My Best and Worst Financial Decisions
I shared a few blog posts ago that I’ve recently become more interested in personal finance. During the journey of transforming your finances, it’s natural to take an inventory of my past decisions. While doing so I found some situations where I handled my money very responsibly and other situations where I did the exact opposite. Since I love sharing my experiences, I thought I would explain my best and worst financial decisions to offer some perspective. Everyone’s financial situation is different but I’m a firm believer in those who know better do better.
MY WORST FINANCIAL DECISIONS
#1: Buying a car that was outside of my means
A few months after graduating college I decided it was time to upgrade my car. So my parents and I spent a week going around to different dealerships, learning and test driving a few cars. By the end of the week, I’d purchased a brand new SUV and inquired around a $35,000 debt. Looking back I did not need an SUV as my first car. Pair that with a very high-interest rate since I didn’t have any established credit. Luckily at this time, I didn’t have any other bills or debt so where it might not have been my most intelligent decision, it was not detrimental to my financial health.
#2: Starting a Roth IRA too prematurely
A couple of months ago I started a Roth IRA through Vanguard. In order to open an account with Vanguard, you have to deposit $1,000 upfront. Now I know investing in your retirement as soon as possible is the most popular tip you’ll hear from financial advisors but I didn’t truly understand how Roth IRA’s worked. Because of that, I didn’t actually invest my money in anything, I’d just opened the account and the money was just sitting collecting dust.
When I looked at where I was in life and what my goals were, I noticed that the $1,000 that I’d deposited into this account could be going toward things that would help advance my career. I could upgrade my devices, invest in my professional development, or even save for moving out, but that was no longer an option for me since that money was tied up in something that wasn’t my top priority at the time.
#3: Weekly beauty services
For the first year after graduating from college, I would get my nails done on a biweekly basis. I’d just discovered the dip powder technique (which of course is the most expensive option) and every two weeks I spent $50-$75 on my nails. Now I will admit that my nails looked amazing and it was a definite confidence boost, but the gratification that I felt was not worth the $100-$150 cost per month. I decided to start doing my nails at home and eventually, I stopped doing my nails altogether, preferring the extra cash in my pocket.
MY BEST FINANCIAL DECISIONS
#1: Investing in quality over quantity
I’ve always been taught to value quality over quantity, but I’ll admit that once money got tight (especially in college) I got into fast fashion and buying cheaply. Once money wasn’t as tight I returned to my roots and started purchasing quality items that would last for years instead of cheap things that I’d have to replace often. In the past year, I’ve purchased a staple designer handbag, an iPad, a DSLR camera, and a MacBook Pro all with cash, and I know that these products will last me for years to come.
#2: Responsibly using credit cards
Shortly after purchasing my car, I started to realize the importance of credit. All throughout my childhood, my parents stressed the importance of not accepting credit card offers while at stores, so I always steered clear of credit entirely. At this point, I’d noticed that responsibly establishing credit is an imperative part of life so I decided to apply for a credit card. Once being accepted I followed the golden rule of credit cards: pay off your balance every month so you never carry a balance. I’ve been doing this for almost a year now and it’s radically transformed my finances.
#3: Experiences and Travel
Since I live pretty far from most of my friends, any time I get the opportunity to see them I take it. Whether that be 24 hours in New York, driving hours to small towns, or bumming it on an air mattress in a crowded room, I’ll do it to spend time with my people. Along with that, I’m willing to spend a good chunk of change in order to have these experiences (within reason), and I’ve never regretted it.
So that’s it! Hopefully, this post was informative and your ability to avoid some of my mistakes. Let me know down below what your best and worst financial decisions and thanks so much for supporting my blog!
