What have been your best financial decisions overall? [Archive]

pinkytoe

4-16-13, 10:09am

Now that I am getting older, I can look back over a lifetime and see the silly financial mistakes we made along the way. Things like not finishing my education or going into severe debt. There are a few things though that we did right - like buying a mediocre house in a great location after several purchases where having a great house was more important than location. I think another thing that will "pay off" is having stuck with my state job as I will have a pension and insurance when I retire. I think it would be helpful to hear what some of your smart final decisions have been.

SteveinMN

4-16-13, 10:39am

For me, I would say starting to save for retirement early was a great decision.

I was lucky to make enough money to start saving in a 401(k) as soon as they'd let me. The company's match helped and the compounding interest of starting early helped. But the biggest positive was to ingrain saving as a habit -- I haven't had a job since (in 30 years) that I didn't put money into a 401(k) or IRA. And by doing that, I never got into the habit of spending every cent I earned. Being used to living on less than I made, as I got promotions and raises, I knew I could live on what I had been making, so I banked the increase. Yeah, eventually you move to a higher-cost lifestyle. But saving helps keep that in check, and gave us options some of my peers can only dream about.

try2bfrugal

4-16-13, 11:21am

In hindsight, I would have done many things differently. However, the things I did right were going into a high demand field, buying a house in a desirable location, and always living below our means, and marrying someone happy with a LBYM lifestyle.

herbgeek

4-16-13, 11:43am

The things I did right: getting into a well paying field (engineering), marrying someone who spends very little and has similar values, getting into a 401K at the beginning of my career and putting at least 1/2 of every raise towards the 401k until I maxed out.

The list of what I did wrong would be longer, but in the long term view of things, appears to not have made a significant difference in our financial stance, though we could have been retired already. I did take a few years off, and realize I'm not ready to retire anyhow.

lhamo

4-16-13, 5:16pm

Not going into debt to fund education (both DH and I got Ph.Ds. without taking on student loans).

Marrying someone frugal.

Continuing to live more or less like a grad student for several years after we finished grad school and saving from 30-70% of our income most years.

Making very smart/profitable real estate investments.

Not only not selling during the recent economic downturn, but taking the opportunity of everything being "on sale" to plow a lot more into long-term investments.

Having a very generous cash cushion that allows us to follow through on big financial decisions without a lot of anxting.

Leaving a HSSJ for one that paid less but where the environment was not so dysfunctional -- I still look forward to FI/retiring early, but it is more a positive future goal than something I need to make my life bearable.

Mrs-M

4-16-13, 5:22pm

Knuckling-down and applying ourselves. No fancy vehicles, no fancy houses, no fancy holidays, no fancy nothing. Just the basics.

Rosemary

4-16-13, 6:10pm

Getting an M.S. degree in engineering without any debt.
Maxing out my 401k as soon as I began working.
Changing jobs a couple of times - I got better raises than I would have staying with the same company.
Marrying someone who believes in living frugally but shares similar values for spending
Never carrying debt other than a mortgage. For brief periods we had low-interest car loans but paid them off as quickly as possible.

Worst financial decision: holding too much employer stock.

awakenedsoul

4-16-13, 6:35pm

1. Buying a house in a down market. It's never gone down in value; even now it's worth almost 50% more than what I paid for it.

2. Spending less than you earn. Asking myself if this is a need or want has really helped me.

3. Taking care of your things. Right now I'm having the exterior of the house painted. It's amazing how different a home looks and feels when it's well maintained.

4. Having inexpensive hobbies. Knitting brings me hours of pleasure, is relatively cheap, and when I'm finished I can wear what I've made! I also read, hike, do yoga, and garden.

5. Buying the smallest house in the neighborhood. It will help yours hold its value. I have the tiniest house on the street. Even with all the foreclosures, it's still held it's value and gone up. The land is worth more than the house.

6. Budgeting for repairs, emergencies, and car maintenance. I also budget for things like insurance, property taxes, etc.

7. Buying used. I buy used cars, used clothing, furniture, and home decor. I get lots of compliments and I save a ton of money. Most of what I buy I find at the Salvation Army or the local church thrift shop.

8. Growing my own food. Once I retired, I was able to invest time in growing veggies and adding fruit trees to my orchard. Because I eat so much produce, it's really helped my budget.

9. Bicycling for transportation. I only drive once a week and bike the rest of the time. It's great exercise, and it keeps my mileage down. That reduces what I spend on car insurance, registration, etc.

razz

4-16-13, 6:47pm

Marrying someone who shared my frugal values
Going into an emerging field with high demand
Buying real estate
Avoiding all debt except mortgage and the occasional car loan when starting out
Paying cash for all else
Buying used vehicles and running them to the ground
Buying farms that fed, sheltered and warmed us as well as brought in income and healthy activity
Knowing when I had enough and being satisfied.
Cooking from scratch most of the time and preserving the garden's produce.
Rarely eating out
Modest classic clothing choices that had to be totally washable.
Cold water washing and air drying

bae

4-16-13, 7:26pm

Marrying well, and not getting divorced.

