Financial mistakes people make

[disneysteve]

well, my issue with 'taking risks' is yes, a lot of people do make money from them - but a lot of people lose out big time. when you take a risk and you're not sure of the outcome, you're gambling. or is gambling a good financial choice?

I'm still not sure what you are suggesting here.

Everything you do with your money involves risks. Whether you keep it stuffed in your mattress, put it in a checking account, a MMA, a CD, stocks, bonds, real estate, gold or baseball cards, each option carries its own particular risks. And in every one of those examples, you can't be sure of the outcome. To compare it to gambling makes no sense to me.

[whitestripe]

I'm still not sure what you are suggesting here.

Everything you do with your money involves risks. Whether you keep it stuffed in your mattress, put it in a checking account, a MMA, a CD, stocks, bonds, real estate, gold or baseball cards, each option carries its own particular risks. And in every one of those examples, you can't be sure of the outcome. To compare it to gambling makes no sense to me.

well, don't worry about it.

obviously what i suggested ISNT a financial mistake that people make then!

[grand_canyon]

How about my parents. Thinking that the "advisor" are merrill lynch knows everything. So they keep on paying to get "Advice" to lose 40% of their portfolio.

I agree with this statement. The only person that really cares about your money is you. Many of these so called "advisors" are nothing more than people trying to sell you something that benefits them and their company at your expense. I got burned years ago when I went to Ameriprise looking for financial advice so I wised up.

Other mistakes is making purchases without investigating to try to find the best deal. For example, I was paying thirty bucks a month for a gym membership and I started doing research and found a deal for 299 bucks for two years at another gym. My health plan pays me 150 bucks a year for fitness expenses so now I just got a free membership.

I try to do this for even smaller purchases like buying food products in bulk when they go on sale. Every little bit adds up. Also, not maximizing your savings interest rate. Many banks are paying 0.1% and with a little research from these boards now I'm making 3%.

[swaymonae]

CA & AZ tax nightmare

Not shopping second-hand.

I always check Ebay & cragislist for everything before I go out and buy new.

[rizzmo]

I would add things like nusana, pampered chef, mary kay, ect. The vast majority of people make little to no money doing this. Many of the less reputable companies require an up front investment.

[Snodog]

I don't think anyone mentioned co-signing. That is one I see often.

Most people would be ok financially if they didn't buy too much car or house.

Impulse buying- before I make a purchase > $25 I always wait a month to see if I still want it. I've saved a lot of $ over the years doing this.

Assuming nothing bad will ever happen.

[blankcheck]

Sorry if this has already been said (I didn't see it): Lending money to family/close friends and not coming up with a specific plan of repayment. Thankfully I haven't put myself through this, but I've seen cousins get in physical fights over something as small as $100 from 7 years ago.

[segmond]

getting emotionally involved in an investment which makes it hard to walk away. gotta learn to cut your losses short and walk away. most people bankrupt themselves due to emotions. e.g knowing they are going to end up in foreclosure and instead of holding on to their last savings and walking away, they keep paying till they empty their savings and still end up losing the house.

who cares how much % you put down? or how much repair you have done? if you are going to lose it, lose it fast. it's best to lose your house and have $5k cash to start over with than to lose it and not even $100 to put your things in storage. i get really sad when i see forclosed houses with all their personal properties throw in the street.

[Snodog]

The above post reminds me of another mistake that people do. If they are having trouble making their house payment they will dip into their 401k and a year later they will have drained their 401k and will lose the house anyway and maybe even file bankruptcy. Don't dip into your 401k- even if you file bankruptcy that money is protected.

Another mistake is attending too expensive of a college.

[rob62521]

When you can buy something with 3/4 of its life expectancy for half the price. that is a much better deal than new. You can still add driving the vehicle longer to make it an even better deal. This one may not be worth it for some people to whom owning a new car is an easy purchase, but many people who really cant afford it go out and finance new cars because thats what they think everyone else is doing. We may just have to dissagree on this one. I added leasing to the list

I would agree except it depends on where you live and where you can buy a used car. We buy new for a couple of reasons. We can afford it and we really don't trust buying a used car from any of the car lots or from other people selling their own car. I've been burned on buying a used car. We buy new and drive it and get the puppy paid for before even thinking about looking at a new one.

[disneysteve]

really don't trust buying a used car from any of the car lots or from other people selling their own car.

That's exactly why the certified used programs have gotten so popular. You can buy from the dealer, know that the car has been fully inspected and still get a factory warranty. You pay a little more than buying a similar car from a private party but you get some peace of mind.

[Stuartthomas]

Great Post.this Is Seriously Something I Have Been Trying To Communicate To All My Customers And Colleauges Outside Of The Industry. Love Every Bit Of It.

[snafu]

I'm floored by how many people are unable to differentiate between 'Needs' and 'Wants.' If you want it...it has become a need, just figure out how to add one more monthly payment to your over burdened list.

[Stuartthomas]

i really like how you gave your personal feel to it....

[Tonyall]

"NOT HAVING A BUDGET. A written budget that includes all monthly necessities as well as money set aside each month for quarterly and yearly expenses. Even better if it includes saving for your next vehicle. This budgeted amount should be kept well below income, if it is not, it must be paired down or more income must be found."

Personally, I have never kept a budget but always have been able to save. In my view, time spent on managing it could be better utilized making more money, looking for deals or just doing what you enjoy!

Just stop and think before buying things and really think if it is something you really will use.

I suppose that is easier said than done for many people though and most need a budget.