What was your dumbest financial decision?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Twins Fan
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Re: What was your dumbest financial decision?

Post by Twins Fan »

As others said, I also have many on my list... but, my worst decision was not making the decision to really get involved in my finances and financial future until I was 39 years of age. :oops:
travellight
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Re: What was your dumbest financial decision?

Post by travellight »

This is what my husband did on our first date over 30 years ago!
Niiice, Gnirk!
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Nowizard
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Re: What was your dumbest financial decision?

Post by Nowizard »

Traded for Lucent stock and added some to it when ATT split. Had $20,000 in it which went to $155,000. Started down, and I "knew" it would come back. Sold for total of approximately $30,000, a nice profit, but................... Have bought few, individual stocks since.

Tim
etowers
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Re: What was your dumbest financial decision?

Post by etowers »

Buying a deferred annuity for $5k p.a that would only yield 2% p.a and would have deductions totalling in excess of $300k. Even worse was buying $3k of bundled whole life insurance with the annuity. Luckily I found this forum and was advised on what a terrible deal that was. Cutting losses of $8k for one year's premium that's non refundable. Oh well. At least I learnt from that exercise to severely rationalize all my insurance cover. Will be looking to cut it from 22% of income to about 11%.
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grabiner
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Re: What was your dumbest financial decision?

Post by grabiner »

sscritic wrote:Previous threads:
Financial Mistakes you have made- non-investing
http://www.bogleheads.org/forum/viewtopic.php?t=37041

Your worst investing mistake (2011 version)
http://www.bogleheads.org/forum/viewtopic.php?t=69004

Your worst investing mistake (2007 version)
http://www.bogleheads.org/forum/viewtopic.php?t=3313

Quiz: what do the latter two have in common? What can we expect in 2015?
A poll which makes sense. A forum upgrade a few years ago caused results from pre-upgrade polls to get corrupted.
Wiki David Grabiner
RenoJay
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Re: What was your dumbest financial decision?

Post by RenoJay »

I bought a house in Nevada in late 2006. I knew there was a housing bubble and had been a renter from 2002-2006. Then, after I saw the local market fall 20%, I figured it was a safe time to get in. Then I watched prices continue to plummet for years. Now we're on the upswing, but the value is still 20% below what I paid. (And remember, I bought well below the peak.)
BrianMc
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Re: What was your dumbest financial decision?

Post by BrianMc »

Bought a house in a major metropolitan area on the East Coast pre-housing market meltdown and ended up selling it 5 years later for $125K less than I'd paid for it (although I wasn't under water). Two years later, the market in which I had bought/sold has rebounded back with a vengeance. In hindsight, I'd have kept it as a rental. In fairness to myself, I had 90 days from the time I was told I was transferring to the time I had to report to my new job, so coupled with a very unstable market (at the time) my decision was rushed. Nonetheless, I think I'll regret this decision forever.
uglystickrules
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Re: What was your dumbest financial decision?

Post by uglystickrules »

Using a large wedding gift plus my savings to put a down payment on our first house (which has turned out to be a money pit/fixer upper) instead of staying in our $350/mo. rental right out of Little House on the Prairie. This happened prior to Bogleheads.

It was my parent's house that I was raised in, and I thought I was doing it to help my parents and have a potential rent house in the future. Since then, we've used my wife's land to build our new house near her parents so we can have free childcare, but now we've got to figure out what to do with our current house. We've put quite a bit of money into maintaining it, and if we can't get it sold in the next couple months, looks like someone else we'll be paying the mortgage for me! If I could go back and foresee the future - us having a child, my mother actually retiring early, and having a decent job I have to commute to, I would have just kept living where we were, kept saving money, and used my wife's land to build our house and not have bought the old home. But, c'est la vie. Hopefully, we get it sold, get some money out of it, and go back to school which will earn more in the long-run than having a potential money pit for a rent house.
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danwhite77
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Re: What was your dumbest financial decision?

Post by danwhite77 »

Gnirk wrote:
travellight wrote:
Just envision a scenario where you take a woman out for a lovely dinner and then pull out a two for one coupon with your credit card to pay. A boglehead compatible woman would be impressed; this could be a good screening mechanism to eliminate incompatible partners AND save money.