Lainey

4-16-13, 8:18pm

iris lily

4-16-13, 10:17pm

In addition to the usual basic thing of pursuing ways to enjoy life that are frugal, I will say that chasing a career, doing what I love, has turned out well.

While for many years I made not much money, I really enjoyed what I did and I moved for better opportunities that didn't mean more money. Eventually that parlayed into decent money.

Also marrying DH who can turn a penny into a dime was a good financial move. It wouldn't have been conventional wisdom since I've always made more money than he has. But he preserves our wealth, plus he brought significant assets into our relationship.

Rogar

4-16-13, 10:44pm

Getting college degrees and graduating without debt.

Renting for a long time and then buying a home with a big down payment and fairly quick debt payoff. Renting and buying have both had advantages and looking back I have enjoyed them both for their respective pluses.

Not being obsessed with a career early on and spending a few years of relative youth footloose, which had some good lessons in frugality and also that life can be very good on a small income.

Eventually settling into a job with good benefits and a pension and sticking it out through a few unpleasant times.

Wildflower

4-17-13, 2:11am

Marrying someone that shares both my moral and financial values.
Paying off all of our debt by the time we were 50, including the mortgage on our modest home.
Raising two kids that are very self sufficient, who worked hard and helped pay their college costs.
Not wasting money on trendy things. Never trying to keep up with the Jones...
Gardening and eating little meat. Cooking from scratch.
Buying few clothes/shoes, but what is bought is quality and long wearing.
Skipping make-up, hair color, pedicures, manicures, perfumes, expensive lotions, and jewelry.
Decorating home sparingly, with hand me downs and natural items.
Purchasing energy saving appliances, windows and doors for our small home. The savings on utilities has been impressive.
Owning only one vehicle.
There's lots more, but overall living a simple life has been my best financial decision.

Blackdog Lin

4-17-13, 6:56am

(1) Getting out of, then staying out of, debt. I can't really take much credit for this one, as it seemed to come along as a function of age. As in, we were young and stupid with our finances for a long time, then around age 40 we started getting much smarter about them.
(2) Finding and then sticking with a decently-paying federal job w/pension. This one I can take full credit for. I went through many periods of my employment that were hellish, but I stuck it out, knowing even from a very young age that it was my best - maybe only - chance at a decent middle-class lifestyle.

reader99

4-17-13, 11:41am

The very biggest smart thing DH and I did was to buy our original condo in Jax Beach. It was a lifestyle decision at the time, we didn't think we were doing an especially smart financial thing. I told DH I couldn't live any longer in the moldy apartment we were in and he said, well if we're going to move I want to live on the ocean. And I said, if we're going to live on the ocean we'll have to buy, the rents just keep going up and up (that was 1998). So we paid a then-huge $80,000 for 448 square feet on the ocean. We thought that we would move to the Daytona area in 2007 when he retired, because we saw many inexpensive condos there. In 2005 a guy stopped Cliff in the parking lot and asked about buying the condo. So we put it up for sale by owner and got $230,000 for it at what turned out to be the top of the housing bubble.

We took that cash and paid cash for a smaller oceanfront condo in the Daytona area, $161,000 at the top of the market. We used the rest to pay off all debts and had some left.

DH died of throat cancer in 2009. in 2012 I sold the oceanfront condo for $49,000 and took the cash and bought a two bedroom condo inland for $36,500. Now I rent out the master suite for income. If I had a morgage or rent and debt payments I could never get by since I haven't been able to get work.

The sale of the oceanfront condo generated a tax loss that is very helpful on my 1040. But I think if I added up the money we actually earned and paid onto the mortgage and ignored the market fluctuations, I doubt we really paid more on the mortgage of the original condo than I got for the second one when I sold it. And now if I live long enough the value of this condo ( I bought at the bottom) will rise and I or my heirs will make a profit on it.

larknm

4-17-13, 11:58am

Getting a PHD at my state university UT at Austin in the 1970's when it was almost free and I could teach there at the same time, which covered both my education and living expenses. Listening to the undergrad teacher who suggested I do that. Every job I was good at has come from that. Living in a cheap neighborhood in a cheap state (New Mexico). Studying Amy Dacysian, YMOYL, these Simple Living Network Forums and The Simple Dollar until I could apply what they say. Giving up most unnecessary expenses to pay off our HELOC (2nd mortgage for us) at a phenomenal rate--was paid off this week--I know it was phenomenal because the people at the credit union who had loaned us the money were astonished each month. Living in 1/2 our small house in winter to cut heat bills. Loving friendship and activities over things--this did not come automatically. This is a great question to think about, Pinkytoe, thanks for starting it.

