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3 Mistakes I Made That Cost Me Thousands

This article was written by in Personal Finance. 19 comments.

This is a guest article written by Darwin, the author of the blog Darwin’s Money. Darwin is a numbers guy with an MBA. If you like this article, subscribe to the Darwin’s Money RSS feed for more.

You live and you learn, right? Well, that can be expensive when you’re first setting out in the world and haven’t had much exposure to the various significant financial decisions adults face in life. I’ve had some great successes financially from buying a home right out of college during the boom to making some great investments. However, I’ve made my share of mistakes, especially the first time I encountered various key financial decisions. Hopefully, young readers will catch this before they repeat the same mistakes.

1. Wrong health care plan: $3,000. It should be a pretty simple choice, right? You pick an HMO plan and as a young, healthy employee, chances are you’ll barely spend any money out of pocket no matter which plan you pick, right? Well, I had always heard that HMOs had lousy service and restricted doctor network lists, etc., so I naturally went with a 90/10 plan requiring my wife and I to be responsible for 10% of the total medical costs until we hit a rather high threshold of $1,500 per person. For a couple years the 90/10 was working out fine. Then we decided to start a family.

What I didn’t realize, and never bothered to check, was that a typical birth would run $20,000 to $30,000 and we’d be on the hook for a portion of that. Under the HMO plan, it would have been a straight $250 total, no matter what went down. Even more frustrating, which I didn’t figure out until our second kid, was that my wife’s ob-gyn was in-network for the HMO anyway, so there should have been no concerns over lousy network coverage. Well, once our child was born, I also realized that the $1,500 cap wasn’t limited to just my wife! They billed our child and my wife, so in the end, we ended up paying between $2,500 and $3,000 total when we could have just paid $250 under the HMO plan.

Granted, bringing a child into the world for a couple thousand bucks was well worth the cost and reasonable given everything involved, but we could have done it for thousands less. I’d advise that you scour the health plan details at selection time each year, and if you’re considering a child the next year, make sure you pick the plan that suits that situation best.

2. Burned by a real estate agent: $6,000. I bought my first house a year out of school in 1999 just when the real estate market was ready to run during between 2000 and 2006. I’ve always considered that purchase to be my best investment. I turned a 3% down payment into a 100% return on the home at sale, netting me a six-figure profit and enabling us to buy a much larger, nicer home when our family grew. However, I paid $6,000 more than I had to for the home. When I put in my bid on the house, the agent said there was another bidder offering more, and I had to bid higher if I wanted the house. This was common as houses were flying off the market if you didn’t move quickly.

As my one-year lease on my rental was running out and this was the only house I actually liked in the area, I figured I had to act quickly. I raised my bid by $6,000 and I got the house. What was odd though, was the agents always seemed to go out of their way to ensure I never talked to the homeowners, like during the inspection, during the closing, the final walk-through, etc. What was revealed at the last minute was there was no other bid!

The wife, who probably didn’t know what was going on, made a statement like, “Wow, I’m so glad this worked out. If you didn’t agree to buy when you did, I don’t know what would have happened. Our other deal would have fallen apart!”

I was a bit confused and said, “Oh, didn’t you have other bids?” She didn’t answer. Perhaps she figured out what happened as well and was initially wondering why I even raised my initial bid. I was a dumb 23-year-old and didn’t know the game, but my hunch is that the other agent, perhaps with or without the help of the seller or my agent, had somehow concocted the situation to get me to raise my bid unnecessarily.

When I contacted the seller’s agent, he told me there was another bid but he couldn’t provide me the documentation since it was confidential from the bidder, etc. I just dropped it. I had a home I loved and the deal was closed. What was I going to do? In hindsight, I think this was just a function of a crazy housing market and some unscrupulous people in the industry, but after reading this, perhaps you’ll be armed with some questions and options to combat a similar situation in the future.

3. Paying for stuff I didn’t need: $1,000. There’s a pretty long list of things I spent money on in my twenties that I clearly didn’t need. Here are just a few that easily added up to over $1,000 annually. These are expenses I no longer incur now that I’m older and wiser:

  • Paying for warranties on electronics (bad investment statistically)
  • Being an early adopter of new gadgets like MP3s and GPS systems (expensive hobby)
  • Subscriptions to magazines I can’t keep up with
  • Paying for daily newspaper delivery when I only have time to read on weekends
  • Shopping without using coupons — and worse, forgetting the store card and paying ridiculous prices for groceries
  • Paying a full service broker to do transactions over the phone before finally signing up for E*Trade
  • Paying PMI longer than I needed to before figuring out I could get my home reappraised and wipe it out

All in all, in contrast to many friends and family, I was on the right side of the continuum in terms of responsible saving, investment and frugality, but I’m man enough to admit I made several mistakes that could have been worth a tidy sum now. I didn’t put in the time and effort to holistically attack my spending and seek out opportunities for saving, especially on some of the useless items I used to buy.

What are some of your biggest regrets from your twenties? Please share in the comments below.

Updated September 2, 2011 and originally published September 16, 2010.

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About the author

Darwin is the author of the blog Darwin's Money. He's a numbers guy with an MBA who likes to write about unique investment and money-saving ideas, adapted to today's ever-changing environment. Subscribe to the Darwin's Money RSS feed or follow @EverydayFinance on Twitter. View all articles by .

{ 19 comments… read them below or add one }

avatar 1 Anonymous

I spent probably $20,000 in cigarettes being a smoker from 18-28 averaging 1-2 packs a day. I quit because I am cheap.

