Confessions of a Personal Finance Journalist (Part 2): 3 More of My Worst Financial Mistakes

One of the best things about being a personal finance journalist is my ability to recognize the many financial mistakes I’ve made in my life.

I already divulged some of them in the first version of this confessional two years ago. Although some of my blunders were worse than others, they all make me cringe – and the ones below will probably make some readers cringe. Others of you can relate.

Either way, I hope sharing them can help someone else avoid making the same mistakes – which have potential long-term consequences that aren’t particularly good. It’s hard to calculate the cost of my mistakes during my Gen X as an adult, but suffice it to say that I would have more money if I had made better decisions.

Learn more about personal finance:
Here’s how to reduce the sting of inflation
How to Avoid Buying a Flood Damaged Car
Here are the new tax brackets for 2023

Here are some gems, in no particular order.

I was at least two decades into adulthood when I decided I could see into the future. In other words, I just knew that the stock market was about to drop and would stay low for a while.

This crystal ball reading talent came about when I transferred money from an old 401(k) into my then-current retirement account. I confidently placed the deferred funds in a money market account (which is earning close to 0%) so that I could buy stocks during the impending market decline and therefore be positioned to capture gains when the market rallies .

So, of course, stocks rose in the days and weeks that followed as I waited for the big drop.

It did not materialize.

I waited months. By the time I actually moved the money into an equity-heavy target date fund – not because the market had crashed, but because by then I had developed the fear of missing out something – the shares had continued to rise.

By keeping my money aside, I missed out on those earnings – as well as any compound interest the funds would have earned, both during those cash months and in the future.

When I first signed up for a 401(k) plan as an adult, I only had a basic understanding of investing.

In other words, I knew that the stock market generally rose over time and was a good place to put long-term savings, such as for retirement. The details, though? Not really.

So when I had to choose from a range of funds to figure out where to direct my 401(k) contributions, I did some research: I asked a colleague near me which fund she chose. She rattled off his name. I told him that sounded good, so that’s what I decided to do too.

“Wait a minute,” she said. “I don’t want to be responsible for ruining your retirement if your investments explode.” I waved the idea aside and assured her that she was the smartest person I know.

Now, that was long enough that I have no recollection of the performance of the fund or my account balance when I finally transferred the money to another retirement account.

But that’s kind of the point: I had no idea what I was invested in.

As far as I could tell, the fund I chose was made up of “safe” investments (US Treasuries, cash) that might not keep pace with inflation and might not provide the kind of long-term growth term that the shares would have. I also had no idea what the fund was going to cost me each year in fees.

In other words, I had absolutely no idea if it was appropriate for my personal situation.

I was involved in five home purchases as an adult. One of them was sold “as is”.

A friend of mine told me at the time, “Whatever you do, make sure you have your house inspected before you buy it.

I assured him I would, then quickly decided to ignore his sage advice. The seller wasn’t going to fix anything, I thought, so what’s the point of an inspection? After all, I had looked carefully during my two pre-purchase visits to the house and nothing major had jumped out at me.

Well, let me tell you in case you didn’t already know: there are a lot of things that can go wrong with a home and its property that aren’t immediately visible. And depending on the specifics, repairing them can be very expensive.

While I don’t think a pre-purchase inspection of this particular home would have changed my mind, it very well could have given more bargaining power over the price – and in the process saved a boatload interest because it would have been calculated on a lower mortgage amount.