stupid things I have done

Inspired by My Open Wallet and The Digerati Life, I've decided to share with you - the few, the proud, the Frugal Zeitgeist readers - some of the stupid-ass things I have done with money.

Age 15: I was employed at my first job, busing tables at a Chinese restaurant. When tax time came, I tried to figure out how much tip income I had (because wait staff were required to share tips with busboys/busgirls and dishwashers), but I had never kept track. I gave up pretty quickly and just wrote in zero, thinking that the IRS wouldn't care about a teenager working twelve to sixteen hours a week.

WRONG.

A few months after tax season, I received a rather harshly worded letter from the IRS. It seems that the Chinese restaurant had provided the IRS with an accounting of tip income for all staff, and their numbers didn't match my the big, fat zero I had provided. The IRS went on to tell me that I had a choice: pay tax and penalties according to their calculations or prepare for an audit.

I sent the check off the next morning, and I've been squeaky-clean and scrupulous about my taxes ever since.

Age 19: I stormed down to the bank one day to rant about the $10 that had been deducted from my account. Clearly, it was a mistake: it was labeled as a penalty for not maintaining a minimum balance, but my minimum balance was right there.

The lady at the bank explained to me that not only was minimum balance a reference to average minimum balance over the course of a month, they had been deducting this fee monthly for six months before I noticed.

I made a point of looking at my bank statement much more closely from there on out.

Age 23: I was living and working in Japan. For some reason, it seemed better at the time to buy traveler's checks in $10,000 increments, make them out to my mom, and send them to her to deposit than to just wire the money to my US bank account. I don't think I lost any money doing this, per se. I just wonder why this seemed smarter at the time.

Age 24: I went to an Ivy-league graduate school with no funding and no clear plan for what I wanted to do with my life. I was lucky: I managed to scrape by on savings from two years abroad, and after the first semester I started raking in fellowships and TA-ships. I felt like a fraud in my doctoral program, though, and I ended up completing an MA and then doing a second MA in a slightly more practical field. In 1995, I fell ass-backwards into an internship that I took simply because it paid more than $10 an hour, and that internship morphed into a lucrative career that I'm still pursuing. I can't say I lost money here either, because although I graduated with some minor loans, my folks intercepted the first payment notice and paid them off. Their rationale was that I got through three years of graduate school with two degrees and honors while working my ass off at three concurrent jobs and they thought I had suffered enough.

I said it before and I'll say it again: I've tried to live my life in such a way as to justify my parents' confidence in me. This period of my life was also when frugality and simple living took root in my psyche and became part of who I am.

Age 27: Once I hit the workforce for real, I started my 401(k) and my Roth IRA just as soon as I could. I had just read about diversification of assets so, thinking I was a smart and well-diversified investor, I put 5% of my 401(k) into a money market fund instead of plowing it into mutual funds with the other 95%. This lasted for about six months, when I realized that the rest of my 401(k) was going like gangbusters and my money market fund was just sitting there. I finally gave some thought to my time horizon between that time and when I expect to need it and concluded that with somewhere between thirty-two and forty-five years to go, I could afford to take a little risk. I then moved it into mutual funds like I should have done in the first place.

Age 28: In those early years of investing, I learned a lot. One huge mistake I made was in chasing prior year returns without looking at mutual fund objectives, expense ratios, P/E ratios, management, or holdings. This is how I ended up with a dog like the Strong Schaefer Value Fund and one other that I don't even remember. (It got acquired by someone else and the name changed.) These funds were great when I first bought them - paying top dollar in an overvalued market, of course, but at least I was dollar-cost averaging - but when they started to slide, they bit the dust pretty hard. I finally cashed out after two sickening years. I don't think I actually lost money from my initial investment, but the opportunity cost was huge.

Age 30: I got married. Our wedding was a restrained, low-key dog-and-pony show that we put on solely for our families' sakes, and I don't particularly regret that. Marrying my ex was an expensive proposition, though: he cost me money. He grew up in Britain with a somewhat different perspective on money (there's much more of safety net there than we have in the US), and he had never saved a dime in his life. Probably trashed his credit, too; I wasn't smart enough to check. We had two years of living together before marriage to find out that we were incompatible in many ways, fiscally being one of them. Neither of us were ready and willing to face reality, so we went ahead and got hitched. In the years we were together, I had to watch our money like a hawk or we simply wouldn't have had any. I really did try to show him the magic of compound interest (and help him grow up and be a man, something I couldn't admit at the time), but in his view he was legally chained to a big meanie who didn't let him have all the toys and gadgets and fun he wanted.

The marriage failed sooner rather than later, of course, and I've never tried to figure out the actual cost of the relationship, when I spent money I otherwise would have saved in an effort to reach some sort of happy compromise together. I don't regret the cash I dropped on the divorce lawyer, though. Best ten grand I ever spent.

Age 31: I got caught up in the tech boom and bought horrendously overvalued shares of Microsoft, Cisco, and Dell. I only speculated (because I can't call what I was doing investing) with about $3000, but I've been underwater for seven years now. I'm hanging onto them for no other reason than to remind myself of the cost of believing the hype. Other people have done worse; I know one person who claims to have lost a million dollars day-trading. I don't know if I believe it or not, but ghost stories are another good reminder of the importance of not running around like a crazy person in response to irrational exuberance.

Today: While shuffling around the kitchen making toast and tea (because I'm sick and was working at home), I managed to knock over a brand-new, unopened bottle of olive oil.

It broke.

My counter is concrete. Concrete is porous.

Total cost: about $7 for the olive oil, 99 cents for an entire roll of paper towels, probably about 20 cents for Ajax, and another 7 cents for the pine-scented cleanser from the 99 cent store.

I've never been a shopaholic, carried a credit card balance, or made any real estate gaffes other than waiting too long to buy (but I don't really count that as a mistake, since dividing real estate in the divorce would have made that process even worse than it was). Overall, I guess all of my mistakes are pretty tame.

Of course, there are plenty of things I've done that have cost a lot of money and were totally worth it, like spending three weeks in the Galapagos, going to Paris for my friend's wedding and a nine-day holiday, and traveling through all of Japan by rail. The key to knowing the difference between a worthwhile expense and a stupid one is to figure out where the cost fits in with your income and your short-term, medium-term, and long-term personal, professional, and financial goals.

In other words, my friends, it's all about finding balance and harmony in your life.

What were some things you spent money on and don't regret?