Personal finance bloggers confess their biggest money mistakes
By Emma Lunn
Just because you're an expert in something doesn't make you infallible.
In fact, oftentimes it is the lessons learned from mistakes that can lend credibility to your cause.
We asked some personal finance bloggers to reveal their biggest financial missteps -- and, more importantly, what they learned from them.
before leaping into an investment
Annie Shaw is a freelance personal finance journalist and founder of CashQuestions.com. Her biggest mistake was buying technology stocks back in the 1990s at the top of the market.
"I'd received a newsletter' from a well-known financial firm urging me to put tech stocks into my ISA," she says. "But my £3,000 investment was cashed in a year or two ago for something around £300."
Lesson learned: Shaw says she learned that if tips from financial firms are being featured in a magazine or newsletter, the market has likely already peaked. The only one making money out of the tip, therefore, will be the firm itself.
"Always do your own research and remember that if something looks too good to be true, it probably is too good to be true," Shaw says.
be too quick to jump on a deal
Iona Bain runs Iona's Young Money Blog, which aims to help young people get the most out of their finances and understand financial issues affecting their generation.
Bain made her biggest money mistake recently, when she switched her mobile phone contract from O2 to a cheaper one with Talkmobile with the intention of saving money. Her new plan had fewer minutes, but allowed for more text messages and data usage. She calculated she'd save about £40 a month -- but underestimated how many calls she would need to make, and is now paying over the odds for her mobile.
"My biggest mistake was making the switch when I was in the process of becoming full-time freelance journalist," Bain says. "I had to make a lot of calls in that time. By the time I had figured out how to check my balance, I had already gone about £30 over my minutes allowance."
Lesson learned: Bain still recommends shopping around for a new mobile contract - and switching to save money.
"But you have to be very careful when selecting your package and watch your minutes, text, data like a hawk," she says.
‘no' to payday loans
Steve Perry was a normal guy until he decided to take out a payday loan. That one loan spiralled into more than 60 payday loans that he took out pay off the original debt. Perry set up a blog, SayNoToPaydayLoans.co.uk, to warn others about the dangers of short-term, high-interest credit.
"A stupid £250 loan for a short break
somehow turned itself into a near £22,000 repayment, after borrowing from a
dozen lenders a combined total of 64 times in 18
months," Perry says. "The problem, along with my own stupidity, is the lenders involved had no intention of acting responsibly themselves, otherwise they would have ended it sooner, rather than waiting for me to finally default."
Lesson learned: Never be too embarrassed about your debt to seek help, Perry advises. Instead, be proactive and tackle the debt head-on before it becomes too big to fight.
"Rather than facing my fears, I curled up in a corner," Perry says.
Expect the unexpected
Jay Lewis is one of the founders of SterlingEffort.com, a blog that aims to help people without a financial education understand their money.
Lewis' biggest money mistake was buying a Mazda RX-7 car in March 2001, a purchase that cost him more than he had bargained for. He figured the car had depreciated as much as it was going to, and that selling it a couple of years later for the same amount he paid was a "safe bet."
"I have a good understanding of the car market," Lewis says. "However, I couldn't have foreseen the value of the car dropping by nearly £2,000 within six months of me buying it, which it did. I realised my mistake and, in the end, it took three months to sell, for a loss of £1,700. Investment fail."
Lesson learned: If you're going to gamble, never bet more than you're comfortable losing.
"The moral of the story is that if you cannot guarantee a good thing, make sure you can afford to lose all of the money invested or held in it," Lewis says. "Although I didn't want to lose the amount I did, it didn't put me into debt or force me to break into savings."
Published: 12 April 2012
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