My Financial Mistakes (So Far)

One of the things that I frequently talk about in my classes, my books, and when talking with folks individually is that one of the biggest problems we have in personal finance is that talking about it is still taboo for many people in our culture. We’ll talk about making money in general, and certainly about very wealthy people and what celebrities make, but very few people go beyond that to talk about exactly what they themselves make, what they spend their money on (and why), how they make their decisions and the values that drive those decisions. Even within families, most parents don’t share very much detail with their kids, and this results in the majority of people more or less “winging it” when it comes to financial planning and decision making.

This blog, my classes, my books, and my interactions are often focused around opening up that conversation, making these topics and decisions more transparent in an effort to overcome that taboo. There are many reasons it’s a taboo topic, but certainly some of the problem arises from folks worried that they’ll be “judged” for what they spend money on or “made fun of” for poor financial decisions in the past (this comes up a lot in my classes). I think there’s often this perception that people who are “successful” financially (other than inheriting) somehow are smarter than other people, and that they’ve never made any mistakes. But that’s rarely the case, and it’s like anything else, we can only make the best decisions we know how with the information we currently have. If we don’t openly talk about finances and try to learn more, we’re unlikely to be more successful.

So, in that vein, I thought I would share some of my financial mistakes over the years. The reason it’s “some” and not “all” isn’t that I’m consciously editing out some mistakes, it’s that I’ve made so many of them that I’m not sure I remember them all. In addition, there are probably some mistakes I’ve made (or am currently making) that I haven’t even realized are mistakes yet. So I’ll try to briefly (for me) summarize each mistake and then also rate them on a scale of regret, with 1 being very little regret and 10 being a huge amount of regret.

1. Career Choice (early 1980’s): I was the kind of student that schools were made for and I was very successful. This allowed me to choose to go to college pretty much anywhere I wanted to and major in almost anything I wanted (well, anything non-artistic). Some of the things I considered were engineering, computer science and accounting before eventually settling on Mathematics Education and getting my teaching certification for grades 6-12. As will be no surprise (and was not a surprise to me either), this had an immediate and large effect on the amount of money I made. My starting salary my first year of teaching was about $18,000, which was less on a yearly basis than what I had been making working in a credit union in high school and college and much less than what I would’ve been making in any of those other fields. It wasn’t until somewhere around year 13 or 14 of teaching that my salary finally matched the starting salary I would’ve earned straight out of college in those other disciplines. And, of course, the salaries in those other disciplines typically rose faster and had a much higher ceiling than in education.
   
   Regret Level: 2. I don’t really regret this because, as cliche as it sounds, money isn’t everything. I feel like my career as a teacher had purpose and I hope that I helped make a difference for folks. The reason it’s a 2 and not a 1 is simply because I would have loved the opportunity to experience those other professions as well. I’m definitely one of those folks who would like to have multiple timelines where I get to try out lots of different things. Not necessarily to figure out which one would be best, but just because it would be fun to try those other things. I suppose if I was familiar with FIRE back then I might have more seriously considered working in Computer Science and then becoming financial independent before age 40.
   
2. Not Getting My Master’s Degree Sooner (1980’s and 1990’s): Most teachers are paid on a salary schedule, and most salary schedules have both steps (based on years of experience) and lanes (based on education level). A big dividing line in most salary schedules is having a Master’s degree. If you don’t have one, your salary schedule tends to top out fairly quickly. Once you get one, then you typically have some additional steps and lanes you can access. So the common advice for new teachers is to get your Master’s degree as soon as possible. I was well aware of this advice, but had a strong preference to not get a Master’s just to get a Master’s. I wanted it to be meaningful for me and help me become a better teacher. So I stubbornly held out looking for such a Master’s program until 1996, when I finally gave in and got a Master’s just to get a Master’s (finishing in 1997). Those 9+ years of not getting a Master’s had a large impact on my total earnings (as I’ve written about), both during those years and then in the delay after that before I progressed up to the highest lane (which, at the time, was MA+60).
   
   Regret Level: 5. Since I ultimately gave in, I should’ve given in earlier :-). I think there is definitely something to be said for having values and sticking to your principles, but since I eventually abandoned those principles I wish I would’ve done it sooner.
   
