
Ask HN: What was your worst personal financial mistake? - mavsman
I&#x27;m curious what traps smart people have fallen into that I should avoid, perhaps because you weren&#x27;t informed or perhaps because you got to confident in some way.
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keiferski
Not changing my fundamental mindset about money. 99% of the time, it's better
to focus on the long-term goal of increasing your income, rather than saving a
small amount of your current income. Extreme frugality is almost always a
waste of time and earning potential.

For example: 15% of $150,000 is more than 40% of $50,000. This is also why
living in a HCOL but making proportionally more money is financially smart. If
you can only save 10% of your income, that 10% number will be far higher if
your total salary is higher.

~~~
z303
I second this. Spent so many years turning down jobs in London. Took the
plunge about six years ago. earning over double what I did before but more
importantly got so many more opportunities and levelled up my game

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PruneTracy
Negotiating against myself, and accepting the negotiating "frame" of the
bidder when I had a monopoly/monopsony asset.

I sold a four-letter common-noun .com domain to a major corporation back in
the '90s when they were scooping up domains, and fell for the "name your
price" trick: I asked around and named a number I thought was high and they
said "that's acceptable" – I'll never know how much they might have paid if
I'd tried to find another bidder and made a market.

Did I learn my lesson? A few years ago I sold a long-term residential lease to
a private-equity developer after bidding them up to "enough to buy an
equivalent apartment" – but really the value of the lease to them may have
been much higher. I negotiated as if I were selling them my apartment, rather
than pointing out that what I really held was their ability to freely develop
a very valuable property into which they'd already sunk $40 or $50 million.

I can't really complain, both "mistakes" were only failures to maximize
windfalls. And I'm not embarrassed – they were professional negotiators and
I'm just a lucky programmer. But I do sometimes regret not being greedier!

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csa
My worst financial decision was to choose to be an academic as my “first”
career. The pay wasn’t terrible in my case, but it wasn’t anywhere near my
potential.

The other side of that coin, however, is that it was probably one of my best
life decisions — I am a much better and happier person because of it.

Answering a slightly different question: I can definitely say that I know
several people for whom getting married and later divorced was extremely
expensive for them on many levels. I imagine that some folks will be reluctant
to state that for themselves in a public forum, but it definitely happens. It
can be a very tricky topic in terms of what constitutes a reasonable division
of assets.

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jon-wood
Dismissing Bitcoin as vapour in the very early days (back when you could
feasibly mine on a CPU). I still think it’s nonsense, but it’s nonsense that’s
made the people around me who bought into it very comfortable!

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drakonka
I am making mine right now - I spend too much money and save too little. I'm
working on it, but it's proving difficult to get out of the habit. When I was
a freelancer saving was easy because I didn't have the illusion of a
consistent paycheck. But now I'm in a full time, stable job in a country where
employee rights are good and job security is high, and I'm not prioritizing
saving as much as I know I should. This is something I'll be working hard to
improve.

~~~
throwaway413
Right there with you. One trick I've been using as of lately is pre-paying my
rent by paying for 2 months each month. That way the money isn't available for
me to spend uselessly. I'm still spending it, but on a bill that I'd hav to
pay anyways. I'm up to 3 months of pre-paid rent and feels good to know that
if something happened to my job, at least I won't lose my apartment.

~~~
marketgod
This is good but you are better putting this in a GIC instead and then pay
rent from there. Ladder GIC's or a HISA account.

If you pre-pay rent, which is good to have it paid and not worry about, you
aren't earning interest with that money which can add up, suppose you get to
saving 12-months rent in advance.

~~~
throwaway413
Good point, very true. The issue I struggle with is discipline - if I have any
way to access the funds, I will end up spending them, doesn't matter how many
accounts I have to transfer through. Hence why I went with the pre-pay rent
route - it's technically already "spent" and I can't simply take it back or
acccess if after that. The goal is to recalibrate my spending habits after
paying double rent for some time, and then begin to reallocate that monthly
budget to better investments as you have mentioned.

~~~
marketgod
Get a savings only account at a bank far from you. Throw the bank card out.
Set automatic withdrawal to that account. This way you have to go to the
physical bank to withdraw money. This may work for you. Good luck, it is
really a challenge.

~~~
throwaway413
That’s a solid idea, thanks for the tips!

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quietthrow
Not starting retirement savings till I was 41

Ps I just started this year. Would like to see how I can understand what I
have lost so far and what would I need to do to “make up”

~~~
sergiotapia
[https://www.daveramsey.com/smartvestor/investment-
calculator](https://www.daveramsey.com/smartvestor/investment-calculator)

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sergiotapia
Not starting to invest sooner. I should have started at 18 but I didn't know.
What I would give to have those extra years of time in the market.

~~~
atmosx
Without time to build _not afraid to lose_ capital?

