This post by Maria Nedeva is part of the Yakezie blog-swap. Maria is the blogger behind The Money Principle: a personal finance blog that will ‘make your head hurt and your wallet sing’. There she writes about money management, wealth, health and anything that takes her fancy.
You can head over to The Money Principle and read my mistake and lesson learned.
Ha! What is my worst money mistake? Sounds simple, doesn’t it? Well, it isn’t. Throughout my life I have made many mistakes including, as Ella Fitzgerald gently croons, ‘smoking, drinking, never thinking of tomorrow’. In my case, it was so much the ‘smoking and drinking’ as the last part: I’ve always earned rather well but it was my choice not to think about tomorrow. This is how, when finishing my PhD, I ended up one week inviting my friends to restaurants and the next selling a sizeable gold ring from my mum so I could buy food.
Another vintage was buying some shares – in fact quite a lot of them – in a company the name of which I liked. Sounds dumb but it was just lazy and ignorant – I thought the company is in biotech, it looks sound on the surface we can’t get this wrong. We did get it wrong and ended up losing money we could have used; and we still have the shares but only a miracle can recover our losses.
You are thinking this is bad? Think again because I have done so much worse. My worse mistake was to refuse to engage with our financial situation and leave my husband to deal with it on his own. But let me start this from the beginning.
So It Begins
About twenty years ago I got really scared about money (and please note the use of an emotive word); I was terrified. We had just moved in our new house, has two children in primary school and I was earning a bit more than pocket money (not an unusual situation for many academics when they are starting out at a new place, in a new country and they are not yet ‘stars’). Then the lab where my husband was working announced they are relocating at the other end of the UK and he decided not to go but take severance.
He had nothing lined up and kept mentioning ‘earning opportunities’ like playing the stock market. I had recently arrived from socialist Bulgaria – a place of absolute albeit not very abundant security. Of course I’ll be scared!
What did I do? I went through the normal for me sequence of facing trouble: panic, intellectualization, detachment, action. While the first two are pretty obvious let me tell you about detachment and action: this simply means that I refused to have anything to do with the ways in which my husband intended to make a living or engage in anything financial, and I went out there and started earning as much money as I could. I doubled my salary in three years.
“Great”, you may think and I’ll agree. Except that because of the detachment I had absolutely no idea how much I earn, how much we spend or, for that matter how much things cost. I could have paid $15 for a pint of milk without batting an eyelid.
The Money Siphon and Lessons Learned
Now, this is how one finds herself in a lot of debt: it turned out that my husband didn’t know much of what is happening to our finances either. I did use to blame him; things improved when I accepted that leaving him with the burden of managing our finances without bothering me was the worst money mistake I’ve ever made: it was thoughtless, it was heartless and it was eminently irresponsible.
This is a sure way to end up in a lot of debt and in even more marital trouble! In my case this resulted in about $160,000 worth of consumer debt – all paid off in three years – and, eventually, much stronger and more open relationship with my husband.
All is well when it ends well and it ends well only when we’ve learned something from it. This is what I learned:
- Money matters. Pretending that money doesn’t exist doesn’t cut it in today’s economy and society. I can’t be good to anyone, or do any good, if I can’t pay my own mortgage (or in time, pay for my own spectacles, hair colour, artificial teeth and old woman’s slippers). But money doesn’t matter in the way of short passionate affairs; it matter like long marriages do – it is a ‘slow burn’ kind of thing that nourishes your life.
- You ain’t going anywhere if you don’t know your numbers. I am not talking theoretical mathematics here; but everybody who is not headed for the soup kitchens needs to know some key numbers. Like how much they earn, how much they spend and what do simple things in life cost; yep, like a pint of milk.
- Don’t drop your partner in it! People get together in couples for variety of reasons: love, sex, companionship. But ultimately what is left when all this fluff has disappeared is support and friendship. Dropping your partner in it and refusing to engage with them goes against this main rule of couples.
- Things go wrong when people don’t talk. This includes discussing money related issues and problems. After all, you stand a much better chance to sort things out as a team.
- It is good to have problems. Now, this one is interesting because most people would shy away from problems. This is because they don’t seem to realize that having problems is good because it means that there is a solution lurking somewhere around. The real killer is when you have a predicament – there is not obvious way out of this one. What I learned through my worst money mistake is that my main concern ought to be to move from a predicament to a problem. Once I had a problem, all was clear and action could be taken.
You see, I did mess up big time. Do I regret it? Not for a second because this mega-mistake of mine lead to a crisis; and the crisis lead to a renewal, refined money management and a strong position – in finances and life.
How about you?
Editor’s Note: Thank you Maria for offering up your story about your scariest money situation and the lessons you learned from it. Quite inspiring!
Image courtesy of Stuart Miles / FreeDigitalPhotos.net
This Free Tool Helped Me Pay Off $75,000
Sometimes all you need is free! I opened a free Personal Capital account back when I was in debt and it helped me get control of my financial lifestyle. Since paying off $75,000, I’ve been able to save over $180,000 and I couldn’t have done it without Personal Capital.