As adults, we all have to make financial decisions. Some of them are good and help to advance your financial position. Some of them are bad and put you financially further behind. Sometimes, they are so bad, you need to file bankruptcy and start over with a clean slate. I am thankful that my situation did not go to those extremes and that I have become more financially responsible.
Here are the best decisions I have made:
- Realizing there is a problem. As long as I had money in the bank, I did not have financial problems. As long as I could make the minimum payment, everything was ok. I realized it is important that start to decrease the balances to zero. No matter how much money I had in the bank, paying interest was causing me to lose money.
- Stop charging things I could not pay for in full for the following month. I refinanced all my high interest credit card debt down to two cards. One has a balance of about $7500 and is at 2.99% for life. The other has a balance of $3300 and is at 0% until Jan 2008. I plan to pay both of these off by January 2008.
- Contributing to my 401k. When I first started my job, I wasn't really to excited about having anymore deductions out of my paycheck. Taxes were unavoidable but I could cut out the 401k. I quickly realized this was a bad decision and I started to contribute 5% to my 401k. I chose 5% because I was able to get the full 3% company match.
- Starting a blog. This blog is certainly helping me in my quest to reduce debt. I feel if I "fall off the wagon" so to speak, I know my readers will call me out on it. I also thank my readers for the comments and inspiration.
Now for the bad. I have made so many bad decisions that I could write a book. I will try to stick to the major ones.
- Taking out a 125% loan on my home. I did this as a quick get out of debt strategy. I thought I would stay in the home long enough to payoff the extra 25% before it came time to sell. Not only did I not stay in the home, I ran up the balance on my once paid off credit cards again.
- Purchasing a new car every 2 years. My senior year in college, I bought a brand new car. I was so naive, I didn't even haggle on the price! I paid the sticker price and thought I got a great deal because my payments were only $289/month. Well, 2 years later, I had to have another new car so I just rolled in my negative equity and went on my way. My payment then went up to $388/mo. Approx 2 years later, I wanted another new car so I repeated the process again; this time I upped my car payment to $425/mo. I told myself this would be my last new car and I was going to pay this car off and drive it to the wheels fell off. I got bored one day and went to the dealership. 3 hours later, I was driving away with a new car and a $555/mo car payment. This was about a year and a half ago and I am now starting to get the new car itch. I will NOT fall into the 2 yr trap again. I am done. I know that this is killing my financial future. I am making a big dent in my debt and I DO NOT want to see that number increase.
- Failure to research purchases. If I wanted something, I would go out and get it. No research and no plan.
- Taking out extra financial aid in college. I worked 2 jobs in college to help put myself through school. Since my mom had no assets and very low income, I qualified for the maximum amount of loans and grants. I chose to accept alot more money than I needed and would get a huge overpayment check. Some of the money I used for living expenses but most of it I just spent frivolously. I did not think about the amount I would owe and have to repay once I graduated. If I had only taken what I needed for school and a little bit more to live on, I would have only owed about $13,000 when I graduated vs. my grand total of about $28,000. I've since knocked this balance down to about $22,000 but because of the low interest rate, I am focusing more on higher interest debt.
Please be sure to visit the posts from my fellow M-Network members. We don't want you to make the same mistakes that we made.
6 Financial Lessons - Don't Learn The Hard Way - from Gather Little by Little
My Least Bad and Least Good Financial Decisions - from Plonkee Money
My Best and Worst Financial Decisions - from Moolanomy
Best and Worst Financial Decisions: From the Trenches - from I've Paid for this Twice Already
My Best and Worst Financial Decisions: They Might Surprise You - from Being Frugal
My Best and Worst Financial Decisions - from ChristianPF
My Best and Worst Financial Decisions - from The Dough Roller
One good financial decision and a whole lotta bad - from DebtFREE Revolution