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drieddust
My Worst mistake was to give too much of my personal gains to close family out
of sense of duty only to realize very late that they were simply playing me to
accumulate wealth for themselves and whomsoever they considered dear.

Another big one was to invest in real estate without research.

Both were teachable moments this year.

~~~
BigFish12
"only to realize very late that they were simply playing me to accumulate
wealth for themselves and whomsoever they considered dear."

As someone starting out a pretty successful career with a not so wealthy
background, I also feel that I will soon need to give of my personal gains to
my close family out of a sense of personal duty. Which doesn't really bother
me, as I am very grateful for what they have done for me and they would have
probably done the same for me if the roles were reversed. My question is why
do you feel that they played you? They asked for too much? They asked too
often? They were not grateful? You were expecting things that they did not do
for you? Could you please elaborate more on this?

~~~
drieddust
Yes they asked for too much and demand increased as my income levels grew so
watch out for this behaviour. I would say decide what you want to share and
keep the boundaries clear.

I don't mind giving at all. It's getting fooled part which pinches.

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muzani
Investing about $5k into starting a cafe. Low risk businesses are actually
surprisingly high risk in that the margins are really poor, sometimes even
negative once you count inflation.

Also heavily underestimated inflation of developing countries - if it has high
growth, it probably has high inflation. In SE Asia, prices will double every
15 years, if not faster.

If you know tech, invest in tech, because your odds are likely above average.

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cimmanom
Waiting until 2008 to invest savings dating back to 2003.

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miguelrochefort
Too frugal with money, too wasteful with time.

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fractalwrench
Taking 3 years to move from my first job, as I was underpaid and didn't
realise how much until getting an offer.

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Spooky23
1\. Shooting too low and not taking enough early career risk.

2\. Wiping the hard disk that contained 5 BTC from 2008 :)

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farseer
Buying a lot of domain names, unfortunately selling them is a lot harder than
expected.

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Anurag8701
Investing in under-construction properties in developing countries which never
got completed due to builder fraud and losing a large amount of money :(

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miguelrochefort
\- Quitting my job

\- Traveling full-time

\- Not selling my ETFs (I'm down 20%-30%)

~~~
danroc
I guess you did (1) in order to be able to (2). How was that a mistake? You
did not have savings or a plan? (considering doing the same here...)

~~~
miguelrochefort
I am frustrated by the state of the world, and I have a urge to fix it. I
can't tell if it's a legitimate concern, or if I'm being delusional. The
delusion and frustration could be explained by undiagnosed depression and
ADHD.

I'm traveling to force myself out of the routine I was stuck in for the past
few years. I hoped it would allow and motivate me to act upon this urge to
change the world. Something else must be missing, as I'm not making the
progress I expected.

I'm currently trying to figure out what's preventing me from making progress.
I'm doing a lot of introspection, meditation, eliminating distractions and
time sinks, organizing my values, goals and commitments, using a task manager
and calendar, building new healthy habits.

I'm trying to fix myself before I can fix the world.

My personal finances are currently taking a hit, but I hope it will turn out
to be a good investment.

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ssvss
Leaving around 20 btc in my silkroad account.

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pfdietz
Not cashing out some options as soon as they vested at a large corporation
that then went into decline.

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PaulHoule
Short selling the S&P 500 in 2005. I saw trouble coming but I missed what the
trigger would be entirely.

~~~
mslate
What would you say was the trigger?

That was actually my favorite thing about The Big Short—the author did a good
job of showing how the traders first to short the market earned the least and
experienced the most distress.

~~~
PaulHoule
My theory at the time was something I called "The Syndrome" which was based on
the idea that the business cycle is based on the balance of "solving problems"
vs "creating problems" and thus a homology between the events surrounding
1929, 1968 and 2000.

In the "syndrome theory" there is a crisis of the private sector creating
problems faster that can solve them that then leads to a change in the
governing philosophy that improves matters for a time, but then we run into
the limits of that regime and it happens again.

This theory called the top in 1999 (I remember watching a football game on
Christmas day and the ads were for stocks and bonds and not beer and I went
home and sold)

In 2005 I thought the 2nd Iraq War would lead to a government crisis
(analogous to Vietnam/Watergate) but that didn't happen.

Interestingly there was no real "regime change" after 1999 but instead SOX and
other regulatory changes seemed to cement a culture of rent seeking and
inpunity.

Milton Keynes, the great trader, said that "Markets can remain irrational
longer than you can remain solvent" and that is quite true.

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thiago_fm
None, I'm quite savvy with money since very young. But I surely did lost a lot
of opportunities.

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iamthelord
Buying Facebook stocks

~~~
happppy
fb isn't going anywhere. Don't worry. Everybody needs fb for data.

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notomorrow
Staying in academia

