Money mistakes, we all make them

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Savings

MoneyPlus Features Team

18th April 2017 at 7:30am

Like with anything in life, blunders are bound to happen. And when it comes to money matters, mistakes are often made.

I know I’ve made a good few, one being spending inheritance cash on a two week trip to a party resort. But I was 18 and foolish, that’s my excuse and I am sticking to it!

But it got me thinking, if I have made mistakes I have learned from, perhaps others around me have too. And maybe I, and you, can learn from others so that we can avoid these money mishaps and lead a financial life relatively free of failure.

So here are a few terrible tales from my friends. Stories of spending, debt and financial fails.

Jackie and impulse buying

‘Well, I once went out for a coffee, bumped into a friend and accompanied her on the way to buy a horse.

I did wonder at the time why on earth she would want such a thing, so much money to fork out when you could just head up to some public stable on a weekend instead like I did with the kids every week.

I suspected the horse would cost her a mere £2000, which you may think isn’t too bad but the fees and looking after it until it retires would set her back £45,000 at very least!

I wouldn’t be willing to pay that much, at the time I had my eye on a cottage for £48,000 and didn’t go in for it as I thought that was too expensive, so the idea of paying that much for a pet seemed ludicrous.

Soon after heading up to see what was on offer my reserve crumbled, I just fell in love with a dark bay gelding with a skittish personality and a desire to gallop.

I bought him straight away.

That was an expensive coffee after all!

Stephen and waiting too long to switch

‘Switching energy provider is something I’ve always put off as one, I didn’t think we’d save that much and two, I thought it was going to be long involved process which I don’t really have the time or patience for.

I got an email from my supplier saying they were putting up their tariff which was the final straw so I took action, I just couldn’t put it off any longer. I used the u-switch website and it was dead easy – I went with a little company and I am actually saving a small fortune based on last year’s actual fuel usage in my house.

The switch was all done online and part of the deal was upgrading to smart meter so we can actually keep an eye on where the fuel usage is happening as we had no idea.

It’s like having a new toy, we’re constantly keeping an eye on our bit of new tech and making sure we’re keeping our consumption under control. This is especially important as we’ve just extended our house so there’s more to heat. I just wish I’d done it so much sooner.’

Stephen is saving a whopping £500 per year, that’s a huge £10,000 saving over the next 20 years. That money could be spent on an amazing trip abroad with his loved ones or to buy that shiny new car he’s had his eye on.

If you want to save that kind of cash in a matter of minutes head to u-switch today.

Elizabeth and the debt cycle

‘It was a good few years ago and I had gotten myself in to a load of debt. With a young child to pay for and financial support from her father being non-existent I should have tried to curb my spending.

Instead I found solace in the world of credit cards.

Soon I was in so much debt I couldn’t ignore it, and instead of getting help I decided it would be a good idea to pay it off with a bank loan.

And so the spiral continued, I felt like I just couldn’t rein it in, couldn’t stop the rollercoaster of spending and debt I was on.

To make matters worse I then took out secured loans to pay off the original loans, I was getting in to so much debt I just couldn’t see a way out.

There was one morning the post arrived and I flicked through, I was about to put the items I knew very well were from debt collectors in a drawer out of sight as I always did.

Instead that day I looked through the pile of brown paper envelopes, and I just knew I couldn’t ignore it forever. I couldn’t put it off, I couldn’t go on like this.

That’s when I took control and contacted citizen’s advice. They got in touch with the creditors to arrange lesser payments and to stop interest.

But it was a double edged sword as doing this blacklists you and wrecks your credit score.

I now can’t take out any loans. Creditors won’t even consider me when it comes to getting finance for things like cars or holidays. To say that makes things difficult would be a huge understatement.

If I could go back I would never have taken out a credit card with a limit higher than I could afford and would never have even looked in the direction of creditors who offer high interest loans.

Luckily my relationships with friends and family stayed strong, and got me through the tough times.  But I have friends whose marriages ended because they got into situations like mine. In a way I’d say I’m lucky in that respect.’

Blacklisting is a really serious situation to be in, but for Elizabeth it was the only way out. If you’re finding yourself getting in to more debt to pay off other creditors, take action. Seek help from Citizens Advice and take back control.

Susie and the repayment plan that just wasn’t right for her

‘This really has to be one of my longest lasting financial mistakes. I was 24 and had a 3 year old child at the time. I was with my new partner and everything was going great, so we decided we were ready to buy, we weren’t.

We didn’t really know what we were doing and took out an interest only mortgage, not realising that the interest payments alone were all that we could afford and as such none of the capital of the property would be paid off.

We did this for years, buried our heads in the sand and tried not to think too much about it, which made things so much worse as we simply weren’t saving anything to pay off the capital. As we got older we realised we were pretty much renting our property and building a huge debt at the same time.

It would have been so much easier if we had just taken a capital repayment mortgage from the start as we’re forking out three and a half times more per month now to catch up on payments and pay off the mortgage.

We thought times were hard back then, they’re even harder now.’

Interest only mortgages may be right for some, but it really does pay to do your research. Take a look at the Home Owners Alliance for information on what type of mortgage is a good fit for you.

Mistakes happen

We’ve all made mistakes, my silly inheritance spend flushed £2000 down the drain. But I did learn from that mishap, and it’ll stay with me for the rest of my life, stopping me from making bad financial decisions. And if I think of it like that, £2000 for 40 years’ worth of good decision making equates to £50 a year.

I’d pay that, wouldn’t you?

Everyone is capable of financial mishaps, and some can have more lasting effects than others. But hopefully by listening to the experiences of those around us and learning from our own mistakes, you and I can make savvier decisions to save cash and keep our finances on track.