What Are Your Financial Regrets?

By: Roshawn Watson

Reflection is mental concentration. Sometimes the insights one gains by reflecting can be the difference between obtaining your breakthrough and languishing in failure. It’s easy to continue repeating the same mistakes if you never learn from them. However, suppose you could turn back the years and were eighteen again. Would you leave everything the same or would you change things? Personally, I would correct some past mistakes. Here are four things that I would do differently.

Car Note
Fact: After my first car died on me for the Xth time, it was time to replace it.
Fiction: I needed a major upgrade right then.

Oh how I regret ever getting a car note! Although I paid it off very rapidly, I realize getting this debt in the first place was one of the dumbest things I ever did by far. Oh how I wish I would have had more backbone and stood up to the salesperson. I wish I would have gone with something that I could have afforded right then instead of arrogantly assuming that everything would work out. Fortunately, I only made this mistake once.

One reason I regret this is that cars are rapidly depreciating assets: the average car loses 45% of its value in the first three years. However, the primary reason car debt is a big one for me is because of opportunity costs. If you just invest the typical car payment in North America (approximately $480) from age 20-70 (assuming 10% annual return), you would have a sweet $5 million. Even if I’m half wrong, you’re still in a great situation. Once I realized what I was giving up, I could no longer enjoy my car. Thus, I almost sold it but in the end I resolved to pay it off and count it as stupid tax…never to be repeated.

Student Loan Debt
I received plenty of scholarships, but the truth is I didn’t do everything to minimize my debt. For example, I could have worked more while in school, applied to more scholarships, or agreed to work for companies after graduation in exchange for tuition. I could have also chosen a less expensive school (although I love my alma mater greatly). There were some phenomenal other schools (very strong academics) that I was accepted to that would have cost a fraction of what I paid. Thus, I not only consider my student loan debt self-inflicted but also preventable.

While I am happy that this worked out too, I got the degrees and paid off those debts, I certainly wouldn’t call my decisions financially wise. Student loan debt has now surpassed credit card debt by $3 billion, and 43% of students don’t graduate. It’s bad enough to have the student loans, but to be indebted without earning your degree is akin to digging a hole without a shovel. I know it won’t be you or anyone that you know who doesn’t graduate, but I would suspect that close to 100% thought that they would graduate too, yet 43% didn’t. With student loan default rates now exceeding subprime mortgages, car loans, and credit cards, and the near impossibility of bankrupting them, student loans are far from innocuous. I’m sure we all know an educated indentured servant or two.

Investing Earlier
I wished I would have started investing earlier too. Although I started a few months after I began working full-time, there was no good reason I couldn’t have started while I was a teenager. I wish I would have learned about brokerage accounts instead of just savings accounts and c.d.s, even if the only obvious benefit I received was getting over my initial trepidation with respect to investing process.

I experienced some “growing pains” with respect to investing too. For example, I initially followed the asset allocation suggestions for my age group, but that didn’t fit my risk tolerance. Consequently, I was anxious and with good reason. Had I continued with that initial strategy, I would be very unsatisfied with investing today. From this experience I learned that one-size fits all advice makes great sound bites but can be misapplied due to the specifics of your situation. Just because your investment plan is unconventional doesn’t make it ineffective.

If you purpose to learn more about investing, consider subscribing to investing magazines and listen to investing greats, such as Warren Buffet. An insightful read is The Intelligent Investor by Benjamin Graham. Although I didn’t start investing at six, like my colleague Money Reasons, I am happy that I grabbed a hold of this lesson sooner rather than later and intend to be a life-long investor.

Delayed Grad School or At Least Been More Innovative
I also wish I would have trusted myself more with respect to going back to school. I was concerned that if I stopped, I might not return. In my situation, it would have been financially more prudent to have delayed grad school, even if it was for only six months. However, instead of working something out to minimize the financial implications of going to grad school, I blissfully ignored my mess initially. Although my decision was more palatable that way, I almost got burned…badly.