This is what my husband did on our first date over 30 years ago! :sharebeer
I did this with my wife on our first date. We've been happily married for ten years and spending our money (or not) like Bogleheads.
"While some mutual fund founders chose to make billions, he chose to make a difference." - Dedication to Jack Bogle in 'The Bogleheads' Guide to Investing'.
TRC
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Re: What was your dumbest financial decision?

Post by TRC »

Buying a multifamily thinking I wanted to be a landlord.
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villars
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Re: What was your dumbest financial decision?

Post by villars »

Let'see which of these is worst...

buying house in '06 with zero down then
Contributing nothing to 401k for 2 consecutive years in order to save money for 2nd house downpayment, because i "learned my lesson" about not putting money down :oops:
Then maxing out 401k contributions to "make it up" , but keeping them in money market while S&P gains 30% :oops: :oops:
General Disarray
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Re: What was your dumbest financial decision?

Post by General Disarray »

In some ways, my dumbest financial decision = pursuing grad school. Graduated with no debt (no loans), because the tuition was paid for by the school all those years, but that was nearly a decade worth of lost income. In spite of not having to worry about tuition, it was still an immense economic struggle, as I lived in a very high-cost area and my graduate stipend was insufficient to even make ends meet (I had to essentially deplete my savings during this period).

The end result seems to be worth it--at least for the time being--but I am quite a bit behind in my retirement savings. Saved some and have emergency funds, plus a chunk for a down payment for a home but am not where I should be. I try to save as much as I can, but it is hard to catch up after losing about ten years.
island
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Re: What was your dumbest financial decision?

Post by island »

General Disarray wrote:In some ways, my dumbest financial decision = pursuing grad school. Graduated with no debt (no loans), because the tuition was paid for by the school all those years, but that was nearly a decade worth of lost income. In spite of not having to worry about tuition, it was still an immense economic struggle, as I lived in a very high-cost area and my graduate stipend was insufficient to even make ends meet (I had to essentially deplete my savings during this period).

The end result seems to be worth it--at least for the time being--but I am quite a bit behind in my retirement savings. Saved some and have emergency funds, plus a chunk for a down payment for a home but am not where I should be. I try to save as much as I can, but it is hard to catch up after losing about ten years.
Grad school for 10 years?
General Disarray
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Re: What was your dumbest financial decision?

Post by General Disarray »

Not 10 years exactly. Just rounded it up. 7.5 years from start to finish.
island
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Re: What was your dumbest financial decision?

Post by island »

General Disarray wrote:Not 10 years exactly. Just rounded it up. 7.5 years from start to finish.
Well that's quite a big round up. :D Still a lot of years though, masters, doctorate and ?
gator15
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Re: What was your dumbest financial decision?

Post by gator15 »

In my early 20's with an income of around $40k I had nearly $40k in vehicle loans. I had another $5k in furniture loans. I made payments on a pickup truck and on a speedwagon (Mazda RX7) simultaneously. I had just enough money left over to pay rent, max out my Roth IRA and party. I did this for a couple of years before selling both vehicles and getting an SUV. I reached a point where I couldn't maintain the lifestyle anymore. Buying these vehicles wasn't smart according to Boglehead standards, but I don't regret the decision to purchase the vehicles. It was a learning experience and I had a lot of fun with those vehicles.
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LowER
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Re: What was your dumbest financial decision?

Post by LowER »

May I count the ways....

You can't be old and wise without first being young and stupid....
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tigerman3
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Re: What was your dumbest financial decision?

Post by tigerman3 »

Buying VIX two years ago and watching it sink to a small fraction of its original price.
sschullo
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Re: What was your dumbest financial decision?

Post by sschullo »

Two fixed annuities.
"We have seen much more money made and kept by “ordinary people” who were temperamentally well suited for the investment process than by those who lacked this quality." Ben Graham
thisismyusername123
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Re: What was your dumbest financial decision?

Post by thisismyusername123 »

Here are four dumbs and three smarts.