Spartana

4-17-13, 2:06pm

Not having any debt ever accept for my first very modest home that was below my means. Living cheaply to save a big down payment to buy that and paying it off asap. Getting 2 temporary roommates to help pay the house off, maxing out all my available retirement savings and saving as much as possible, having a somewhat low paying government job that had a defined pension, one which I could add my military years too, and living well below my means no matter how low those means were. Joining the coast guard after high school and getting a very marketable job skill while in, and money for college once out. marrying a man who was just as frugal and debt-adverse as I am and having a financially easy divorce 17 years later. Not having kids (cute but expensive :-)!). Being a natural born minimalist who doesn't have any desire for "stuff". Selling my house and downsizing to both a cheaper but much nicer area, a cheaper but much nicer house, and being able to use the equity to fund my early retirement at age 42. And most importantly, loving the "small life and things" better than a big fancy life full of even middle-class expectations. I'm happier living small than living large.

San Onofre Guy

4-17-13, 4:49pm

In the early 80's borrowing student loan money at 3 percent and earning 15 percent in a money market. I earned 12 percent no risk. Don't forget that was when the prime was near 20 percent

ctg492

4-17-13, 5:37pm

Not having debt or mortgage, paying cash for everything.

JaneV2.0

4-17-13, 10:38pm

1) getting a college degree in the 1970s when it was still cheap!
2) Buying a modest ranch house in a desirable location
3) using equity from same house to buy a small foreclosure house in 2011 for cash which has now doubled in value
4) lucking into, then sticking with, a job with a pension
5) being happy with the basics in life - not a shopper nor envious of others with lots of material goods

I was thinking that all my financial decisions (or lack thereof) have been bad, but with the exception of #3, I've done all those (I'm happy with the basics, anyway). I feel better already. On the other hand, I didn't buy two separate properties that could have made me a lot of money, and I can throw cash away with the best of them.

ApatheticNoMore

4-17-13, 10:53pm

Yea, I don't think I've ever made any really good financial decisions. The big wins have been mostly luck (yep luck - right place at the right time and quite random), and all else is just slow plugging away (regularly contributing to retirement accounts etc.) and hoping. I was raised to be throughly allergic to credit though, guess that's mostly a good thing.

befree

4-18-13, 10:38am

Such interesting posts! My best "decision" wasn't really a decision, but an affinity for the attitude expressed in "Your Money or Your Life" - choose the simple life, don't bother keeping up with the Jones, and the visible trappings of success (big house, new car, namebrand clothes) are really not trappings, but traps. In hindsight, YMOYL was the "what" and Dave Ramsey's 7 steps was the "how" of it all.

Paige

4-20-13, 3:15pm

Best decisions: Contributing to Roth IRA, 403b, and defined contribution plan young and as much as possible and sticking with it other than a few years where I stopped to pay off debt (which I sort of did so bad decision). Also, I went against some investors philosophies: I invested while still paying off debt. As most people, I am in and out of debt yearly, so had we waited to pay off all of our debt or stopped investing every time we got debt, we never would have invested. Glad I listened to my instincts on that one. I just heard another investment commentator/podcaster/financial adviser, Liz Weston, who also advocates this plan.

catherine

4-20-13, 3:44pm

Best decision: To take a chance and ask the president of my company if I (a lowly typist) could take on a job that they never would have hired me for if they had just seen my resume and didn't know me. Increasing my income was by far the best financial decision I've made. In fact, it was the only good financial decision I've ever made.

flowerseverywhere

4-20-13, 3:55pm

Paying off the mortgage asap then moving to a much better neighborhood in a great school district and paying that off quickly

Buying cars for function and putting over 200,000 miles on them. Now only one car

Only having two kids

Tracking every penny spent for many years

Buying way fewer things than most but focusing on quality

Staying married and working out five and ten year plans and working towards those goals together

LilyB

4-21-13, 12:54pm

Marrying a man who is very frugal and who taught me to be also.

Inheriting a bit of rural property and building a modest home on it in the late 70's.

Swapped for a lot of stuff we needed instead of buying.

Borrowed farm/gardening equipment and household goods from neighbors and lent them what we owned.

Buying most of our cars used and keeping them until they had 100,000 to 200,000 miles on them.

Both of us took turns returning to school in the late 1970's...DH for his Masters and I to complete my BA and get my graduate certification in teaching. Back then college was far cheaper and DH's employer paid for a good portion of his degree.

