Confessions of a personal finance reporter (Part Two): 3 more of my worst money mistakes

Confessions of a personal finance reporter (Part Two): 3 more of my worst money mistakes

Sarah O’Brien hard at work writing about personal finance.

Salvatore Agostino

One of the best benefits of being a personal finance reporter is my keen ability to recognize the many money mistakes I’ve made in my life.

I’ve already divulged a few in the first iteration of this confessional two years ago. While some of my blunders have been worse than others, they all make me cringe — and the ones below probably will make some readers facepalm. Others of you may relate.

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Either way, my hope is that sharing these can help someone else avoid the same mistakes — which come with potential long-term consequences that aren’t particularly good. It’s hard to calculate the cost of my flubs over the course of my Generation X adulthood, but suffice it to say I’d have more money if I had made better decisions.

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Here are a few gems, in no particular order.

I tried to time the stock market because I ‘knew’ where it was headed

I was at least a couple decades into adulthood when I decided I could see into the future. That is, I just knew the stock market was on the verge of dropping and would stay down for a while.

This crystal ball-reading talent emerged as I rolled over money from an old 401(k) into my then-current retirement account. I confidently put the rolled-over funds in a money market account (earning nearly 0%) so I could buy stocks during the market drop that was imminent and therefore be positioned to capture gains when the market went back up.

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

That didn’t materialize.

I waited months. By the time I actually moved the money into a stock-heavy target date fund — not because the market had tanked, but because by that point I had developed fear of missing out — stocks had continued climbing.

By keeping my money sidelined, I missed out on those gains — as well as any compounding interest the funds would have generated, both during those months of sitting in cash and in the future. 

I sought investing advice from a random co-worker

The first time I enrolled in a 401(k) plan in young adulthood, I had only a basic understanding of investing.

That is, 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 specifics, though? Not so much.

So when I had to choose from a lineup of funds for where to direct my 401(k) contributions, I did some research: I asked a co-worker near me which fund she was choosing. She rattled off the name of it. I told her it sounded good so that’s what I decided to go with, too.

“Wait a minute,” she said. “I don’t want to be responsible for ruining your retirement if your investments blow up.” I dismissed the notion with a wave of my hand and assured her that she was the smartest person I knew.

Now, this was long enough ago that I have no memory of the fund’s performance or my account balance when I eventually moved the money to another retirement account.

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

For all I knew, the fund I picked was in “safe” investments (U.S. Treasury bonds, cash) that may not keep pace with inflation and not provide the kind of long-term growth that stocks would have. I also didn’t know what the fund was going to cost me every year in fees.

In other words, I had exactly zero idea whether it was at all appropriate for my individual situation.

What could be that wrong with a house?

I’ve been involved in five house purchases as an adult. One of them was being sold “as is.”

A friend of mine said at the time, “Whatever you do, make sure you get a home inspection before you buy it.”

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

Well, let me tell you in case you don’t already know this: There are a lot of things that can be wrong with a house and its property that aren’t immediately visible. And depending on the specifics, fixing them can be really costly.

While I don’t think getting an inspection before purchasing that particular house would have changed my mind about buying it, it very well could have resulted in more negotiating power on the price — and, in the process, saved a boatload in interest because it would have been calculated on a lower mortgage amount.

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