Updated: Mar 11
They say mistakes have the power to turn you into something better than you were before.
When it comes to financial mistakes, I would mostly agree. Now, don't get me wrong, I would not want to make the same mistakes again, but when I reflect on my current financial position, my past financial mishaps have helped me make better financial decisions today.
By sharing my mistakes with you, I hope you can either relate or learn to not make these mistakes yourself. I narrowed a long list of more than twenty mistakes down to the top five. I believe these five have had the most significant impact on my life today.
Taking Out Too Much Graduate Student Loan Debt
I borrowed almost $60,000 pay for college. While I do not consider the $20,000 I borrowed for undergraduate school to be a "mistake," I do believe the $40,000 I took out for graduate school was unnecessary. Here's why:
The four-year value for my undergraduate education was approximately $80,000, including room and board. I borrowed less than 25% to pay for necessary expenses and cover the difference between tuition costs and grants/scholarships. I borrowed less than my expected first year salary (general rule of thumb for student loan debt) and did not use funds for unnecessary purchases.
On the other hand, I had a $100,000 scholarship for graduate school and still managed to rack up $40,000 in student loans. Most of those loans were drawn to pay my rent for two years. I had the option to live rent-free with my mother and brother (although I would have had to sleep on the couch), but chose my young adult independence over future financial freedom. Almost 9 years later, I am still paying off those loans.
What I learned from my graduate student loan debt is, sometimes sacrificing comfort for financial stability is worth it. Living “on my own” in a big city was not worth $40,000 of debt. I could have sacrificed my living situation for two quick years to save money. I learned my lesson though, believe me. In 2017, I accelerated my student loan payments and have set a goal to have them paid off by 2021. And now, other than a mortgage, I have yet to take on any other debt since college.
Accepting a Low Paying Internship
Accepting a low paying internship played a big role in the size of my graduate student loan debt. In Graduate School, I interned at a nonprofit that I thought would serve as an entry point to a successful career in the nonprofit sector. My goal was to become a nonprofit CFO or grant supervisor.
Thinking that the internship experience was more valuable than pay, I accepted a fixed monthly payment that was barely above minimum wage. I worked overtime and at one point even took over the accounting role of the nonprofit, all while getting paid a low salary. My expenses increased while my salary did not. Instead of looking for ways to increase my cash flow - I took out more student loans.
What I learned from this is to always know my professional worth and negotiate my salary. The financial hit I took during that internship still impacts me today since I am still paying off student loan debt. I am grateful that my current company compensates us well for the work we do. However, I am constantly monitoring the average salary for my position to make sure the raises and bonuses I receive match up with my peers.
Girrrrllll, let me tell you. I have been swindled and bamboozled when it comes to giving money. Sheesh!
But, you know what, I cannot blame anyone but myself for irresponsible giving.
I have given unemployed people money for living expenses when they really needed a budget. I have given “homeless people” money for food only to find out they lied about their living situation. I have tithed at a financially irresponsible Church. I have gone on dates (before my husband) and paid for transportation and entertainment.
Yes, I have been straight foolish. I think my irresponsible giving came from the false perception that money fixes everything. To be honest, I am still working on renewing my mind in this area. What I have learned is to not be so quick to throw money at a struggling situation. If I come across someone in need, I should assess their need before giving money. By doing this, I can do a better job of loving them rather than enabling them.
Being Ungrateful for Financial Provision
The false perception that money fixes everything stemmed from a childhood full of money problems. When my mom became a single mother, it seemed like all of our struggles boiled down to finances.
After my parents divorced, our family of four had to move from a comfortable house with a full backyard into a small one-bedroom apartment. At various points throughout my childhood, we could not afford utilities and would sometimes have to fill up buckets of water at the park or use flashlights for light until the bills were paid. In high school, we had to live in a motel for a few days when my dad lost his job and could no longer pay child support.
Through all of it, however, we always had shelter. We never missed a meal. God always made a way.
Unfortunately, I did not value God's financial provision as a child or even in my early twenties, so I looked for security in finances instead of God. After I got married, this false security showed itself completely. My husband was financially responsible and a hard worker, but I found myself constantly comparing him to men in a higher economic class. I wanted control over all of our financial transactions. My mind was always worried about money in spite of having a three-month emergency fund, stable jobs, various other savings, and bills that were taken care of.
Eventually, I had to accept that my childhood financial struggles negatively impacted my mental health and discussed it with close mentors. Soon after, I repented of discontentment and came to the understanding that nothing provides more security than our faith in Jesus. I still have to fight financial obsession today, but acknowledging this mistaken mindset, talking and journaling about it, and seeking the Bible for God's promises has allowed me to let go and find security in Christ.
Spending Too Much Money on Food
Now, this is one mistake that I have made with every life transition. When I went to college, I spent too much money on overpriced campus food. When I joined the workforce, I spent too much money shopping at local stores instead of bargain stores. When I got married, we spent too much money on high-end restaurants. And, when I had my first child, I spent too much money at Costco.
What I have learned from this mistake is to do my best to meet a food budget, but to be flexible and to not beat myself up when the budget is exceeded. Failed recipes, change in appetites throughout the week, time limitations, and other external factors can mess up efforts to manage spending on food. So, with that in mind, I download coupons from the Flipp app when applicable, meal prep on Sundays, and set specific nights for eating out to manage our food budget the best I can, while always leaving room for change. I also regularly compare our grocery spending to the USDA averages to make sure we are spending within a reasonable range.
No one is perfect, ESPECIALLY not me. I could easily write a Part 2, 3, 4, and 5 to this blog with even more financial mistakes. However, each lesson has helped me become a better financial steward today. I look forward to more growth, wisdom, and faith as the years go by.