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Be Open About Your Financial Mistakes
May 1, 2008 | 3 Comments
The Simple Wealth had an article published on the Carnival Ethics, Values and Personal Finance of that reminds us of remembering our past financial mistakes.
It is important to learn from mistakes. In a society where talking about money is taboo, talking about financial mistakes seems to be ever more taboo. When you do not recognize, remember and meditate on the things you have done wrong, you do not get to learn from them and make mental connections that will prevent you from doing them again in the future.
Some of my financial mistakes:
Poorly Diversified: Too many bank stocks at the wrong time. Should I say more. Cost of mistake: over a hundred thousand dollars. (Most of it recovered by now, using even riskier trading techniques.)
Buying a fixer-upper for rental: Not that fixer-uppers are bad. They are great if you are handy and if you will live on them (and can live with the inconveniences until you fix them). They are terrible when you do not live on them — since you will have to rush to fix them before you can place tenants on them. If you are not a good handyman then it will also cost a lot of money: on people you have to hire to do the job in a hurry. Cost of mistake: tens of thousands of dollars.
Buying The Latest Gizmos: Sometimes you just want the latest technical gizmo or toy. I have been pursuing the dream of ultra portable computing since I was in college – yes, more than 15 years ago. I have purchased ultra modern writing tablet computers 10 years before Bill Gates declared them for the mainstream (and today, five years later, they are still not used in the mainstream). I have purchased several PDAs that promise extreme connectivity options, ability to carry your presentations and spreadsheets, and play music, tv, and all that stuff. Never fully satisfied with them. Intel is pushing the concept of ultra-portable now. Maybe we are ready now. Maybe we are still not ready. Maybe I should wait for second generation devices now. Cost of mistakes: thousands of dollars, some of them to my dear parents who had to fund a portion of these mistakes when I was back at home.
Fake Collectibles: When someone advertises a new product or release of a new product as a collectible, do not believe them. Well, you can collect anything you want, even stones picked from every river you visit or snapshots of every friend you have. But valuable collectibles can’t be declared to have a collectible value until people start paying more than their intrinsic value for them on a secondary market. I made this mistake once, in conjunction with my family. Some silver (gold plated) replicas of famous stamps that was supposed to be a collectible edition. Cost of mistake: a couple thousand dollars. Their current value: about a fifth of that if you think about how much silver has appreciated. One of these days I will frame them — as a reminder of what not to do.
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