At the very least, I wish I had been more innovative. A few years ago, I read Campus CEO by Dr. Randall Pinkett (winner of The Apprentice Season 4). He wrote that he and his partners built a multimillion dollar business by compensating for their limited financial capital by using other resources that were readily available at their university. Unfortunately, this was not my experience, and to this day I fault myself for not applying myself more in this area. Let me paint an illustration of how being more innovative might have helped me. Depending on your sophistication, the same 10 lbs of iron can be used to create several different levels of income. For example, you could use it to make: (1) horse shoes (worth $30), (2) needles (worth $300), (3) watch springs (worth $3000). Too many times in life, we try to solve our financial problems with “horse shoe” level answers. I count my blessing that it worked out, that all is not lost, and that there is still time. (I did do some creative things to leverage my income, which I describe in an upcoming post).
 
Well, those are my missteps; do you want to share some of yours?

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Copyright 2012, Roshawn Watson, Pharm.D., Ph.D. All Rights Reserved.

36 comments

  2. Money was tight after I graduated, but once I started working… I should have used the company's tuition reimbursement program. Instead I started a family. I love my family, but I would have liked to have a masters degree too…

    Even though I had my first stock when I was 6, I didn't really understand it fully. But with continual exposure over the years (my uncle would buy $100 worth of stock every Birthday), it did slowly take hold. I lost a little money on stocks like "New York Seltzer water" and had some other near bombs. But since I didn't have too much money to invest, I also didn't lose that much money 🙂

    Today, I'm a much better investor, but it was a rocky journey for me initially, even if my Uncle did take and point me in the right direction (and give me a bit of a shove too).

    Now I'm doing the same for my kids, but on a bit larger scale. 🙂
    My recent post Do Movies and TV Shows Affect Your Purchasing Decisions

  6. Two regrets: 1) I didn't buy Berkshire Hathaway stock with I first heard the name Warren Buffett, and 2) I wasted money buying a couple of fancy cars right out of college to impress people that did nothing but lose value.

  9. Wow, you are right. There are several similarities. It's amazing how many experiences feel "unique" that are really shared in one way or another.

    Yes, I think about the car analogy a lot. It's is something that I keep in mind every time I see a financed car that looks nice. I say to myself: is that car which will lose about 50% of its value in 3 years worth $5 million? I can say that the decision is easy for me then.

    Best regards Kris!!!!
    My recent post What Are Your Financial Regrets

  12. There definitely are things I could have done differently, but I would have missed out on key life experiences. And unfortunately, we have to learn things the hard way sometimes.

    My "learning experience" was buying a house at the peak of the market. If I could take that one back, I so would.
    My recent post November is Not for Working

  13. Sure, there was definitely A LOT of real estate mania. It was hard not to be caught up in it and equally hard to know when the prices were approaching ridiculous.

    It's certainly good to extract the lessons from these experiences; that is progress and meaningful.

    Thanks for your comment!
    My recent post What Are Your Financial Regrets

  14. When I look back on my life, I realize I've really screwed up.

    But I had one hell of a time.

    Even after all the dope, crazy living, and having a good time, fate smiled on me. Maybe sometimes one's just lucky.

  15. Biggest financial misstep was buying a vacation property too early after the bubble had burst. Markets kept going down. Looks like they've stopped, but damage was done. That said, I never planned to sell, and can afford the payments, hence the principal value is kind of an illusion. I want it to be as low as possible so there is little property tax to pay!
    My recent post How To Overcome Poor Grades And Get A Job

  16. Hey Mike!

    Sounds like one heck of a party! Seriously, you are right. Some of us are incredibly lucky despite the mistakes that we make. It's good there is grace in life: many mistakes are not fatal flaws. I'm glad things ultimately worked out for you!
    My recent post What Are Your Financial Regrets

  17. Hello Sam, I'm sorry for your loss. Like you said, other than the sting of overpaying (a horrible feeling), this seems inconsequential. While it is true that the value technically goes into your net worth calculation, but since you never plan to sell it doesn't seem like it matters. I look at home values the same way: a home/property is mainly for living, vacationing, or renting out. You weren't treating this as an investment, so minimizing expenses (lower taxes) on a place that you love seems like a great strategy to me.

    Best regards!!! Your Yakezie member post inspired me!!!

