Money mistakes, by Marguerite Tennier, M.A This post may contain affiliate links
Avoid those big money mistakes
Money. Money.. Money. I like to think that I have always been careful with my money. Yet, when I do a quick review in my mind – as I am doing now – I can see where in my life where I could have been a lot better in the money department. I made huge money mistakes that ended up costing me a lot of money.
Mistake no. 1
The first money mistake I remember doing was to neglect investing the cash value of a life insurance my parents had taken for me at birth. I don’t remember how much it was, maybe $1,000. Not much by today’s standard but $1,000 invested at 7% when I was 20 could have grown to close to $15,000 at 60. At 10%, over 40 years, that would have grown to over $45,000. – yes forty-five thousand dollars.
Pearl of Wisdom
Obvious – if you have some money falling from the sky, whether it’s the cash value of a life insurance policy or a gift from a generous relative, and you don’t absolutely need it to survive, invest 90% of it – and treat yourself with the other 10%. If we are talking about huge amounts of money, invest it all now. Consult with an independent financial adviser (fee for service) first. And yes by all means treat yourself but remember that even a million dollars does not go very far these days.
Mistake no. 2
Mistake number 2 also has to do with investments. I worked in the Federal government in my 20 and early 30’s. I can’t remember exactly at which point I did it but I did: when I moved to another job in the private sector, I withdrew what was in my pension plan instead of having it transferred to my private registered retirement plan. I was still at that point very ignorant about compounded interest. Again, the amount was probably not huge, a couple or a few thousand dollars??? That invested in a registered plan would have multiplied many times over the following 30 years.
Pearl of Wisdom
Any time you change job, transfer your 401K, Superannuation or other employer pension plan to your new employer’s plan. If it’s not possible do not cash it. Transfer it to your private pension plan so you don’t pay huge amount of taxes on the withdrawn money. If you are not familiar with financial matters, speak to a professional accountant about the tax implications.
Mistake no. 3
Mistake no. 3 was about real estate. In fact, it’s a compounded mistake. Selling a house in a city I loved living in to buy in another close city – where I thought I would like to live and living to regret it in more ways than one. The townhouse I sold ended up increasing in value after the sale so that by the time I sold the house where I thought I would like to live, house no. 1 was no longer affordable (3 years and the price of homes had almost doubled in my favourite city). And I totally hated my new neighbourhood. More about this in Mistake no. 4
Pearl of Wisdom
Study the real estate market before you make a move. Sometimes you don’t have a choice to sell and move, but if your situation is like mine was, just a choice to move across the river, look at what you love about your neighbourhood and assess whether the place you want to move to will also have those great features. I love the city and the convenience of walking to the store, etc. My new house was in a totally residential neighbourhood and I had to take the car if I needed a quart of milk. So before you sign the offer, walk the neighbourhood. See if it feels comfortable. If it offers what is important to you, whether it’s walking to the store or a nearby park, pool or school.
Mistake no. 4
Mistake no. 4 the last but not the least, was to buy the second house without having the house inspection done – that was a mistake that cost me hugely – to the tune of $10,000 to repair the foundation. This too was a compounded mistake, as I bought in a neighbourhood, a street really, where on one side there was a serious problem of drugs and on the other a lot of yelling and heavy drinking which made me feel quite unsafe because of the former and uncomfortable about the latter.
Pearl of Wisdom
That was a huge mistake. It not only cost me money but it also cost me a lot of stress. Finding mold on the wall and realizing the foundations are leaking is a bad way to start any day. When that mold is in the rental unit of the house adds another layer of stress.
Never, never buy a house without having it inspected by a reputable home inspector. That profession is not regulated everywhere, so ask friends, neighbours, people you trust for referrals.
Never assume you will enjoy the neighbourhood unless you have visited it during the people, listen for noise, the traffic, late night parties, the general feeling. If like me you live in a city that has a long winter, it makes the above advice harder to follow during the cold season than when the temperature is mild and people spend more time outside, but still, do spend time walking on the street before you sign on the dotted line.
I hope you can avoid making these same mistakes. Please share the information with your family, friends, colleagues. If even one person can learn from this post, I will be more than happy.
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