Regular readers of this site know that the BITA family is accelerating towards financial independence as fast as we possibly can. In 2017 we have saved and invested north of $260,000 and we don’t intend to slow down until we reach the finish line.
What regular readers don’t know are the sordid and sorry details of our financial past. I’ve hinted at our past financial ineptness more than once, but I have never laid it out in all its awful glory. I shall do so today.
Why am I opening up the closet doors and taking the old skeletons out for a spin? Not because I enjoy dwelling on my idiocy. Not because I want to convince the teeming hordes of my fervent followers that I, the savvy financial blogger, have feet of clay. Not because I want to give you a belly laugh at my expense.
I’m doing it in the hopes that it will help somebody out there.
If you have ever roamed the universe of financial bloggers and found yourself disheartened instead of inspired, this opening of the kimono is for you.
If you have ever thought to yourself, I can’t do this. Figuring out how investing works is too much work, or too hard for me, this peek into our murky past is for you.
If you can’t believe that financial independence could be something that you could dare to pursue, allow me to prove you dead wrong.
If I could turn it around, believe me, so can you.
Financial Mistake #1: My First Car Purchase
Let’s start at the very beginning. I have it on good authority that this is a very good place to start. The beginning, for the purposes of our tale today, shall be 2008, the year I immigrated to the land of applehood and mother’s pie.
I bought my very first car, a 2009 Honda Civic. Shall we count the ways in which I did this wrong?
- I bought a new car.
- I visited one dealership, the one closest to my apartment, and bought the first car I looked at.
- I did not bargain.
- I put a few thousand down, and took out a loan at a handsome 6.49% for the rest.
- I bought extended warranty on the car.
Why did I make these godawful decisions? In no particular order, the reasons were:
- I did not give a flying fuck about my money.
- I had been in this country for a month. I had no credit history and nobody would give me a half decent interest rate. I did not come here with that much money, so I couldn’t afford to put more down.
- I felt my life was changing at breakneck speed and I did not have the energy nor the inclination to spend one second more on the purchase of a car than I actually had to.
Financial Mistake #2: My Move to San Francisco
My first year in the U.S. I lived in the lovely, soul-crushing suburb of Palo Alto. I shared an apartment with an old friend from India. Then he moved to Boston, and I decided that if I spent another minute in suburbia, I would be in grave danger of turning into a mass murderer. So I decided to move to the city of San Francisco.
I also decided that I would not consider roommates. I would live by myself in one of the most expensive cities in the world. So I moved into a 460 square foot studio that cost me $1,565 a month in rent. Utilities were extra. Parking was another $150 a month. Remember my precious Honda, of the 6.49% fame? I was taking the train into work every day, but I felt the need to hold on to the Honda like a security blanket. A very expensive blanket that cost me $150 a month in parking. I finally sold the Honda a little over a year after I had lived in San Francisco.
I looked at the website of my old apartment complex when I wrote this post and found a similar studio available for rent right now. Mine didn’t have that triangular portion on the right – the rest of the floor plan is identical. The current price makes my 2010 rent seem like a steal.
Financial Mistake #3: The Selling of the Honda
Not content with my massively wasteful Honda purchase, I decided to make the sale of the car as spectacularly stupid as the purchase.
A colleague who had recently immigrated to the U.S. from India offered to buy the car. He bemoaned the fact that all the loans he was applying for were at ridiculous rates. For obvious reasons, his plight hit a nerve. He made me an offer slightly below the KBB value of the car, and asked if he could pay me in 6 equal monthly installments interest-free, because he didn’t have the money right then.
Guess what my response was?
I may be the only person in the history of the world who has managed to convert a trusty Civic into a money sink.
Financial Mistake #4: The Lack Of Investing
Not only was I making fantastic lifestyle choices with respect to two of my largest categories of expenses, rent and transportation, I was making even more fantabulous choices with the rest of my money.
Or rather, I was making no choices at all. Whatever I did not spend sat in my bank account. From 2008 to February 2016 I let my money gather dust in a savings account. Put that in your pipe and smoke it. That is pretty much what I was doing with the money at the time.
The one saving grace was my 401k. My first roommate (the old friend from India) gave me an investing book to read when I first moved here. I refused to read it. I can’t even remember what it was called. He then earmarked 4 chapters for me to read. No horse ever lead to water was more stubborn than I. I treated the book worse than a leper. He finally gave up and told me that he would stop nagging me if I promised to max my 401k. So I did. Every single year from 2009 to now I have maxed that one account, and I am ever so grateful for that one silver lining on my humongous financial cloud.
I met Mr. BITA in 2009, we started dating in 2010, got married in 2013, and it was not until 2014 that Mr. BITA started contributing to (and maxing out) his 401k. We were truly a match made in heaven.
Financial Mistake #5: Making Jeff Bezos Wealthy
Do you think you can stomach some more? For those of you not doubled over cackling or throwing up in disgust in a corner, I recommend my guest post on Budgets Are Sexy where I detailed how I spent $40,981.60 on Amazon from 2008 to 2016, and next to none of that on household essentials like trusty toilet paper or coffee.
Financial Mistake #6: Invoking the Ire of the IRS
And finally, we come to my close call with the IRS. I’ve written about that ordeal in detail, so I’ll just hit the highlights here. I ignored my Indian investments, neglected to pay attention to reporting requirements for foreign money and ended up needing to petition the IRS for forgiveness and pay a hair over $12,000 as my idiot tax.
I Got My Financial House in Order
This final bungle was the wake up call I needed. After nursing Huey, my pet ulcer, for months wondering whether or not the IRS was on their way to kick down my door and haul me off in chains, I had had enough. No more treating my finances worse than the Dursley’s ever treated Harry Potter. I got our financial house in order, and we have since been on FIRE.
So, disheartened Reader, chin up! I hope my financial full monty proves to you that no matter how financially inept you feel right now, you absolutely can course-correct.
My name is Mrs. BITA, and I was a financial fool. If I can be a fool no more, so can you.