Dumb: I bought the most expensive house in the neighborhood. I still felt like a genius because it appraised for 40k above purchase price. Then I got another appraisal a year later for my refi and it appraised 35k below purchase price. No longer a genius. Plus, nonconforming lot and all that. But, you know what? Buy and hold. Just like stocks. Buy and hold. I also get to live in a nice place. You can't live inside the Vanguard Total Stock Index. Worst thing that could happen is that I lose most of my down payment, but it's very unlikely that I'll be underwater.

Dumb: I didn't know until three years ago that I could invest in a Roth IRA. I always assumed that you couldn't open a Roth if you already had a 401k. Whoops.

Dumb: I didn't know what a 401k was until well after I started my first job. Missed out on about a year of company matches and compounding. Fortunately that was a long long time ago.

Dumb: A long time ago, probably through a gift, I had some shares of a trucking company. Somehow, for a reason I still don't understand, the stock symbol became that of an internet company. It was worth $50k in early 2000 and I didn't touch it.

Smart: I went to a state-run law school. My co-workers who make the same amount of money as I do still have six-figure loans nearly a decade later. Mine are paid off (and not very aggressively at that, only a couple of years ahead of schedule.) Now I am in a place where I can take a lower-paying job to preserve my sanity and still be on track to retire at 60.

Smart: I bought a Hyundai when others with aforementioned large student loan balances were buying BMWs. I will own free and clear in a couple of months.

Smart: Even though I was not serious about investing until fairly recently, I still knew about expense ratios and managed to stumble into total stock market index funds (but then cashed most of them for a down payment). Still, my personal rate of return on my long-held FSTMX over 4 years is 95%.
letsgobobby
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Re: What was your dumbest financial decision?

Post by letsgobobby »

In 1999, despite my strong belief that markets were grossly overvalued, and having stayed in cash since, forever, I relented and bought $500 of TGLO (The Globe.com). It quickly went to near zero, and I sold it for $17. This was a very brief time period and it represented only about 5-10% of my assets. But it was a psychological failure of my investing strategy based on PE10 and in that sense it ultimately paid very high dividends, by propelling me to learn a great deal more about psychology, market behaviors, manias, panics, and oh yeah, Valueline (which made the recommendation on which I based my purchase decision).

So it was a dumb financial decision, but it did pay for itself many times over as a lesson learned.
letsgobobby
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Re: What was your dumbest financial decision?

Post by letsgobobby »

danwhite77 wrote:
Gnirk wrote:
travellight wrote:
Just envision a scenario where you take a woman out for a lovely dinner and then pull out a two for one coupon with your credit card to pay. A boglehead compatible woman would be impressed; this could be a good screening mechanism to eliminate incompatible partners AND save money.

This is what my husband did on our first date over 30 years ago! :sharebeer
I did this with my wife on our first date. We've been happily married for ten years and spending our money (or not) like Bogleheads.
16 years ago this beautiful young woman and I went to an all you can eat sushi buffet for our first date. I really had *no idea* this wasn't romantic. I mean, all you can eat? sushi? $12.99? What's not to love? Apparently, it's worth laughing at still because my wife will not let me live it down.
Caduceus
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Re: What was your dumbest financial decision?

Post by Caduceus »

16 years ago this beautiful young woman and I went to an all you can eat sushi buffet for our first date. I really had *no idea* this wasn't romantic. I mean, all you can eat? sushi? $12.99? What's not to love? Apparently, it's worth laughing at still because my wife will not let me live it down.
All-you-can-eat sushi is excellent! They must not have had a lot of sashimi though :)
rr2
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Re: What was your dumbest financial decision?

Post by rr2 »

The dumbest financial decision was when we dealt incorrectly with an unforeseen debt. This put us in a financial hole for many years. This was almost completely due to not seeking good advice. We were reasonably new to this country and we're very young and were total novices when it came to negotiations. We did not explore or consider all possible choices that we had.

In retrospect, it was a great learning experience. I only wish there was internet back in those days.
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interplanetjanet
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Re: What was your dumbest financial decision?

Post by interplanetjanet »

Waiting until almost my mid 30s to really research personal finance in detail. Many sites helped me with this but this one helped more than most.
MP173
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Re: What was your dumbest financial decision?

