Last week, Adam of Your Money Relationship posted “Money Genie: I Grant You 3 Financial Do-Overs” in which he offers the three things he’d do differently if he could go back in time. Never signing up for credit cards, funding his Roth every year, and not taking on student debt are his three. Somer excellent dialog surrounding each wish and the invitation that others take on the same exercise, discussing what they’d change. The bloggers taking on this gedanken experiment included Mrs. Micah, Budgets are Sexy, and Free Money Finance. Drop a note if you’re a PF blogger and want to be added to this list.
First, what I don’t regret – the loans I racked up during college. In the early 80’s, the minimum wage was $3/hr. I did work a bit, but still needed to balance work, study and play. Anticipating a decent wage, I figured my older self would be able to pay the loans back with far fewer hours worked and I wanted to give that guy some memories he’d enjoy. That bet went my way, no regrets there.
Mistake/Do-over #1 – In college I somehow convinced myself (such authors as Robert Allen of “No Money Down” fame) that I was going to make my fortune in rental property. I bought into the 86-89 upturn, and then the crash came. Ouch. At one point I owed nearly $70K on a property worth only $20K. I worked my way out of this mess, selling 3 of the 4 properties I owned over the years, and still have one condo I rent out. Anyone looking to get into rentals should get a copy of the movie “Pacific Heights.”
Mistake/Do-over #2 – The Tech Bubble of 2000. I had learned enough about finance (got my MBA in ’93) to understand some sophisticated financial instruments. I hadn’t yet heard of the Black Swan, but I did have a keen sense of things that blow up, financially. So I developed a strategy that started with a small investment, less than 2% of our worth, in options. Long story short, I came out better in the end than going in, but had a ride I wish I got off mid cycle. Think 1987, times 10. That was the tech bubble for me. (Lest anyone forget, the Dow ended up about 5% including dividends for the year, but during the year it was up over 40% at one point.)
Mistake/Do-over #3 – I was having a Denny Crane/ Alan Shore moment with a friend of mine about two and a half years back, the interest rates had bottomed and were on the rise. We were discussing the very topic of ARMs and option ARMs. Yup, a few beers and we get pretty crazy. Had we given more thought to this, there was a lot of money to be had, not that I’d have sold my main investments, I am a Stocks for the Long Run believer, but I had learned enough from the options trading and success of 2000 that I’d be happier today. I should have gone with my gut.
What are YOUR three financial do-over wishes?