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What Are the Dumbest Financial Decisions You Have Ever Made?

wouldntitbenice

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A thread like this means so much more to me than the inspiration or pretty hollow example threads. I don't take comfort in anyone's failings, but it helps to be reminded it happens to smart people.

For me, my dumbest financial decision has been keeping my savings in cash for the day that big opportunity comes, instead of investing it in index funds while I wait. My formal education was in finance, and I've always been a sensible investor, and had I invested one a larger and consistent, but still safe, scale compared to what I did intermittently over the years, I would have hundreds of thousands more in savings. I always feared the right opportunity would come while the market was on a downward swing, and I'd miss it...so instead I missed large parts of the longest stock market gain in history.
 

Leona Ta

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:) Hi ! The most dumbest decision I've made so far is buying an 20 ml eye cream with 80 USD. The problem is I didn't use it after that and I bought it because I thought I might use it somehow. In Vietnam and for a woman, 80 USD is a paycheck for 2 working days, I could have done a lot of useful thing with my 2 days time, now I can't take it back. :(
 

James007Hill

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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 ;)
 
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Guest-5ty5s4

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



Ignorance of wash sales washes guy out...
7b28664e-368e-4f9c-84cf-c9be73a22d80.jpg
Reading about wash sales, I still do not understand how that $800,000 bill is possible.

It should have only reduced the tax deduction he could take for losses... So how on earth... ?
 

TSM

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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.
Yes - I think that's often the case. Trading looks so easy in hindsight and I cannot tell you how many newbie traders I have spoken with who convince themselves that they are somehow special and that the terrible odds don't apply to them.

In more general terms, human brains are terrible at stats: huge, but very unlikely gains (e.g. lottery, day trading success) draw us in like bees round a honey pot. We lose all rational decision making capacity and forget that the applicable equation is value = probability of success x potential gain.
 
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wouldntitbenice

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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.
There was an Amazon FBA craze 4 years ago? Was this a craze around buying existing operations or starting one? I thought the craze was happening now.
 
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wouldntitbenice

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Reading about wash sales, I still do not understand how that $800,000 bill is possible.

It should have only reduced the tax deduction he could take for losses... So how on earth... ?
If you're trading a stock daily, racking up losses on it but also gains, and every gain is the only thing the IRS is looking at, you'll have a nice capital gain on paper. This person had $45MM (!) in transactions, with only $45K in profit.
 
D

Deleted78083

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Yes - I think that's often the case. Trading looks so easy in hindsight and I cannot tell you how many newbie traders I have spoken with who convince themselves that they are somehow special and that the terrible odds don't apply to them.

In more general terms, human brains are terrible at stats: huge, but very unlikely gains (e.g. lottery, day trading success) draw us in like bees round a honey pot. We lose all rational decision making capacity and forget that the applicable equation is value = probability of success x potential gain.
I wouldn't have been able to put it better myself, 100% agreed!


There was an Amazon FBA craze 4 years ago? Was this a craze around buying existing operations or starting one? I thought the craze was happening now.

The craze now is in SaaS and NFT (not that the latter is worth anything, but that's another topic...)
 

wouldntitbenice

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The craze now is in SaaS and NFT (not that the latter is worth anything, but that's another topic...)
Online business broker listings have a lot of FBA businesses for sale. FBA is easily the vast majority of ecommerce listings. SaaS is definitely growing in popularity, but NFT is just a craze being peddled by the media and speculators.
 
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sambreaker20

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There was an Amazon FBA craze 4 years ago? Was this a craze around buying existing operations or starting one? I thought the craze was happening now.
It was before all the crazy restrictions. Buying from big brick stores and reselling on amazon fba.
 
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Guest-5ty5s4

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If you're trading a stock daily, racking up losses on it but also gains, and every gain is the only thing the IRS is looking at, you'll have a nice capital gain on paper. This person had $45MM (!) in transactions, with only $45K in profit.
shouldn't they also see the losses?
 
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Guest-5ty5s4

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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.
does the same apply when you BTC (buy to close) a short option in the red? Because that would be a BIG yikes.
 

WJK

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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.
So, on #1 -- did he spend your money while you were together, or did he get it in the divorce? or both?

On #2 -- what did he say he was adding to your business to get you to say yes? What did he actually contribute or rip away?

Without knowing the details, I would suspect that you trusted these people. They talked a good game. And then they major let you down.
So,
When did you know that it was all going south in each situation?
What are your lessons from all of this? It's a lot deeper than don't get married and don't take on partners.
Why did you think that you needed these relationships and these particular people in the first place? What attracted you to the situations and why did you choose these particular people?
What were the commonalities in the two situations? They sound very similar.
What has changed since you made these decisions? Would you still be attracted to them and would they be attracted to you? Have you changed enough that they would now run away when they saw you coming?
Do you look in your mirror and see a different person now? Are you still the same person on the other end of all of this? How have you grown?
 
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Guest-5ty5s4

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

That being said, my execution and marketing are still a bit weak and I’m not totally convinced this product is a winner or not.

But it has been sellable when I get up and go to the customers.
 

P789

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Buying a course without doing do diligence as well as feeling good for the moment (ACTION FAKING). Lost almost $600 in mom’s money in the midst of the pandemic.
 
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Guest-5ty5s4

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Buying a gaming pc for "work".

I ended up losing three years to gaming addiction and who knows how money in opportunity cost.

Buy a Mac, never look back.
use the Mac for work, depreciate it on your taxes.
 

SaharaSnow

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So, on #1 -- did he spend your money while you were together, or did he get it in the divorce? or both?

On #2 -- what did he say he was adding to your business to get you to say yes? What did he actually contribute or rip away?

