I have definitely made financial mistakes since age 18 in regards to handling and managing my money. We all make mistakes and that’s OK as long as we learn from them and move forward.
1. Paying for a weight loss program:
I was young and newly engaged and wanting to look good for my wedding. A friend had signed up for this program and lost weight already and encouraged me to as well. So, I signed up for a private weight loss program (I won’t mention which one). I think I paid $600 for a one year program which included the weight loss phase and maintenance phase. Once I lost 15 of the 20lbs that I wanted to lose, I foolishly didn't continue with the maintenance phase and I totally stopped doing the program after 6 months. In hindsight it was an interesting experience because I don’t think I fully grasped the full potential of what I could have achieved while in that program or how I could have utilized it best. However I did gain some of the knowledge that I needed for future weight loss and I gained some knowledge about nutritional eating. Unfortunately, the workers never specifically addressed exercise as part of the weight loss process, but maybe I just wasn’t open to hearing that message. It was definitely a purchase out of desperation and peer pressure from a friend and the sales pitch from the company made me feel bad about my weight at the time (poor marketing but they still made the sale). However, it was a good life lesson and one that I will never forget. I will never again pay money for a program like this, because now I have the tools and my own motivation to go through the weight loss process by myself. Life Lesson: don't expect to pay for a service and think they will do all the work for you and that somehow miraculously it will lead to success. Your success solely depends on what you put into the program. Programs and coaches (whether it be fitness, financial or life coaches) can provide the accountability and the cheer-leading that you need but ultimately the success is up to the client purchasing the service.
2. Paying for mortgage life insurance:
My husband and I signed up for this type of mortgage life insurance when we signed the papers for our first mortgage. Everything about our first mortgage was like an out of body experience. We had no idea what we were getting into. It was definitely another life lesson. I wish we had been more informed about the process before we started. Financially we were in the right place to purchase a home but we definitely didn't do our homework to be financially aware of all the costs associated with being home owners. We reviewed some pros and cons of purchasing a newer home versus an older home and about location and commuting but we didn't research the mortgage insurance piece of the puzzle. I actually didn’t even think about or even learn the foolishness of this mortgage life insurance that we were paying for until I heard Dave Ramsey’s information about the different types of insurance. When I learned that we had paid insurance on a gradually decreasing amount of mortgage principal, I felt tricked by the bank but it was our own mistake for not researching this insurance ahead of time before purchasing it. A mortgage insurance policy requires a fixed cost premium payment by the borrower to cover a reducing mortgage debt for the benefit of your lender until the mortgage is paid. This is different than mortgage default insurance which is required by CMHC if you have less than 20% for your down payment on your home.
In 2006 we started paying $60/month for critical life and accidental death insurance until 2014 when we came to our senses and cancelled this useless insurance. That’s $5,760 wasted over 8 years!! We started paying for regular 20 year Term Life insurance in 2014 and stopped paying for this mortgage insurance because the money paid out for term life insurance would have been more than enough to cover whatever was left on our mortgage. Not to mention that I also had life insurance and disability insurance through my employer. Life Lesson: don't sign up for any monthly amount no matter how low it seems, if you haven't fully researched and evaluated what that cost translates to in regards to the service it provides. Research whether there are better options out there.
3. Paying for a gym membership for myself:
I think I have paid for gym memberships twice in my life and never fully utilized those memberships so for me, it was not a frugal purchase. I realize now that I really do not enjoy exercising in front of people or enjoy using weight machines. I prefer to exercise on my own timeline at home either outside running or on my treadmill or with free weights. I have exercised far more consistently since not having a gym membership. I know I have been beating this drum for a long time, but I love Fitness Blender workouts (www.fitnessblender.com). They are free and if you want to purchase a program, their programs can be reused indefinitely. The most I’ve ever paid is $15 Canadian for one of their 4 week programs. I’m not saying that others can’t benefit from a gym membership but for me personally, it was definitely not something I feel is worth the cost. On the other hand, my husband has been able to fully utilize his gym membership for the summer months when he doesn’t have access to the gym facilities at his workplace. I personally don’t need the equipment and machines. I only use smaller free weights. My favorite weights are the Power Block ones (https://powerblock.com/). Life Lesson: learn what method of exercising you utilize best throughout the year and stick with it so that you continue to stay fit for life, which in turns saves you health care costs later in life.
