56: Turning Money Mistakes into Money-Saving Lessons
Nov 02, 2023
Carolyn
Ever had that feeling when you realize you've made a financial blunder? Well, you're not alone. I once impulsively signed up for a store credit card for a tempting discount, only to be sideswiped by the interest on my bill. Hear the story and the lessons I learned about setting clear financial priorities and understanding the implications of credit cards. And how I later applied this lesson in a similar scenario but this time with a much wiser strategy.
We all have our share of money-related missteps, but the trick is to turn them into lessons and prevent future mistakes. Follow me on a journey as I expose my financial mishaps, from signing up for store credit cards without understanding the impact, to buying my first car at an auction without seeking advice. Through trials, errors, and bit of hilarity, I've learned the importance of avoiding bad money choices, budgeting, and setting goals for financial health.
Join me and let's grow wiser together from our financial mishaps!
Ever had that feeling when you realize you've made a financial blunder? Well, you're not alone. I once impulsively signed up for a store credit card for a tempting discount, only to be sideswiped by the interest on my bill. Hear the story and the lessons I learned about setting clear financial priorities and understanding the implications of credit cards. And how I later applied this lesson in a similar scenario but this time with a much wiser strategy.
We all have our share of money-related missteps, but the trick is to turn them into lessons and prevent future mistakes. Follow me on a journey as I expose my financial mishaps, from signing up for store credit cards without understanding the impact, to buying my first car at an auction without seeking advice. Through trials, errors, and bit of hilarity, I've learned the importance of avoiding bad money choices, budgeting, and setting goals for financial health.
Join me and let's grow wiser together from our financial mishaps!
Hello everyone. My name is Carolyn. Welcome to the Saving for your First Home podcast. I am the CEO of the Financial Moment. We offer money coaching for those who are ready and willing to make financial changes in their lives. For the most of us, there comes a point in time where we think to ourselves it would be really nice to own property, but it sometimes can feel like a pipe dream and not very easily obtainable. So I created this podcast to give you all the information and tools you need to take the steps forward toward home ownership. Take it from me my husband and I started our lives together, working part-time jobs with a young child. Fast forward, through many hiccups and failures, we stepped our feet into our very first home. For us it was a pile of dirt, but eventually our family home was built on that dirt. Now we are in the midst of growing our investment property portfolio. I created the savings for your first home podcast to give you easy, actionable tools for you to do the same. If you have that same gut feeling that I did and want to create a life for yourself and your growing family, but don't know where to start, you are in the right place. Let's do this. Hello and welcome back.
Speaker 1:
I feel like this episode is going to be kind of like a blooper reel. Either you're going to be laughing at how I got myself into these crazy situations or you're going to be able to relate and share some of your crazy stories with me as well. So today I thought we'd talk about our bad money choices. Now why, you ask? Why do we want to go down memory lane and think about all the mistakes and problems that we had when it comes to making money decisions? Well, there's a couple of things that we can learn from our past. Faux pas First is identifying a pattern. If you have something that occurs time and time again and it's leading to poor decision making, recognizing those patterns perhaps is a good, positive first step to making change. Also, I mean, who doesn't learn from experience? Right, you fall, you cut your knee. You're going to watch where you're walking the next time, right? So every financial mistake, it really offers a valuable learning opportunity. Whether that could be overspending, accumulating debt, you know, failing to save. All of these experiences really become a source of wisdom and if you acknowledge your errors, you can better understand what went wrong and why. And another reason why we kind of dive into this is because we really want to set clear priorities. Okay, so let me share one of my experiences with you.
Speaker 1:
I'm not sure if I've mentioned this on the podcast before, but I am a bit of a spender, so I love to shop, I love getting a deal and it just lights me up for some reason. So many, many moons ago, I was in New York one year and Macy's had this great sale and of course you know, picking up different things, and if you sign up for their Macy's card, their Macy's credit card, you'll get an additional. I don't remember what it was, maybe 20% off, and it was already on sale, and so it would have been even more of a deal if I got this card. So I'm thinking, sure, why not, right, get the 20% off and save myself some money? So I'd go through the whole hassle of signing up for this credit card. I get my 20% off and I'm like, yes, you know, I didn't even have to spend my US dollars that I had at the time on the purchase, so it was an even better score.
