What were some financial setbacks when you were young?

[creditcardfree]

Don't lease a vehicle.
Put up as large of a downpayment on a home as you can to avoid PMI.
Have more than liability insurance even if your car is paid for.

[MonkeyMama]

I am good at putting bad things out of my mind so reading this thread is bringing back memories - hehe.

1 - The worst thing we ever did was buy a bunch of tech stocks in 2000/2001. Yeah... (Scared me off of individual stocks. But learned that lesson right out of college which was fine. Could have been a pretty bad slaughter if we had invested longer. As is, we lost a few thousand dollars).

2 - Definitely guilty of not taking full advantage of 401k and IRAs, etc. If I could do 2000 & 2001 (DINK years) over I would have maxed out my 401k and maxed out our IRAs. BAck then, tax savings from 401k would have been enough to max out both IRAs.

3 - The money I invested as a teen (IRA) sat in cash earning 1% for about a decade.

4 - Along the same lines, our cash was only earning 1% or less. I think this is our worst mistake ever. When our income was lowest we had $30k cash in the bank earning like 0.5%. For a few years. The thought makes me cringe today.

IF you see a theme here - we had a great financial education and avoided most pitfalls, but yeah, terrible at managing assets. As were our financial role models.

5 - We bought 2 homes. That actually worked out okay. BUT, at the same time, was a risky enough experience I would never do that again either. I think we were rather lucky. We looked to buy some acreage around 2006 when prices were falling and real estate professionals were REALLY pressuring us to buy before we sold our current home. We knew not to move, buy, or move and quit job, until cash from house was in our hands (we talked often of moving out of area, to cheaper lands, when equity skyrocketed). Though original experience (2001) was a tad painful, definitely helped us keep our head when we had $400k+ equity in our current home for a time. We never got attached to it. I Can't say we would have been so wise if we hadn't already ridden an equity roller coaster with our first home. The most important lesson here was "Don't go shopping with paper gains." Owning 2 homes can be okay if you can AFFORD them.

In 2005 (real estate peak here), a LOT of our friends were snatching up second homes and didn't take it well when we warned them to be careful. They didn't understand we had been there, and yeah, did not pan out well for them at all. Some things you have to learn the hard way I guess.

[Goldy1]

I have not yet read the responses from others but here was a big lesson to me. I moved from the dorms to a sorority house in college. My parents gave me a credit card for emergencies and occasional charges, but never told me it was for emergenies or discussed a limit. There was sort of an unspoken rule I could charge about $100 a month.
I bought a few things for my new room in the sorority house ie. $100 desk, lamp etc. and apparantly ran up about 200 or so bucks.
My mom called me and told me how much I spent and to stop it. I denied spending as much as she said b/c I literally didn't think it all added up to be that much. She had the facts. I learned how stuff adds up, and I only used the card about twice the next 3 years to spot me I got a p/t job.

Also my mom told me how much her income went to my college, and it touched me and I appreciated it. Kids don't know these things.

[srblanco7]

PMI on a mortgage - drove me nuts

Fiddling around w/ my 401k investment choices - in essence, trying to "time the market" - cost myself a lot of money

And an ongoing issue of helping to support my brother in law and his wife. He has substance abuse issues and we've kept his wife solvent while he was in rehab etc.. The most recent "gift" was the last. Never again.

[project15]

I bought a 10 year old used car in college because I wanted a "sports car". It turns out the car was a piece of junk and fell apart on me a few months later. Sold it as a shell to someone who wanted to fix it up. I lost about $4k on that mistake which was a lot to me at the time.

I still want a sports car, but next time, I'll buy something a little newer and have it checked out a little better.

[FrugalTexan75]

Numerous mistakes over the years - but the biggest one of all was getting involved in a fire safety business. I lost a lot of money, that I didn't really have to lose. The fallout from that is really what brought me to where I am now today - much much smarter about how to handle my money.

[Gjowers]

I once bought a land rover. They are not reliable and repair bills start at $1000. I have a Honda now.

[zetta]

This one probably only applies if you are in high-tech or biotech. Don't exercise incentive stock options unless you will do a cashless exercise and sell them the same day.

I worked for a small telecom company that was privately held. AT&T was going to buy our equipment. The CEO and managers said the stock value was going to go up and up, and we were likely to go public soon. So I exercised my options. I thought I would owe about $16k in AMT, but it turned out the board had changed the value of the privately held shares upwards by about $10/share, and I ended up owing $40k in AMT taxes. Then AT&T broke up and cancelled our project. The company went in a downward spiral, and ended up getting bought out. My shares were ultimately a loss. I'm getting the AMT back in little dribbles each year, so it's been like a large interest-free loan to the government.

The other thing I've seen to be cautious with is employee stock purchase program (ESPP) with a company having hard times. One company I worked for kept having long lockout periods where we weren't allowed to sell any company stock that we owned.

Also, buy-and-hold-and-ignore wasn't the smartest investment strategy for me. I owned AT&T stock that later spun off some Lucent stock. I held it all the way up -- at one point it was worth about $40k -- and all the way down.

