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Worse Money Mistakes

by guest on October 12, 2012 · 18 comments

in guest post, money mistakes

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The following is a guest post from RichUncle El @ Money Watch 101.

Just imagine if you could take back all the stupid money mistakes you made during your lifetime. Well for me at least most of these were made during my 20′s. Two of them were referrals by someone I knew and I didn’t want anything to do with them initially, but I guess their sales pitch was good enough that I fell for their lies. I love personal finance and I was tricked into something that I couldn’t imagine getting into ever now. Something like a vacation package or whole life insurance. I hope all of you can ingrain these mistakes in your head and never fall victim to these dumb errors I made.

The Worst Money Mistakes I’ve Made:

I was stooped into getting Whole Life Insurance.

Number 1: I was 21 years old and somebody that used to be in my life referred me to a whole life insurance salesman. This guy talked the talk and showed me a bunch of happy go lucky graphs and pie charts, promising me tremendous returns on my investment. Yes you heard right, it was sold to me as an investment product with a life insurance protection combo. What was the damage you ask? Well I paid $100 a month for about 3 years. The hundred dollar bill covered the life insurance fee of 18 dollars and the rest was supposedly invested in a savings account for me. What a load of lies. After the third year I called and ask to find out how much I could take out just in case of an emergency and the representative told me not a penny! I couldn’t believe what I was hearing. She said that after 5 years of paying into it, I could then borrow against the life insurance policy and take out 20 grand, but then still be required to pay it back for another 10-15 years. As you can clearly see this was no savings account and a shady company to deal with, I stopped sending money to them immediately thereafter and let the policy lapse.

 I bought a 10 trip vacation package for $3,500 dollars. (Only used it once)

Number 2: Oh just thinking about this vacation package scam makes me mad. I paid about 3,500 bucks for a 10 trip vacation plan. I was also pressured by a team of sales people in a brightly lit office in the 5th floor of a corporate building. Something should have clicked when the meeting was scheduled for Saturday morning. Nobody works on Saturday mornings, only sales people and bagel makers. I wanted to say no again, but was taken by the fabulous sales pitch of 10 vacations broken down by 3,500 dollars is 350 per a vacation as they quoted. But below are the fine print details, with every trip taken certain fees had to be made prior to vacationing.

Fees:

189 Reservation Fee (1 Week stay at resort Free)

45 dollar per kid fee

Food All inclusive was at your expense

Flight expenses were at your expense

So you can see this vacation plan sucks, because even though I am getting the stay at a discount I still have to add all these other expenses into the full vacation price plus the 350 dollars per trip initial fee. Do you agree what a sham this is? If you add it all up it’s like I am giving them the 3,500 dollars for free.

I didn’t focus enough on building money making skills.

Number 3: I could have taken extra courses in high school and college to help me build side hustle skills. For example learning an in demand language or wood making classes or being involved in sports or learning how to play an instrument. All of these skills with the proper marketing can provide someone with side hustle money. I see tennis instructors all the time meeting clients in the local parks, I assume making some very easy dollars. How awesome would it be to know how to build your own furniture? Somebody who played Varsity basketball in high school will be more respected to teach the sport than somebody who never played on a team. I played basketball as a hobby for all my life, but never on a team for my schools.

I never researched the repercussions of driving violations and insurance penalties.

Number 4:  In my late teens and early twenties I racked up a few points on my license because of speeding and stupid violations while driving. What I didn’t know was that my insurance was going to ding me with added fees and surcharges, plus the DMV was also going to charge me ticket violation fees, court fees, and ongoing surcharges through the state. Wow just thinking back on how much I forked over to settle all of those stupid mistakes I could have had a 100 shares of coca cola compounding as we speak. I blame myself and my parents for not telling me these little details of life. Yes they would always say drive safe, so I don’t hurt myself or anybody else on the road, but I never knew about all the added cost of driving I was surprised with.

I allowed one family member and a close friend to buy a Timeshare.

Number 5: Timeshares are the worst, second only to the vacation plan I mentioned in number 2. Granted these mistakes were not made in my name, but I feel as the personal finance guru in my family, I should have steered them away from this stupid mistake. If I communicated the vacation plan debacle earlier to them maybe they would have never dropped the 10 grand to purchase the stupid timeshare that drains people of their money in addition to annual maintenance fees. In both scenarios the timeshares have not been used since they bought the darn thing. It’s been about 3 years now and their week is just sitting there for nobody to use. In my defense they made the timeshare purchase and then notified me after the fact, and by that time it would have been too late to convince them otherwise. To any other friends and family reading this please never buy a timeshare.

But man communication about money mistakes is important between family members so that they can be made aware of these and not fall victim to the same errors we all can make in life. 

RichUncle EL

About RichUncle El:

What defines me is accomplishing goals and succeeding in any ventures I wish to pursue. I am a debt languished(Darn Student Loans) person who enjoys talking about improving  finances and money matters. In any social situation if the topic of savings or money is brought up, I immediately want to chime in and can not stop speaking about personal finance. I am a family man who pushes those people in my circle to open up about money. I guess I am a teacher at heart when it comes to financially related subject matters because I am always sharing what has and has not worked for me financially. As you clearly read I just shared what didn’t work, but you can find out what does work for me at Money Watch 101 and on Twitter – MoneyWatch101.

photo credit: flickr Images of Money

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{ 18 comments… read them below or add one }

GPS October 12, 2012 at 1:55 am

Hi,
Great post by Rich Uncle El.

A note for whoever chose the picture. I work in the social policy so I have some background on homelessness. I’m offended by your picture! You’re assuming people are homeless because of their bad financial decisions when that is not the case!