Without knowing the details, I would suspect that you trusted these people. They talked a good game. And then they major let you down.
So,
When did you know that it was all going south in each situation?
What are your lessons from all of this? It's a lot deeper than don't get married and don't take on partners.
Why did you think that you needed these relationships and these particular people in the first place? What attracted you to the situations and why did you choose these particular people?
What were the commonalities in the two situations? They sound very similar.
What has changed since you made these decisions? Would you still be attracted to them and would they be attracted to you? Have you changed enough that they would now run away when they saw you coming?
Do you look in your mirror and see a different person now? Are you still the same person on the other end of all of this? How have you grown?
Hmmm. I spot the Demartini coaching method in your questions. Not a fan.

Learning is inevitable. Everything affects everything. We just get up and get on with it.
 

OleksiyRybakov

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I hope you still have those Yu-Gi-Oh cards. they may worth some money.
Unfortunately, I don't. I know that some of the older cards like those from LOB are worth more now, but I have sold them in 2014.
 

OleksiyRybakov

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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!!
Oh, I am not hard on myself but mistakes are part of the process. This is exactly the reason why I decided to quit my job. No mistakes provide no opportunity to learn.

By the way, if anyone likes to listen to more of my stories like that, you might be interested in visiting my TikTok channel. Mostly, I am trying to give financial content similar to MJ's books on a more simplified level and also, I react to other successful financial (and not only financial) influencers. Later, I plan to go to YT and then to add some content on IT. But I also create different content, for instance, yesterday I discovered a trend "name a country without A and I", so I created a rap video on that in German just for the lolz.

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?
 
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OleksiyRybakov

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More financial mistakes by me:

10. Today, I spent around 500$ from my gambling fund with SHIBA INU coins in it on eKart INU coin since I wanted to find another crypto increasing 100x. After having read some Twitter comments I realized that this coin looks like scam.

11. I realized that it will be very challenging for me to even get a job which is large enough to cover my expenses. Not even one company has given me any contract due to "my lack of IT skills". I was not even invited to any other interview and the teaching job that I have is not enough even if I get the additional lecture to teach. My social media did not grow enough. And I am over 120k$ in debt due to my mortgage. Additionally, my net worth is only around 100k$ so I won't be able to pay my mortgage from compound interest only. Originally, I wanted to go into Bitcoin, Ethereum and Cardano, but I doubted that any of those cryptos could grow by the required factor of 5 until 31.12.2021. So instead, I went into Shiba Inu which was at 0.0000284 back then. I could withdraw at 0.0000316 but decided not to. And now, it dropped to 0.0000256. Even worse, Bitcoin and Ethereum grew a lot since then. Please don't repeat my Sidewalk move of quitting jobs without alternatives. And especially, please don't gamble with life savings.
 
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Jobless

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Some truly dumb mistakes caused by "picking pennies in front of a steamroller", especially tied to investing and trading stocks. I had great results initially from a year of active trading and became jaded, too confident in my own abilities, losing sight of the risks. If a strategy relies on self-discipline / emotional control, you can lose in a week what took a year to build. It's a bit like reputation, which can take decades to build and seconds to destroy.

The lesson is to create systems to determine business/investment risk, instead of relying on your own good judgment. Neither is perfect, but only systems are consistent enough.
 
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Matte

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I spent 1 entire year trying to open a restaurant. Looking or the right place, fixing the place up, spent a lot of money.
Finally we opened in front of a big university, 4 months before the pandemic, and the university has been closed since... now i'm stuck with it.
Wasted 3 years of my life
 

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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.
Thanks for sharing.
this is a good place for supporting people make good financial decisions (build businesses). Your kids a lucky to have someone as hard working as you, it’ll pay off.
 
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spreng

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I lost around 40k day trading 3 years ago. Still getting tax returns from it lmao
 

Mathew Verble

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Thanks for sharing.
this is a good place for supporting people make good financial decisions (build businesses). Your kids a lucky to have someone as hard working as you, it’ll pay off.

Hell yeah it will. Just an entrepreneur currently working and raising kids.

If nothing else teaching them a little of the unscripted mindset feels like parenting victory.

And the success of finding this path again and limiting my restrictions to only necessity restrictions feels like asymmetric time and value gains already.
 

Ivan Koretskyy

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i earned 40k in trading for 2 months and lost 50k in trading in 1 week. Life can be a bitch sometimes.
 

Albert KOUADJA

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This thread is a book to learn from financial mistakes and how not to make them again.

PS: My big bad investments are:

1- The time wasted at university and invested in stupid Business, non-win-win relationships:

.lesson: do not depend on people, verify and then trust.

2- Pay for things that don't bring me income such as: clothes, watches. All this had cost me 15.000 f. .for me, it's a sum that I shouldn't afford to spend, especially on clothes, but I did. As MJ said in TMF ''misuse money and you will suffer the consequences''. I suffered but I learned.
.lesson: wanting to look rich when you're not, takes you further away from true wealth, can destroy your health, relationship and freedoms...

3- Last rainy season, with a friend with whom we always had projects, we did a business. .that of making a field of vanjou, groundnuts. And we did. But we were not present on the ground ourselves. We only sent the money to our families (It was his mother, my mother and my little brother who managed the activities) so that the jobistes could work for us. .since both of us (my business friend and I) are in town, from different cities. So everything was done over the phone. We had to spend more than 65,000F CFA for the whole thing but after the harvests, and sales, they told us that it was 42,000F that gave us. .it was a field of half a hectare of vanjou and an eighth of groundnut. Normally this kind of weather can make a profit of more than 90,000F but we had a loss of more than 23,000F and also in time.

Lesson: the beginning of the control has been violated. .and also there must be no family in business as they can turn away without fear.
 

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