Personal Finance Lessons Learned the Hard Way

July 21, 2009 by  
Filed under Money and Behavior

first_anniversaryToday is the first anniversary of the Tough Money Love blog. I am honored by those who read what I have to say and thankful for all of your comments. Your input is always educational and, at times, quite entertaining. I hope that you can say the same about my writing.

I also appreciate the advice and support from my fellow personal finance bloggers. I wouldn’t be here today without it. I have been humbled by the willingness of other bloggers to share expertise and their own readers with newbies like Mr. ToughMoneyLove.

To help me celebrate, I invited my blogging colleagues to tell us about a personal finance lesson he or she has learned the hard way. Many have responded with their own versions of the hard truth.

I encourage you to read every one of their contributions (see below) for their entertainment and educational value.

Personal Finance Lessons Learned the Hard Way

Patrick at Cash Money Life writes:

I learned about high mutual fund expenses the hard way when I made my first mutual fund purchase. The fund was front loaded and came with a 1.5% annual expense ratio. It gets worse… the fund basically mimicked the S&P 500, so an index fund with an expense ratio of 0.20 or less would have been a much more efficient way to go. It was an expensive lesson, but I learned that brokers do not always act in your best interest. Since then I have taken it upon myself to learn as much as I can about the basics of personal finance and investing.

Pinyo at Moolanomy shares his story about falling into vending machine hell:

The worst one I made was going to a “free” business opportunity seminar. This one was about candy vending machines. Got all pumped up about the opportunity without doing any research whatsoever. Then fell for the classic, buy your equipment today for half off…a one-time only deal. Well, you know how the rest of the story goes.

fmf at Free Money Finance says his worst financial decision was putting savings in a bank not insured by the FDIC. Then it went under. Ouch! For more details about this painfully hard lesson, read his full post.

From Peter at Bible Money Matters:

A personal finance lesson that I learned the hard way years ago was that credit card companies aren’t stupid.  I remember going to college, and seeing all those credit card companies signing people up for credit cards – giving away free t-shirts and frisbees.  At the time i thought that they must be losing money on the deal, counting it as a marketing cost.  How naive was I? For the credit card companies giving away those cheapo t’s and other freebies was an easy way for them to rope unsuspecting college students into a lifetime of spending and debt, all while creating some sort of credit card brand loyalty.  Only years later after I had paid off my last credit card bill did I realize how I had been duped.  I learned my lesson about credit the hard way.

Lazy Man at Lazy Man and Money learned the hard way what happens when you don’t read the contract in detail. Many lawyers make a good living from mistakes like these.

J. Money from Budgets are Sexy tells us about a clever scheme that suddenly went south:

When we first bought our house I started throwing all our paychecks AND savings/emergency funds against our maxed out HELOC (our 2nd mortgage) in order to defray a few weeks of interest. At the end of the month I’d take that credit back OUT and use it to pay our bills, mortgages, etc.  This worked for 3 months until the housing market went to $hit and froze our credit line. Since it came without warning, I wasn’t able to pull back any of the funds in time, thus denying us almost $10k in straight up cash.  We tried to game the system and we lost, and now we keep all savings and emergency funds in a money market account.

My Journey from My Journey to Millions reveals what happens when adrenaline rush meets casino scam. Another fascinating tale of hard truth that is stranger than fiction.

From MLR at My Life ROI:

When I was in high school, I thought it was a good idea to postpone car maintenance to save money. How’d I learn that lesson? A blown head gasket and torn up rotors… what an expensive mistake!

Yes indeed – deferred maintenance has reached deep into my bank account a few times as well!

From PT at Prime Time Money, a story of procrastination:

I’ve recently learned to do a better job of keeping track of my rebates and gift cards. We recently let some rebates and gift cards expire because we simply didn’t keep up with the expiration date. We lost about $75 in the process. Not a huge sum, but it still hurts. One option would be to never use expiring products again. But I think if it’s unavoidable, we’ll just make sure we use the rebate or gift card right away. If we can’t do that, then I’ll add a reminder to my outlook calendar at work so I won’t miss the expiration date.

Neal at Wealth Pilgrim reminds us that the pain of financial discipline can be much less than the pain of regret:

I owned a home that I had rented out.  The rent was paying for the mortgage and I had NO equity in it…yet….I sold it because I was afraid of having the renters move out and didn’thave the money to pay for two mortgages.  Needless to say, the house doubled in value after I sold it …yikessss….

From Stephanie at Poorer Than You:

As a 17-year-old, I bought into the story that everyone told me: student loans are a normal part of life, and you’ll get a job and eventually pay them off. I ended up at a college that was too expensive for me – though I didn’t know that – and in a major that wasn’t likely to earn me the money I needed to pay the loans I was getting. By my third year, I’d maxed out the amount I was allowed to take out in federal student loans, and also maxed out a credit card trying to make up the difference. I was miserable and terrified. I ended up dropping out of school for nine months to get my act together and figure out a way to pay for school. By that time, I was too far in – my credit’s wouldn’t transfer to another major or another school. I managed to switch my major to Multidisciplinary Studies and added another concentration onto my first major, which allowed me to graduate more-or-less on-time. Now I’ve got $42,000 in student loans, and you could say that I’m still learning my lesson!

FFB at Free From Broke confesses to wasting his raises on lifestyle upgrades. He ended up with little to show for all of his hard work.

Penelope at the Pecuniarities blog burned herself with an outrageous car buying experience:

When my sister and I needed to buy our first car after moving to California, we knew nothing about how the system works: credit (history, reports, scores, etc.), loans, cars and car dealers. We didn’t have a lot to spend so we believed the first person we met who said he could help us. He then drove us from the small used car lot where we met him to a KIA dealership where another car salesman convinced us that because we had no credit history, the only way we could buy a car with with a 24% APR. We were confused, tired and famished after being there for 3 hours, so we finally just accepted the deal they gave us. But not only did we make an awful mistake with taking the deal, we paid too much for a car that our relatives later told us wasn’t a good car.

