Financial mistakes can happen to even the savviest of savers, but these examples should be in a category all of their own. Common money mistakes, like ending up in crippling credit card debt, failing to have an emergency fund, or entering into a home equity loan with a high-interest rate, only scratch the surface of bad personal finance decisions.
When asked, “What’s the worst financial decision you’ve seen someone make?” the internet came through with a waterfall of seriously eyebrow-raising financial mistakes.
These are the worst financial decisions people have made:
“I knew someone who got a loan for their wedding but decided to blow it all at a casino. Now they have a loan for $20k to pay off and nothing to show for it.”
Added another witness to the harm gambling can cause, “I knew a woman whose fiancé was a gambling addict. He promised to clean up his act but somehow got a hold of their savings for the wedding. All of it. Gambled the entire lot. Needless to say, they aren’t married.”
2. Unnecessary home upgrades
“A friend of mine who is very bad with money bought some sort of water filtration system from a door-to-door salesman. He has to pay $300 a month for this filtration system. He was all stoked because it came with a free set of pots and pans.
“Fast forward a year, and his girlfriend has broken up with him and moved out of the house. He’s had to sell his home because he can’t afford to live there. The water filtration system is now sitting in a storage unit where he still pays $300 a month for it because he’s on a two or three-year contract.
“We have great water quality in my area.”
3. Calculating your mortgage off of unsustainable income
“A coworker I used to have worked every second of overtime he could for several years to save up for a house. When he applied for a house loan, he based his mortgage payment on all of the overtime he had been working.
“I tried to tell him that wasn’t a good idea, but he didn’t want to hear it. He ended up divorced a few years later because his wife got tired of him always working,” described a frustrated colleague.
Another individual offered a practical solution for maintaining a safety net when buying a home, writing, “When my wife and I bought our house, we based it off of just my income so that if she lost her job or I lost mine, we would be fine.
“Everyone told us we should get a super nice house with our income since we could afford it. Two years later, my wife lost her job, and now we have nothing to worry about. No added stress. It was the best decision we have made.”
4. Taking out loans against your 401k without needing to
“My supervisor took out a loan against their 401k to pay their rent because ‘their credit cards were maxed.’ Two weeks later, they bought a brand new $60k Lincoln with basically nothing down because ‘(her) daughter just had a baby, and (she) needs a bigger car for that.'”
One individual commented on this type of behavior, writing, “‘Borrowing from your future to pay for the present.’ And not realizing that the money you borrowed could have become far much more if it had sat there earning interest and investments.”
5. Trying to hide assets
Whether it’s from the IRS or your soon-to-be ex-wife, trying to hide your assets is never a good idea. As one friend described, “(He) put everything in his girlfriend’s name to hide assets as he owed the IRS. The girlfriend sold his business, cashed out his accounts, and ran.”
Another user spoke of a similar situation, writing, “My significant other’s father did this. (He) sold his business to an employee for $1 to hide it during his divorce and was shocked when suddenly, the guy didn’t magically give it back. He lost his entire business and inventory for $1.”
It seems like this financial mistake is a common one, as a third individual wrote, “My dad claimed his business was not profitable in the divorce. The lie fell apart pretty quickly as the company accounts were managed by my mum’s brother, who turned up to the court hearing.”
6. Indulging in hobbies you can’t afford
Hobbies shouldn’t be weighing on your personal finances. Some, like collecting rare baseball cards or playing golf, require having a little extra cash in the bank to support the pricey cost. Otherwise, you could end up trashing your bank account.
As one commenter described, “When my ex and I lived together, he suddenly got super into figurines and model kits. Our living room was FULL of them. At one point, I counted, and he had bought more than 30 over the span of six or so months. The math worked out to him spending about $300 a WEEK on these things.
“The thing is, we were both full-time students. He was paying for these with student loans. I had to drive him around because he ‘couldn’t afford a car,’ but he could somehow afford these model kits and figurines and Doordash for every meal.
“He tried to keep living with me when I broke up with him because he ‘couldn’t afford to move’ either. I had no sympathy at that point.”
7. Falling victim to scams
Scams target the gullible. It’s important to stay vigilant and aware of common red flags to ensure you aren’t being taken for a ride.
Wrote one user, “My brother’s ex fell for a Craigslist scam. She found a motorcycle, and the guy ‘needed money up front to pay bills’ before she even saw it.
“We told her ‘don’t do it, it’s a scam.’ She said she already sent $1,000. Of course, he was never available to show her the bike. We found out from my brother after they broke up that she actually continued sending him money in hopes of getting the motorcycle. I think she was out $3,000 by the end.”
8. Ordering takeout for every meal
Delivery services like DoorDash, Uber Eats, and Seamless are tempting when you’re too busy or tired to cook, but the ease of use can also create unhealthy spending patterns.
As stated by one individual, “My roommate buys DoorDash almost every day. They’ll maybe cook for themselves once or twice a week, but other than that, they order food in five or six times a week. I know how much they make, and I have no clue how they can afford that.”
9. Joining a MLM
MLM (multi-level marketing) schemes are notorious for preying on the financially vulnerable. The programs often boast flexible working hours and the opportunity to “be your own boss” while getting rich quick.
These schemes are never what they’re chalked up to be, often forcing sellers to spend thousands of dollars on inventory. As an MLM seller’s daughter described, “My dad retired early from a 20+ year career where he was making over $150k a year so he could join an MLM. He ended up draining his entire retirement fund (over $500k), filed for bankruptcy, and foreclosed on my childhood home in just over three years.”
This article was written and syndicated by What the Fab.
Fix your financial mistakes
We all fall off the wagon sometimes. If your personal finances aren’t as stellar as they could be, cleaning them up might be a matter of implementing a few simple lifestyle changes.
Want to save for a house? Here’s how:
Saving to buy a house while you’re renting a space can feel like being on a hamster wheel. It’s time to get off.
Scrambling for easy, inexpensive dinner ideas?
Help your household budget out. Frozen, store-bought items can be leveled up for a dinner that’s easy, inexpensive, and fast.
Elise Armitage is an entrepreneur and founder of What The Fab, a travel + lifestyle blog based in California. At the beginning of 2019, Elise left her corporate job at Google to chase her dreams: being an entrepreneur and helping women find fabulous in the everyday. Since then, she’s launched her SEO course Six-Figure SEO, where she teaches bloggers how to create a passive revenue stream from their website using SEO. Featured in publications like Forbes, Elle, HerMoney, and Real Simple, Elise is a firm believer that you can be of both substance and style.