My Top 5 Personal Finance Mistakes

5 mins read
The “American Dream” pushes a status quo lifestyle at people that quite frankly isn’t always financially sound advice. Growing up, the expectation from society was to follow these life steps for a respectable, successful life: 
  • Go to College – I think the RoI on an expensive degree is debatable. That said, I set up 529 accounts for my twins. 
  • Get Married – Not everyone wants this!
  • Buy a House – expensive, nuanced process! Requires a lot of maintenance. 
  • Have kids – Not everyone wants or can have kids, and some can’t afford to!
  • Retire – Semi retirement is all the rage now. (Save FIRE for another post!) 
Now I didn’t follow all the rules. I changed careers a few times. I moved from Boston to NYC to Boston. So I got a late start in many ways. Here are the mistakes I made that cost me investment earnings and real estate gains.
  1. Invest early and often. I didn’t invest money, at any amount, every year after college. I spent 2004-2006 freelancing in journalism in NYC. I was focused on getting a foot in the door. To be honest, I was not independent financially during those years, but I worked two-three jobs and internships at a time, and hustled. 
  2. Maximize savings when you boomerang. When I left NYC at 32, I was looking for an apartment in Cambridge, near Harvard. I thought I’d be at home for a few months. I ended up with my parents for nine months. Yes, I saved an emergency fund. Yes I funded my retirement. But I had spent many years making between $30-60K in NYC and living debt free, while fully independent, so I think I spent a bit too much “fun money” when I got home. I didn’t realize I could max out my 403b and then drop it down to 5-10% when I moved into my apartment.
  3. Slow pay student loans. I was lucky enough to have my parents and grandparents pay my college tuition. When I went for a private MBA, part-time at night, I took the full loans the 1st semester. Then I decided to cash flow 50% the 2nd semester onward. I used 0% interest credit cards to pay tuition and then paid them in full before interest started. It meant I graduated with 50% of the loans that many did. I prioritized this because starting my 2nd semester, all of my student loans were unsubsidized, which means interest started the day I took the loans. Had I taken the loans and even cash flowed 25%, I would likely have invested and earned more than the 6.8% interest rate.
  4. Take Real Estate Leaps I missed opportunities to buy real estate, with my parents’ help, in NYC and two top Boston cities. Any of the three would have appreciated by five to six figures easily. But I had no appetite for real estate risk. I also felt shame or inadequacy buying properties that I couldn’t afford alone. Had I treated them like investments, just like I do stocks, we all would have benefited. Now I know real estate is not my forte. But I can change it for the future. 
  5. Slow pay the end of a mortgage. Before my twins were born, I knew I’d be spending upwards of $4,000 each month for a nanny. My husband had already been working hard to pay extra principal on his condo mortgage before I moved in. I thought having no mortgage would make the nanny sticker shock easier to swallow. But, we were already at the point in the mortgage where more of the monthly payment was going to principal than interest. Had we paid the regular mortgage amount, we could have invested more in the market for gains > mortgage interest. We also could have deducted the mortgage interest. 

When you make financial decisions, be sure to think about the short- and long-term impact of those decisions, including the opportunity cost.

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