I've been a little obsessed with personal finance for a long time, which is largely why I spend my days writing about money. But even though I've tried to be responsible and avoid making errors in my financial management, I've fallen victim to temptation lots of times, and it's led me to make a few big money mistakes.
In fact, three of the biggest errors I've made all had to do with getting too deeply into debt.
A lot of effort is made to encourage Americans to buy stuff on credit, so it's easy to make these mistakes. But hopefully you can learn from the things I did wrong and avoid similar issues.
1. Buying a house with less than 20% down
When I first got married, my husband and I were really eager to buy a house. So eager that we did so with just a 10% down payment. And we did this shortly before property values fell dramatically in Florida during the 2008 financial crisis.
For years, we were stuck with paying private mortgage insurance, which meant we wasted thousands of dollars we could have used for other things.
And we were lucky we were able to keep the house and continue paying the mortgage because we couldn't have easily refinanced or sold it for enough to pay off the loan, since the house was worth less than we owed.
Ultimately, the market recovered, we sold the house, and we bought a different one with a larger down payment. But it was a tense (and expensive) couple of years before that happened.
2. Taking out too many student loans
Student loans are a helpful tool you can use to increase your earning power when you use them correctly. Unfortunately, I didn't do the smart thing: Borrowing the minimum necessary to fund my education. Instead, I took out expensive private loans to pay for a nice apartment and even to buy a car.
I ended up graduating from law school with six-figure student loan debt. Paying off what I owed necessitated moving back home for a while, years of sacrifice, and refinancing a mortgage later in life.
3. Borrowing to buy an expensive car
When I first started earning good money from my job, I decided to buy an expensive luxury car. The car payments were high and maintenance costs were astronomical since every time I needed tires or brakes, I had to pay premium prices and go to a special mechanic. I also had to pay a lot in insurance premiums since the car was more valuable.
The costs made it much more difficult to meet my other financial goals and invest as much as I wanted to. And the thrill of driving the fancy car wore off well before the last payment was due.
I couldn't wait to ultimately sell the car, and ever since I've bought inexpensive used vehicles that any mechanic can repair without specialized parts.
Don't make the money mistakes I did
No one is perfect when it comes to managing money, and it's really easy to fall into the trap of excess consumerism in a society built around encouraging you to buy.
The good news is, I recovered from my money mistakes. And if you've made similar ones, you can get back on track, too. If you haven't made these errors, hopefully reading about my experience will help you avoid them.