The 10 biggest financial mistakes that Pete the Planner has ever made

Hi, my name is Pete the Planner, and I make financial mistakes.

Hi, Pete the Planner.

I am not immune to doing stupid things with my money. In fact, I’ve been doing dumb things since I had my first checking account in 1993. Many of the mistakes I’ve made were well before I started giving personal finance advice for a living. Thank God. And sadly,many of my mistakes have been stupid and lazy. I know that I’m supposed to say something like, “I don’t regret a single one of these mistakes.” But I do. I regret every single one of them. I would handle each situation the complete opposite way.

I don’t know whether you should take comfort or fear in knowing that I’ve made some really dumb financial mistakes. But I do know that some people like hearing about others’ mistakes. It’s easier to learn that way. I’ve fixed every financial mistake I’ve ever made, but it hasn’t been easy. I’m still dealing with some of the ramifications of some of these mistakes. I am proud to say that I’ve never stiffed anyone on a bill that I owed money on, and I’ve learned a ton of life lessons. So here they are, the list of my most embarrassing financial mistakes.

1. Bounced a check on my fraternity’s account- I was the treasurer of my fraternity. Go figure. I learned quite a bit about accounting during that time. I also learned not to bounce a check that was written to a vendor. It was a pretty embarrassing incident, if I remember the story correctly. I believe the vendor happened to be the father of one my fraternity brothers. Oops. I was kicked out of my office. They voted me out of office. I didn’t get a chance to defend myself at the chapter meeting, I skipped the meeting to play basketball with my friends. Lesson learned. It worked out.

2. Didn’t sell my home before I bought a new one- Mrs. Planner and I decided we wanted to move out of our townhouse, and build a new home. We talked to realtor about selling the townhouse, but decided to commit (with money) to building the home, in the meantime. We put the townhouse on the market. Didn’t sell. Didn’t sell. Didn’t sell. Crap.  It was April 2007, what could possibly go wrong in the housing market? Boom. Taste it. Loss. We were forced to rent it out because the value of the property fell so quickly. I’m still the reluctant landlord of the property, to this day. While it hasn’t been a disaster, it’s been a character-building exercise, for sure. I learned all about talking to people who owed me thousands and thousands of dollars. Sigh.

3. Signed up for a fitness membership when I was in high school- This was dumb for no less than 338 reasons. I signed a long-term contract, and didn’t quite think it through. I paid the price.

4. Had a mortgage payment considered late, because I paid the wrong amount- This was a weird one. I  was used to paying a particular amount on my mortgage, and I paid it religiously every month. I didn’t realize that my mortgage amount went up $11, due to an escrow increase, and the mortgage company didn’t notify me of my short-pay, until the 29th day. When I paid the additional $11, it was too late. I had a 30 day late payment on my credit report. I blamed my mortgage company for this for a long time. I’ve changed my mind since then. It was my fault.

5. Had a business checking account go to collections because I left it open- A friend of mine and I decided to open a joint business account to share some marketing expenses early on in our careers. Fast forward two years, we both had left the company we were working for, and forgotten that we left money in the account. The balance was below the minimum balance requirement. The bank started taking fees because of this account. The bank didn’t know where to find us, because our business address had changed. The account went negative after about 18 months. Got a collection call. Panicked. Ding on credit.

6. Racked up $3500 worth of credit card debt for no particular reason- It was really dumb. I think it was around 2003 or 2004 and I kept reading about how important it was for me to build my credit. So I put down my debit card, and started using my credit card and paying it off at the end of the month…until I didn’t. I can’t even tell you what we spent the money on. We looked up one day, and we had a big stupid balance. It was a bit shocking, to be honest. I think this is one I first realized that sometimes what the financial industry tells you is a good idea, actually isn’t. Behavior will always ruin technical advice. It did. It does. Don’t do it.

7. Had my debit card declined at a grocery store, two weeks after I got married- Embarrassing, you ask? Um, yes. Did I mention my wife was with me? It was classic young kid. I just assumed money would be in my account. It wasn’t. I hadn’t deposited my paycheck. I’m not making excuses, but no one ever teaches you about that kinda stuff. Nothing like having your new bride stare at you in disbelief when the cashier tells you that you can’t afford the food you are buying. That night, I ate humble pie.

8. I day traded in college- It was dumb. I was risking serious money, and knew close to nothing about investing. Over the years I’ve justified this in many ways, but ultimately, it was a really bad idea. At times, I didn’t even go to class because I was glued to my computer screen. I was too young and too dumb to really understand what I was risking. I worked hard during the summers to earn money. And I ended up risking over $10,000 in the market when I was day trading. Although I didn’t lose money, it was still stupid. I was lucky, not smart.

9. Got a 40 yr interest-only mortgage- This could have been a disaster, but fortunately my discipline and lucky timing saved me. In 2005, a mortgage broker convinced me that I should refinance my mortgage to a 40 year interest-only mortgage in order to reduce my mortgage payment. He then wanted me to invest the savings created by the lower payment into an index fund. I did this. This plan would have been awful, if I had not saved the difference aggressively. The plan was still awful, and the only thing that saved me was the fact that I freaked out, and starting paying more on the mortgage to repay the principal. This ended-up being lucky timing, because I stopped putting money in the index fund right before the stock market crashed. I was talked into this idea based on a book that my mortgage broker had read. I got very lucky. I still have that mortgage, it’s on my rental property, and I still pay it aggressively. Crisis averted. The entire idea was a version of a “get rich quick scheme.” I hate that I did this. Again, it worked out, but it shouldn’t have.