[Pitman]

STUDENT LOANS.


Most definitely I'll have to say my biggest setback when I was "younger" is the students loans I took out. I really do wish I saved money throughout HS, so when I started college I would've been able to pay right out of pocket, and never deal with these darn student loans that I'm still currently paying for. To add insult to injury, all those students loans went directly to waste seeing as how I hating the school, and major I was taking at the time. So that's $8K down the drain for something that had no good effect on my life. But I truly believe in learning from past mistakes, so I'm putting all of that behind me, and paying them off, and focusing on my future.

[GREENBACK]

When I first got a real job I never gave any thought to the distant future which isn't so distant now. I never got in to far over my head with spending but waited about 5 years into my career for retirement saving. I had no real clue about tax savings and compound interest and the other advantages of retirement planning. I figured that if the numbers add up right at the end of the month +/- you're ok. Wish I had those 5 yrs back and the knowledge I have now. I just didn't take the whole thing seriously enough.

[plumpossum]

Ouch this thread hurts. I moved out while I was still in high school, two months after turning 18. I went to school in the morning and worked full time at night.

The first mistake was the car I bought in high school. I financed it (I had just turned 18), it was only a $6000 piece of crap, but I financed it for four years with no money down. AND bought the extended warranty that covered nothing for $1500. When the transmission went out WHILE DRIVING ON THE FREEWAY the dealership claimed the warranty didn't cover it. And the whole reason I financed it was because I worked throughout my younger years, I always held a job, and spent every last dime on going to the movies, clothes, and gifts for my friends. DUMB.

So the next mistake was when I decided to move out. I made a budget, I had plans. I shouldn't say I was stupid with money, because I was far better with it than most high school seniors were, but I will say that I could be a little dense. My budget was great. I accounted for every single thing I needed (even my quarterly water bill!). And somehow I forgot that I needed to eat. Every dollar I earned was wrapped into my bills and I had absolutely no money for food. So I spent the first few months (before getting a roommate that paid me $50 once and then took off and then broke into my apartment twice to steal crap) with the heat as low as I could stand it, not using water and electricity when I could, and mooching food off of family. When previously mentioned roommate moved out, my boyfriend at the time moved in, and we had about $100/month for groceries (this is 2002, so it still wasn't nearly enough)

So I started to learn about finances and decided to get a credit card to build credit. Right away I charged a set of tires for my awesome car. By making minimum payments of something like $12/month I acquired the most expensive set of general knock off tires that ever existed. I also used that card for an emergency room visit, and 7 years later, I'm pretty sure I'm still paying for both.

Then, at the tender age of 19 (2003), when the world of real estate was full of limitless opportunity, the boyfriend and I bought a house with no money down. A house we hate, but were told that it was a once in a lifetime opportunity because of the location and price (and it was a great price, for someone that could've really afforded it).

So the last five years or so have really been a clean up mission for us. Combined we're making triple the money we were seven years ago, but our mistakes are coming back to haunt us. If I could offer advice to people just starting out it'd go a little something like this:

-Pay in cash. If you don't have cash, and it's not an absolute emergency, don't buy it.
-Make a budget, stick to it, and inflate the cost of items on your budget by 10-20% just in case
-Don't finance anything without money down, and make sure it's something you really want for many, many years before financing
-Houses are really expensive. If you don't love it now, you won't love it 10, 15, or 20 years from now.
-Don't buy something if you're feeling pressured, even if it's something you like. Take a breather and come back to it when the pressure's off and reassess how much you want it.

[EEinNJ]

Great question. Seems like a lot of learning has come from these setbacks.
I've made a few mistakes and had some setbacks, too. In the late 80's I dabbled with speculative investments, penny stocks. Won some, lost some, pretty much broke even except for one bad one- a heating oil option play, computerized trade. Lost all of it- $5K- in a week.
Bought a modest house in '89. Traded up in '97, but the sale on the first house fell through. Couldn't even rent it, empty for a year while I paid 2 mortgages, one a high rate alternative, the first an ARM that adjusted up. Finally sold it for what I paid for it. I learned my lesson long before today's real estate problems!
Like others, I also learned leasing cars is an expensive proposition. My Subaru was a great used car- the Saab I bought after that was an expensive source of trouble. Choose wisely!
Lost money in the dot-com crash, most of it just on paper, in retirement acct.s. Probably doing as bad or worse now!
Unemployment is a financial setback I've had a little too often- but lifestyle wise it's great! I call it "pre-retirement" now. Credit cards, I always pay mine off, but the wife did some serious damage a couple of years ago.

Things happen, and nobody's perfect. I've learned from my setbacks and mistakes, but I expect I have more to learn yet.

[falcon2006]

Been born… just kidding
Bought internet stocks during the internet boom, lost my entire life saving, about 30k.

[mom-from-missouri]

I didn't put anything into my retirement the first 2 years I was working. Ouch.

[George23]

One of the biggest mistakes I made was buying things on credit that I really had no business buying on credit.