Speaker 1:
So now here's where things went south. So you know, obviously I returned back to Canada and I had given them all my information, address, information, whatever, but it probably took a while to set up the card and actually send out the bill to me to be paid. So when I finally got the bill, I had long forgotten about this purchase and I kind of just put it aside, because it required me to have it set up online banking, and it was just a hassle, right to pay. So I'm like, oh yeah, I'll get to it. It was a small amount, it wasn't a lot of money, and so I figured I'll, I'll just get to it. Well, you know, they don't send the bills, take a long time to come, and so I kind of just forgot about it, right.
Speaker 1:
And so months went by, didn't pay much attention to it, and then finally a bill came and if you saw the amount of interest that they put onto this purchase, it was like more than double what I paid originally for the item. And I was just like what is going on right now? And so I had to end. This was in US dollars and so the conversion on top of that and here is where I learned my lesson, because my priorities were not on point, you know, I didn't prioritize paying off the debt, I just allowed it to kind of accumulate. I didn't think anything of it and I didn't really realize the impact it would have on me in the future, and so this was a definite learning lesson for me, because I had to pull out more money out of my pocket and I'm sure it had an impact on my credit rating.
Speaker 1:
Probably back then I wasn't paying attention. Now this is where priorities come into play. If I had made a wiser decision at the time of purchase like how much was the 20% off, you know, was it really worth it going down this road? Now perhaps it was. But again, priorities of paying off debt in its entirety when it comes in, those are things that you need to set to avoid unnecessary interest. Also, making it a priority to stick to a budget. Now, because I put that purchase on credit, it freed up cash that I had to spend even more, which probably put me over my budget.
Speaker 1:
Now the real question is did I learn from this experience? So I did do this one more time. I signed up for an Ann Taylor card because, again, it gave me a massive discount off of what I was purchasing. However, what I did learn was that I needed to pay that off in its entirety. So what I did was I took the US dollars that I had for the purchase and I paid it at the cashier. I paid the bill right then and there, so there would be no bill to me in Canada, and I ended up getting the discount and it was all. It was a win-win. So my point in all of this is to say that really learn from your previous mistakes, avoid making the same ones over and over again, and really stick to what your priorities are Paying off debt, sticking to a budget, right. These are things that will help you to make better financial decisions in the future.
Speaker 1:
Okay, so here's another one for you. Have you ever made a money choice without seeking advice? Well, I have, and this goes back to when I purchased my first vehicle. I was so excited, right, I had saved some money and I was going to buy a car and it would be my first vehicle that was considered mine. So I had heard that a lot of people were buying cars via an auction. You know they would be perhaps a leased car that was returned, or a car dealership that would no longer do the vehicle and you would get, you know, a better deal on it. So I was like perfect, let's do this. So my boyfriend, which is now my husband at the time we go to this car action and one of the rules of the auction is you know, you can take a look at the car, you can go inside, but you can't drive it, you can't test drive it, you can't do anything with the vehicle, you just kind of have to take a look and hope for the best. Now I picked a Dodge Shadow. So I don't know if you know, I'm probably dating myself now. But do they even make that car anymore? Probably not.
Speaker 1:
Anyway, that was my first car, first choice. It was shiny, it looked really nice on the outside. We went inside the car. It was clean. So I figured, you know, it's probably like a rental return. You know it's a really good deal, just the car, we drive the car off the lot and no ends of problems. So I don't even remember exactly what the mechanical issues were, but the cost to repair it would have been more than the value of the vehicle.
