My Best and Worst Money Moves

Okay, here’s the deal… Jim over at Blueprint for Financial Prosperity posted his best and worst money moves (so far), so I thought I’d chime in with mine. I’ve actually lived a pretty boring life in terms of major financial decisions. I’ve never hit a major homerun in terms of stock picks (we tend to rely on index funds) and I likewise didn’t ride the tech bubble down when it burst. With that said, let’s take the worst first, and then finish on a high note…

My worst money move: Unfortunately, the details on this one are kind of vague. About ten or twelve years ago I received a piece of mail from Blue Cross/Blue Shield. There had been some sort of class action lawsuit, and the settlement involved disbursement of stock shares in some sort of spinoff. As I recall, I qualified as a member of the class, but I never actually got around to filling out the paperwork and staking my claim before the deadline. I promptly forgot about it, but received a rude awakening a few months later…

It seems that they had decided to give people a choice in the matter: either take the shares or their cash value. And guess what? Our portion of the settlement would’ve been a few thousand dollars — if we had actually bothered to send in the paperwork to qualify for it before the deadline. But we didn’t, and so we lost out on what would’ve been a HUGE (at the time) windfall for us. (Apparently this was such a painful event that I’ve blocked out the details!)

My best money move: When I got my first ‘real’ job after graduate school, I qualified for a retirement plan that provided a dollar-for-dollar match on contributions up to 5% of my salary. Of course, I jumped all over that. As it turns out, they really wanted to double-match our contributions, but were unable to do so due to some esoteric tax rules. Thus, they gave us a 5% “salary supplement” and encouraged us to stick it into our retirement accounts. Of course, they couldn’t compel us to do so, and many people didn’t. Rather, they treated it like an immediate 5% raise and spent it.

My wife and I, on the other hand, decided that we wouldn’t miss money that we had never seen, so we dumped it straight into our retirement account. And following that same logic, we got into the habit of ratcheting up our retirement contributions by 1% of my salary every year when I got a raise. By the time I left that job earlier this year, I was contributing 14% of my income to my 403(b) (5% base contribution + 5% salary supplement + 4% in annual increases) plus the 5% match from my employer.

What about you? What are you best and worst money moves?

11 Responses to “My Best and Worst Money Moves”

  1. Anonymous

    yes, I do believe going to a top school puts you in a club. If you know that and know how to maximize its usefulness to you, being a member of that club is worth all the cost of going to those schools.

  2. Anonymous

    As opposed to Matt, my best money move was GOING to college. I went to an expensive school (an Ivy) that I had to take out loans for but it was because of that school that I got my job on Wall Street (where virtually everyone has Ivy League degrees). Now I’m in my late 20s and earn mid to high six figures per year and have over $1 million in the bank. I have friends from high school that could have gone to top colleges but chose not to for financial reasons and they are now earning what would at best be described as upper-middle class salaries and are lucky to put away more than 20% of their salaries each year. Now me and some colleagues are looking to start our own firm which should bring us seven figures a piece right from start up and if successful will bring us into the 8-figure salary range within a few years. All of this was thanks to going to a top school, it puts you into a “club” of sorts.

  3. Anonymous

    Best: Getting married.
    Worst (so far): Listening to my husband and not investing as aggressively as we are able to. Letting my husband listen to his financially retarded parents for investment advice.

  4. Anonymous

    Worst: I went to college. Biggest mistake of my life to date, financial or otherwise. Thanks to that ill-advised choice I spent most of my 20s broke, miserable, hounded night and day by debt collectors, and working hard for a job that nominally paid good money but after all the garnishments was next to worthless. If it would have helped I’d have declared bankruptcy, but it wouldn’t have…as it was, there were very few days between 1994 and 2000 that I didn’t spend time considering suicide. And as a second-order effect, my credit rating is still horrible today, although I’m working on fixing that.

    Best: Starting my own business. Thanks to this, I’m in WAY better shape financially today than my crappy credit rating would imply. I have mid-six-figures in a corporate bank account in PR (ready to draw on if I need to, but for now just continuing to grow) and am earning, for almost no recurring effort, almost as much money from the business as from my “day job”…all of it free of federal income tax until I repatriate it by “paying myself”. When the business income becomes greater than the “day job” income (this will most likely happen sometime next summer) I plan to “retire” and just focus on new ways to make money for the business.