3. Early Investment Choices and Asset Allocation (late 1980s, 1990s, early 2000s): The good news is that we were pretty good savers and started investing pretty quickly after getting stable full-time employment. The bad news is that we didn’t know very much about investing and therefore chose some investments that I now know weren’t the best (both taxable and in our 403bs). We started teaching in the late 1980s and, at that time, almost any 403b was allowed by school districts (that’s still the case in some places). I believe I initially chose Safeco and Janus (and perhaps Vanguard at some point) and I can’t remember what my wife chose (we were in different districts so had different vendors that were already approved). We also started some taxable investments and, since we were located in the Denver metro area, we heard a lot about the mutual funds that were local, including Berger, Financial Funds (now Invesco), Janus and eventually Marsico. I didn’t know anything about expense ratios or asset allocation and just kinda chose some stuff.
   
   As the 1990’s progressed, however, I started learning more, particularly about index funds, a guy named John “Jack” Bogle, and a company called Vanguard. We slowly started making better choices, starting with moving both my wife’s and my 403b to a Vanguard 403b and stopping contributing to my 403b and contributing to PERA’s 401k instead. After my wife stayed home for 6 years with our daughter, she returned to a different school district that didn’t have Vanguard as a choice for the 403b (it was Equitable – aaaaahhhhhh!), so she started her PERA 401k as well. Eventually we rolled my wife’s Vanguard 403b (from her previous employer) into a Vanguard IRA, with all of our new money going into PERA’s 401k. (Once I retired, I also rolled my 403b into an IRA at Vanguard.) Later I also contributed to a 457b via TIAA (my district had not yet affiliated with PERA’s 457) and my wife contributed to a 457b through MetLife (as her district had not, and still has not, affiliated with PERA’s 457). Both of those 457s we rolled into our Vanguard IRAs once we left those employers. For our taxable accounts we opened up accounts at Vanguard and slowly sold off Berger, Invesco (formerly Financial Funds), Janus and Marsico over time. All of these transitions began in the late 1990s and were mostly complete by the early 2000s, although the last one we closed out was Marsico in 2012.
   
   Regret Level: 4. Again, we didn’t know what we didn’t know, and it was good that we were investing. We were also incredibly lucky that this was happening mostly in the 1990s when the stock market exploded, so it didn’t really matter that much what you were in. By the time things imploded in the dot com crash, and then the GFC, our new money was going into low-cost, diversified index funds, and our previous money was moved into the same or was in the process over a period of years. I suspect that if I had known about index funds from the get go that we would have quite a bit more now than we do, although again we got lucky with the 1990s so it’s not as bad as it could’ve been.
   
4. Not Understanding the Roth (1990s and 2000s): I was slow to understand the value of the Roth IRA and later Roth 401k/403b/457b. Given that we knew we were going to be a two-pension family and therefore our tax bracket in retirement would likely not be lower than when we were working, the advantages and flexibility of a Roth is something we should’ve taken advantage of earlier. This would’ve resulted in a bit more of our retirement investments being in Roth accounts and a bit less in traditional, pre-tax accounts.
   
   Regret Level: 5. In my defense, Roth IRAs weren’t even created until 1997, and Roth 401k/403b/457bs until 2006. But it wasn’t until sometime in the 2010s that I really caught on and, in retrospect, that was a missed opportunity. Both in terms of directing a bit more of our retirement investments to Roth rather than traditional pre-tax, but also I would’ve taken some of the money we invested in taxable accounts and invested those in Roth instead. As educators, we have two employer-based buckets in addition to Roth IRAs, so we could’ve invested a lot more in Roth. I also started doing some Roth conversions in retirement, but that’s on hold now with the enhanced ACA subsidy.
   
5. Not Having the Confidence to Take Over My Parents’ Finances (late 1990s, 2000s, 2010s, 2020s): My family really didn’t talk about finances much when I was growing up, other than to not be wasteful. We were middle class and comfortable and money was not something we worried about (at least that I was aware of), but we also lived fairly frugally. By the late 1990s my Dad was 71 and my Mom was 69. He had been semi-retired for a while (still occasionally did some consulting) and my Mom had one more year of being an elementary school librarian before retiring at age 70. I don’t remember if it started with me asking questions or if I saw a statement and then asked questions, but I soon figured out that they really didn’t have any kind of financial “plan” as such. They lived within their means but nothing beyond that. My Dad had started drawing Social Security and my Mom would start getting a pension once she retired (but no Social Security). Luckily, my Dad had pretty much always worked for universities in some capacity or other, and early on somebody told him to devote a certain portion of his paycheck to his 403b at TIAA-CREF. As a result of consistent contributions and the magic of compound interest over a long period of time, they had a pretty decent amount. They also had way too much in their checking account at Chase earning 0% interest.
   
