9 things I wish I’d done differently in my financial past

Many of us have made financial mistakes. I’m certainly no exception.

Mistakes are the currency of experience, and experience is the fertile ground in which better future decisions are based. So while I won’t say it’s all bad … I could have done these things better.

I wish I would have:

Bought a used car right out of college

When I moved to South Carolina from Michigan in 2002, I was driving a leased Ford Explorer my parents picked up on a sweet deal. Then I took over the last year of my brother’s Explorer lease.

When the lease was up, I needed some new wheels.

Quite honestly, I was ill prepared for what a car payment looked like. My parents both worked at auto companies, they got employee discounts that helped lower the sticker, and I had grown used to some very nice vehicles since college. The leases I was driving were reasonably priced because they were incentivized at the time.

I also admit I had a very unwarranted, warped view of what it meant to buy a used car, so naturally I thought I should get a new car. The nice salespeople quickly shattered my illusions of affording a new F-150 or Explorer. I had nowhere near the salary to swing that kind of vehicle (thankfully!).

So I moved to the Dodge dealership in town and found myself looking at the 2003 Dodge Neon, a sporty little  four-door whose payments I could afford but wouldn’t leave me loads of spending money at month’s end.

It was $15,000 after dealer rebates. I put $2,000 down, financed the balance at 5.25% over the next 66 months and paid $226.85 every month for more than five years. It served me well, and I drove it about 13 years.

Then I bought a used 2014 Ford Taurus for $20,000. I made extra payments like crazy and paid it off in nine months, and I plan to drive it at least a decade. I’m not making that new car mistake again!

Put more into my IRA

I started my IRA at age 20 thanks to good advice from my mom. I seeded it well in the beginning, and then put a relatively nominal amount of money in each month.

Later, when I thought that hundred bucks or so a month could be better used in the present than the future, I pared back my investing. I shouldn’t have done that.

Granted, I was buying mutual funds that carried a load, so I wasn’t optimally invested to begin with. But had I increased my allocation when I was in my early 20s instead of decreased it I would be much happier with the balance today.

I did start putting $100 a month back in when I got a promotion at work at age 26. That’s pretty much where my IRA investing stayed until my epiphany at age 34. That’s when I started to max out my IRA and found the world of low-cost index funds.

Recognized the power of a market downturn

When the market crashed in 2008, I was not yet investing much money, so I didn’t really lose sleep over a drop in my balance sheet.

But I distinctly remember a conversation at the end of August 2010 where someone advised me to increase my 401(k) contribution and my response was, “I don’t know about that. The market isn’t doing too well right now.”

The S&P 500 closed at 1,071 on Aug. 20, 2010.

Facepalm.

By the time I came around on investing, the S&P 500 crested 2,000 points. As of this writing it closed at 2,750.

That’s a 100% gain before I even got interested in what the S&P 500 was doing and a 157% gain overall since that day in 2010. I would have liked to been on the roller coaster for more of that ride.

Waited a little longer to buy my first house

My now-wife and I bought our first house with good intentions, but it was more of an emotional decision than a calculated one.

Like many people are doing now, we saw the housing market climbing a seemingly nonstop hill and figured if we were ever going to be able to afford a home the time was now.

We didn’t have a lot of money, we weren’t yet married and didn’t intend to be anytime soon, and I had no experience purchasing a home. (For the record, the mortgage was entirely in her name. I was basically paying her rent.)

We closed on our house in April 2007. Here’s a fun little chart showing how that turned out for us:

Our house was a $212,000 starter home with an adjustable-rate mortgage that immediately went underwater by something like $30,000. I’m not going to say I should have held out until 2011. I’m not that smart.

But if we had held out another 8 to 12 months, we probably would have been able to get a much nicer house for our money and spent less on improvements along the way.

In the end we still just about broke even on our sale, including the major purchases like new windows, new furnace and air conditioner, added insulation, etc. I also learned a lot about being a homeowner by doing a bunch of work on that house that I might have been scared to do in a nicer home.