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avatar 2 Anonymous

Cigs are one of the worst. Fortunately I never went there. Aside from the money back, you’ll have your life. Lung cancer and an early death is a hell of an expense. You’re in decent shape quitting so young, good for you. People that go 30-40 years often have no chance.

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avatar 3 Anonymous

AH… reminds me of a skit with the Smothers Brothers and the glass of “Smart Juice” . After trying it he spit it out and said “That’s vinegar” only to be told he was “gettting smarter”. Knowledge comes from books, wisdom from experience!

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avatar 4 Anonymous

We recently narrowly averted a similar “oops” regarding health insurance. My wife misread her plan documents, and thought the premium amount was monthly rather than per pay-period. Turned out it was going to be minimum of $1,700 more over the course of the year than my current self-purchased plan.

Persistent, friendly emails to her HR contact got it taken care of though.

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avatar 5 Anonymous

I lost my scholarship after my first year of college and thereafter paid each semester’s tuition bill of $1500 with credit cards. I paid them off in time to have enough available credit to pay the next tuition bill. Interest paid over 3 years – over $500

Beyond that, I was fiscally irresponsible in general buying numerous “toys” that I didn’t need and, really, couldn’t afford. Like a $200 computer case. Not a computer, just the metal shell that encloses it.

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avatar 6 Anonymous

Failing to pay my rent by credit card for 2 years when that was an option. I still paid the rent, but would have racked up about 75,000 airline miles and a free round trip ticket to Europe.

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avatar 7 Anonymous

Oh yeah, I know many frown upon credit card use, but I use simple cash back cards for everything and pay the balance in full every month. It’s about $60-$80 per month tax-free back, so the equivalent of well over $1,000 in annual salary!

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avatar 8 Anonymous

Real estate agent pulled the same move with me.. House was on the market a week and they already had “multiple offers,” and they even claimed some were above asking price. I like the house but it wasn’t that spectacular of a deal, I paid probably 10k too much, and to this day I don’t know if there were really other offers or not. It’s a house I like and it was still under my self imposed maximum price (not nearly the highest price place I looked at) so I can’t complain too much, but I think it was a scam from the start. It’s all a game, and it’s easy for an agent who does this daily to con a buyer who will probably make a purchase 2 or 3 times in their life.

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avatar 9 Anonymous

What kind of “questions and options to combat” the fake bidder scams do you recommend? It seems like there’s a wall between the buyer and the truth, the wall being the realtor(s). So if they can’t prove there is another bidder due to confidential agreements, etc, is there really anything you can do about it? other than take their word for it.

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avatar 10 Anonymous

Well, for one, now you may be warned. You may reconsider bidding higher and if you have a higher level of trust with your own realtor, you can ask that they view the bid if you, as a competing buyer can’t. Perhaps you could even call the agency itself and ask that someone there confirm. There are a lot of other options I’ve thought about after the fact. In my case, I didn’t figure this out until AFTER the closing.

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avatar 11 Anonymous

For #3 which store did you forget your store card for? I know at Albertsons when you forget your card you can punch in your phone number. Also, try shopping at Target. Not sure if yours has it but they’re getting grocery sections, and the food is so much cheaper

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avatar 12 Anonymous

Various. Some stores I never bothered to get a card and there was one store for years – Weis, where they wouldn’t let you put in a number. I used to say to get into the 20th century and with their peers and allow phone numbers but over like a buck, I didn’t fight it too hard. Back then, I didn’t care too much about a couple bucks here and there but older, wiser and 3 kids later…I care a heck of a lot!

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avatar 13 Luke Landes

Thanks for the article, Darwin! My biggest financial mistake was not even thinking about money until realizing I didn’t have any and it was costing me money every month just to keep my job.

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avatar 14 Anonymous

Not calling out car salesmen on their b.s. was a big one for me. Since then, I’ve learned to embrace my confrontational side and not just accept their prices injudiciously. There’s always another car out there, and the salesman probably needs the sale worse than you need the car.

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avatar 15 Anonymous

“What I didn’t realize, and never bothered to check, was that a typical birth would run $20,000 to $30,000….”

That’s what you/insurance company was billed for delivery?!

My wife’s delivery costs were $4,000 (billed to insurance of course). This, of course, was a vaginal, no complication (baby was full term) delivery with two nights hospital stay (we didn’t need it) . Fortunately, we were covered by our insurance plan and paid the hospitalization fee of $250 flat.

If you paid $20k, you must have had a C-section ($10k-$12k), or a preemie ( at least $500/night for extended stay in the ICU) or some complications in the birth?

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avatar 16 Anonymous

It was vaginal, but she ended up in there early since her water broke at 31 weeks. Extended hospital stay, specialists, etc. really add up!

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avatar 17 Anonymous

Yikes! You definitely picked the wrong health insurance plan! But, in the end, if it leads to healthy and save arrival of your little angel then all is worth it, right?

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avatar 18 Anonymous

There is a certain degree of satisfaction in having the courage to admit one’s errors. It not only clears up the air of guilt and defensiveness, but often helps solve the problem created by the error.
~ Dale Carnegie

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avatar 19 Anonymous

I am discrimnated at work. I have lowest pay and I am shouldering my house and 3 cars using muy own money as I can’t even live alone with my salary. My employer knows I am a veteran with entitlements, so that’s why I am surviving my pay suppressant by my management. I want it all back.

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