4. Not paying my taxes for the first 10 months of working as a Registered Nurse:
Let me explain...when I first started working at the Foothills hospital as a nursing aid in 2003, I signed a document requesting payroll not to deduct any taxes from my paycheque because I was making less than $6000/year at the time. Later in 2005, when I was hired as an RN after graduating from nursing, I didn’t realize that paperwork was still in place. However, since I had never made over $6000/year as a student and never paid taxes before, I literally had no idea what the acronym for Canadian Income Tax looked like on my pay stub. I knew deep down that something didn’t seem right, but I didn't know what. It wasn’t until I finally showed a co-worker my pay stub at work and they asked “how come you aren’t paying any income tax?” that I instantly felt sick to my stomach and panic ensued. I had been working full time as an RN for approximately ten months! How was I going to pay back all this income tax? However, God was definitely watching over me and obviously has more wisdom than me and it worked out in my favour for that period of time in my life. Because I had post secondary school credit, I was able to use that credit as a tax deduction to lower my total taxes. Needless to say, because I had all this extra (tax) money at my disposable, I was able to put it directly onto my $5000 student loan and pay off that loan in six months. Would I recommend playing around with not paying taxes for a couple months like I did by accident? not really... unless you carefully paid attention. Especially if you have a tendency to be a spender, it would probably not be wise. I also had enough money to set aside in RRSPs and that further reduced my tax bill and I then used that RRSP money towards a down payment on our first home using the Home Buyers Plan as per a bank employee's advice.
I felt so ripped off when I actually started paying taxes and it’s been downhill ever since. Life Lesson: learn and be aware of deduction or lack of deduction and pay attention to your pay stub.
5. Having money in a matching RRSP but not actually invested:
Setting aside money in a matching RRSP deducted directly from my pay was a very wise move. However, I honestly can’t remember why the person at the bank who set it up didn’t ask if I wanted it invested in mutual funds or anything else? Yet again another mistake was not knowing what I was looking for. I cringe thinking of the lost future income I could have earned in compound interest because I had started this RRSP at the young age of 23. I'm fairly certain I could have made quite the interest from the booming oil industry during that time. I foolishly managed to let 5 years pass before realizing that this RRSP wasn’t invested in anything. It was just sitting there waiting to be placed in any investment. However, I did manage to earn the matching component from my employer so that was a nice benefit to have that additional money. Life Lesson: pay attention to your investments and what they are invested in or in my case not invested in.
6. Wanting or thinking that I needed a brand new home like everyone else:
I will admit that I definitely fell into the consumer trap of wanting brand new everything immediately instead of slowly and intentionally saving for these purchases. It started out with the question: "why stay in the city with a small home when you could move to a small town and pay less for a larger home?" Then this thought morphed into desiring a brand new home just like "everyone else" and started the process of looking for a builder. We were slightly wiser to look into options of how to do some of the building and work ourselves. This is how we ended up going with a modular home scenario where we built the basement and installed the flooring ourselves. Luckily, it worked out for me because we made a large profit in a small amount of time from selling our home in Calgary during the housing boom. But mentally and financially it would have been much more frugal to have purchased a smaller home in town. Don’t get me wrong I LOVE my acreage and where I live but we didn't consider all of the extra costs of acreage living before deciding to live on an acreage. Acreage living can be expensive and the upkeep is time consuming. We take our own garbage to the dump and maintain our own well and sewer system. These are some of the things that you don’t necessarily think about when considering the cost. Life Lesson: Just because you want it now and you think "everyone else" has it doesn't make the right time for you. Research all the costs involved before diving into a large venture.
7. Not intentionally budgeting:
It’s difficult to think of a time when I didn’t intentionally budget but I know that I started intentionally budgeting in 2014. I was always a frugal person with low expenses but as my children aged, expenses definitely started to creep up and I’ve been guilty of buying my children expensive gifts that they didn’t appreciate because they were too young. I really started to achieve my goals and dreams when I started intentionally budgeting because I had a purpose of what I wanted to save up for and achieve with our budgeting. I had my “why”! (https://www.financialresuscitationwithruthy.com/post/part-2-how-to-make-the-goal-your-priority). I could sit and get angry at myself for the wasted years of not budgeting but my husband keeps reminding me not to look back with regret, but to learn and move forward! Again, that’s why the front windshield window is bigger than the rearview mirror! Life Lesson: Dream, Plan, Budget.
I don’t know if you’ve noticed a pattern yet in the behaviour of my mistakes...I’ve fallen prey to consumerism, lack of financial literacy, education and awareness. Things many of us struggle with. Don’t fall prey to this too! I'm gonna tell you what I tell my kids "If you wanna be somebody, if you wanna go somewhere.. then you better wake up and pay attention." Thank you Lauryn Hill!
Now Go and Be Intentional!