When it comes to money, no one has it completely figured out. We can learn a lot from our own failures and from the mistakes of others. Stories like the one shared by Kind Wealth founder David O’Leary – who filed for bankruptcy at age 25 – highlight the fact that no matter who we are, we’ve all made a mistake or two with our finances. There’s no shame in admitting it, and by sharing our financial failures we can help others avoid potential pitfalls in their own lives.
Humble Dollar blogger Richard Quinn fessed up to 10 big financial mistakes in a recent column, from betting on penny stocks in his late teens, to selling investments at a loss to buy an engagement ring, to borrowing from his retirement account to pay for his kids’ college education. Despite his many money failings, Mr. Quinn still managed to retire comfortably – something he attributes to working for the same company his entire career.
I’ve shared plenty of my own financial mistakes in this blog. I started investing in an RRSP at age 19 when I was earning less than $25,000 per year and still had student loan and credit card debt. I had to cash out my RRSP to pay off my maxed-out credit card.
I got in over my head as a first time home buyer and needed a roommate to help pay the mortgage. When he moved out I once again turned to my credit card to cover my monthly shortfall. Not smart.
I took out a second mortgage – basically a consolidation loan – to pay my high interest debt and clean up my act. Thankfully, it worked.
I bought mortgage life insurance once. Never again.
My investing journey began with high fee mutual funds (I’ll take a pass since it came with an employer-match), turned DIY when I decided to pick individual dividend stocks, before finally coming to my senses and switching to index investing.
I’m still making mistakes and learning as I go. I quit my job last December to focus full-time on writing and financial planning. It was the best decision I’ve ever made for my career and for my family, but now I regret not doing it sooner.
What are some of your financial mistakes? Share them in the comments below.
This Week’s Recap:
I managed one post this week, opening up the Money Bag to answer reader questions about bonds behaving badly, investing USD, active management in a market crash, and how I’m handling my credit card rewards and loyalty points.
In other news, I’ve opened a corporate investment account at Questrade. If you recall, I received an excess cash payout from my pension which means I won’t have to take out any money from our business this year.
My plan is to keep a cash balance of six months worth of projected 2021 expenses (when we will resume paying ourselves), and then invest any remaining funds.
Finally, many thanks to Rob Carrick for including my article on renewing your mortgage in his latest Carrick On Money newsletter.
Weekend Reading:
Credit Card Genius compares five digital wallets and explains why they’re safer than your physical wallet.
A Wealth of Common Sense blogger Ben Carlson describes the five types of investors in this market. Which one are you?
Warren Buffett says he’d disagree violently with the notion that passive investing is dead.
The federal government announced this week that seniors who qualify for OAS will be eligible for a one-time, tax-free payment of $300, and those eligible for the GIS will get an extra $200.
Rob Carrick says seniors deserve help with expenses in the pandemic, but investment losses is another matter:
“It’s not the job of government to backstop individual investing losses. If anyone loses money in the stock market, that’s on them.”
Meanwhile, parents are in financial limbo after spending thousands on sports, arts, and summer camps that have been derailed by COVID-19. Our kids are finishing up their ballet and piano lessons online with Zoom and Skype, respectively. We hadn’t committed to any summer camps because we thought we’d be travelling in the U.K.
Here’s a very good and relevant piece from Jonathan Chevreau on whether retirees should reduce their RRIF payments during COVID-19. The government gave RRIF holders the option to withdraw 25% less than their minimum mandatory withdrawal rate this year.
PWL Capital’s Ben Felix digs into the 4 percent rule in his latest video on how to retire early:
Millionaire Teacher Andrew Hallam shares a stellar post on why Canadians are wasting billions on currency-hedged ETFs.
Michael James reviews the financial documentary, Playing with F.I.R.E. I watched it last week and really enjoyed it as well.
Erica Alini of Global News looks at coronavirus and the housing market, and asks if it’s a good time to buy.
Finally, here’s travel expert Barry Choi on what the future of travel may look like.
Have a great weekend, everyone!
