The following is a blog swap post from Crystal at Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting in the fun stuff along the way. You check out my post at her site today too!
I have written before about the biggest financial mistake I ever made. My husband and I invested in a failing game store owned by a “friend” that ran it into the ground in less than a year. My husband and I lost about $15,000. Today’s post is all about what I would do over if given the chance.
Many Opportunities to Bail
I would probably have convinced my husband to avoid investing in a business that we knew very little about. I also wouldn’t have rushed in thinking that we could fix whatever was wrong simply because we could manage our own personal finances well. Young arrogance is a special sort of problem that I bet we would all like a chance to do over, right?
Lastly, I would not have thrown in an additional $9000 over 3 months after the first $6000 was sucked up like water. Yep, we had a lot of chances to lose a lot less but failed to take any of them until we hit our agreed upon limit of $15,000.
Could Have Been Worse
Of course, hindsight is 20/20. A 23 year-old with savings is simply not as experienced as they will be down the road. Who knows, maybe losing that $15,000 right before we bought our house saved us from getting a larger mortgage. I might not have fought as hard for $114,000 price we ended up getting on a foreclosure. It may have kept us from investing even more in our 30’s into an even worse business venture and hurting our early retirement prospects instead of simply making home renovations more difficult. In short, it could have been worse.
How I Try to View It Now
$15,000 ended up being the price we paid for a small business education. I learned that you should get all of the details up front because even friends twist the truth. I learned that a business is only as good as the person running it – all of the hours I spent balancing the checkbook meant nothing compared to the bad business decisions that our “friend” made daily on the store’s behalf. Good thing I was not involved with the taxes–even online tax software couldn’t rescue us from the poor decisions. I learned that my husband and I work very well together. Finally, I learned that I seem to hold grudges way longer than my husband does. He’s pretty much over this since it happened 4 years ago but I still want to slap a lady in the face…so I guess I also learned that I have anger issues…
Overall, I wish we didn’t have to lose $15,000 to learn a few big life lessons. I am glad our lives weren’t ruined by it and that we didn’t allow ourselves to lose more, but I will probably always regret it just a bit. I know that I will be extremely lucky in life if that is the biggest financial mistake we ever make, so I will try to keep that in mind.
What is the biggest financial mistake you ever made? How would you do it over?
It is difficult to evaluate the prospects of a startup or business if you’re not intimately familiar with the industry and the business model. I’ve forgone investing in some friends’ startups that I thought would never make it and would become cash pits that are now profitable, have had buy out offers, and are poised for incredible growth. Hindsight is 20/20 but at least you learned some valuable lessons.
I just wish we had also “forgone investing in some friends’ startups”, lol. Thanks for the comment!
[...] is a great blog swap post from fellow Yakezie member, Super Frugalette. You can check out my financial do over at her blog today as [...]
Sounds like you learned a great lesson here, but an expensive one. I’m glad that I didnt have that kind of money to invest at that age, or I probably would have done something stupid with it as well.
I think it’s always really hard to tell our friends no. I’ve heard it said before that mixing finances and friendship is a bad idea and haven’t done it myself – I just worry that if something negative were to take place, I’d hold it against my friend.
I don’t know if you would, but I do. She wasn’t a close friend, more like a fun acquaintance…that was the main problem…
Ouch! That is one expensive learning experience! I do the “could have been worse” thinking, too. Still. Ouch.
Yeah, “could have been worse” didn’t really work for me for a couple of years…oh well, I am better now.
That’s a great experience and valuable, as sometimes we can learn a lot from failure if it makes a personal impact on us and we’re objective about it. Better to make that mistake at 23 than at 43!
[...] in the Fun Stuff shares her biggest financial mistake and potential do-over at Super Frugalette: Investing in a Friend’s Business. Its a good, but costly lesson learned about small business.3. Eric from Narrow Bridge Finance [...]
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Crystal, I firmly believe that a mistake like that is worth it’s weight in gold. Look at it a tuition in the school of life. Nicely written.
[...] in the Fun Stuff shares her biggest financial mistake and potential do-over at Super Frugalette: Investing in a Friend’s Business. Its a good, but costly lesson learned about small [...]
I think it is so wise to conclude that your “life wasn’t ruined by it”. The way I see it, you could have been unemployed and “lost $15,000…just from being unemployed for six or so months.
[...] financial mistake I ever made. My husband and I invested in a failing game store and lost $ 15000. budgeting – Google Blog Search This entry was posted in Personal Finance and tagged biggest, Budgeting, Financial, mistake, [...]
What a nightmare! It must be so difficult juxtaposing business and friendship at the best of times; you’re invested emotionally as well as financially. I would imagine that it’s hard to be wholly rational. After all, you trust your friend and their decision-making, so you probably feel that negates the need for all of the cold hard facts. A good lesson and a very interesting post.
Life sure does give out expensive lessons! I am glad you see the positive side of seeing this as a cheap lesson to learn early on in life. There are many people who had to learn this the hard way with their 401k!
[...] in the Fun Stuff shares her biggest financial mistake and potential do-over at Super Frugalette: Investing in a Friend’s Business. Its a good, but costly lesson learned about small [...]
[...] in the Fun Stuff shares her biggest financial mistake and potential do-over at Super Frugalette: Investing in a Friend’s Business. Its a good, but costly lesson learned about small [...]
[...] in the Fun Stuff shares her biggest financial mistake and potential do-over at Super Frugalette: Investing in a Friend’s Business. Its a good, but costly lesson learned about small [...]