Great ''Financial Mistakes” Hunt. What’s your biggest mistake… help others avoid it.

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  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
    First Post First Anniversary Combo Breaker
    Not sending back a proposal form to an insurance company - they said as I hadn't sent back the form in time, they had cancelled the policy and charged me 75% of the policy price - several hundred pounds back then.
  • webwiz
    webwiz Posts: 215 Forumite
    First Post First Anniversary Combo Breaker
    When I retired I did not need a cash sum so elected to take the full pension rather than taking some as a tax free lump sum. I received advice from a large IFA firm but they failed to inform me that this was a big mistake. If you don't need a lump sum but want the biggest pension possible claim the tax free lump sum anyway and then use it to buy an annuity. The difference is that the taxman treats this annuity as partly (roughly half) return of capital and therefore tax free. This is a complicated area and any one retiring should seek advice but make sure that (s)he asks the right questions. This mistake has cost me about £1000 pa for life.
  • webwiz
    webwiz Posts: 215 Forumite
    First Post First Anniversary Combo Breaker
    stingyscot wrote: »
    Property - Buying a house in Aberdeen in early 1977 at the height of the oil boom, when prices were higher than in London. Selling in 2006 when the oil boom was over and prices were among the lowest in the country, having made virtually no profit over inflation on property. Waiting for nearly 30 years for prices to improve in Aberdeen and finally giving up, not staying 1 more year until 2007 when there was a second oil boom and property prices rocketed again. Buying in the south of England in 2007, at the height of the English house price boom - just in time for the downturn in 2008.
    Oh yes, and buying a 'precipice bond' just before the last market crash.
    My advice: watch what I do ...and then do the opposite!

    OK. What are you about to do?
  • DavyBoy_2
    DavyBoy_2 Posts: 25 Forumite
    When my company posted me to America, and I still got paid in the UK, I used my UK Credit Card for everything; purchases and cash withdrawal's.
    My credit card was already about £3k in debt before we moved there, but month on month when my pay check came in, I would pay off the money to the CC that I had withdrawn/spent each month, and pay a little extra off from the £3k debt. There I was wondering why my Interest remainded high.
    I of course knew that the interest I was paying on cash withdrawals was around 25%, and this accounted for around £300 a month, and the standard rate was around 17%, and my purchases accounted for around £700 a month. What I didn't know, was that my £1000 a month I was repaying (plus a little extra), wasn't paying off a single penny of the £300 a month I was drawing out from the ATM, oh no. It was clearing off my £700 a month purchases, and my lower APR debt of the £3000. All the while, my withdrawal debt was increasing, and at a higher APR than my remaining debt.
    Back in the UK, I've cleared the entire debt from that card, and now all my company expense purchases go on a 0% APR Purchases Card, and all my Business related cash withdrawals come from an account with a comfortable buffer for my normal purchases.
    Long story short, NEVER EVER EVER EVER EVER EVER use your Credit Card to make Cash Withdrawals unless:
    • You have existing debt on the CC, and don't mind paying for this new debt for the rest of your debts life
    • You have £0 balance on the CC, and will repay the withdrawal back before adding purchases debt to it
    God forbid that you are actually in this situation, if you are, be aware of how much debt you have on your Credit cards for purchases, and how much for cash withdrawals, and remember that for the latter, they can be easily 2-3x the interest rate you normally pay for purchases.

    Hope this helps!
  • Jennifer_Jane
    Jennifer_Jane Posts: 3,237 Forumite
    Combo Breaker First Post
    Loads of mistakes:

    1. Not checking what the guaranteed annuity was when my old Retirement annuities matured/investing (recommended by IFA, not in this country) a drawdown pension instead which lost 20% of its value.
    2. Not selling when (as) the dot com shares crashed
    3. Starting payments into the NI when I lived abroad rather later than I could have.
    4. Buying my first house in a terrible area - location! Location! Location!

    Jen
    x
  • annettetabs
    annettetabs Posts: 180 Forumite
    Getting every possible loan, credit card and catalogue available on the planet, when we brought our house, and then realising we couldn't pay it all back and suffered a string of defaults and CCJS. That was 10 years ago and we are only just begining to get on top of things.
  • sue-y
    sue-y Posts: 97 Forumite
    As Suzkin has done, I've also left 2 well paid jobs. But, sometimes money really isn't everything (here's where you all shoot me down in flames!!). I may not be earning as much as I used to, but thanks to this site I can live within my means and I'm sooo much happier and far less stressed.

    But I regret not listening to my parents and other older wiser folks. The lesson I learnt the hard way is:
    SAVING NOT SPENDING!!!!
    If I had saved as soon as I started earning I'd probably be sitting in a house I'd bought 10 years ago with probably most of the mortgage paid off. As it is, I've rented privately for 10 years. Although I don't necessarily see it as money down the drain, If I could step back in time I'd give myself a hard slap!
  • kw03cd
    kw03cd Posts: 87 Forumite
    We bought a new caravan that was supposed to provide rental income and use for our own holidays. We were sold a complete line and were lucky to cover our annual fees with the rent. Pretty sure company were renting it out and not passing on the money. Sold after a couple of years for about half price.
  • medic1978
    medic1978 Posts: 515 Forumite
    First Anniversary Combo Breaker First Post
    Only fixing my mortage for 2 years in 2003. Base rate was 3.50% or 3.75%- can't remember. Mortage fixed at 3.79% but only for 2 years. 5 year fixed rates were 3.99% and 10 year fixed wern't that much more
  • from me:
    1. spending way too much cash on sweet fa in my first year at uni, and spending the next four years paying off overdrafts
    2. as everyone else has said, lending to mates. in my case only £100, but that was a hell of a lot of money to me, and it split a since-childhood friendship

    from my parents:
    1. buying windows in installments, instead of just paying off it all when they could afford to because they listened to the damn salesman.
    2. buying their council house just before the council installed central heating and double-glazing in the whole estate (of course, they couldn't have known)
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