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For every success we have had on our financial independence journey, there have been plenty of failures or regrets.
For example, my wife and I have successfully built a $6,500+ income stream from our dividend income portfolio.
This sustainable income stream will continue to grow year after year … even without any work on our part.
On the other hand, I have spent a good bit of money (and time) trying to start various websites to earn side income. To date, none of these sites have turned a profit and most have been abandoned.
So while we have had many successes when it comes to our personal finances, we have had just as many hiccups along the way.
My Top 10 Financial Regrets
Today … instead of writing about what is going well on our path to financial independence, I thought I would list our top 10 regrets over the years … in no particular order.
See if any of our financial mistakes are on your list too!
1 – Waiting too Long to Focus on FIRE
I get jealous when I read about people in their early 30’s already being financially independent and retiring early.
I love reading about these stories … they are motivating. But I feel I have wasted 20 years or so … not worrying so much about financial independence.
Don’t get me wrong … my wife and I could be in much worse shape right now. We have been investing for years … but we could have done better … much better.
So now into my mid-40’s … I don’t have time on my side like I would have 20 years ago.
I think early retirement is still possible in the next 10 years, but we will need to be more aggressive now that time is not on our side.
On a positive note … I am going to make it my priority to teach my children about financial independence while they are young. So then when they are out in the real world on their own … they have the knowledge to decide if FIRE is for them.
2 – Ignoring High Retirement Account Fee’s
I wrote a post on this a while back … about how I ignored several of my employer sponsored retirement accounts after I left past jobs.
Up until a few months ago … I had ignored these accounts and they make up a good chunk of our net worth!
Many of these retirement accounts had been left to sit un-managed for over 10 years … just racking up fee’s.
The goods news is that something finally smacked me in the face and told me to wake the heck up.
I recently reviewed our accounts and realized we were paying high fee’s (1.17% and 1.14% were the highest) for funds that were not outperforming basic index funds.
The good news is that I have finally rolled over most of these accounts and have picked better index and target mutual funds … that have very low cost.
Do yourself a favor (if you haven’t already) … review the fee’s being charged on your retirement accounts.
3 – Wasting Money Trading Options
Back when I was younger, just married, and had no kids … I took more risks when it came to investing.
Early on after getting my Master’s degree and getting my first job with a decent salary … I started trading stock options.
I was (and still am) fascinated by how they work. And to be honest, how much money you could make (and lose) from trading them.
This was around the time when day trading became popular. I figured, why day trade stocks when I can day trade call options?
And it worked really well for me for a while.
In order to get the capital to start trading options, I cashed out several mutual funds and began buying and selling options (just calls no puts) contracts.
Trading went very well early on. I soon had doubled my investment and had over $60,000 worth of assets in less than 3 months! I felt like a rock-star.
Then it all came tumbling down … and down … and down. I refused to give up, but in the end I lost the $30,000 I had profited … along with most of my initial $30,000 investment.
If I would have known better and put that $30K into a low-cost index fund … I would have had a very nice retirement nest egg built up already.
Even today I still get the itch to start trading options again … and must remind myself to learn from the past.
4 – Not Focusing Enough on Pre-Tax Accounts
Between our emergency fund, which would cover 1 year of our spending, and our dividend income portfolio … we are doing a good job of building up our taxable accounts.
Our emergency fund is setup in a CD ladder that earns a low interest rate but is easily accessible in case we need it through the year. And any interest we earn from it is taxed.
Our dividend growth portfolio currently will earn us $3,400 in extra income this year that will be taxed.
We very rarely sell a stock in this portfolio, so paying taxes on capital gains are not much of a concern. But some of those dividends will always be taxed.
Over the last 4 to 5 years, almost all of our focus has been on building up these taxable accounts. And while those accounts are in good shape, we have ignored our pre-tax accounts like an IRA or 401k.
Prior to my current job, we did save up a good nest egg in company sponsored 401k plans. However, my current job does not offer any company match, so we have not invested in the 401k.
UPDATE – Since writing this post, I have realized most of our dividends are qualified and not taxed. Plus with our current tax optimization strategy, dividend income is not going to push our taxes any higher.
5 – Not Investing in a Rental Property
One of my biggest regrets over the years is never investing in a rental property.
Most of my focus and research has been on investing all our available savings into dividend paying stocks.
We have built up a nice side income stream that will grow and grow over the years from dividend stocks. But what if we would have put some of that money and research into a rental property?
Nothing is certain, but the return on investment would have likely been higher and we would have diversified our side income streams.
The good news is that there is still time to invest in a rental property. Over the past couple of months, I have started researching potential rental properties while trying to learn tips from those who have had success with real estate.
Maybe one day my wife and I will take a calculated risk on buying our first rental property.
