The Smartest And Dumbest Decisions I’ve Made With Money

Written on December 4, 2007 by Tezza

Tuesday’s weekly guide to Personal Finance from 4EvaYoung.com

Since I’m in my late twenties I’ve hardly scratched the surface of smart and dumb financial decisions. My only hope is that as age creeps on my smarter financial decisions out weigh the dumb ones. But alas with youthful enthusiasm I’ve taken a few pot shots at trying to run my life into the financial ditch and I’ve managed to collect myself together to string along some good financial decisions in my later life. Since I’m the ever optimist and like to see the glass as half full, I’ll start my list with the Smart Financial decisions I’ve made so far, it might make me look temporarily smarter until you make it to the second half of the post. Hopefully, you have the time to learn from my mistakes and make wiser choices.

The Smartest Financial Decisions I’ve Made With Money

1. Buying A Used Car Instead Of New

While it’s tempting to buy a brand spanking new car, I at least had a limited enough foresight to buy used when I turned 18. That was the year I bought my first car, paid with cash saved up and with some help thanks to my parents. It was a near new 3 door Daihatsu Charade. Now when I say near new, I literally mean it still had the factory smell new.

The owner selling the car had originally bought the vehicle for his wife, he also had his own vehicle and then his company provided a vehicle. So it doesn’t take a rocket scientist to figure out that two people don’t need three cars, so the Charade just sat in his garage for two years. When I came across the deal not only was the car two years old, it had less than 800 kms on the speedometer. No that’s not a typo, imagine the shock on the mechanics eyes when you bring in the vehicle for it’s first 1000 km new car log book service which is usually performed within the first few months of ownership.

The owner had bought the car brand new with all the extras and add ons you could have wanted. The salesperson must have saw him coming a block away, but at least we know he must love his wife. By the time he sold the car to me his depreciation on the car came to over 60%. Partly because he was a nice guy, but really because he was an ex pat who was returning back to his home country on short notice and wasn’t returning again so he just wanted to sell it and be done with it. So a string of lucky breaks got me my first car at a good deal.

Well I drove the car till it died seven years later, had some good and bad memories in that car. It’s not a reflection on Daihatsu and their cars but rather more a reflection of my careless attitude toward motor vehicles. I never serviced the car until something went wrong and I practically drove it to an early grave with my sometimes heart stopping driving. I’ve probably single handedly shaved off countless years out of my own and my friends lives over the life of that car. Towards the end the car used to stall at low speeds, and no it wasn’t because of my dodgy left foot, the car was an automatic. The writing was already on the wall and when the mechanic had a look over and gave me the damage report (cost of repairs) I decided it was cheaper and less stressful to just buy another car.

2. Saving And Investing My Paycheck Instead Of Spending It All

When I got my first full time job, it didn’t pay much. I was starting at the ground level but I decided very early on that I would save so that I could invest for my future. While everyone else was buying brand new cars on lease or finance, going on overseas trips, blowing their paychecks on expensive night outs at the pub I toned it down in order to save. Instead of the new fancy car to show the world how well your doing in life, I drove my little trusty Charade. Instead of the expensive overseas trips that give you fond memories and a massive hole in your financial pocket I chose to do smaller trips in my home state or nearby states. Instead of the expensive night outs and a hang-over I chose to spend it with good friends at restaurants enjoying good food and good company.

I managed to save nearly $1000 per fortnight back then and I invested several hundred dollars per month on books for my continual growth during this period. It was probably the single best thing I could have done cause no matter the inevitable ups and downs of life I have a tidy stock portfolio to show for my working efforts. Thanks to capital growth and dividends it’s no longer pocket change and provides me with a healthy buffer to weather most financial storms or shocks in the future. While you might think saving $1k per fortnight seems impossible you have to bear in mind that I didn’t have a family, mortgage or huge expenses at the time. Thus I was able to capitalize on a short term window of opportunity to maximize my savings plan.

The Dumbest Financial Decisions I’ve Made With Money

1. Spending Money On Credit Like It Was A Magic Money Tree

When I got my first ever part time job while putting myself through University, I thought it an appropriate time to get myself a credit card. My logic at the time was that it would help my credit rating so that I could get bigger loans down the track, pay for some of my education and lifestyle costs where a credit card was a more convenient payment method and to also give me something to fall back on during emergencies.

Well my logic flew out the window once I got my hand on the credit card and evil Tezza reared it’s ugly head. I was like a kid possessed in a candy store, I took to the credit card like it was a magic ATM machine, spitting out money at my every whim. I had a part time job at the time and it was a running joke with my work colleagues that the only reason I turned up to work was to pay off my credit card bill. It certainly wasn’t because I loved the work place thats for sure.

My paycheck literally went towards paying off my previous weeks expenses, it was a never ending cycle of debt and paycheck. It took me much later to realize my stupid ways and thankfully I wasn’t doing this when I had a full time job as it would have hurt a lot more. I learned during this period that you should never trust a young adult with credit no matter how responsible they may be and all financial decisions good or bad will eventually catch up to you.

2. Getting A University Education Instead Of Getting A Life Education

Along with countless others in life, I was always trained to believe that the logical route from High School was University where you were trained to join the work force. University certainly has it’s place as many professions require it to maintain a minimum standard. But for most people going into university, especially the ones who haven’t yet figured out what they want to do with their life and I was one of them its really just a pointless period of enforced imprisonment with the periodic party to keep you sane. I fumbled and tumbled my way through my classes and all the while I was accumulating student debt for the privilege.

Knowing what I know now I would have forgone University education until I came to an impasse in my life where it became a critical requirement for going forward. It would have saved me many wasted years, countless sleepless nights studying for pointless exams and thousands of dollars in school fees. I can’t think of one practical use of any course I’ve taken that could be useful in the real world. It just sits there gathering dust in some remote corner of my brain somewhere. The reality is that most work places will train you in the practical skills needed which aren’t provided in your University education and if you are a good employee they will rather invest in your progression rather than replacing you with someone with book knowledge.

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