I’ve made a ton of financial mistakes over the years from buying a timeshare, to making bad investment choices, to refinancing to a bad mortgage. The reality is we all make bad choices with our finances at one point or another.
My worst financial mistake came when I bought a $4500 timeshare on my honeymoon of all places because I thought it would be a great to force us to take a vacation every year.
This lead into other financial issues when we decided we wanted to sell our timeshare and found out it’s next to impossible to sell them.
We tried for over 2 years to sell our timeshare with literally no luck at all. Our lowest point came when we decide to sign up for a couple of timeshare resale companies and this only lead sticking $1100 into a losing battle.
Finally, after 6 long years of owning this timeshare, paying maintenance fees, and losing our money to the timeshare resale companies, I was able to contact my resort and get a buyback option that allowed me to get out from under this black hole that had done nothing more than suck the money right out of my pockets.
In total I had lost right around $7200 due to this one financial mistake. Ouch!
Who Is Really To Blame
Overall I took a huge hit with my finances and I was not happy. In fact for a long time I was very upset at these companies for putting me in this position. However several years later now as I reflect I realize something that I didn’t then.
I have a choice when it comes to my finances.
That’s right I could sit here and blame everyone but myself about all the money I lost but the reality is I made those choices. I bought the timeshare, and I invested in the timeshare resale companies, not anybody else.
Sometimes I think this is the real mistake we make with our finances. A good example of this is credit cards. I hear people claiming credit cards are bad but my belief is that they’re only as dangerous at the person who is using them.
If I have a credit card and pay the balance off every month it’s not necessarily a bad thing to have. On the other hand if you are someone who continually racks up tons of debt they are not a good thing to have.
The point is that it’s not the credit cards fault you are in debt, it yours. You made the choice to spend your money the way you did. Nobody forced you to do that.
Now I know this may be a bit hard for some of you to swallow but the sooner you accept this, the sooner you will be able to improve your finances and get out of this disaster that you created.
How To Escape A Financial Mistake
To escape a financial mistake and protect yourself from further disasters I’ve put together a simple 6 step plan to help you navigate the waters and get through these financially tough times.
The first thing you need to do if you want to escape a financial mistake is accept that you are solely responsible for what you have done. Just as I mentioned in the last section knowing this allows you to take control of your situation and move forward.
By not doing this you will continue to blame others for your financial woes.
Cut Your Losses
The next step is to cut your losses as quickly as possible before you end up sinking more money into a lost cause. When I originally bought my timeshare for a few years I thought I would still use it even though it had completely depleted my emergency fund.
Eventually I did sell my timeshare but I only ended up getting $400 for it on top of paying for other expenses such as maintenance fees. What I should have done was cut my losses right away and I would have saved a lot more money, but as they say hind sight is always 20/20.
Do Your Research
The third step is to do your research before making any big purchase. If I knew now that I would have known then I would have never bought that timeshare. Shortly after buying the timeshare I went online to do a little research and any time I typed in the word timeshare I couldn’t help but see the words “don’t buy it,” or “scam,” next to it.
Doing the research ahead of time would have helped me realize that these things were incredibly hard to sell and that people who do buy them don’t pay much for them because most of them are just not worth it.
Don’t Go At It Alone
Another key way to avoid these costly financial mistakes is not go it alone but rather have someone who can help watch your back sort of speak. In my case my wife does this very well.
Whenever I’m trying to decide whether I want to buy something that is a bit of bigger purchase I like to run it by my wife as a safe guard to get her thoughts. She will usually tell me straight up if she thinks it’s a good or bad idea.
Consider The Long Term
Next consider your long term situation before you make a big decision. When you look out 20 years from now where do you see yourself? If your goal is not in alignment with what you are about to buy this should be a clear indication you should not buy it.
I wish I would have asked myself this question back then because I would have realized that taking these kinds of vacations were definitely something that didn’t fit what I wanted in my life. At that point and time in my life I was looking to start my own business and spending money on these high end vacations was not something I had planned for.
Don’t Give Up
Finally, the last step is not to give up. In the end even though you may have lost a lot of money realize that you can always get money back. There are a lot of other things that you can’t get back. Here are a few to consider.
- The last thing you want to do waste a ton of time on something that is losing you money. I wasted around 6 years with this timeshare when I should have gotten rid it much sooner and once that time is gone you don’t get it back.
- If a financial situation is really bad it may cost you your marriage and even losing your family over it. I once knew a family that had gotten into so much credit card debt that the parents were getting divorced and foreclosing on their house. All of that could have been avoided if they would have only cut out their bad spending habits sooner.
- The worst thing that can happen is you could lose your life. How many times have you heard about a stock investor losing all their money and then committing suicide, or someone getting stuck in a bad gambling habit and losing everything. I know we don’t like to think about these things but they do happen all because we failed to see the signs.
When it comes down to it you don’t want to give up. I’ve been faced with a lot of debt, living paycheck to paycheck, and never did I once think about giving up.
My Final Thoughts
To wrap this article up one of the best ways I’ve found to avoid making a costly financial mistake and not sell my soul is to just slow down and take the time to reflect on the situation.
I know this can be hard to do with all the media and hype that comes with making a life changing purchase, but if I would have done that from the beginning it would have saved me thousands of dollars in the end.
If you are someone who is looking to save and earn more money you can check out my special page I’ve set up for Canadian Budget Binder readers. There I’m giving away my free ebook on how to save a $1000 in 30 days even if you don’t have the extra money. You can get the get the ebook by clicking here.
Finally, what’s the worst financial mistake that you’ve ever made? Share your thoughts and comments below.
Guest Contribution: Chris Holdheide is the mastermind behind the personal finance blog Wallet Impact. You might remember reading about Chris and his blog with his recent feature here on Canadian Budget Binder in the Making A Difference feature.
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