Post by MP173 »

Several decisions have been dumb:

1. Not investing in Roth IRA at a point in time when I could have. Lesson was learned...Roths are a gift.
2. Purchased a small amount of an individual stock and watched it ride to $0.0. Lesson was learned...do your due diligence on individual stocks.
3. Sold a stock in 1998 to fund a vacation. At the time the stock had doubled. Today it would be up over 20x. The vacation was our last as a family as my wife had terminal cancer. The vacation could have been funded with cash. I really have no regrets about this decision. It was worth it. Lesson was learned on two fronts - enjoy the time you have with family members and if you believe in a company then hold on to the stock.
4. Thinking I could be a landlord and rent out the family house when we moved. Lesson was learned...let the real estate pros handle rental properties.
5. The dumbest financial decision was lending a significant amount of money to my sister in law in 1995. She made two "payments" and that was it. We are still on speaking terms and perhaps the best decision I made was NOT to allow this to become between us. Lesson was learned...let the banks do the lending.

None of the above has severely effected my life. I have always felt that the best mistakes are those that cost you and that you learn from.

Ed
thisismyusername123
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Re: What was your dumbest financial decision?

Post by thisismyusername123 »

Just a comment on loans/gifts to family members. You should definitely go into this with absolutely no expectation that you'll be paid back, but it is also a very good idea to draw up a promissory note requiring repayment on demand with a nominal rate of interest. Why? In the event of bankruptcy, you can get in line as an unsecured creditor.
jon-nyc
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Re: What was your dumbest financial decision?

Post by jon-nyc »

The one that comes to mind - I invested 25k (or was it 50k?) in my former colleague's de novo bank startup. A few years later it was sold at 22c on the dollar, thereabouts.

Yeah there were some dot com busts as well. Those fortunately happened when I didn't have much money so I learned the indexing lesson by the time I had any real wealth to invest.
Slowmaha
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Re: What was your dumbest financial decision?

Post by Slowmaha »

Dumb:
1. Bought a bar (way more fun to go to one than own one)
2. FNM (in an IRA)
3. New cars

Smart:
1. Married the right woman
2. Sold a bar
redhotlama
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Re: What was your dumbest financial decision?

Post by redhotlama »

Paying $750 for Ameriprise Financial Planner that only wanted use to transfer all our money there so he could earn 1% on it and buy overpriced insurance. When we said no he ignored us completely.
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FelixTheCat
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Re: What was your dumbest financial decision?

Post by FelixTheCat »

marrying the wrong person, and then getting divorced.
+1 on divorce.

It's all good. My ex-wife and the attorneys are all wealthier due to my choice. :oops:
Felix is a wonderful, wonderful cat.
kaudrey
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Re: What was your dumbest financial decision?

Post by kaudrey »

travellight wrote:marrying the wrong person, and then getting divorced.
+1
wrl
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Re: What was your dumbest financial decision?

Post by wrl »

1. Buying WCOM on the advice of a broker when I previously made my own decisions. Lesson learned.
2. Selling most of my tech stocks like MSFT and CSCO in 2001 after the pain in 2000. If only I held on for a year or two. Instead of selling I should have bought more! These were not startups going away.
Jerrybaby
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Re: What was your dumbest financial decision?

Post by Jerrybaby »

letsgobobby wrote:
danwhite77 wrote:
Gnirk wrote:
travellight wrote:
Just envision a scenario where you take a woman out for a lovely dinner and then pull out a two for one coupon with your credit card to pay. A boglehead compatible woman would be impressed; this could be a good screening mechanism to eliminate incompatible partners AND save money.

This is what my husband did on our first date over 30 years ago! :sharebeer
I did this with my wife on our first date. We've been happily married for ten years and spending our money (or not) like Bogleheads.
16 years ago this beautiful young woman and I went to an all you can eat sushi buffet for our first date. I really had *no idea* this wasn't romantic. I mean, all you can eat? sushi? $12.99? What's not to love? Apparently, it's worth laughing at still because my wife will not let me live it down.

I applaud you, sir.
YttriumNitrate
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Re: What was your dumbest financial decision?

Post by YttriumNitrate »

danwhite77 wrote:
Gnirk wrote:
travellight wrote:Just envision a scenario where you take a woman out for a lovely dinner and then pull out a two for one coupon with your credit card to pay. A boglehead compatible woman would be impressed; this could be a good screening mechanism to eliminate incompatible partners AND save money.
This is what my husband did on our first date over 30 years ago! :sharebeer
I did this with my wife on our first date. We've been happily married for ten years and spending our money (or not) like Bogleheads.
Darn'it, now I feel like a schmuck waiting until the second date with my wife to pull out the coupons.