Speaker 1:
I was devastated. I never even got to drive that car for more than three months because it was just such a lemon and all the hard earned money that I had just went down the drain and later, of course, you know, the mechanics that I took it to said well, why didn't you bring a mechanic with you to take a look? And you know, just start the engine, listen for its different sounds, whatever I'm like, I don't know. I just thought you know these cars would work. Like you know, I had no knowledge of what I was doing, to be honest with you, and so that really resulted in one of probably the worst money choices that I had ever made. I went on to have to save again for another vehicle and I was able to buy another car, but it was painful, right, because I was taking the bus and it was just not pretty time for me.
Speaker 1:
So, having said all of that, it is so important to seek out guidance and advice right, and this can come from your mentors, it can come from financial experts you know really people that you are knowledgeable in what it is that you're trying to do. Now, this doesn't have to be a purchase, right. It can be about financial decision making, like you know retirement goals, or saving for your kids' education, or buying a home, or any of the big financial decisions. You really need to seek out guidance and advice. You don't just want to jump in. You know, things can be so emotional when it comes to money. You see something, it's shiny, it's nice, and you jump in and then, all of a sudden, you've lost thousands of dollars. And so did I learn from that experience? Well, yes, because the next time I purchased a car, you know, I learned that you can get certification, that certain safety criteria need to be met. You know, there's so many things that I learned from that experience. And so, again, reflecting on these things and making better choices the next time really puts you in a better position.
Speaker 1:
Okay, so bad money choices also often result from poor financial habits. Okay, so I'm going to draw on again some of my poor money choices to give you an example of what I mean by this. So in the past, I would kind of rub Peter to pay Paul have you ever done that? So I would pay the minimum payments on some of my cars so that it would free up cash to be able to do some other things that I wanted to do. Now let's just think about that for a second. I'm paying minimum payments on the debt that I already owe and then I take the money that I have left over that I really should be pitting on that debt and then go and spend it on whatever else.
Speaker 1:
Now again, I think at the time you probably had a little bit more limited income and my son was probably in competitive sports and you know all that stuff cost a lot of money, and so in order to pay a fee like, for example, their entrance into a competition, I had to pay in a certain amount, and it wasn't budgeted for, of course, and so I had to just pay lesser on some of my bills in order to free up the money to put towards their competitive fees. And this is a really unhealthy habit that I probably developed over time of just paying the minimum and using that money for something else, because what it did was really cycle me into a series of debt. And then, all of a sudden, you have a large amount of debt, whether on credit or whatever, and you don't even know how you got there, because you didn't feel like you spent a lot of money. But yet the debt is piling up, and this is where understanding how interest really works is important, because compounding interest on the debt that you already owe is going to get higher and higher and increase your debt load. So having an increased financial awareness is really crucial. This is why financial literacy, to me, is one of the most important pieces of knowledge that you should have as an adult, and it really does come from your childhood. But as you go into adulthood, understanding how interest works, understanding why you should be creating some healthy habits, really is going to set you up in a better financial position and it really is going to help you to make better, more conscious choices for your future, and you're going to avoid a lot of pain and stress.
Speaker 1:
Let me tell you Okay. So those are some of my bad money choices, and I have many, many more, but I'd like to hear from you Am I the only one? Have you guys made any kind of bad money choices that you know have changed the way you think about money? Or perhaps you're still making them? I don't know, but I'd really like to hear back from you. If you could send me a DM on Instagram, that'd be great. You know, just make me feel a little bit better that I'm not the only one, but we can't just talk about the mistakes that we've made. Yes, I want you to learn from them. I want you to develop good habits. I want you to have a little more financial acumen, but what I'm going to do is actually give you some tips on how you can kind of avoid some of these situations.
Speaker 1:
So I always talk about a budget. Right Now again, I've said it many times that a budget doesn't have to be something that is very restrictive. It can be something that is very simple. So, for example, if you're traveling and you want to do a little shopping or excursions or whatever, create a budget for it, understand how much it is that you want to spend before you leave and really keep track while you're away of what you're spending, because you don't want to come back to a huge credit card bill when you get home. You know it kind of takes away from the trip that you just had, right. So what I do sometimes on my phone, in the notes section of the phone, is just create a little chart, right. So you have three columns date, the item and how much you purchased. So if you feel like you need to record your food costs or you need to record what you're purchasing whatever it is you know just quickly enter it into your phone when you're making the purchase and when you come back to the hotel, you can kind of see how it's adding up day over day, right. And then you can kind of scale back. Or you can spend maybe a little bit more, who knows, right.
