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Money mistakes. We all make them. The important thing is to learn from them so we don’t make the same mistakes again in the future. With that in mind, I wanted to invite you guys to share your biggest money mistakes so we can all learn from each other and — hopefully — avoid repeating the same mistakes over and over.
To get things kicked off, I’ll go first…
My biggest money mistake
My biggest money mistake in the recent past has been missing a huge opportunity for tax loss harvesting during the market meltdown last year. At the time, we were sitting on some fairly significant paper losses in our taxable investment account, and we could’ve banked that investment loss for future tax savings.
In order to avoid a wash sale, we would’ve had to switch to a slightly different investment for at least 30 days, but that would’ve been fairly easy to achieve. Our primary holding in that account is the Vanguard Total Stock Market Index (VTSMX).
Given the high correlation between VTSMX and other funds within the same family, such as as the Vanguard 500 Index fund (VFINX), we could’ve easily made the switch without missing on any potential rebound during while waiting out the wash sale rule.
All it would’ve taken was a quick login and a few clicks of the mouse. The payoff would’ve been a significant loss that could be used to offset future capital gains and/or up to $3, 000 in ordinary income per year. Since losses carry forward, we could be reaping the benefits at tax time for several years to come. But I didn’t do it.
Honestly, the thought never even crossed my mind until I was pulling together our tax paperwork earlier this spring. Of course, it was far too late to do anything by then. But I’ve learned my lesson, and won’t miss my chance the next time the markets takes a dive.
What about you?
Okay, I’ve shared my story. Now it’s your turn. What’s been your biggest money mistake? Don’t be shy… Maybe the rest of us can learn from your mistake.