Paid off our mortgage and consumer debt before we retired.

chrissieq

4-21-13, 6:44pm

I've been thinking a lot lately about ways we spent money in the past - regretting money spent which should have been saved or at least spent more thoughtfully. However, that is the past and can't be changed - only learned from.

Good things - married someone who didn't necessarily want to jump on the simple living bandwagon but has come along graciously, owning only one car - buying used, driving infrequently - he takes the bus to work and I walk, using more of the yard for a garden, paying off the mortgage early thanks to our inheritances and putting that amount of money into our IRAs, buying used clothes, no shopping as a entertainment, never carrying consumer debt.

Florence

4-21-13, 6:51pm

1. A good public school education followed by a degree from a state university. Graduated with no debt.
2. A degree in a field which was in demand and paid very well.
3. Learned early on how to live on a budget and never went into debt other than a mortgage.
4. Paid off the mortgage early.
5. Contributed maximum amount to 403b.
6. Learned from frugal, Great Depression era parents.

Tammy

4-21-13, 11:00pm

There's two types of good decisions: those that reduce spending and those that increase income. In the second category, best decisions I've made have been to say yes to all challenges and opportunities related to my career, including a cross country move. Riskier and more emotionally difficult at times, but it has paid off every time.

shadowmoss

4-22-13, 11:17am

citrine

4-22-13, 11:37am

Buying a condo before the boom and selling it at the height of it.
Using the monies allocated for my wedding to buy a house, renovate it, and have a wedding.
Starting my 401K and IRA contributions at the age of 24.

jennipurrr

4-23-13, 6:29pm

Well, I still have a long way to go, but so far...

Marrying a spouse with a solid work ethic, who is fairly content to live a simple life and over time developed financial skills (even if he did come with a bunch of student debt in the beginning.

Driving cars for 200k+ miles and then paying for the next car in cash.

Buying a small house close to work.

Taking out no debt for (when I am done) 3 degrees. DH is another story, but after we got together he got on board - his masters degree was paid for through tuition reimbursement.

Stumbling into a college major (completely by accident) that has always had solid job prospects and while I have had some interesting wanderings to get there, I have ended up in a job and field I enjoy, have fulfillment in the greater mission of my work, have lots of exciting technological developments I get to be a part of, and I am compensated at a decent rate of pay. I guess I should go back in time to pat my 19 year old self on the back for switching majors from psychology to management information systems because she liked to sell stuff on ebay.

clara24

5-9-13, 2:44am

Me too i am starting also now to save some money for my self when i get old.Before i am really into debt in fact i got some loan in Finland country at http://www.lainasto.fi/ and 1 more year i will be debt free on it.That good thing on getting loan in that place is that the interest is really low and you can save money while paying it.

Lainey

5-9-13, 9:05pm

Moving to Honduras for a couple of years to pay off debt. I don't think I would have paid if off for another decade without doing that. The lower cost of rent as well as little to no access to temptations and the Jones family had less than I did helped in that aspect as much as the higher take home pay (no taxes since I was living off-shore).

shadowmoss, can you tell us when you're planning to be back in the states (unless you are already and I missed it, or unless you'd rather not say ..)

Rachel

5-26-13, 5:05pm

• Going back to school and getting re-trained when I realized I didn't have the talent for my first career choice.
• Saving for retirement starting fairly early.
• Right now I hope that the money and time I'm spending on health and exercise will pay off in lower medical costs and short or no stay in a nursing home when I get older.

Kestrel

5-26-13, 6:09pm

1) Worked putting DH through college in the '60s while it was really cheap :D . We had #1 son before DH graduated and considered taking a student loan so I could stay home with him, but decided not to -- really don't know, still, if that was the right decision, but at least we didn't have any student loan to deal with.

2) Decided to build our own home, with our very own hands, in the mid-'70s, and while I was scared to death to risk it, it really paid off. Well built, well insulated, good design, etc (1500sqft) and even tho we financed 100% of it, we made a nice profit when we moved twelve years later. We went back to visit it two years ago, and it's still beautiful and in outstanding shape 35 years later. We did good.

3) Getting 100% out of debt, not as soon as we should have, but we did it nevertheless.

4) Buying our previous home (cash) in an extremely down market in a "depressed" area, but sold it six years later literally at the top of the market ... and the marked "crashed" within a month after we sold and moved. What good timing for us.

5) Not a conscious decision, really, but DH's career with the Federal Govt has been a blessing. And I worked there for 10 years, long enough to get an annuity as well. Even if we didn't earn as much a we could have perhaps earned elsewhere, we had the most wonderful life in the most beautiful National Forests and Parks in the West. How lucky we've been.

6) And, deciding to have only two children. We love our "boys" beyond all understanding <3 , but a large family would have killed us. We love our kids, and our grandkids, but ... well ... two was enough ... :D