Bloopers and Outtakes (Financial, that is...)

Everyone loves bloopers.

Growing up as a baseball fan, one of my favorite baseball-related shows were the latest blooper reels, showing the mistakes, blunders, and screw-ups from the past week. You had easy fly balls glancing off gloves falling to the ground, throws sailing well beyond their target, and professional players slipping and falling as if the field was littered with banana peels.

Even for the non-sports fans, outtakes are the bloopers of the entertainment world. Professional actors flubbing their lines, unable to contain their laughter, or clumsiness provides comic relief

Why do we love the bloopers and outtakes? Maybe it's because it helps us better identify with the people and personalities we view as larger than life and put on a pedestal. Ordinarily, they seem out of reach with our normal lives, until they show us that they make mistakes just like we do.

Again, everyone loves bloopers/outtakes.

That is, except when they are your own.

When we make our own mistakes, and they turn out to be impactful in a not so good way, we tend to dwell on them, feel regret, and allow them to hold us back from benefitting from other opportunities.

The best way to deal with our own mistakes, is to accept that we all make them, and will continue to make them. The key is to learn from them, and make sure you're not repeating the same ones!

In this fashion, I'd like to come clean and admit my biggest financial bloopers, and I'd like to think that at this stage, I have indeed learned from them. I'd be lying if I said that I didn't dwell on these from time to time, and experience regret, but I think I am moving forward and becoming better from a financial perspective


I joined an MLM and Lost Lots of Money 

I got sucked into the allure of the lifestyle stories of those involved in this MLM, but even worse at the recommendation of my coach I spent ridiculous amounts on advertising/lead generation programs, which in most cases I did not follow up on when the leads came through.

I guess even worse than that, is that in my pursuit of these lifestyles, I paid little attention to my finances. I spent money, with the justification that it was helping me reach my lifestyle goals. Fast forward a few years, and I had racked up tens of thousand dollars of credit card debt, in which I was only paying minimum payments.

As one can predict, I got to a place where I fell even further behind. I felt like I reached a point where things had spiraled out of control, and I couldn't even make the minimal payments. I ended up in debt consolidation, and for 5 years, I had to basically put most of my paycheck towards the debt after rent was paid.

There was very little margin for error, and at the end of it, a gigantic weight was off my shoulders and I felt I could breathe again financially.

I withdrew prematurely from my 401k

As a continuation from the MLM mistake, I had gotten so much debt, that to continue to make payments I ended up liquidating my 401k, tax penalty and everything. Of course we all know how dumb that was, but at the time I felt like I had backed myself into a corner, and my options were few. I shake my head at myself right now as I write this, even many years later. It's something I've had to accept as part of my journey to reach a zero net worth, en route to a positive net worth, which I thankfully have today. I started back up investing in my 401k in 2012, being able to max out my contributions since 2016.

I Chased Yield

I started investing outside of my 401k in 2014, mainly looking for a return on my money larger than what you see from the banks at the time, which was 1% if you were lucky. I started to look into dividend stocks, mainly as a vehicle that could pay you back in income much more than the 1% that banks were giving. I made the typical big mistake that many dividend investors make: I started chasing big yields.

My eyes saw yields in the 10% range and above, and couldn't look away. I didn't do enough research on the companies I was looking at, blinded by the yield. With many of these companies, the share price plummeted, they stopped making money, and they ended up cutting their dividend, multiple times in some cases.

I learned to do more research, and focus more on the growth of the company (and their ability to grow their dividends over time). I have sold many of those yield-chasing mistakes, and replaced them with better companies, and have enjoyed much more investing success, as well as increasing dividends. 

I Waited Too Long to Invest

I'm not sure why I waited so long to invest. It might have been the fear, based on the occasional crashes that I heard of while growing up, and also throughout my adult life. In seeing and hearing about the worst, it probably had something to do with my hesitation.

Instead I looked for other means of income, which weren't exactly the best (see my MLM experiment above). It was actually the one who was to become my fiancee, who got me into investing, by way of some stock options she got through her work. In conversations we would have, I got more and more interested, and read more about it.

Eventually I decided to jump in, in 2014 (other than 401k, I restarted my 401k contributions in 2012). I frequently wonder what could have been if I had been investing since getting my first job after college, since the late 90s. It's very possible I could be financially independent by now. Then again, I may not have had some of the learnings I have now, if it were not for these failings.

I Allowed Money to Burn a Hole in My Pocket

I'm not naturally a saver. I'm a spender, and have been a spender ever since I can remember. I always seemed to have this mindset that whatever money is in my account, needs to be spent. So it definitely would burn a hole in my pocket, as I would almost get itchy whenever I had extra cash.

Of course, I had heard all the instructions that I should be saving, but I let the enticement of "things" do me in. I love music, so I spent them on a bunch of CDs (the collection was impressive, the resulting bank account at the time was not). I then graduated to DVD, and bought a bunch of those. I love tech gadgets, so money would go there as well. New phones, computers, computer upgrades, computer peripherals, music players (iPods, CD players, etc.), it went on and on.

What flipped the switch for me? The debt consolidation mentioned above definitely had a big hand in it, but also the relationship I am in with my fiancee also helped put me on the right track. She is a natural saver, and I saw the benefits of saving first hand. Also as time went on, in communication with the FIRE crowd has enhanced this and allowed me to streamline things.

By the way, I am still a spender, but choose to spend the remainder of my checking account at the end of each pay period by way of transferring money to my online savings account, Roth IRA, and taxable investment accounts. It definitely has been a circuitous journey, but I do feel I am finally on the right track.


Not Something I'm Proud Of...

So these are my financial bloopers. Not things I am proud to admit, but glad to be in a position to be able to share these, and be in a good position to entertain the thought of financial independence. Although I sabotaged myself many times, I was fortunate to be in a profession that paid me well, in order to allow myself to climb out of these situations. I know others aren't so fortunate.


Learnings

So....What have I learned from these bloopers?

• Don't join an MLM

• Do not withdraw from my 401k prematurely, if possible. There's always a chance that things get so dire that there is no other option, but otherwise, my 401k money stays in there for the foreseeable future.

• Do not chase yield. I choose to do more research and invest in companies that have drivers for future growth, not just a big yield.

• Keep Investing: Time in the Market over Timing the Market. 

• If I'm Going to Spend, I'm spending on my Financial Independence goal. I will still also spend on things that are important to me (travel, live music, hobbies), but cut out all the other things I don't value, and redirect that money to my FI goal.

Much like seasoned pros still dribble the ball off their foot, fumble the ball, and overthrow first base, I'm sure there will be more financial bloopers to come, but I vow not to repeat the mistakes above. 

What are some of your biggest financial bloopers? Share in the comment section below!