   His 403b was 100% in growth stocks and I kind of freaked out. Obviously, that had been fine (actually really good) over the years (and luckily TIAA was one of the good vendors), but probably wasn’t the right asset allocation now that they were both going to be retired. While the combination of his Social Security and her pension was enough to live on, it didn’t provide much wiggle room for any unexpected expenses or health care needs. Besides the investment help, they also didn’t have any tools to plan the rest of their financial lives or a current will, power of attorney, or health care directive. I strongly urged them to find a financial advisor who could help them with their financial plan (and a lawyer for the estate documents), and especially figuring out what they should be invested in sooner rather than later. (If you remember the late 1990s, the stock market had had quite the run but was extremely overvalued.) Being me, I anticipated they would get this done in the next couple of months (along with the estate documents), so I had my Dad move all of his 403b into the money market fund with TIAA as a temporary holding place until he got some advice. But I had forgotten that they (particularly my Dad) didn’t like to be rushed into anything or “forced” to do anything so, as a result, it was close to two years before they hired someone.
   
   The folks they hired were “fine.” They are nice, helpful, give pretty good advice, and certainly didn’t try to take advantage of my parents in any way. But the amount they charged – the standard at the time of1% of assets under management – was way too high for the services they were providing. Interestingly, they did have a provision that for any quarter that your total investments with them lost money, they didn’t charge the advisory fee. After a few years they had to change that because apparently that wasn’t allowed (or perhaps there were too many bad quarters), so they ended up lowering it to 0.85%. They also had a proprietary investment system they had developed to “beat” the market. A few years later, they then offloaded the investments to an investment firm that had its own system. Luckily, both systems tended to use lower-cost funds, so it could’ve been much worse that it was. But they still would’ve done better in just a few, simple, low-cost, diversified index funds and with perhaps a different asset allocation (and, of course, without the 0.85% management fee). They were also still paying on their mortgage with an interest rate north of 5% (I don’t remember the exact number anymore). Since they had more than enough in their checking account that was earning 0% to pay off the mortgage (much less perhaps tapping into the retirement account), they obviously were not receiving the overall financial plan that I had hoped for (although, again, it wasn’t horrible).
   
   In retrospect, I wish I would’ve felt comfortable doing it myself. At the time (late 1990s), I may not have known enough, but by the late 2000s I think I did, but I didn’t want to upset them (or possibly my siblings) by suggesting a change. Even now, after my Dad has died and my Mom has moved in with us, the remainder of his (now her) retirement account as well as taxable investments from the RMDs is still with the advisor. We are now taking any RMDs (as well as the sale of their house) and instead of reinvesting in the taxable account with the advisor I am investing separately in a brokerage account at Vanguard. It’s awfully hard to tell, of course, but my guess is that if I had had the confidence to take over say in 2010 my Mom would likely would have about twice as much money as she does now.
   
   Regret Level: 5. We left a lot of money on the table, but there’s also the family dynamics piece and, of course, if I had taken over even earlier I didn’t know as much and may have done something that would’ve been hard to recover from (I don’t think I would have, but possibly.) Certainly during 2008-09, having their money with a “real” financial planner meant that they didn’t question anything, whereas if I had been managing it with the same losses there might have been some tension.
   
6. Over Saving in 529 Plan (2000s, 2010s): We adopted our daughter in 2000 and, in 2001 as soon as she had a Social Security number, we opened a 529 plan for her. We automatically invested money each month and occasionally added some lump sum investments to try to front load things a bit. We sort of had a target in mind and I think we had a good plan, but then 2008-09 hit and our balance dropped by almost 50%. So we continued to invest amounts monthly (and once or twice a lump sum) trying to “recover” and, as we now know, the stock market went on an incredible decade-long run (close to 16% annualized from 2011-2021). We didn’t know that was going to happen, of course, so continued adding to her 529 through about 2014 (she was going to graduate high school in 2018). Well, due to that incredible run in the stock market, combined with her deciding to attend a state university, we ended up with way too much in her 529 account. (To be clear, this is a great problem to have, and rest assured the money will eventually be put to good use, even if we have to pay taxes and a penalty.)
   