Most people who are homeless are generally homeless for two main reasons a)mental health issues b)social segregation.
Think about it… even if you made the WORST financial mistake ever. Your loved ones would still help you out. It’s when you start hurting those around you and burning your bridges is when you start to lose your safety net. You start to segregate yourself.

Other forms of social segregation include racism, sexism, other people not being comfortable with you who are as a person. Like if you’re kick out of your home because your parents didn’t like the fact that you were gay.

I would appreciate it if you replaced the picture. I’ve read every single one of your posts, but your choice of picture is a disservice to people who are homeless who are working hard to get out of it!
Thank you.

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retirebyforty October 12, 2012 at 8:21 am

I apologize if I offended anyone. I’ll get a new photo up today.
I know many people are homeless due to mental health issues, but isn’t social segregation a choice?

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GPS October 17, 2012 at 3:08 am

Thank you! I appreciate it!

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GPS October 17, 2012 at 3:33 am

Some parts of social segregation is totally a choice. I know some people who purposefully burn bridges, but then there’s a moment when people realise if they don’t make an effort they will be alone, and no money and pretty stuck so these people may start making an effort at the end.

But there are many instances when social segregation is not a choice. People who are gay or trans gendered are the best examples. Gay and trans gendered people are often kicked out of home at a young age, so don’t have the safety net to finish school and pay for rent at the same time. While it’s starting to get easier for my gay friends, people who are trans gendered often have trouble seeking help without the rest of society shunning them.

Nomadic people are often shunned from society, like the way Gypsies were in the old days.

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RichUncle EL October 12, 2012 at 10:22 am

Thanks for the comment, I was a bit nervous with sharing my money mistakes but admitting I made them will help me somehow in the future.

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Glen @ Monster Piggy Bank October 12, 2012 at 2:39 am

As long as you learn from your mistakes then all is not lost.
I think we all make poor financial decisions when we are younger. For whatever reason, when I was younger I wouldn’t listen to anyone. I had to experience everything first hand. It doesn’t matter if everyone told me that I was wrong, I still had to find out for myself.
Normally I ended up finding out that I was wrong, but at least once I made my mistake I never repeated it.

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20's Finances October 12, 2012 at 8:19 am

Sorry to hear about your bad experiences. For whole life insurance, I don’t think the issue was the type of plan, but the company that you got your plan with. I currently have whole life insurance and I can take a loan out against the cash value without disrupting the death benefits at practically no interest. This past year, I got a decent dividend on my investment, not including the total cash value (approx. 4%). Not a bad return for also being paired with a life insurance plan.

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RichUncle EL October 12, 2012 at 10:16 am

Well at least you had some great luck with your plan, I was only 21 and didnt really want it but did it anyways just to see how it was going to turn out. I am now covered under Term life insurance and invest my money elsewhere. Thanks for the comment.

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JoeMc October 12, 2012 at 10:34 am

My biggest mistake was buying a brand new $36,000 car upon graduation. I started making $48k, but had absolutely no business buying that car. I should have bought used or cheaper newer model. That set me back at least 5 years

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RichUncle EL October 12, 2012 at 10:58 am

YEs cars are the biggest debt mistake the average person can make. It’s great that you now realize it and cannot fall victim to the cycle of reoccurring car debt.

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JoeMc October 12, 2012 at 12:36 pm

Never again.
I have owned my subsequent car for 3 years few and clear- while putting aside a little each month for my next car. Neither my wife or I have had car payments for years and love it.

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RichUncle EL October 12, 2012 at 12:53 pm

Smart plan. Why make the dealerships rich when you can make yourself richer everyday with smart tactics and retire like Mr. Retireby40.

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Justin@thefrugalpath October 12, 2012 at 5:10 pm

I think a lot of people buy whole life insurance when they start their financial journeys. They believe that since its complicated it must be good, plus all of those charts and graphs.
When I was 23, unmarried, with no kids I had no business buying any type of life insurance. I took out a $50,000 plan that cost $50 a month. At that point in my life $50 was a huge amount. I’m glad that I have learned to keep my insurance and investments separate.
My new 20 year term policy’s death benefit is worth several times that of my whole life policy and my investment returns earn much more than they would in the whole life plan.

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Carol@inthetrenches October 12, 2012 at 8:10 pm

Your photo caught my eye…not because I found it offensive at all but because I didn’t get it. My bus stop is among many homeless and shoppers so an empty cart is just someone too lazy to return it to the store :)

My biggest financial mistake honestly was marrying someone who viewed my frugalness as a way to have more money to spend, and spend, and spend whether we had the money or not. I know that I am not alone in this as 80% of those who end up divorcing site money problems as the number one reason, even ahead of adultery. “A house divided against itself cannot stand”. Guess it is very difficult to really know someone until the bank statements arrive.

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Michelle @ See Debt Run October 13, 2012 at 10:11 am

Great post, Rich Uncle! I’m so mad for you about that vacation package….wow, what a scam! Thankfully, you realize now that it was naive and won’t be letting anyone fool you into similar “deals” ever again.

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Elizabeth @ Broke Professionals October 14, 2012 at 9:25 am

My husband and I almost bought a vacation plan too, for about $11k. We didn’t, and after reading your post, I’m reminded why!

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Thomas S. Moore October 14, 2012 at 10:42 am

Well just look at it this way, you have learned valuable lessons and wont make the same mistakes twice. I to have made a lot of mistakes like starting to save so late in life and I myself bought a vacation package. We have been using it so only time will tell if it was worth it or not.

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RichUncle EL October 24, 2012 at 6:21 am

Thanks for all the comments. I get mad when I think about all the mistakes I made, but as you guys mentioned in some comments, I lived and I learned from them. I will never make mistakes like this again thats for sure.

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