The 3 Biggest Financial Mistakes I've Made in My Life (So Far)

I can't say I'm proud of my financial screw-ups, but I can't imagine where I would be without them. As terrible as each situation felt at the time, those blunders are one of the reasons I'm good with money now. And because I've made so many mistakes, I'm far less judgmental toward others as they find their way.

I'm not done living yet, so I'm sure there are a few more financial modifications in my future. In the meantime, here are three of my most ridiculous belly flops.

1. Not fearing debt

Imagine this: It's 1995 and I'm putting the finishing touches on a new home in Michigan. After years of being broke college students, my husband and I could finally afford to loosen the purse strings a little. And boy, did I ever let loose. I couldn't pass a sale without buying something and had zero qualms about pulling out a credit card to buy whatever struck my fancy.

The reality of compound interest

The problem was, the average interest rate on credit cards in 1995 was 16%, and I had no trouble carrying debt from one month to the next. After all, we always made our payments.

Man, was that naive (or ignorant, foolish, short-sighted -- insert your own adjective here).

Let's say I spent $2,500 that December. If I made a $75 payment to my credit card company each month, it would've taken me 45 months to pay the card off. Worse, my $2,500 worth of purchases would end up costing $3,341 once interest was factored in.

What are the odds anyone remembers what I gave them for Christmas or how fabulous the dinner party was nearly four years later?

What I hope you do instead: I still use credit cards, but I pay them off in full before the monthly billing cycle is up. If you're not doing this, it's something to work toward. I can't begin to tell you how much stress it will lift from your shoulders.

2. Having zero patience

It took me decades to develop patience. I couldn't wait to move out of our starter home and into a big house we couldn't afford. I couldn't stand driving an old car, so I'd buy a new one before we were financially ready. I couldn't even wait to adopt a puppy until we had enough cash to purchase pet insurance.

Every single time I've made a financial decision based on the idea that "I can't wait," it bites me in the butt. But I eventually learned that waiting can be exciting. I almost always enjoy fantasizing about our next vacation more than the trip itself, and have adopted the same mindset when I want to spend money we don't have.

If there's not enough extra sitting in our checking account to pay for something, I look at our budget and estimate how long it will be before the money is there. I don't touch our investments or emergency savings accounts. I wait.

But it's the wait I've come to enjoy. Just like planning for a vacation, planning for a new patio set gives me time to fantasize about what it will be like. I can't tell you how many times I've been sure I wanted something, only to change my mind about what I wanted as I waited.

What I hope you do instead: If you have trouble delaying gratification, try a practice run. Think of something you want, then don't buy it. Instead, save up. You may find you enjoy the dreaming part most.

3. Thinking I would never age

I suspect you're sick of hearing about the importance of investing as soon as you get a job. I won't pile on. I never felt a burning desire to invest for retirement when I was young and arthritis-free. And honestly, it's one of my biggest regrets.

Because I waited for evidence that we all age, I've spent the past years playing catch up. That means investing far more than we would have needed to if I started earlier. Because such a large portion of our incomes now goes to retirement accounts, we're not able to take all the trips we dream of or buy the classic car my husband has always wanted.

In other words, we're living more frugally now because I spent like there was no tomorrow when I should have been investing.

What I hope you do instead: Starting now, I hope you'll sock money away so that compound interest can do its thing. Consider this: If you were to invest $300 per month (roughly $10 a day) for the next 20 years, and that investment earned a realistic average of 7% annually, you would have approximately $148,800 extra. It's not enough to retire on, but it is enough to add to your financial security.

Australian palliative caregiver Bronnie Ware wrote a book called The Top Five Regrets of the Dying, and interestingly, money was nowhere on the list. The five most common wishes people had as they neared death were:

• That they'd lived life true to themselves rather than what others expected of them.
• That they hadn't worked so hard.
• That they'd been courageous enough to express their feelings.
• That they'd stayed in touch with their friends.
• That they'd allowed themselves to be happier.

What I've learned along the way is that money doesn't buy happiness, but it can help fund the things that do. For example, staying out of debt means not having to work so hard, and visiting loved ones is easier when you've saved enough money to cover the trips.

In the end, life is about the people we love and the lessons we learn. And let's face it, mistakes teach us more than we'd like to admit.