   Regret Level: 2. Nobody could predict (with any degree of confidence) that the market would do what it did, so no real regrets there. Obviously in retrospect it would’ve been better to put some of that money elsewhere (Roth!) so it doesn’t have the restrictions that 529 withdrawals have but, overall, it’s a great problem to have. Especially now that we’ll be able to use some of it to fund her Roth IRA for a few years. She may also decide to go to grad school, or we may help my niece and nephew, or we may just leave it there for any children she may have, or we might withdraw it and take the penalty and pay the taxes. That last one is the one that really bugs people, but I look at it as money we didn’t expect to have, so it’s really just a bonus. Sure, it would’ve been better to put it somewhere else without the taxes and penalties, but it’s still money we weren’t expecting to have at this point.
   
7. Not Monetizing My 15 Minutes of Fame (2000s, 2010s): I was a teacher and technology coordinator and was heavily involved with the integration of technology into schools that began in earnest in the late 1990s and then exploded in the 2000s and 2010s (and this was before the pandemic and forced online instruction). As part of our staff development efforts I started a blog in the fall of 2005 in order to share and discuss ideas and participate in the wider “edu-blogosphere” that was developing. Due to the nature of that community, my blog started getting some traction and then I ended up creating a video that became one of the first (perhaps the first) viral education video (which then attracted even more folks to the blog). (Keep in mind that YouTube was pretty new then, so popular videos were spread out across multiple sites, although YouTube fairly quickly came to dominate. My favorite I think was iambored dot com.) So I briefly became “famous” in a small corner of the K-16 world. But I never tried to monetize that. Yes, I did some speaking engagements and did make a little bit of extra money, but I didn’t aggressively pursue those, didn’t charge market rates, and sometimes just got reimbursed for travel expenses. I didn’t ever try to monetize the video or the blog, either with advertising or affiliate marketing or whatever, and eventually even started turning down speaking engagements because I wasn’t sure I was being all that effective.
   
   Regret Level: 1 or 10. Financially, I guess the regret level would be 10. I certainly could have generated both a lot of passive income from advertising and affiliation, and much more active income from speaking engagements or “trainings.” I could even have quit my job and done that full time and likely made at least twice as much as I was making as a teacher. Given the amazing run of the stock market in the 2010s, all of that would’ve compounded nicely. But that would have really went against the whole ethos of the edu-blogosphere (as least my view of it). We were there to share ideas, ask questions, try things, and generally just try to figure out a way to improve K-16 education. Yes, there was nothing wrong with occasionally earning a bit extra from that but, for me, that was a far cry from actively trying to monetize it. I was getting so many questions that once I even wrote a blog post asking if I should add advertising (which was becoming much more common), but pretty quickly decided against it. So my regret level is a 1, because what we were doing (or at least trying to do) would’ve been endangered by trying to monetize it too much.
   
8. Not Understanding the HDHP/HSA Soon Enough (2010s): When high-deductible health plans and HSAs came along sometime in the early 2010s in my school district, I didn’t really know much about them. The general feeling was that this was just a way to shift more of the health care costs onto the employee and lessen the burden on employers (and that was certainly part of it). So, initially I stuck with our HMO. After learning a bit more and doing the math, I switched to the HDHP and contributed to the HSA, but then reimbursed myself for any out of pocket expenses. It was only after a year or two of that that I realized the power of using an HSA as a stealth retirement account and stopped reimbursing myself and instead invested the money and watched it grow.
   
   Regret Level: 1. We only lost a couple of years of contributions (both for myself and my wife), and then a couple of years of being fully invested. Now that we’re retired (but still pre-Medicare), we are still in an HSA-qualified HDHP and maxing it out, not reimbursing ourselves (yet), and letting it grow.
   