6 – Never Starting That Business
Another big regret is never starting an actual business.
We have our dividend income stream and a couple of blogs … but none of them are an actual business. Now the blog(s) may eventually become a business … but none of them are currently earning any income.
I have had so many ideas in my head around different businesses to start … but have never acted on any of them out of fear of failing.
Of course, some of the ideas I have had probably wouldn’t have made any money … but I will never know until I try.
Just like buying a rental property … there is still time for me to start a business (or two). I just want to make sure I have a solid idea with plenty of due diligence to back it up.
7 – Bought too Much Home
We have been in our current home now for almost 10 years. It is the second home we have owned, after selling our first one and moving to another state for work.
Initially when we started out home shopping, we realized the cost of living was much lower in our new state. So … of course … we bought a much bigger home than we really needed.
Our family of 5 lives comfortably in a 3,350 square foot home. We have a 30-year mortgage, with a reasonable interest rate.
We can certainly “afford” this home. But I can’t help but wonder how much money we would have saved if we would have downsized a bit 10 years ago.
We live in a nice neighborhood with great neighbors. Our yard is big enough for the kids to play in. We feel safe here and it is a good place to raise our kids.
But … buying a smaller home a decade ago would have meant lower mortgage payments. Likely lower taxes too … although that would depend on the location and city we picked. Fewer utility bills for all those years. We have a couple hundred square feet that hardly ever get used.
Of course, we could always sell our home and look for something smaller. But with 3 kids and busy schedules … not sure I am read for that stress!
If I could go back in time (before kids), I definitely would have taken advantage of house hacking.
8 – Spent too Much Money (and Time) on Transportation
Picking up where I left off on our home … I drive too far to work.
It is a 60 mile round trip to my work, which takes about 50 minutes (with no traffic) one way. So I am spending 1.5 hours or more out of my work day driving.
If we would have bought that smaller house closer to my work … then we may have been able to keep 2 different expenses low.
I estimate that I drive 11,000 miles per year to work. Taking the IRS mileage rate of 53.5 cents per mile (2017), my drive is costing us about $5,885 extra per year.
Plus, the insurance on the vehicle. If I was able to bike or take public transportation to work … then we wouldn’t need a second car. Unfortunately, neither are an option for me right now.
I have also estimated that if I didn’t have to drive (and worked from home), I would save 11.75 days a year. Wow, I spend almost 12 days of every year in the car driving to work!
One of the first things I want to teach my kids about personal finance is that hacking your housing and transportation expenses can be a real game changer!
9 – Jumping from One Project to the Next
So despite never officially starting a business, I have started many side hustles.
I tried to get into freelance writing a while back. Made a few dollars but got bored at it. I didn’t really like the topics I was assigned to write about.
Years before that, I tried to start an on-line store through Shopify. That lasted about a month before giving up.
I have started and abandoned many different blogs over the years … all with the intent to generate side income.
For extra cash, I have tried taking surveys (boring), Amazon Turk (heck no), selling on Fulfillment by Amazon (I don’t like to ship stuff), selling on eBay (yeah I don’t like to ship stuff), investing in Peer Lending (too risky), trading options (even riskier), building CD ladders (not risky enough), and plenty of other far fetched ideas I hate to mention.
Other than building a sustainable dividend income portfolio of stocks, I have not stuck with too many projects.
I have never been good at focusing in on a project and committing to it.
I get sidetracked with meaningless tasks trying to figure out everything at once. Like focusing hours and hours on blog themes instead of actually writing content.
And while the projects I mentioned may not be ideal for me … I just wish I would have committed more time and effort to a few of them. At least enough time for me to figure out for sure if they weren’t good side income options for me.
10 – Getting a Pool
I know … just when you were probably thinking they bought too big of a house … we put in a pool too!
Not long after we moved into our home, we decided to put in an in-ground pool. Personally, I feel this was one of the worst financial decisions we ever made … and we got the money to put the pool in as a gift. So we only ended up paying for about $5,000 worth the costs.
Having an in-ground pool at your home can be fun … don’t get me wrong. The kids love it for the first 2 months of every summer … then they get bored of it.
Despite only paying $5K out of pocket for the pool installation, they are an ongoing money drain. Chemicals, winterizing, the time it takes to keep the pool clean … it gets tiring and expensive.
Then when the pump suddenly goes out after 5 years … you don’t have many options other than putting in a new pump. Next year, we will need a new liner … yup another couple thousand dollars down the drain.
If we had to go back and do it all over again … I would have declined the offer for money to put in a pool. It just isn’t worth the return on investment.
When I think about it … the pool was a bigger financial regret than even buying a house that is too big!
What personal financial regrets do you have? I would love to hear from others to see if any of their personal finance regrets are on my list.