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

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  • brownbabygirl
    brownbabygirl Posts: 1,356 Forumite
    I am so thankful for this thread, learning so much! Thanks for all those who are selfless to take the time to share their experiences.
    QUIDCO £2827 paid out since October 2007:D
  • Sheepy1209
    Sheepy1209 Posts: 14 Forumite
    Taking out a Burton Group storecard as a spotty-faced 18-year-old student.
    That was the beginning of a slippery slope that's lasted 25 years!


    I think the roots of my money problems were lack of awareness (my parents were pretty poor and we lived in the sub-prime world), combined with going to university and being surrounded by middle-class London kids - so I lived a life I simply couldn't afford.

    I've had a few flickering light-bulb moments but only to deal with short-term crises - finally thanks to Barclaycard and MBNA I've embarked on a DFW plan which on paper has me debt-free (apart from a small mortgage) by the time I'm 48 - sooner would be nice, but I MUST clear it all before I'm 50!

    Having managed to stay in budget for six months I'm optimistic for the first time in many years.......
  • Mickey_Monk
    Mickey_Monk Posts: 65 Forumite
    Winning £5 Million on the lottery....

    Spending £4,999,999 on women and booze.

    BIGGEST mistake..... Wasting a quid.
  • rospax
    rospax Posts: 26 Forumite
    Some years ago while I was in business with a partner we agreed to accept some shares in a company in lieu of payment they owed us for services. Although it sounded promising and all looked good on paper, the business eventually failed and my business partner and I lost £30,000 between us. Stupidly, this was the second time we had been caught by the same hook as we had previously accepted shares from a different company, with the same unhappy end, and on that occasion lost about £5000. I have always had a rule never to make the same mistake twice but I guess we got caught up in the excitement of building a new and exciting business. Did I learn my lesson...?

    Well, on a third occasion, we ended up accepting shares once again as a last resort, as the company in question was clearly never going to come up with that amount of hard cash, and the situation was somewhat different as we had been instrumental in setting up that particular business, and we knew it would be a long-term strategy. I am pleased to say that this time it did work out for us (third time lucky?). The value of the work we had done was around £60,000 and the shares were split 50/50 between my business partner and myself. I have sold half my shares to date as a safeguard (to ensure I have at least something to show for it all) and made £14,000 for them. In a way I wish I hadn't sold these when I did (although I needed the money at the time) as the other half which I still own is now worth £30,000 today, and the shares have even traded at double that price in the last 2 years when the market was more buoyant. Being an optimist, I believe they stand a good chance of recovering again in future as the market stabilises and in any case I see this as a long-term investment (one for the sock drawer).

    What's the moral to my story? Accepting shares in lieu of real money isn't always a no-no but is only a viable option if you can afford to do without the cash, are really sure of your ground, and are prepared to take a long-term view ob the potential return. Unless you really know what you are doing and can afford to risk losing the money, only ever accept shares in companies that are actively listed on the stock exchange, so you can sell at a moment's notice. Don't accept shares in new ventures that are unlisted and that involve management with unproven track records.
  • rospax
    rospax Posts: 26 Forumite
    DavyBoy wrote: »
    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.
    /quote]

    My now deceased banker father (god bless him!) taught me at a young age how to have two different credit cards, and draw cash on one to pay off the whole balance of the other, and vice versa (until I was in a position to clear the debt). Apparently, paying the cash withdrawal fee (about 2% in those days) worked out cheaper than paying the minimum and letting the interest accrue on the balance on each of the cards. I don't know if this is still a viable option today (I haven't needed to work it out, thank goodness) but it will only work if you have sufficient credit on each card, different payment dates for each card (so you can alternate), and enough self-discipline to stay on top of it.
  • infj
    infj Posts: 68 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    My two biggest financial mistakes were

    1) 6 months before 9/11 investing £3000 in a UK tracker and £1000 in a health fund. The tracker is currently worth only £3400 and the health fund is still worth £200 less than went in.

    2) I was offered redundancy by my former company but didn't take it. 4 weeks after the offer closed I was offered a job somewhere else and took it. 8 weeks after I left the company, it offered redundancy again! I'd worked for them for 11 years:mad:
    I don't regret moving jobs but I do sometimes think about those few thousand pounds I could have had if the job timing had been better.:confused:
  • dunstonh
    dunstonh Posts: 116,211 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    1) 6 months before 9/11 investing £3000 in a UK tracker and £1000 in a health fund. The tracker is currently worth only £3400 and the health fund is still worth £200 less than went in.

    Thats not a mistake. The tracker was medium/high risk and hte health fund speculative. Other speculative funds have bombed or boomed and its the risk you take when you invest speculatively. Making a speculative investment and it not paying off isnt a financial mistake unless you foolishly put too much money into that area or cannot afford to take such high risks with your money. Back in the early 90s I invested in a company that went on to be worth just 25% of its investment value within a few years. I sold those shares earlier this year after they recovered and gave an annual equiv return of over 14%. Your health funds could do the same.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • stingyscot
    stingyscot Posts: 81 Forumite
    dunstonh wrote: »
    Yet had you waited just a few years you would have gone on to double your money. As is the nature of the stockmarket that you take the ups and the downs. Plus of course, stockmarket and cash are not the only options and going 100% into either is usually a foolish move (as well as missing out the other options as well). And stockmarket is not one level of risk either.



    I'd be more worried about inflation if I was you. Especially if you are using the interest to supplement your income.

    Actually, I did wait until the share values had crept back to more or less where they had been when I bought them, before selling them and swearing that I would never again buy shares - and I haven't once regretted that decision. I was also fortunate enough to be able to bail out of a handful of with profit bonds, another 'sound investment', before they stopped paying dividends and started charging exit penalties. I'm old enough to have seen almost all the 'sure fire' financial wheezes that IFAs have dreamt up to part us from our cash ... I very nearly invested in split caps, which were 'safety guaranteed', for heaven's sake!
    You can only invest in the stockmarket if you have time on your side, i.e. you're young, and if you have no likelihood of ever needing to access the money (and if you don't mind watching your hard earned cash going into some IFAs pocket)
    I'd rather have cash safe at 7%, than something unsafe with the promise of some future possible bonanza. Remember how you couldn't lose investing in property?...
  • Pet48
    Pet48 Posts: 13 Forumite
    :mad: The biggest mistake my husband and I did was go to our bank to ask for help. We had been customers for over 20 years and knew the manager and staff. We needed a loan to cover necessary improvements to our house and estimated that about £7,000 would cover what we wanted to do. We were advised to take out an endowment policy for £15,000 over 25 years, as that would enable us to get more work done on our house. We didn't have a mortgage at that time and had only paid £2,000 for our house in 1967. I've tried and tried to file a 'miss-sold endowment policy' but I keep getting told that there's nothing I can do. Over the years so far I'm sure that we have paid more than the £15,000, so that is my sorry tale.:mad:
  • joan_brennan
    joan_brennan Posts: 98 Forumite
    helping a friend out. Her horse was in my field and i rang her to tell her it needed a vet . She asked me to call one which i did. He pursed me for the money as he was called by me. She refused to pay because it wasn't in her name.
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