I could use in my business. But also, at that time, I didn't have one.

 

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[Guest1413tpa]

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

HOT! - MINDSET - Introducing MJ's Personal Unscripted Network, Join Now for FREE!

If you'd like to keep your Unscripted journey on track, please text me direct at the number above, or click my signature to subscribe. If you are in IDEA mode, text "IDEA" to the above number. If you are in LAUNCH/START mode, text "LAUNCH" to the above number. If you are in GROWTH/SCALE mode...

www.thefastlaneforum.com

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.

big oof on this one. You did dodge a bullet...

 

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[garyfritz]

There are long-term and short-term strategies in both stocks and commodities.

The fund I ran used strategies I developed that generally held positions on the order of 1-2 days. And actually it's misleading to call it a "commodity" fund, even though that was the official term. I traded *futures*, but mostly not *commodity* futures. It was mostly stock index futures (S&P500, ND100), bond futures, etc.

Most people make money in stocks by holding for a long time. But I have friends who make over 100% per year with short-term trading in stocks and options.

 

[TSM]

Just before the "credit crunch" in 2007 I invested £10,000 on a Bulgarian "off-plan" ski property - and lost the lot, with the property never even getting built! DUMB!

However, a few years later I made this look like nothing when I decided to move away from investing on the financial markets to instead take up GAMBLING (under the guise of "trading") on these things called "Binary Options". I gambled away well over £100,000, 2 houses and racked up £70,000 in debt too. So in hindsight, not my finest decision

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?

 

[federicocrespo]

I was about to get $10K in Bitcoin in 2015.
A friend came up with this idea, a bar in the city, Buenos Aires. Ended up giving the money to him.

The bar lasted two months. 60 days.

 

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[MJ DeMarco]

shouldn't they also see the losses?

Wash sales can get confusing. From what I remember is this:

If you sold Tesla stock at a $4000 loss and bought back the stock within the wash sale period, the $4000 is disallowed. So if then the next trade you made $4,000 on Tesla and break even-- it isn't a wash. You get taxed on the $4K, not $0.

In other words, you got taxed $1,600 to break even. (at 40% tax rate).

If he is trading in and out of the same stock at a $45M clip, I can see how the big tax bill comes into play.

 

[Djioul]

I bought a Jeep Cherokee Trailhawk which is quite expansive in Europe. The car cost me around 45 k€ but at least, I bought it cash.
I sold it a few months ago for half the price and 2 weeks later, the new owner started to have some mechanical problems with the car. Now he will most likely take me to court because he claims that I am responsible for the car issues.

I have no regret about this situation as I had to make a shitty financial decision in order to learn the hard, what it's like to take dumb decisions. It also totally changed my relationship with money.
I am the only one responsible for this situation and instead of wasting my energy on complaining, I focus on ways to reduce the impact of this situation on my life.

 

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[Guest-5ty5s4]

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 ...

This was a very old comment, I ended up selling over 140 of them and thinking about ordering more. This biz really did start making money.

 

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[MJ DeMarco]

This was a very old comment, I ended up selling over 140 of them and thinking about ordering more. This biz really did start making money.

So it wasn't the product, but perhaps marketing and/or execution?

 

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[MattR82]

Home and land package in what turned out to be a bit of a crappy suburb. Negative gearing yo! They even recommended the property agent (attached to the builders lol)to use for finding and managing tenants. Easy!

They whacked the first applicant and she did 30k damage straight away. Couldn't be rented out for over 6 months.

I ended up breaking even (almost) when I sold it 3 years later. Lost a lot of hair over it though. So much for cash positive negative gearing lol what a sucker.

Then I read TMF .

 

[rocking-m]

Buying a timeshare
Joining a MLM scheme
Trying to time the market in 2008
Running up credit card debt

lol - I think I'm a slow learner!

 

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[Redcable]

I think buying a BMW when I first had 10k in the bank was pretty bad, luckily I was able to sell it with a profit but altogether it was a pretty time and money consuming decision..

Same I financed a BMW once I graduated from college and got a full time job. My debt increased and the car was given me troubles. I got another car that was more reliable.
lesson: take the time to learn about assets vs liabilities. Focus on building your wealth.

 

[Vas87]

Buying dividend shares in 2017, and selling in March 2020. Lost about 20k from that one + any dividends they would have produced.
Sold a car in April 2020 for 24k, it's worth about 34k in this market.

 

[Mike Ronin]

Investing mid-six figures in several normally great performing mutual funds about 2 months before the September 11 terrorist attack in NYC, and then on top of that allowing the now ex-wife access to much of the remainder. Bad, bad, bad.....20 years later it still ticks me off, so I try not to think about it and look forward instead of backward.

 

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[Antifragile]

I invested in a game development company $$$ - six figures. It had 70 employees, was on a brink of delivering a brand new game and the buzz was all over. My investment was debt with convertibility feature after 3 months to equity. The company had been in existence for over 5 years and delivered a few successful games to the market already. This was supposed to be the next big win. I saw the game, loved it, put up the money and went to Shanghai. Came back a month later to learn private debt company funding them called the debt… company went into liquidation. I learned a lot about bankruptcy! I was a shareholder in all kinds of meetings.

It was stupid because I invested based on people. Who were referred to me by trusted friends. I failed to look at the financials and how levered they were, in all my excitement. One of the stupidest investment decisions I’ve ever made.

Good tax write off… that’s the only good thing.

 

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[Deleted74925]

• Not joining a self-driving insurance car startup in 2019. It was only 5 ish employees at the time and I wanted the comfort of a stable job. They just raised $2 million in seed round Media - Koop Technologies
• Taking out $7,500 from my 401(K) as a distribution instead of a loan. My company match would have vested to $15,000 in two years. I didn’t listen to my accountant closely enough.

 

[Mister]

In my early years of working, I got into a drug addiction and spend all my money that I had on that shit.

Should be a total of 10-20k over the past of a few years.

Thankfully I learn my lesson

 

[MJ DeMarco]

Edit @Admins: I have seen some people in this forum promoting their own social media channels. At this point, I would like to advertise mine, but am I allowed to do so according to the forum rules?

You can add them in your signature, you have 50+ posts so now you can.

 

[Deleted78083]

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

I don't know if I am allowed to laugh, but it is kinda funny, no harm intended : )

I counted one of the mistakes as not having a job when I should have gotten one, so...you may explain why you were broke, and the mistake you made by not doing something, which let you remain broke : )

 

[AFMKelvin]

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...

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

 

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[Guest1413tpa]

Man I feel you



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



Ouch.

Ouch is right to say the least. Ha!

 

[JunkBoxJoey_JBJ]

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.

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.

@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).

 

[Deleted78083]

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.

What I am about to say may be very stupid so please, correct me if I am wrong.
Isn't the purpose of a commodity fund to sell for profit?

Doesn't investing in stocks and investing in commodities suddenly become two opposite activities, where you want to hold the stocks as long as possible, while you want to sell the commodity...as fast as possible?