My dumbest financial decision (so far) was to invest $1000 in a biotech start-up company while in grad school...and recommending the stock to my parents :oops: . In hindsight, it was also one of the better decisions because the learning experience was worth every penny.
letsgobobby wrote:16 years ago this beautiful young woman and I went to an all you can eat sushi buffet for our first date. I really had *no idea* this wasn't romantic. I mean, all you can eat? sushi? $12.99? What's not to love? Apparently, it's worth laughing at still because my wife will not let me live it down.
It could be worse, on your first date you could have taken your future wife to an all you can eat Chinese Food Buffet and proceed to spray her (more than once :P ) with crab juice while cracking open crab legs.
Dave55
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Re: What was your dumbest financial decision?

Post by Dave55 »

Investing in start ups, Chasing Alpha with actively managed funds, then Being too conservative, then being too aggressive, in other words all over the map.
(Now 56 and content with 50/50 - 3 fund portfolio)
:happy
uncaD
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Re: What was your dumbest financial decision?

Post by uncaD »

I lost $18k in Webvan stock when I was just starting out. Yes, Webvan :oops: Boy, was that a learning experience...
AdamP
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Re: What was your dumbest financial decision?

Post by AdamP »

Making a killing in a week betting against the market during the crash of 2008, and then losing all the gains slowly over the course of two months because I was convinced I had it figured out.

Investing in a taxable account (and keeping money there) while raiding 60% of my Roth contributions to pay down student loans very early (super high interest rate, so they had to go - I could've handled it better).

And continuing to invest in my taxable account when my current employer allows after-tax 401k contributions that I can in-service rollover to my Roth (super happy I learned about this recently - just wish I had known earlier).
Jerrybaby
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Re: What was your dumbest financial decision?

Post by Jerrybaby »

Co-signed for a car loan with someone who was barely an acquaintance. Of course, the car was repo'd a year ago. Don't ask how I allowed it to happen.
Side note: Amazingly, my FICO credit score has climbed back to 720 already.

And, married the wrong woman resulting in divorce. That is a 24 year curse that just keeps on giving and giving. We older men have THE greatest piece of advice and the young men just simply have no interest in it until they get bonked on the head too. What a shame.

Are there any recent threads on "smartest financial decision"? I think I will enter that phrase into search to see what comes up.
Edited: Came up empty on the search.
Quickfoot
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Re: What was your dumbest financial decision?

Post by Quickfoot »

Getting married to my ex wife, second dumbest financial decision was having a kid with her. I love my daughter more than anything but when considered purely from a financial standpoint it was a poor decision. It's cost me 40K in attorney's fees and by the time my six year old daughter graduates high school I will have paid $220,000 in total support to my ex for one kid on a 50/50 sechedule.

Plus side is I now have the most amazing, beautiful daughter in the world.
Last edited by Quickfoot on Thu Mar 06, 2014 6:24 pm, edited 6 times in total.
Atilla
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Re: What was your dumbest financial decision?

Post by Atilla »

Mine was spending more than I earned my entire life until 35 years old.
dowse
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Re: What was your dumbest financial decision?

Post by dowse »

In my 20's, letting a friend talk me in to investing in rare coins. This was during a time of high inflation, and coins were appreciating rapidly. He was so confident, that he guaranteed me a 20% annual return . A year or two later, I needed the money, and I asked to cash out. Well, you guessed it, the bottom had fallen out of the coin market. I let him off the hook and asked him for only my principle back. He paid that, but at a loss. We remained friends for a while, but drifted apart over time. Lesson learned for me - bigger lesson for him.
NYGiantsFan
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Re: What was your dumbest financial decision?

Post by NYGiantsFan »

I had opportunity to purchase 50% partnership of real estate of value around 2.1 million for 120k and I did not act upon it. Property had very little mortgage left and was throwing 60k net cash each year.
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TimeRunner
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Re: What was your dumbest financial decision?