Speaker 1:
But setting a detailed budget for your trips or your kids' school activities or you know things that just are a little bit outside of your normal everyday budget. It's important to do that, because that's what's kind of throw you off and force you almost to make a bad financial choice. And then I want you to have some clear goals, right? So goals about saving for your home, paying off debt, building your emergency fund All these things are very important for your financial health and if your goals are forefront in your mind, you're going to make better choices because you know the bigger picture is around the corner, right? So take the example of me paying the minimum payments. Well, had I thought about it and actually put the money down on the card, I would have saved myself the interest and I probably would have had more money to put towards my children's activities. So you know it's all a big circle and if we focus on our major goals that are important to us, we will make better decisions along the way.
Speaker 1:
Another tip is to really separate your money. I did an episode. It's number 27. If you want to take a listen to that episode, it talks about how I actually set up my banking and if we separate our money for different purposes. So, for example, our essentials, the bills that need to be paid, perhaps our discretionary spending groceries, gas all in separate individual accounts and we set an amount for each of them. When we've reached that target and we've spent the money, then we kind of know that that's it right. So it's almost like a forced way to stay on track.
Speaker 1:
Now, in doing so, you do need to create a system of tracking. Now, I think everybody hates to track, including myself, right? I think that it's painful to record every single thing that happens or any of the time you spend money. So there's different ways of doing it. If you need help with creating a budget or you want some tips, I have a great guide that you can download. You can just go to thefinancialmomentcom backslashbudget-tips. It's going to give you several ways in order to stick to your budget.
Speaker 1:
But tracking is actually something that really helps us to stay aware. Especially in these days where things are so much more expensive, it's important to have an idea of where your money is going. Do you need to increase your budget? Say, for example, gas. Gas prices are super high right now and if you have it that your budget at the same targeted level you did last year, then you're definitely going to have a shortfall, which can result in additional debt.
Speaker 1:
All right, so why don't we recap on why we're reflecting on our bad money choices? First off, it's going to help us to identify some patterns. If you've made financial mistakes in the past and you're continuing to do the same things in the future, you need to identify those patterns and then make some positive changes. And, of course, we need to learn from our experience. Right, every financial mistake offers that valuable learning opportunity.
Speaker 1:
Then we talked about setting clear priorities. We want to ensure that our priorities about saving, about budgeting, paying off debt, are top of mind, so that when we go to make a financial decision, we understand what our priorities are. And this leads into our healthy habits. Right, making decisions based on just a habit that we've always done. Right, robbing Peter to pay Paul. Also, we want to increase our financial awareness.
Speaker 1:
Now I know I'm speaking to the choir because you guys are listening to this podcast, so by doing so, you're improving your financial literacy and I'm hoping that you're going to have some takeaways that you can implement in your own lives. So just continue to be financially aware and use that to motivate you to change. And then don't forget to ask for guidance, right? You can save yourself so much pain and heartache if we just seek out financial expertise and advice. Set your clear goals. Make sure they are top of mind, like investing for retirement, paying down your debt, saving for a home All those big, big goals that we have in mind. Make sure that they are top of mind when you go out and make those little, tiny money decisions.
Speaker 1:
So I hope that you've enjoyed listening to some of my money faux pas and what I've learned, and don't leave me high and dry. Send me a DM and tell me some of the mistakes that you've made, just so that maybe I can learn something as well. And just remember to download the budgeting tip guide. You can find it at thefinancialmomentcom backslashbudget-tips. All right, I hope you guys have a wonderful week and we will see you next Thursday. Thank you for listening. We are committed to helping you place your very first steps into your new home. See you next time.