9. BlockFi (Early 2020s): After listing to multiple episodes of Animal Spirits about BlockFi, I decided to invest in stablecoins. While I wasn’t all that enamored of cryptocurrency in general (pretty much an agnostic), I did feel like stablecoins were a reasonable investment because they were backed 1:1 with dollars in a bank account. My thought was that even if those high interest rates didn’t come to pass, the principal was pretty safe. I understood how BlockFi was able to pay those rates and sort of thought of is as the equivalent of selling shovels and picks to gold miners instead of mining gold myself. I also felt that BlockFi was legitimate and had pretty good risk controls in place (I still feel that, at least the legitimate part, although future information may change that). And my alternative at the time for this money was to invest in the stock market, which was extremely highly valued. So I figured it wasn’t that much more risk than investing in an overvalued stock market. (And, in fact, the market declined by about 25% over this time.) The part I didn’t fully understand was that even though every GUSD was backed by a dollar in an actual bank, BlockFi’s GUSD assets themselves apparently were not. So when FTX got exposed they took BlockFi down with them. (Again, at least as of right now, I think BlockFi was legitimate and wasn’t committing any kind of fraud.)
   
   BlockFi is going through bankruptcy right now (very much slowed because it’s very dependent on how much they can recover from FTX) and, at some point, we will get some of our money back. After getting comfortable with BlockFi over the course of about 6-8 months we ultimately invested about $19,500 total in GUSD (there was also a little bit in Bitcoin, but that was just from bonuses and promotions, not any money we actually invested.) Given that the stock market declined about 25% in that time, then I figure we’ve lost about $14,625 at this point. (Ouch!). But I’m reasonably hopeful that we will get at least some of that back (if and when we do, I’ll try to remember to update this post with the amount).
   
   Regret Level: 9. This was definitely a case of not being satisfied with having “enough”. Because the stock market was overvalued, the bond market had expected negative returns, and savings accounts were paying next to nothing, I felt like taking a bit of a risk for additional yield was worth it. (And then, after the stock market corrected, I would likely pull the money and invest it in our taxable brokerage account.) With my (incorrect) assumption about GUSD (at BlockFi), it felt like it was not really risking the principal. We are at the point financially that not that much moves the needle, which was part of the reason I took the risk (“I gotta do something with this money besides get 0.5% at Ally!”). But I could have just as well used that same logic to say “Why bother?” and just leave it in our savings account. Definitely a learning experience.
   
10. Not Taking Advantage of Credit Cards Soon Enough (2000s, 2010s, 2020s): I’ve written about credit card rewards before (here and here and here), but I was pretty late to take advantage of them myself. We’ve pretty much always had a credit card, but typically just one (and eventually a second one as “backup”). We used them as a convenience, paid them off every month, and even sometimes got 1% cash back or something. Compared to many of our peers, we were doing great, as we never got into debt with them or paid any interest. But I also looked somewhat askance at folks who said they were “hacking” credit cards and figured it was either sketchy or just not worth the effort.
    
    Well, after learning a bit more, we now are doing much the same, although to a much lesser extent than the folks who are really into it. This includes not only getting sign up bonuses, but making sure we are using the right credit cards for the right purchases to maximize the cash back. It’s very little work and the payoff is pretty good. But, even now, I have to force myself to do it. For example, I recently got the Chase Sapphire Preferred card after delaying for a really long time, and then just got one for my wife. Even after the $95 annual fee for each, we are likely to make about $1,300 cash back for about 30 minutes of work (and that’s worth over $1,600 if we use it in the Chase Travel portal which I’m starting to explore).
    
    Regret Level: 4. Yeah, we left a lot of money on the table (and still are leaving money on the table because I just can’t motivate myself to really go after this). And while the money doesn’t materially effect us at this point in our lives, it’s still worth something, especially as we are incurring costs for taking care of our aging parents that could escalate quickly.

So, like I said, this isn’t all of my mistakes, and there are probably additional ones I am making right now, but hopefully this gives you the idea that everyone makes mistakes, even the folks who seemingly know what they are doing. (Hopefully I seemingly know what I am doing most of the time.) And yet, despite all of these “mistakes”, we have been incredibly successful financially. Do the best you can with the knowledge you currently have, and slowly learn more in order to do even better. The biggest mistake of all is ignoring your finances altogether.