Personal finances: My biggest money mistakes

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I’ve made a lot of financial mistakes since I turned 18 and was responsible for my own money. There are a few that really make me cringe and have impacted my financial future more than others and I’d like to talk about them here in case you can identify with them.

Some of these mistakes were made unintentionally, but some of them were truly just bad decisions — putting short term happiness and gratification over having a financially secure future.

Here are my four biggest money mistakes:

Taking out a personal student loan to study abroad: All student loans are awful, but the one that seems to just be salt in the wound is the personal student loan I took out when I took a three-week trip to Thailand the summer after my sophomore year of college. The trip cost about $8,000 and I definitely didn’t have that kind of money lying around to pay for it out of pocket. Of course, the professor played up the importance of taking a trip like this and how I could probably get a student loan to cover it. So, my inexperienced 19-year-old self marched right to the financial aid office and got approved for a $8,000 personal loan through a private bank—not through the government which is what many student loans are through. I wouldn’t learn until after graduation that the loan had been accruing interest for the last two years of college totaling a whopping extra $3,000 to the loan’s total. I JUST NOW am back down to the original principal balance. It’s taken me EIGHT YEARS to pay off $3,000 in interest because the interest still accrues daily. There is also no option for an income-based repayment or any kind of relief or help. Personal student loans have no protections. So, if I could go back in time and not take out that loan I would. I’d really like that $85 I pay on it every month.

Being irresponsible with credit cards: There are some people who can pay off their credit card balance in full every month and never know the anguish of carrying a balance—I am not one of those people. I never have been and I accept that I never will be good with credit cards. I have no self control when it comes to credit cards. Even though I rationally know that I shouldn’t use them for frivolous purchases I have continued to do it all throughout my 20s. It started first with a couple of store credit cards which I racked up and paid off several times before closing them. Then it was a credit card through my bank that I racked up and paid off many times before closing. I actually went about two years with no credit cards and then I opened one when I moved to Pittsburgh…and then another…and then another. I’ve been battling the balances ever since.

Not having a savings account: I know to some people this will be the most shocking mistake of all. I have literally never had a savings account. I just never made it a priority. I always just wanted to spend every dollar I made and honestly never really thought about preparing for a secure financial future. I’m trying to fix that now and start saving more so I don’t depend on credit cards when a big expense comes up.

Not contributing to a 401K or IRA from day one: My first job out of college paid $20,000. My paychecks were about $600 every two weeks. After making all of my bills I barely had enough to survive. I even went without health insurance for the same reason (this was before Obamacare was instituted). I never really had anyone to give me advice or talk with me about how important contributing to a retirement fund is. Now that I’ve explored the topic on my own and have an employer that matches my contributions I have started putting money into a 401K. I feel so behind, but I know I can make it up by contributing a lot more once my debt is paid off.

I’m really enjoying writing about this and I hope you find it helpful in your own money journey!

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