Like everyone else in our consumer culture, I have made financial decisions that make me cringe. My bad decisions have helped me pile up a sizable amount of consumer debt. My good decisions have put me on a path to become wealthy. Today I'll share some of the highlights of my financial past that have brought me to where I am today.
Here are some of The Good decisions I have made:
- Education - I always worked hard in school and kept a high GPA. This led to me get into engineering school at several colleges (some prestigious and some not as much), and it allowed me to choose a school that fit my budget (State U). I worked even harder in college to graduate with better than a 3.5 GPA in Computer Engineering. That performance gave me a number of competitive employment options, but I selected the one that paid for my entire Masters Degree and permitted me to take courses by teleconference during my work hours. While job paid only 75% of what my peers got, it covered grad school expenses and that more than made up for the lower pay. Again I excelled and earned a 3.9 GPA in my graduate studies. Now, after proving myself on the job and in the classroom my salary has nearly doubled from what it was when I was hired (and is significantly higher than any of my old classmates).
- Entrepreneurship - I started my first business when I was 11 years old. I ran a neighborhood recycling service to collect the paper, glass, and plastic from my subscribers and take them to the county recycling center each Tuesday. We did not have curb-side pickup of recyclables. I saw an opportunity that my upper middle class neighbors needed to have filled and made it work for me. I charged $100 per year to subscribe or I would bill my clients $10 per month. My dad made sure I learned to use a computer (back in 1994) to make fliers in Word Perfect, invoices in a spreadsheet, and budgets in Quicken. When I wanted to travel to Europe on a school trip at 15, I paid my own way from the earnings of my business. I spent my money to buy for myself the things other parents gave to their kids, and I learned what it means to earn a dollar (with guidance and help from my parents).
- Work - I got my first real job when my business no longer was viable because sanitation department sponsored curb-side recycling made my business model obsolete. The first job I took was washing dishes at a little hole in the wall restaurant where some of my friends worked. I hated it. I learned after only six weeks working there that working hard is not nearly as rewarding as working smart. After talking to my dad about this, he suggested I find something I love and work in that industry. We came up with a plan for me to take an internship at a computer repair shop. I pitched my services free of charge to every shop in town in exchange for them teaching me how to fix computers. After a number of rejections I finally found a shop that would take me. My conditions were that I would work for three months free of charge, and if I met expectations I would be hired as a full computer tech. I learned quickly and was soon building new systems and diagnosing botched Windows 98 installations. I was hired on at $10 per hour at age 17. I've worked in the computer industry making at least that much per hour ever since.
- Investing - I got my first taste of investing in middle school when, on a whim, I joined the Stock Market Club. I was a nerd who was a member of the math team, the science quiz bowl team, the chess team, and the band. Stock market club seemed fun and exciting to me (plus my other friends were talking about joining too). We each managed a hypothetical $10k portfolio and checked it each day using the news paper. I selected three stocks for my portfolio: Disney, Dollar General, and Maytag. I picked Disney because I had just gone to Disney World for the first time and Dad said the place, "took all your money and convinced you it was your idea." I picked Dollar General because they had just opened a new store in my town and it was a bargain at only $1 a share. I picked Maytag because that's the company my dad worked for at the time and it seemed safe. I hit the jackpot when Dollar General doubled during our semester long competition, and I easily won. I never forgot the fun and money making power of the stock market. Today my approach is a little more rational, using my 401(k) and Roth IRA to buy index funds in diversified asset classes.
Here are some of The Bad decisions I have made:
- Consumer Debt - Gradually over the last six years I have built up a sizable pile of consumer debt. Frequently it is for unplanned expenses like dental bills, car repairs, and sporadic taxes. These types of expenses should have been paid by my emergency fund which at the time I had yet to set up. I also used debt to buy home furnishings, a flat panel TV, and a car. Thankfully these things were generally financed at below market interest rates (often 0%) and will outlast the length of the loan, but they still have added up to a significant amount hanging over my head.
- Bad Business Venture (MLM) - My wife and I tried a Multi-Level Marketing (aka pyramid scheme) home business. We tried unsuccessfully to sell beauty products and health supplements. I let my normally cynical business sense be swayed by the Mercedes and gorgeous home that our "up line" (my wife's aunt) bought with the business. I wrote a business plan and tried to do everything right, but what I missed was that the target demographic for the products is wealthy, vain older women, and I was a young, overweight man and my wife is introverted and shy. We had trouble finding clients in our sphere of influence and had terrible sales results when we did manage to get a captive audience. The $2,000 in 'initial' inventory is sitting in a closet while I pay off the loan the hard way.
Here are some The Ugly decisions I have made:
- Weight Gain - I have been overweight my whole life. It has varied from just being a slightly chunky kid to being flat-out-fat at the end of high school. I have never enjoyed team sports much because I'm not very good at them, and I always caught flack from the jock types at school. I also hate running more than about anything else in the world. M7y lifestyle is sedentary because working as a computer engineer (and now blogger) means I sit in front of a computer terminal about 90% of my waking hours. During the last two years of college I took up racquetball and managed to loose a LOT of weight and reach a BMI within the 'normal' category. I was at my target weight and felt great. All of that progress was lost two years ago when I tore my ACL while I playing and needed knee surgery . Since then I have sat on my butt making excuses while I've gain a ton of weight back. I can feel it sapping my energy away. Being overweight is terrible for my pocketbook in a number of ways and poor health later in life may my limit my ability to enjoy the wealth I am working so hard to build now. This is my worst personal finance decision that I intend to fix ASAP.
Check out these other great personal finance blogs that have also recently posted about their Best and Worst Personal Finance Decisions.
6 Financial Lessons - Don't Learn The Hard Way - from Gather Little by Little
My Least Bad and Least Good Financial Decisions - from Plonkee Money
My Best and Worst Financial Decisions - from Moolanomy
Best and Worst Financial Decisions: From the Trenches - from I've Paid for this Twice Already
My Best and Worst Financial Decisions: They Might Surprise You - from Being Frugal
My Best and Worst Financial Decisions - from ChristianPF
My Best and Worst Financial Decisions - from The Dough Roller
One good financial decision and a whole lotta bad - from DebtFREE Revolution
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