  19. Yes Kris mentioned not having anything to invest too. The problem with me is although I wasn't what most people would consider irresponsible with the money I earned earlier, I didn't honor the full principle of paying myself first for the long-term. I was fine in the short-term (saving for a goal), but I wish I could have even experimented with something small like 2 or 3% consistently. This would not have been about the ROI, especially in the short-term as much as the education.

    Mich, the way you and Kevin talk about losing your prime years in school, one would expect both of you to be in your late 50s (a few decades off 🙂 Seriously, I totally understand, but I didn't 10 years ago. I definitely had to make some immensely tough and painful choices as the result of going to school for long. Mitigating the financial damages and dare I say thriving did not come easily or effortless in any way, shape, or form.
    My recent post What Are Your Financial Regrets

  20. Since time is money and viceversa, I sometimes regret having spent time in years past in profoundly unproductive pursuits.

  22. Without a doubt, not being frugal or money smart in college.

    I had no idea what a budget was, I just paid the bills and spent the money, and if I had extra left over, I didn't think about savings or anything.

    Only came out with student debt, but I could've had a lot less, had I been smarter.

  23. I think most of us went through a non-frugal phase at some point. Since the definition of frugality is so fluid, based on who's defining it, I suspect not being frugal for you may be completely different from not being frugal for others 🙂 At least you didn't end up with credit card debt and a car note!!!!

    Best Regards

  24. My own financial regret is spending too much money on current consumption when I was younger ( a new car, etc…)… I was working a lot but because I was paying for all my living expenses while studying, most of the money was being spent. What I had control over (like car expenses) I could have reduced instead of spending so much… and that would have given me more money to invest and save.
    My recent post Challenging Your Thoughts and Beliefs

  25. It sounds like you were being responsible mostly but just hadn't learned some of the lessons life wanted to teach you (i.e. frugality). I can completely relate to this regret. There were times when I cared about things that really just shouldn't have mattered as much (like what others thought or what I wanted instead of what I needed right then). That's the beauty of making mistakes while you are young, many of them, such as these are not fatal: course correct and move on!

    Cheers mates!
    My recent post Yakezie Personal Finance Carnival- Dream Edition

  28. I made many of the same mistakes, but would like to put a bit of a different twist on this topic. Many times, these very mistakes are our motivation to do better. As I read the thread I kept thinking of how your readers have benefited today because of their mistakes of yesteryear. I say, "Let's embrace those regrettable decisions and move ahead wiser and smarter."

    I love my life so much today that, if I had the chance to do things over, I'm not sure I would change much. Those "corrections" might not have turned out well in the long haul.
    My recent post Book Review- Control Your Cash

  30. This line of thought is a difficult one for me. It's not that I don't think that one can learn from mistakes because I do. It's just more painful (and often unnecessary); however, if mistakes are the only way someone learns, then I can see where making the mistake is necessary. I appreciate that things ended up well, but I personally believe things would have been better faster had I heeded to wisdom even earlier. That said, who knows what would have happened in a parallel universe (imagining at least). I assume some at least, would have been miserable if they always played it safe 🙂

  32. I don't have any real financial regrets other than I should have been a bit more patient with some holdings and wish I had learned financial planning/tax tricks a bit earlier. I cashed in some options with no clue on the tax consequences.
    My regrets are that I didn't seek more public speaking opportunities at a younger age and I didn't have the confidence when I was younger to take creative writing. Both., I found, are useful in explaining financial concepts.
    My recent post Need An Intermediate Bond ETF

  34. I can certainly see where understanding the tax code better would substantially impact the bottom line, as taxes are our number expense. Public speaking and creative writing are very interesting regrets, as I think few people wish they did more public speaking 🙂 and much financial literature is of a technical nature, so the use of creative writing isn't immediately obvious. That said, some of the most popular personal finance advice books are much less technical and use very illustrative examples.
    My recent post What Are Your Financial Regrets

  35. My biggest financial regret was putting too much money into company stocks. I came out OK, but I think the opportunity cost was pretty big. I wish I knew more about asset allocation at the time. These two are probably my biggest investment mistakes. Anyway, I don't dwell on the past too much and it's all behind us now.

    My recent post Investing Fundamental 6 – ROTH IRA

  36. Pingback: Learning from our financial regrets

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