There’s definitely a silver lining, but in straight financial terms we bought at the peak.

Gotten a longer term on my life insurance

This is one lesson I tell people a lot. Buy term life insurance early, and buy it for a 20- or 30-year term.

Why?

Because it’s unlikely your health is going to improve with age, which means it’s unlikely your premiums are going to decrease with it, either. You may be 23 and care-free now, but by the time you’re 31 and 20 pounds heavier and have two kids in the house you’re going to wish you had that ridiculously cheap premium from back in the day.

I did a 10-year term a little less than 9 years ago. Now I wish I would have locked it in for 20. My health has changed, so the prices have changed. At the time that didn’t seem like a big concern. I wasn’t thinking about the future the way I should have been.

Look, if your health changes for the better when you get older, by all means get a new policy and cancel the other one. But if you’re the other 99% of the population, get a reasonable term life policy in place for a long time before your health gets any worse.

Tracked and projected my spending sooner

It wasn’t until 2015 that I started to actually keep track of my spending in any formal way, and a year later before I adopted my current tracking/projection spreadsheet.

Before that, I simply paid bills and had an idea of what they were going to cost, and I tried to keep enough buffer in my checking account to cover variables. When that buffer got a few grand lower than I was comfortable with one month, I decided to get my act together.

What a difference that made!

I have continued to refine my tracking and add more detail since then. Now I track exactly what kind of spending I’m doing in all my major categories (See the example of ‘Our completely ridiculous 2017 spending recap’). That allows me to see where we’re spending more over time and recognize whether budget changes are inflationary, intentional, or lifestyle creep.

It also allows me to hold myself accountable to lifestyle and financial goals along the way and course correct if needed.

Now what I really wish I had was this kind of detail going back to when I first struck out on my own. It would be fun to see how my spending habits have evolved!

Shopped around on car insurance more often

I had the same car insurance company for six or seven years. I got a quote from them when I bought that new car I mentioned above, and I took the policy. That was the extent of my research into car insurance.

I just kept paying whatever they told me to pay. For a long time, I paid the monthly premium. I didn’t appreciate the savings of paying a six-month premium until much later.

Now I get quotes from at least two insurers every year, and lately I have been switching every year and saving hundreds of dollars doing so.

Car insurance companies are like cable providers. They’ll hook you with a great rate, and then slowly increase it while you’re not paying attention. They hope you won’t notice, and most of you won’t.

I know I didn’t.

Jumped into travel hacking

I’ve already gushed about travel hacking quite a bit in the past year.

It’s saved me over $4,800 to date, which means I’ve been able to travel more with my family than I would have if we were paying cash and getting a measly 1.5% cash back on that spending.

I travel hacked flights to California for our cruise, Cabo San Lucas for an all-inclusive resort, Michigan for a weeklong visit, Nashville for a family birthday, Florida for FinCon, and Colorado to climb a mountain.

That’s 14 round-trip flights for $374.01 and 194,016 points between Southwest and Chase.

Seriously, if you are a responsible credit card user and haven’t looked into travel rewards cards as a way to save money you’re missing out. I should have done this 10 years ago.

Learned more about personal finance early – and implemented it

I was always in decent financial shape.

Even when I wasn’t making a lot of money, I also wasn’t spending like I was making a lot. I never carried a credit card balance. I kept my car payment affordable. I was frugal in many ways.

But man I wish I got bit by this bug earlier. Knowing the compounding effect of the power of time on investments means I now know how much I missed out on by not really understanding what I was doing.

I thought investing was something you had to have a professional help you with. I figured retirement was something you really worried about when you got closer to it (whatever “closer” means). If I’m being honest, I thought what I was doing was good enough.

I really wish I would have picked up some books, looked at some information online, and really thought about what I was doing with my money earlier than I did.

But I’d much rather be where I am now than where I would be if I never decided to learn about personal finance when I did!