Post by TimeRunner »

Redacted
Last edited by TimeRunner on Tue Jun 30, 2020 10:14 pm, edited 1 time in total.
One cannot enlighten the unconscious.
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zaboomafoozarg
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Re: What was your dumbest financial decision?

Post by zaboomafoozarg »

travellight wrote:Just envision a scenario where you take a woman out for a lovely dinner and then pull out a two for one coupon with your credit card to pay. A boglehead compatible woman would be impressed; this could be a good screening mechanism to eliminate incompatible partners AND save money.
Plus the use of a credit card would be a good way to eliminate Ramsey literalists :)
Tony_L
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Re: What was your dumbest financial decision?

Post by Tony_L »

Amazon. Bought at adjusted price of about $2/share. Sold at adj. price of about $3/share. Didn't want to be greedy and get burned. Made more than 50% in relatively short time. Closed today at $372.16. OOPS!!
ChiefIllini
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Re: What was your dumbest financial decision?

Post by ChiefIllini »

Tony_L wrote:Amazon. Bought at adjusted price of about $2/share. Sold at adj. price of about $3/share. Didn't want to be greedy and get burned. Made more than 50% in relatively short time. Closed today at $372.16. OOPS!!
Even though I don't understand why this stock keeps going up without any significant earnings....WOW!!!
dipsylala
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Re: What was your dumbest financial decision?

Post by dipsylala »

Tony_L wrote:Amazon. Bought at adjusted price of about $2/share. Sold at adj. price of about $3/share. Didn't want to be greedy and get burned. Made more than 50% in relatively short time. Closed today at $372.16. OOPS!!
Probably it does not count as a mistake. Amazon could have gone bankrupt during the bubble.
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OnFire
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Re: What was your dumbest financial decision?

Post by OnFire »

Not insisting that my father make out a will after he had his second heart attack. My step-mother got the $600K house in the 'burbs, the $500K summer house, and told me that the family construction business was worth zero. The $1M in equipment and $500K in property was only going to cover the outstanding bills. Oh, and that his life insurance (which he had to get a physical and blood work to qualify for) was worth $50K. I talked to numerous lowers about trying to recover any assets I could. They were all in agreement I was owed nothing. I wound up with a seven year old Jeep and great memories.

I wouldn't still be paying back student loans at 40 and struggling to save for my kids college educations if I had a quarter of what my father worked his life for.
Last edited by OnFire on Fri Mar 07, 2014 1:17 am, edited 1 time in total.
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john94549
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Re: What was your dumbest financial decision?

Post by john94549 »

TimeRunner wrote:Not mine but family. In the 1960s, Grandfather sold the two adjacent houses he built on Malibu beach because he couldn't get good TV reception. Of course Sat and Cable TV came along to take care of that problem. I wince every time I drive by. Surprisingly, the two houses have not yet been torn down for mini-Mansions like all the neighboring properties.
Not mine, but family (sound familiar?). My great-aunt Hazel owned a square block of property in Burbank back in the early days of the Depression. Not sure which block, as she was always very tight-lipped about it, after it was sold for taxes. Of course, both Hazel and my Grand-Mother were tight-lipped about how Hazel came into all that money to buy the property in the first place during Prohibition. Use your imagination.

My Dad actually went to live with her in LA when he was in high school, as she was the only one in the family with money. Hard to imagine times being so tough you have to ship your kid to your sister. Mind you, he never hinted he lived in a former speakeasy/brothel, but he never elaborated, either.

As she died without children, and I was the only surviving grand-child of her sister (my grandmother), I always wondered what it might have been like to have inherited a square block in Burbank. But, then, I guess that thought always crossed my Dad's mind, as well.*

My wife wants me to pony up a few bucks to do an "ancestry.com" and title search to see exactly what she owned, but I think it would just depress me.

*I look at the bright side. Had my Dad inherited the block in Burbank, he would have quit his job and moved to LA in the mid-60's. I would then have gone to college at USC, and never have met my wife. And no doubt become a "ne'er-do-well" trust-fund wastrel. As it turned out, I went to high school in Kansas (Shawnee-Mission East), college at Stanford (where I met my wonderful wife), and all turned out quite well. Inheritances aren't always what they're cracked up to be.
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