Saturday, August 18, 2012
My Biggest Financial Mistake
As someone who lives frugally and saves more than half his net income, invests monthly into high-quality dividend growth stocks, writes a blog about trying to reach financial independence before 40 years old and has a long-term financial focus it may be natural for you to think that I've always been this way. It's easy to think I've always been conscientious about purchases and money matters; that I've always been frugal and knowledgeable about the stock market. But this is extremely far from the truth.
In May, 2003 I inherited just over $62,000. I had just turned 21 years old and had only found out about this money mere months earlier after a reconnection with my father. My father had left our family many years before the events I'm now recollecting for you, but suffice to say it's unimportant to the overall story. My grandmother on my father's side had left my three sisters and I equal parts of a fairly large sized estate. My portion turned out to be just over $62,000. At 21 years old, I was nowhere near the type of person I am today unfortunately.
When I started this 12-year journey to financial independence back in early 2010, I had none of the money from this earlier inheritance left over. I spent every last dime of it in a span of about two years. And I have only scant memories of exactly how it all wasted away, and certainly nothing to show for it. I bought a slightly used Corvette and sold it two months later after I realized the cost to insure a sports car for a 21 year old...not to mention the cost to gas it up and drive it. I promptly quit college and moved out of my home state of Michigan for a while to "find myself" and figure out what I really wanted out of life. Unfortunately, this journey to self-discovery came with no employment and plenty of expenses on food, rent and transportation as I was far away from any type of support system. It was a terribly confusing time for me as the reconnection with my long lost father ended, my mother died, I dropped out of college and moved out of state all within a six month span.
After the money ran out in 2004 and I found myself back in Michigan around family and friends, I truly realized the gravity of the situation. I was a college drop-out, broke and just as confused as ever. I had somehow wasted $62 thousand dollars and had absolutely nothing to show for it.
I worked odd jobs for a few years and struggled with money. I felt a little defeated, but remained optimistic and continued to grind away until I eventually got a lucky break in late 2005. It was at that time that I started an entry level position in the field that I'm currently employed in. That brings us to now. Seven years into my career and I already feel burnt out. It was a combination of feeling exhausted and also wanting to dramatically improve my financial skills that led me to where I am now. In early 2010 I started reading books about investing, stocks, how to reach financial independence and started researching the idea of frugality. The trap was sprung.
The point to this incredibly personal and revealing story is that my biggest financial mistake, wasting $62,000 in two years, led me to where I am now. It was the fear of finding myself broke again and the level of blindness and thoughtlessness I experienced with money that drove me to earn all that money back and I vowed to do a much better job the second time around.
This cautionary tale should make you cringe and wag your finger at me, because believe me...I've done the same exact thing. But it should also show you that overcoming your mistakes is possible and continuing to believe in yourself every single day is a priority. We're all human and we all make mistakes. The important thing is to recognize that fact, realize where you went wrong and correct it going forward. I realized that I had no financial prowess and vowed to fix that. I did. I found my wasteful spending disturbing and promised myself that I would earn it all back. I did. I was determined to do a better job the second time around. I'm still working on that one, but so far so good.
What about you? Any big financial mistakes?
Thanks for reading.
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