10. I (currently) spend more than I should on housing- It’s true. If you take a look at Pete the Planner’s Ideal Household Budget, you’ll notice that I want people to spend 25% on housing. I spend more than this. We spend next to nothing on transportation, less than 1% of our income. I put a great deal of the surplus created in this category, toward our housing budget. Since you and I are in the trust tree, my housing spending stresses me out. We aren’t overhoused. If we had consumer debt, a car payment of any sort, and didn’t save money, I would be really worried. But the fact remains the same, I spend too much on my mortgage payment. I have rectified this the best I could over the years by refinancing my mortgage, increasing my income (I fortunately control my own salary), and saving a larger than normal emergency fund. But it’s still a giant mistake. You can’t polish a…never mind.

I don’t know if I’ve hit the million-time mark yet, but let me try: our financial lives are dictated by our behavior. We have to set ourselves up to succeed. Your behavior CAN change. Mine did. If you have struggled with any of these mistakes, or any other ones, for that matter, then just know that it’s okay. You can change. You should change. I’m very passionate about helping people prevent these mistakes. I lost a tremendous amount confidence in my decision-making ability during these times. I was so upset by some of these stupid mistakes that I’m trying everything in my power to prevent others from reliving them.

What’s your biggest mistake? Let’s use the comments section as a confessional. Go.

20 thoughts on “The 10 biggest financial mistakes that Pete the Planner has ever made

  1. Hey Pete,

    This is one of my favorite posts as well. I think this demonstrates that you are human, just like everyone else, when it comes to money. To me, this makes it easier to relate and even adds more credibility to Pete the Planner. The personal side and stories in your blog remind others that you aren’t just some perfect financial mind preaching advice from atop a mountain. Instead, you are someone who has learned from mistakes, lived them and made changes as a result.

    As for one of my mistakes – financing a new HDTV from Best Buy on Black Friday…but it was such a good deal!

    Thanks for sharing!

  2. I bought a 26 unit trailer park as a “turn key” investment that wouldn’t require much of my time. Nothing could’ve been further from the truth. I learned a lot about people who live for drugs and alcohol, the police, the eviction process and every “BS” line in the world why the rent is late.

    Just when I thought I had relieved myself of this burden by selling the park (on contract), the new owner turned out to be a criminal who schemed people out of their money. She’s in prison now, but I had to pay almost $20k to foreclose on her to get the park back.

    I still own the park today, and my wife still reminds she said not to buy it and don’t sell it to the “lady.”

  3. I once bought a stock based on a tip from one of the Money Magazines that I bought in an airport. The stock was Owens Corning and the article was about how all the asbestos legal problems were behind them. Three months later they filed bankruptcy. Most expensive flight I ever took.

  4. 11. You didn’t loan Robby $20 when you had the chance.

    If you had, Robby would have bought your book that much sooner, leading to a domino effect of prosperity and unicorns and rainbows.

    Just kidding. Thanks for writing this. Awesome stuff.

  5. 1. Bought a house. Took a new job in a city 600 miles from house. Rented house for slightly less than mortgage payment, while paying rent on apartment in new city. Did not receive notice that mortgage had been sold to a new mortgage company. Kept sending checks to old company. Spent 3+ years sorting out the entire debacle.
    2. Racked up about $3k of credit card debt sorting out debacle listed above.

  6. I appreciate your honesty and wisdom from personal lessons learned. This is such an encouraging post because it helps me see my mistakes don’t make me a hopeless cause.

    I was took out a personal loan to help a family member and ended up having to make payments and live on my credit cards until the next pay period several times. It is an expensive lesson- financially and to my credit score.

  7. The sacrifices we make for our families can be funny things. Our hearts sometimes write checks that we can’t cash.

  8. I also did your number 3 — a three year gym membership.

    Also:
    Took out a student loan to help my mom pay bills.

  9. Here is the sad story of my twenties!
    1. Bought a car as soon as I got my first full-time job. Didn’t have any credit, so my parents co-signed. I think I made the first 3 months of payments on time, and that was only because there was no payment due the first 2 months.
    2. Went to college before having any clue what I wanted to do. Wasted about 2 years and close to $20k switching majors (and then taking a year off).
    3. Smoked a pack of cigarettes a day in my early 20’s, during which my bank account carried a balance of appx. $14.
    4. Didn’t get a new retainer after my dog ate mine (didn’t want to spend the $150 for a replacement). After a few years my teeth shifted back and I had to get braces again.
    5. For the first 5 years of my career, I went out to lunch nearly every day but didn’t invest in my company’s 401k. I didn’t want to see my paycheck to get smaller (or have less money to waste).

    phew. I feel better.

  10. I bought a sweet sports car a year out of college, as my second car. I could afford it, but didn’t NEED it. Sold it a couple years later, but wish I had that money (secretly wish I still had the car:)).

  11. Let’s see.
    – I went to a private school and racked up an enormous amount of student loan debt.
    – I allowed myself to feel sorry for myself when I graduated and didn’t get my dream job, also allowed myself to ignore the 10+ phone calls a day reminding me my student loans were late.
    – I moved back out of my parents house the week I started my first career oriented job, deciding that paying $1000 a month in rent + bills was a better idea than paying on aforementioned student loans.

  12. I bought a house because 1)I fell in love with it 2) I never considered how much work it would be for me–turned out it was like having one foot nailed to the floor. And then the real estate market went south and 3)I trusted a man because he was my secretary’s husband. Wrong on all counts.
    tara

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