When it comes to money management, books can teach you a lot, but the best lessons come from experience.
None of us are perfect, but we all can learn how to leverage our “slip ups” into opportunities for growth.
Doing so takes understanding that falling down is a part of the learning process. It takes focus, and having the presence of mind to learn from the fall.
We’ve all made some questionable decisions; all of us. So, I wanted to share a few of mine, and how I turned them into tremendous learning opportunities.
Sometimes your biggest L can be your best chance at a W.
That Time I Gambled Away My Savings
Hands down, the most ridiculous thing I ever did with money was gambling away my savings back in 2011 when I was 25.
In just a few short months, I went from winning at the occasional roulette, to becoming a compulsive gambler, and then losing roughly $10K.
At first, I denied it, but after wiping out my checking and the bulk of my savings accounts, I finally accepted I had a gambling problem.
Not my proudest moment in life, but a struggle I now have an appreciation for.
I put my nose to the grind, built a recovery plan, and started digging myself out of the mess I caused. Within a year, I went from nearly zero in the bank to $20K saved.
That year of personal struggle became a defining moment for my money mindset and overall approach to life. I proved to myself that I could create my results just by aligning my mind with my actions.
What I learned:
- To start off, humility: Up until that point I didn’t really think I could ever allow myself to be so reckless. I thought addiction could only happen to those that were “weak”, and I never saw myself as vulnerable. I was wrong in so many ways.
- What an unhealthy relationship with money looked like: Being exposed to greed, and the façade of quick wins can breed an unhealthy mindset. You start thinking that you can throw money away, and just fix everything with “one lucky roll“. Life doesn’t work like that.
- How to appreciate the journey: Building wealth via the slow grind puts you in better position to sustain it. Most of us aren’t taught how to be mentally prepared for money. If you have too many quick wins with money, you may never learn the true value of how to keep it.
- Why consistency and intentionality will always win: I fell in love with consistency and intentionality. By working three jobs, budgeting, and sacrificing, I was able to go from nearly being broke to having more than $20K saved within a year. I did it by taking deliberate steps day after day.
- The importance of aligning thoughts, feelings, and behaviors: I can honestly say that I had to practice flooding my brain with positive and productive thoughts 24/7. I worked hard to not allow myself to get caught up into negative thought patterns of shame or anger. At that time, I didn’t know what I was doing, but I was using my values and thoughts to fuel my actions.
That Time I Signed Up For a Credit Card To Get a Free T-Shirt
Probably every kid that went to college in the mid 2000s can relate to this familiar temptation.
There I was, strolling along the campus of Bowling Green State University. You know, just minding my own business. Citibank had a tent setup right by our dorms and they had FREE pizza, FREE! Not only that, but they were giving away free T-shirts to those that signed up for a credit card.
It sounds ridiculous now, but back then, offering free food and clothes to young college kids was the move! I jumped my butt right in line, signed up, and got my free shirt. It was a replica “COLLEGE” t-shirt from a movie I had never even watched! Animal House, of course.
Running the risk of credit card debt is not worth a cheap free t-shirt!
Thankfully, I didn’t have to learn that the hard way as I never did use the card. But, it was an odd decision that led me down a journey of learning about credit.
What I Learned:
- That baiting tactics are real: We were starving, broke, irrational-thinking college kids! Talk about predatory lending, GEESH! We were the perfect suckers to sign up for credit cards. Since then, I’ve remained mindful of the various ways lenders try to entice consumers into debt.
- What credit cards were all about: After the satisfaction of the pizza wore off, I decided to actually figure out how credit cards even worked. My first resource? My parents. I picked their brains about what it meant to have one, and somehow, they convinced me to set it aside strictly for emergencies
- How credit scores were calculated: I didn’t end up using the card, and eventually closed the account, but not before reading up on how credit scores worked and the impacts of interest. Not the smartest idea to grab a mini loan just for a free shirt, but it did spark learning about a new topic.
And you know what? I still haven’t watched Animal House.
That Time I Invested In A Company That Went Bankrupt…Twice!
The year was 2015, I had just got into individual stock investing, and I must have thought I was Warren Buffett Jr or someone. This was when the oil/energy sector started tanking and as a result, shares of oil companies were getting cheeaappp to buy.
