When it comes to financial mistakes, I would absolutely agree.
When I reflect on my current financial position, my past financial mishaps have helped me make better financial decisions today. Not only that, they gave me life experience to better help you.
By sharing my 5 biggest mistakes, I hope to help you make better decisions on your own financial journey.
Taking Out Too Much Graduate Student Loan Debt
I borrowed almost $60,000 to 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:
Undergraduate Degree
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. The loans also covered the difference between tuition costs and scholarships.
In addition, 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.
Graduate Degree
Graduate School, on the other hand, was a whole different story.
I earned a $100,000 scholarship and still managed to rack up $40,000 in student loans.
The crazy thing is, most of those loans were used to pay my Los Angeles rent. 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 a comfortable living situation for two quick years. That sacrifice would have allowed me to have more financial freedom today.
I learned my lesson though, believe me.
In 2017, I accelerated my student loan payments and am on track to pay them off by October 2021.
Also, other than a mortgage, I have yet to take on any new debt.
Accepting a Low Paying Internship
One of the reasons why I had to take out loans in Graduate School is because I accepted a low paying internship during my first semester.
I interned at a nonprofit that I thought would open doors to a successful career in the nonprofit sector. My goal was to become a nonprofit CFO or Grant Program Officer.
In my naivety, I assumed that the internship experience was more valuable than pay. I worked overtime and at one point even took over the accounting role of the nonprofit, all while getting paid only slightly above minimum wage.
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.
Giving Irresponsibly
Girrrrllll, let me tell you. I have been swindled and bamboozled when it comes to giving money. Sheesh!
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 consecutive dates (before my husband) and paid for transportation and entertainment each night.
Yes, I have been straight foolish in giving.
You see, by nature, I am a “fixer.” So, when I met someone in the struggle, I took on the false perception that money would fix everything.
To be honest, I am still working on renewing my mind in this area [God is still workin on me y’all].
What I have learned is, if I come across someone in need, I should assess all factors before giving money. I should identify the root issue instead of assuming the issue is 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 to take a bath. We even had nights where we had to 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. I discussed my internal struggles with close mentors who poured their wisdom into me.
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.
Unpaid Medical Bills
Once again, in college, I made another financial mistake.
After a regular check up at the University Health Center during my sophomore year, a nurse noticed I had an irregular heartbeat.
She referred me to a local clinic to get additional tests on my heart. All of which I assumed would be covered under my mother’s insurance policy.
Well, to my surprise, I received a medical bill a few months after the tests. I told my mom, and she assured me that our insurance would take care of it.
They didn’t.
The bills continued to come and I ignored them. I probably even threw them away.
Then, the collection notices arrived.
The first notice caught my attention and I immediately told my mom. She called our insurance company to resolve and eventually, after a few line transfers and back and forth, the bills were paid.
Mom for the win!
Unfortunately, the unpaid bills had already been reported to all of the credit agencies.
At age 19, my credit was just getting started. This means those unpaid bills took my score way down.
Even worse, I was ignorant about credit and the importance of it, so I did not try to remove the unpaid bill from my report.
Not until I graduated did I realize my credit score was nothing to be proud of. Fortunately, I did not make any major purchases immediately after college that required a strong credit score.
From all of this, I learned not to ignore bills. That lesson seems pretty obvious, but you’d be surprised with how many people receive bills and put them off.
Also, if insurance does not pay its portion of the bill before the payment date, communicate with the biller and ask for an extension or other payment plan.
Finally, I learned to protect my credit score at all costs. My purchasing power depends on it.
Final Lesson
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 I progress on my adventurous financial journey.
