My pastor asked the kids at church one Sunday if they thought a time machine would be cool. He asked them where they would go with it. I thought to myself as I was sitting there, “I would travel back to my 25-year old self and slap myself silly because of some poor financial decisions that I made.” (Yes, there were other places I thought of that would be cool to go see, too.)
Buying Vehicles to Impress
I didn’t do anything that a normal 20-year-old wouldn’t have done, but that’s the problem. Why did I buy a new vehicle and then three years later buy a different one? Why did I buy the largest vehicle I could find when it was just me? Oh sure, I could afford it on my income since I was single and had very few responsibilities. I mean, after all, that’s what people do, right? They think they can afford a vehicle because they can afford the monthly payments. I really didn’t buy my second vehicle. I leased it! It was “only” a $400 a month lease payment back in 2004, and I could easily afford that payment each month. I didn’t know at that time, but if I would have just bought a vehicle for half that price, it still would have been a nice vehicle, and I could have an additional $60,000 in my account right now. I only bought it to show off my success. The Ford F-150 Super Crew was the vehicle to have back where I grew up. Even when I got married, I wanted to buy my wife nice things, but some of that was to show off my success. After someone rear-ended her $4,000 car that she brought into our marriage, I got her a $26,000 car on payments! She didn’t even ask for a nice car. She would have been content with a $10,000 vehicle or even another $4,000 vehicle. I justified buying the first vehicle because I had my first real income, and I justified leasing the next vehicle because it was “cheaper” that way with the monthly payment, and I justified buying our third vehicle because I wanted my wife to have something nice, and she needed a car after all. There’s nothing wrong with buying vehicles. You don’t build wealth by buying new vehicles. Unfortunately, this is how most people live.
Instead of buying those three new vehicles and if I would have bought three different vehicles at half the prices, I could have another $130,000 in my investment account right now. The vehicles would have looked almost as good and functioned the same as the new ones.
Borrowing From 401k
Another stupid financial decision I made was when I borrowed from my 401k. The doctors told my wife and me that we wouldn’t have children together, so we decided to adopt. We didn’t have anything saved, probably because of the financial decisions mentioned above, so the only way we were going to adopt within that year was by borrowing this money. At least that’s what I thought at the time. Either way, borrowing from your retirement funds is not something you want to do.
I’ve made stupid financial decisions. We all have, and it costs us money! There’s no time travel, and it’s no good to live in the past, so no matter what bad financial decisions you have made, you need to move on. You cannot go back to fix them, but you can start right now to better your situation. Start by getting on a budget. Then you can begin cleaning up any financial mess that you still have.