After doing ZERO research, I bought 1400 shares of Hercules Offshore, an offshore drilling company. About 4 months later, the company filed for Chapter 11 bankruptcy. My investment? Gone!
Months later, the company re-emerged from bankruptcy and was allowed to re-structure. They issued out more stock, and after clearly not learning my lesson the first time, I bought stock with them again. 2 months later, they went bankrupt, again!
Hercules went bankrupt twice within one year. They were the first oil company during that oil downturn to go so-called “Chapter 22” by going bankrupt twice.
Even Warren Buffett makes investing mistakes, but I’m not sure he ever played himself twice like that!
What I Learned:
- Most importantly, I learned that you don’t invest in things you don’t know. I knew very little about the oil industry, and even less about offshore drilling. Had I done my research into the industry, I would have been able to quickly find out that the industry was a MAJOR risk due to over production and falling demand for oil. Also, if I was to buy into offshore drilling, this was one of the WORST companies to take a chance on as they were drowning in debt.
- That just because a stock is cheap, doesn’t mean it’s worth it: When evaluating stocks, you can’t just look at the stock price. In fact, that’s often times a recipe for disaster. It’s important to look at company growth, outlook, profitability, industry performance, management expectations, and debt! I looked at NONE of that, and well, I got burned.
- To not let a bad experience, sour my perspective: I made two bad calls, and that’s ok. You may make bad calls, and that’s ok. Losing money on a stock didn’t mean that I should never invest again. It meant that I should learn, and do better the next time.
I’ve since become very knowledgeable on evaluating stocks, and have enjoyed some excellent market returns. Hercules was a painful, but worthwhile learning experience.
That Time I Bought A House Without Getting The Chimney Inspected
As a first-time home buyer, the process can be both exciting and exhausting. So many documents to sign, so much to remember, and so many different people involved.
One of the most important people to have on your side is a good home inspector. Home inspections can potentially save you big bucks by identifying potential problems prior to buying.
That said, even general home inspectors can have their limits. So, if the house you are purchasing has a chimney, it’s a good idea to have a specialist look at it. A chimney inspector will have more in-depth knowledge and expertise in pinpointing potential problems. They will know more about chimneys than you can imagine.
My home inspector suggested I do this, and I didn’t listen. And damn, did I pay for it. A year and a half into owning the house, I noticed cracking in the exterior chimney façade. After hiring a chimney inspector to take a look, he identified both exterior and interior water damage issues. $5K worth of needed repairs.
Had I scheduled a specialist inspection prior to buying, I could have requested the seller to foot some or all of the repair bills. I won’t make that mistake again!
What I Learned:
- To control emotions in major financial decisions: 80% of our financial decisions are based on emotions. Emotions are a part of the human experience, but we have to learn to control it, especially in major purchases. Usually, I am such a logical and rationale thinker, even at times to a fault. This has always been my hallmark, but I got overly excited during the buying process. I was so excited to get to closing and move in, that I cut a very important corner. I should have taken the extra few days to get the chimney inspection, even if that meant pushing my closing date back.
- A reinforced trust in the importance of emergency funds: While I did skip out on the chimney inspection, I at least started a home emergency savings fund. I knew it was just a matter of time before something major came my way, so I prepared for it. Having to pay for the chimney repairs definitely sucked, but I had the cash available to pay for it. Having those savings turned a potentially financially damaging situation, into an inconvenience.
- Being proactive is a key to avoiding stress: Whether it’s taking care of a house, car, or your body, you have to be proactive. Invest the time and resources into ensuring your assets are still in good health. Yes, it can be annoying, but it can save you thousands of dollars, hours of frustration, and years of stress.
Buying a house can either be a blessing or a financial burden. To ensure it’s the former, check out these 13 First-Time Home Buyer Tips to Avoid a Financial Mess. And don’t forget to build an emergency fund!
You live and you learn!
That’s a cliché, but the part that deserves the most attention is the “and”.
Live AND learn!
Whatever you have gone through in your financial life, they were opportunities.
Opportunities to learn, expand your capacity, and propel you further in the future.
Reframing even the wildest of circumstances is a crucial mindset shift.
This is also how you begin to strengthen your relationship with money, and you can do this in your life.
Growth is all around us, if you know how to look for it.