As I mentioned in Part 1, this story is not about everyday money leaks or niggling oversights we all make from time to time. It’s about the type of money blunders that wake me up in the middle of the night and leave me covered in a cold sweat.
I’ve already covered the first five mistakes. Here, in reverse order, are my five biggest blunders:
5. Not holding out for a higher starting salary out of college.
As a newly-minted engineer out of college I had competing job offers from two companies. The starting salary offers were identical, but I really wanted the job that was based in southern California very badly so I accepted the position without making a counter proposal. Dumb. After talking with several colleagues some years later it was apparent to me that the company would have most likely accepted a counter proposal of up to 10% over their original offer. Although I did make up some ground in the years immediately following, I didn’t recover from that blunder — and then some — until I changed employers ten years later.
4. Not having an exit strategy with respect to my stock options.
I got my first set of stock options in 1999. Over the next five years I accumulated additional options. Those stock options had to be exercised within 10 years of their issuance. In mid-2008 the value of all of those options was over $30,000, and I hadn’t exercised a single one. Stupid. I expected the stock to continue to soar — but it took a huge hit after the market crashed a short time later. If I had established an exit strategy for cashing out my options when I got them I’d be a lot happier today — and a bit wealthier too.
3. Buying near the top of the housing market in 1990.
In 1990 the housing market in Southern California was fevered and rising at a spectacular pace. I was a young engineer still living with my folks and saving money for a house down payment. But home prices were rising so fast that it looked like I was going to be completely priced out of the market. Thinking that it was now or never, I jumped into the market. Bad idea. Soon thereafter, the aerospace industry in Southern California was hit hard and home prices plummeted. For seven long years I owed more on the mortgage than the house was worth. Making matters worse, my home was in a less-than-desirable part of town — and it sat 50 yards from a set of very busy railroad tracks. I know. It was really impossible to be truly happy there, but I wasn’t willing to wreck my credit by walking away.
2. Not allowing a song I wrote to be used by another artist.
In Part 1 I mentioned that my band had an album that didn’t go anywhere. Well, one song on the album, Vancouver, was generating significant local buzz. We soon got the opportunity of a lifetime when the song got the attention of a Hollywood music business attorney. The guy loved the song. In fact, he swore that it was a radio-ready hit single — but he wanted the song for use by another artist, and I wasn’t willing to do that. Crazy. For several weeks, the attorney tried to convince me to change my mind. Then he just stopped calling. He wouldn’t return my calls either. So I went to his swanky office in downtown L.A. and he basically told me to get lost. There were no more breaks after that. I still think that song can be a hit for someone. I know a friend of a friend who co-wrote a song that got on an album by one of those boy bands, I think it was N’Sync; he’s supposedly received more than $80,000 in royalties — and it wasn’t even a hit single.
1. Not investing some of my early income as a teenager.
I made some (relatively) big money as a teenager working for a grocery store. I earned $14,000 in 1983 alone — that’s equivalent to more than $41,000 today. While I did use the money I earned as a teenager to help pay for college, I also wasted a chunk of my earnings on expensive audio equipment for my car and other goodies. If I had invested even $4000 of that money back in 1983, it would be worth more than $47,000 by the time I reach 65 in 2029, assuming a return of 5%. Dumb.
Photo Credit: Pic 2 Fly
Concerning mistakes … 8 years ago someone offered me 10K for one of the sites I owned. Stupid enough, I said No. I didn’t get the time to work on the site anymore, so it was soon worth almost nothing. I kick myself even today for being that stupid 😀
That does suck, Dojo. But it’s nice to know I’m in good company when it comes to “stupid”! 😉
I did your 3,4, and 5. I am chalking up my mistakes to lessons learned and when I find myself wanting to kick myself I resolve to focus on now and the future. Yep, lost a lot of money in the past.
Of those three, Jenna, number 3 is kind of a crap shoot because it’s always tough to time the market … But there is no excuse for 4 and 5.
I think you’re kinda hard on your teenaged self. Give yourself credit for being industrious enough at that age to earn $14k, that’s amazing!
Thank you, Kurt.
I wish I wouldn’t have spent so much money on dang clothes. AH!
The song was probably an emotional decision back then but it stinks that the Guy never got back with you. At least you have the story to tell.
That’s so cool that you were able to earn college money as a teenager, Len. Besides, who’s even thinking about investing as a teen?
Not letting another artist record your song? Now THAT was dumb! ;o)
If only I had listened to my Dad, Catseye … He advised me to put away a little of the money I was making away for investing purposes, but I had “better things” to spend my hard-earned money on — like my car!
Yes, #1 is a tough one. I had saved $5000 by the time I turned 18 but as soon as my dad saw my savings account statement he made me give him all my money to “invest” in his business. I never saw that money again. Lesson learned: hide money from dad (and any other high spending male). What’s the value of $5000 30 years later?
I guess we should both look at the bright side, Suzanne. The best lessons are always learned at the school of hard knocks — and it’s best that we learned that particular lesson earlier rather than later. 🙂
As long as you learn from your mistakes you shouldnt really beat yourself up over things you did in the past. You cant re-write history. Move on, smile be positive and don’t repeat them.
Oh, I’ve had a few interesting ones. The one coming to mind right away was my “brilliant” idea to lease 2 places one year in college, back in the stone ages.
More accurately, it was paying housing expenses for 2 places at the same exact time. One for my shared room in the fraternity house, and another for an off-campus apartment I wanted as a 2nd place. Summer job money wiped out, very quickly. I think our brains just aren’t fully developed at that age. Dumb move by the “wise” squirrel 🙂
Fortunately, I managed to sublease the apartment after a couple of months, so the damage wasn’t extreme. Also fortunately, my father never reminded me of my bad move after that!
Len, I have to say, you’re an inspiration. If you can recover from your dumb money mistakes so well, then there’s hope for the rest of us too. 🙂 Thanks for sharing.
You’re too kind, Laurie! Thank you.
It works both ways on #4, Len. I was employee number 28 at a high flying tech company in the late 90s. Owned 4,000 stock options. I decided to leave the company because I didn’t like the management, particularly my new boss. I also didn’t believe in senior management.
I sold 4000 of my options at $25/share. Received $70,000, net after taxes. Had I waited one more year, I would have been fully vested when the company sold…for $175/share. Would have made $700,000.
I invested the $70K in my new house as a down payment, and the house price doubled in the 8 years I owned it, before selling in 2007. So I did well, but not as well as I could have.
Coulda, wouldda, shoulda…
Even so, a $70,000 payday ain’t bad and is a nice consolation prize! Congratulations!! 🙂