Moral of the story and epilogue: Learn how the system works – not just the financial aspects (credit, loans, etc.) but about car shopping. At least things worked out for us in the end: we lived frugally, save as much as we could and paid off our loan early after 13 months, which saved us a few thousand dollars.

Vicki C from Watch Me Save Money writes:

My financial lesson is not that bad, but I would have to say the worst was investing in universal life insurance. The projections of being a millionaire at 65 sounded so good, I guess too good to be true. Fast forward 3 years and I have a cash value of $00.00. I am sure this has everything to do w/ the economy, but it still sucks!! So now my universal life insurance is a waste of money, but currently the price of term insurance is the same as my universal insurance so I feel stuck.

Vicki – you might want to take another look at the policy cost differentials!

John the Mighty Bargain Hunter finds regret in acting too soon and on bad advice:

I watched some stock go down 99% after the dot-com bust.  Then I got scared into selling it at that price by someone who didn’t even own it.  If I had taken my “friend’s” advice in context – what the heck did HE have to lose? – then I would have noticed every big-name insider in the company buying like crazy, bought a bunch, and watched it go up over 2000%.

Another gambler – Brian from Building Wealth Together – learns a hard lesson at the poker table:

Online poker is not your friend.  I lost around $10,000 playing online poker in college and grad school.  It went so fast, i don’t even have an exact amount.  It was just…. gone!

Brian – I hope that wasn’t student loan money you gambled away!

Last but not least, SVB from The Digerati Life learned a hard lesson from not being diversified in the market:

Let me date myself for a moment.  I started investing in 1990, just before the Iraq-Kuwait war hit.  My mistake was to invest in LA Gear at its price peak or $30 or so in the summer of 1990.  I put almost all my money into this stock then — all of $12,000.  When the Kuwait invasion triggered the 1990’s recession, this stock descended rather rapidly to a price of $2.  I bailed out at $15 to save roughly half of my net worth. My biggest mistake?  Not diversifying and not really knowing much about the stock I had purchased.  I swore never to pull a stunt like this again!

Thanks again to my colleagues for reminding us that mistakes made by others can be helpful lessons for us all.

The Future of Tough Money Love

Tomorrow will begin year two of regular Tough Money Love programming. I have enjoyed researching, reading, ranting, and writing over the past year – all 361 posts. I intend to continue for as long as I feel I have something worthwhile to say.

As many of you know, I also blog on baby boomer and retirement planning topics at Go To Retirement which also keeps me busy.  During this next year I will likely reduce my posting frequency here at Tough Money Love to a 3-4 posts/week schedule. I believe this will give me more time to write what I want to say at both blogs. I will try to do a better job of informing readers of each blog when I write something that may be of interest to everyone. If you are a regular reader of ToughMoneyLove, I hope this scaled back posting schedule won’t discourage you from sticking with me. I truly value your readership.

Thanks again to all of you.

Photo credit: barriebarrie

Feed Mr. ToughMoneyLove

FREE UPDATES: If you enjoyed this, please subscribe to receive the newest hard truth from Mr. ToughMoneyLove automatically by RSS feed (what is RSS?) or by spam-free Email.

  • Banner


13 Responses to “Personal Finance Lessons Learned the Hard Way”
  1. Snowy Heron says:

    These were some great comments. I love learning from other people’s mistakes, rather than making them myself. It is amazing how many ways there are to get scammed.

  2. Brian says:

    Great post today. Thanks for the mention and its nice to know i wasn’t the only one with a gambling mistake. In honor of this post and your one year mark i posted in detail my gambling experience. Not pretty at all.

    Happy anniversary!

  3. Congrats on hitting the 1 year mark. I’m impressed that you’ve managed to write 361 posts in this period, and am always impressed with the quality of your posts.

  4. My Journey says:


    Happy anniversary. Huge fan of your blog, and have been since the start. I
    look forward to another year of angry posts!

  5. FFB says:

    Congrats on the anniversary! Best of luck in the years to come!!

    And a great list of money mistakes too. I think it really helps to see that other people make mistakes too and it’s not just me!

  6. Congrats on the anniversary – you’ve been one of my favorite reads this past year! very interesting to read all the money mistakes that people have learned from – a lot of them sound familiar.

  7. Patrick says:

    Congrats on your one year anniversary, and thanks for including my post. :)

  8. Happy Anniversary! May there be many more years of blogging joy in your future! :) Thanks so much for featuring such a great post. It’s helpful to look back and remind ourselves of lessons we should be keeping in mind.

  9. Thanks for including me! It was definitely interesting to read everyone else’s big financial lessons from the school of hard knocks. I’m sort of glad I got into trouble early on – Ad astra per aspera! (To the stars through difficulty)

  10. PT Money says:

    Great job this past year, TML. You’ve put together a great blog and definitely showed yourself to be a clear voice in our community. Thanks for sharing my excerpt above and best of luck to you in the coming year.

  11. Thanks everyone for your congratulations. I am glad to be here and look forward to publishing a lot more hard truth in the future.

  12. Vikki C says:

    Congrats on 1 year!!
    It’s always nice to know that you are not the only one making financial mistakes. Thanks for the mention and I wish you even more success next year.

  13. J. Money says:

    Man we’re a crazy group 😉 It’s a good thing most of us owned up and are back on track now! Congrats on the 1 year my good man, we’ll see you back for the 2nd one.

Speak Your Mind

Please leave a comment and tell us your version of the hard truth...

You must be logged in to post a comment.