    Runner up (for “Best”): Falling in love with a woman who was about to come into a large inheritance. 🙂 (No, I’m not marrying her for her money. But having the money does mean we were able to buy an extraordinarily wonderful house, with all the room we’ll ever need, when we’re only 31…and that may prove in the long run to be even better for my finances than the business.)

  5. Anonymous

    I’ve had more “worst” moments than best, but I’m getting better and can chalk the bad ones up as a learning experience.

    The most painful money move was when, in 2001, I began investing in investment notes with a profitable, publicly traded company called American Business Financial Services. They made loans to subprime homebuyers and small business owners. To fuel growth, they sought funding from investors in the notes. Great rates (I think the highest note paid 12%) and I received an interest check in the mail every month. Things were looking great, and I doubled down: I received an offer from my credit card company for a convenience check at 2.99% for the life of the balance. I took out my limit- $30,000, and put nearly all of it in these notes. In 2004 my first note matured. I requested redemption (they had an auto-renew policy) and received my check. Thinks looked great, but in late 2004, the company announced the SEC would not allow them to issue new notes. I don’t exactly remember why, just that the company announced that without incoming funds, they would have difficulty paying interest and upcoming redemptions. I don’t have to tell you the rest of the store. The company filed for bankruptcy in January 2005 and soon converted to Chapter 7. I haven’t gotten a cent back and probably will never (most assets have been liquidated already and secured creditors are still owed).

    My best money move was to become a value investor. Three years ago I began studying Warren Buffett and Benjamin Graham, and their ideas are now ingrained in my thought processes. Value investing is a long term program, though I have had some early successes (take today, when Outback agreed to be privatized. My gain is roughly 25% over 6 weeks!).

    I suppose we all learn from our early mistakes. I continue to make them, but the mistakes are less frequent and not as severe these days.

  6. Anonymous

    Mine are the same, too.

    Worst: Getting a credit card in college. I was not mature enough (nor smart, savvy and educated enough) to handle it properly. It got me in 5-figure debt by my early 20s. And it took me years to dig out of the hole.

    Best: Getting a credit card in college. It led to the biggest money lesson of my life: If I can’t afford to pay cash, I don’t need it. These days, I never carry a balance on my credit card from month to month. It took a hard lesson, but I finally learned how to handle plastic.

  7. Anonymous

    My worst move- buying a house to get over a bad relationship. Lost tons of money on that and just got away from that investment last December.

    My best move- early acceptance into nursing school (fall of my senior year in high school)- giving me huge ammounts of time to apply for scholarships and grants. I paid for half of my education this way! By the time I needed to pay, I had a year and half saved up- graduated free & clear of any loans whatsoever. This gave me the advantage for years!

  8. Anonymous

    Worst: didn’t join a startup because I was mad at my old boss. Startup got bought and my take would have been about $4M.

    Best move: reconciled somewhat later in the startup’s growth cycle and ended up getting about $180K with my stock options. Second best: staying at home for awhile after college and buying a condo instead of renting an apt.

    In terms of stocks, my worst move was sensing a wonderful opportunity in TXU, the Texas electric and gas utility, a few years ago when its CEO was on the rocks. I bought at $20, it tanked down to $10, and slowly crawled back to $21, where I sold. It’s now a split-adjusted $169, and for exactly the reasons I thought – they fired the old management team and the new one cleaned up the place. It sucks to be right and wrong at the same time…

    Stockwise, my best move was to never get involved with the dotcom Kool-aid, although I worked at several dotcoms during the boom and still live in Silicon Valley. Having worked with them, I knew there were few technical or business barriers to entry for most of these companies, so I figured the market was being suckered.

  9. Anonymous

    Worst Money Moment:
    I lost $69 a month for the last year because I haven’t gotten around to getting some former clients off of our hosting server. I’m fixing that today though. Man, that added up.

    Best Money Moment:
    I’m contributing to my company’s 401k that matches up to 6% and offers profit-sharing. we receive up to $2,000 a year that is placed into our 401k automatically.

  10. Anonymous

    My best and worse are the same:

    stayed invested in some internet stocks during the bubble (made more than $1 million on $50000)

    stayed invested in internet stocks during the crash (lost most of it again.)

    Guess if I were smarter I would not have made so much nor lost so much.

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