Financial Reflections

Writing this blog has given me the chance to reflect on my previous financial follies - hence the name.  I’m not doing that to extend the misery, but rather to identify and correct the problems I’ve had so I can fix them in the future.  Here’s what I came up with:

I thought I was doing OK with money before 9/11/01.  But after the tragedy, the economy took a dip for a couple of years in my industry (to say the least).  I ended up with a job that gave me a 42% pay cut and I was glad ro have it.  But the whole ordeal let me realize that I had some serious flaws in my plans.

• No Emergency Fund - This is a biggie.  Far bigger than I thought it would be.  Without some kind of fund, I ended up charging things I shouldn’t have.  I did “accidentally” have about 2 grand saved up at one point.  That saved me from problems when I found myself without a job for a very short period after 9/11.
• Letting Credit Card Debt Pile Back Up - After 9/11, I kept trying to party like it was 1999.  I charged a bit here.  And a bit there.  And a bit more somewhere else.  It added up after a couple of years.  I’m in the process of eliminating that debt now, with plans to never return.
• No tracking of my monthly/daily status - Now I keep close track of my money.  I keep track of my checking account about five times a week.  Every month I have a budget.  Every quarter I analyze what little 401(k) I have.  It keeps me on the straight and narrow financially.  Before, I just spent everything, which kept me from saving.  It also caused me to overspend, because I didn’t really know how much “everything” was.
• No Retirement Savings - I neglected putting money in funds like a 401(k) because I felt like I didn’t have enough money.  With better planning, I could have, and ended up buying when the market was low.
• Bad Mortgage Loan - I’ll admit it.  I bought too much house.  Then I took out an adjustable rate “interest only” loan.  I’m not behind, but making payments hurts.  Then I took out a larger second mortgage to pay off credit cards - without stopping my spending on those cards.  I just ended up with more debt.  Now I have a wonderful large home that I can’t sell because I’m essentially upside down in it.

In a later post, I’ll summarize where I’m doing things right, and how I’m doing each one.  That way I can see how I’m doing on this year’s financial goals.