It's important to be smart with your money, but inevitably, you'll make some mistakes. Fortunately, it's easier to learn from the mistakes of others than it is to deal with the damage when you make them yourself. In an effort to share our pain and help you avoid some potential regrets of your own, below you'll find three stories about some common money-related woes that our Fool contributors experienced during 2015.
Selena Maranjian: I moved in 2015, and in doing so, found that I had way more belongings than would comfortably (or attractively) fit in my new home. I had too many books, too many clothes, too many games, too many of lots of things. I did the smart thing a little -- I thinned out my stuff. I packed up lots of boxes of books and donated them to a local library. I packed up lots of boxes of clothing and donated them to a local charity. Still, it wasn't enough.
I ended up renting a storage unit. It's only $135 per month or so, which sometimes doesn't seem like that much. But multiply that times 12 months and I'm looking at a cash outlay of $1,620 -- per year. Ouch. Even worse, I'm now locked into paying that sum -- until I empty the space, which will be a big undertaking.
If you're considering renting a storage unit, ask yourself if there's any way you can avoid it. If you can donate belongings more aggressively, you can avoid paying for a unit and may be able to enjoy some tax deductions for your donations, too. If you sell many belongings, you can collect many dollars instead of spending them. And all of us might want to look into self-storage companies as possible investments for our portfolios, too, as they feature some great characteristics, such as recurring revenue and customers often not being able to easily empty their spaces.
Chuck Saletta: Like Selena, my family also moved in 2015 and can pin my biggest money regret squarely on that. We went from Cincinnati, Ohio, which was one of the lower-cost cities in the country, to Rhode Island, one of the higher-cost states to live in. Because of the move, we have way more money tied up in our home and less in an emergency fund than we'd like.
While we downsized our house, we still upsized the costs. Though our new house is about 1,000 square feet smaller than the one we left, it cost nearly $100,000 more. Additionally, we got a reasonable price for the area on the home only because it needed some tender loving care to make it comfortably habitable for our family of six vs. the widower who previously lived in it alone.
Add the higher costs of the home purchase to the costs of readying it for occupancy, and the move ate through our entire cash savings, including our emergency fund. We've started rebuilding it, but it has been a substantially slower process than we'd like as other surprise higher costs of living and new home start-up charges keep cropping up.
Moving is stressful enough on its own. Add in living in a higher cost-of-living location without an emergency fund, and the net result is our family's biggest money regret of 2015.
Dan Caplinger: My biggest regret for 2015 was being too conservative in keeping emergency funds available in a cash savings account. Most financial experts recommend that aspiring to keep three to six months' worth of expenses in an emergency fund is sufficient to cover an unexpected financial crisis like a job loss or major household or automotive expense. Yet as the bull market has aged and stocks have started to become more volatile, I found myself diverting money that I had ordinarily put toward my investing account into savings, pushing it above where it needed to be.
The overall stock market didn't have stellar returns in 2015, so I didn't miss out on as much potential profit as I might otherwise have. Nevertheless, I chose not to make some specific investments in individual stocks that performed very well over the past year.
The lesson here is that, if you really need money for short-term purposes, keeping it in an emergency fund is a good idea. For long-term money, though, letting nerves stop you from following your broader investment strategy can be a costly mistake. Having the discipline to know the difference is important if you want to maximize the returns of your entire investment portfolio over the long run.