Life lessons: My costliest financial mistake
It’s tough to admit to making mistakes that ended up costing you a lot of money, not to mention the frustration and heartache that follow them.
Whether it was a bad investment, the wrong property, a dodgy car or a glitchy gadget, many of us learnt the hard way about how to make good decisions that involve your finances.
But equally, learning through experience is probably the best education in managing your finances or being a wiser consumer.
We asked a number of folks from different walks of life to tell us about their biggest financial mistake or their worst purchase as a consumer and how they learnt from the experience.
Carol Tallon, property broker
“My worst financial mistake was my first house!” says Carol, who runs property agent Buyers Broker. “It had a huge impact on me, my life and my daughter, and that is what drove me to change careers and work with property buyers to help them get it right.
“At that time, I was a young single parent and broke trainee solicitor and I had no concept of the difference between wealth and money. I made all the classic buyer mistakes — bought a house I didn’t need, in an area I wasn’t crazy about.
“When I wanted to move I couldn’t sell it, so I had to rent it out and then I went on to make every mistake an amateur investor makes (including renting to tenants from hell who caused all kinds of difficulties, including squatting on the property after they stopped paying rent). Suffice to say, every lesson was learned the hard way.”
Shane O’Donoghue, motoring journalist
“About 10 years ago, I was living in England and fancied a fun road car to take on the occasional track days,” said Shane, a motoring journalist and editor of Completecar.ie. “I spotted the exact BMW I wanted on eBay and, in a panic, effectively hit the ‘Buy it Now’ button for the equivalent of about €4,000. It’s only when I went to pick up the car did I realise that its interior had been completely stripped out and it wasn’t really usable on the road.
“It ended up sitting outside my house for months, unused, where it developed an oil leak. That leak was used by the person I eventually sold it to push the price further. I lost money on it and never did get to take it on track.”
Senator Lorraine Higgins, politician
“My biggest financial mistake was getting into the bad habit of sticking purchases or paying for services on my credit card and then forgetting about them until the bill arrived,” said Lorraine, Seanad Labour spokesperson on foreign affairs and trade. “I’ve had to train myself to keep credit cards for emergencies only, because with interest rates applying to some cards, you often find yourself in the mire of more debt unnecessarily.
“Like many Irish people my age, I got my first credit card during the boom when attitudes were very different. Since then, I’ve had to address my use of my card and key to that has been making more informed decisions when utilising it. I’d urge everyone to apply the same strictness in the interest of their financial health.”
David Quinn, financial advisor
“My single biggest investment mistake was a pension investment in 2002,” said David, managing director of financial advisors Investwise. “I had worked for two large banks up to that time so had developed a false sense of security about my investment and market knowledge, along with the overconfidence that working in a bank brings.
“When I left, I invested all of my pension, not a huge fund at the time, into a Paris commercial property syndicate with one of the life assurance companies. Thankfully, it wasn’t one of the syndicates that went bust, and is growing again now, but it fell about 80pc by 2009.
“It taught me a valuable lesson about diversification and the dangers of leverage, and that lesson was early enough in my career that it didn’t do lasting damage.”
Niall Kitson, technology journalist
“The biggest waste of money for me was my first mobile phone, the Motorola a130, aka ‘the brick’, aka ‘the Ready to Go phone’ which ran on the 088 analogue network,” says Niall, editor of Techcentral.ie.
“As a weapon, it did a fine job and you could use AA batteries if you ran out of charge. However, you had to extend an aerial to get a good signal, the contact book held barely two dozen numbers and didn’t have caller ID.
“By the time my friends got on board with mobiles they were using pre-pay GSM handsets and texting instead of talking because it was so much cheaper.
“Imagine that, a phone you couldn’t communicate with your mates on and was ridiculously expensive to own. I think the experience made me develop a healthy scepticism when it comes to new technology.”