Retire from 8 to 5 

1. 2009 – Not investing in company’s 401k (and missing out on matching contribution) for 1.5yrs.
2. 2009 – Not educating oneself on 401k basics
3. 2011 – Relying exclusively on low-interest bank CDs and/or savings account, and not opening a brokerage account sooner.
4. 2014 – Not paying attention to expense ratios.
5. 2016 and 2017 – Too many accounts, and didn’t have a good mechanism set-up to track and compare across accounts.

We hope to keep the updates to this article to a minimum, but surely we will make more mistakes as we continue our financial journey.

Here are some common financial mistakes that we have seen people often make:

1. Excessive and Frivolous Spending:
   • Great fortunes are often lost one dollar at a time. Even seemingly small expenses, like buying a daily double-mocha cappuccino or dining out frequently, can add up significantly over time. For instance, spending just $25 per week on dining out accumulates to $1,300 per year. During financial hardship, avoiding unnecessary spending becomes crucial because every dollar counts.
2. Never-Ending Payments:
   • Evaluate recurring expenses carefully. Items like cable television subscriptions, music services, or high-end gym memberships can lead to perpetual payments without accumulating any assets. Simplifying your lifestyle by cutting unnecessary subscriptions can help you save more and build a financial cushion.
3. Living on Borrowed Money:
   • Relying on credit cards for essential purchases has become common, but it’s not wise financial advice. Paying double-digit interest rates on everyday items (like gasoline or groceries) can make them significantly more expensive. Avoid living beyond your means by using credit responsibly.
4. Buying a New Car:
   • Purchasing a brand-new car can be tempting, but it’s a major financial mistake. New cars depreciate rapidly, and the initial cost, insurance, and maintenance expenses can strain your budget. Consider buying a reliable used car instead.
5. Spending Too Much on Your Home:
   • Overspending on housing—whether through a mortgage or rent—can lead to financial stress. High housing costs mean higher property taxes, maintenance expenses, and utility bills. Aim for a home that fits comfortably within your budget.
6. Misusing Home Equity Like a Piggy Bank:
   • Some homeowners tap into their home equity for non-essential expenses, treating it like a piggy bank. While home equity loans or lines of credit can be useful, using them for frivolous spending or lifestyle upgrades can lead to financial instability.
7. Living Paycheck to Paycheck:
   • This is a hard one. A lot of people (including us in 2008-2011) live paycheck-to-paycheck. Its nerve racking and incredibly stressfull. However, if this situation turns around, then do not throw away any savings on unnecessary expenses. After living paycheck-to-paycheck, and learning how to live frugally, we can never go back to wasting money and not saving it. Failing to build an emergency fund or save for the future can leave you vulnerable. Living paycheck to paycheck means you have no financial buffer in case of unexpected expenses or job loss.
8. Not Investing in Retirement:
   • Delaying retirement savings is a significant mistake. Take advantage of employer-sponsored retirement accounts (like 401(k)s) and individual retirement accounts (IRAs) to secure your financial future.