Financial Mistakes of the Worst Kind

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Financial Mistakes

The following is a contribution from Deb at Debt Debs. If you’d like to contribute to Frugal Rules, please contact us.

The way I handle our finances today is dramatically different than how I used to handle them. So much so, that I even have a hard time remembering some of the financial mistakes I’ve made. It’s probably because I push bad memories from my consciousness. Call it a coping mechanism, but I tend not to dwell on past mistakes.

So before I completely forget everything, I thought I would try to document the things I do remember about the worst financial mistakes we made that got us into $394,000 of debt.

You read that right folks! So now I would like to walk you through things we would do over, if we could go back and make different choices. Hang on for the ride!! 🙂

Worst Financial Mistakes – Not Tracking Spending


The worst of the financial mistakes we made, that probably snowballed into other mistakes, is that we did not have a budget. We did not track our spending via a spreadsheet, envelope system, or even chicken scratch on the back of a napkin. Nada. Zip. Zilch.

We would pay for things on credit cards, and if we didn’t have the money to pay off the balance, we would pay it with the line of credit. We could never figure out why we never had much money. I even wondered if someone was dipping into our account at the bank as it just didn’t make sense.

We didn’t spend extravagantly, but we weren’t being super frugal either. We ordered pizza on Friday nights, went out for a meal maybe once every two weeks, we bought things for the house, signed up for intramural sports activities for the kids, bought work clothes and purchased make-up for me. There was usually a family holiday most years, movies, Christmases, parties … you get the picture. Normal stuff, right?

In fact we were so busy just living life and working, there didn’t seem to be time to spend on scrutinizing our finances. Nor was there the motivation. That job would be boring and tedious and I wanted no part of it.

Refinancing Against our Home Equity (four times!)


Talk about wash, rinse, repeat! We took out our first refinancing loan to put an in-ground pool in our backyard. We justified it because our youngest had just turned 4 and our oldest was 14, and we wanted to have the pool when they were at the age that they could enjoy it. Of course, we had some line of credit spending built up so we rolled that onto the mortgage too.

Life keeps going at the same busy pace, and we continue with our previous habits, not changing a thing. My husband lost his job and the line of credit gradually built up again. We ‘solved’ the problem by rolling the line of credit and other mortgage debt onto the mortgage one more time and told ourselves, “We’re never doing this again,” we swear!

Unfortunately, because we made no changes to our spending habits and did not track our expenses, we ended up refinancing yet again. You could say we were on a five year cycle. Sure, we had family events that caused us to live a bit YOLO, but I really think that if we were more disciplined in managing our finances, the damage would not have been as severe.

So our last refinancing was needed because all forms of lines of credit and credit cards were tapped out. Our mortgage was coming down with each payment, but all the other forms of debt were increasing steadily. We took out a $235,000 mortgage and paid off all credit cards, HELOC and personal line of credit, all except for $9,000 on the personal line of credit. The bank could not advance us enough to wipe that out. Ouch!

How’s that for a wake-up call? Everything changed after that, some things quite dramatically almost overnight while other aspects of frugal spending have taken longer to evolve. Ultimately, we’ve paid off $121,000 over the course of two years and have four more years to go to eliminate our debt.

As an aside, if you’re considering refinancing against your home to get a lower interest rate, it’s really only advisable if you cut up your credit cards, cancel your line of credit and live within your means. Don’t be a dolt and do do-overs like we did.

Cashing in Retirement Savings to Finish Our Basement


During the above time periods, our children were obviously growing (we have four and a four bedroom house) and it came time for the younger two who were sharing a room to get their own rooms. At least that was the thinking I had at the time.

We also wanted an area of the house where they could hang out with their friends. So we decided to finish our basement so our son could have a room and bathroom down there and his sisters could each have a bedroom upstairs and share the family bathroom. During the time that my husband was unemployed, he did this work and we decided to dip into his retirement funds since he had low (no) income and was allowed to do this and taxes would be low.

Now that he is 61 and still needs to work, I see what a big financial mistake that was. Okay working at 61 is not the end of the world, but still, after raising a busy family it would be nice to have choices and we took some of those choices away from ourselves with our spending decisions.

Today I see how many of our financial mistakes stem from the first big one of not tracking spending. If we had a better handle on our outflows, we would have been better prepared to weather a layoff and would have made wiser spending decisions.


Have you ever refinanced your consumer debt on your mortgage? Have you cashed in some of your retirement savings for spending you now regret? If you could redo one financial decision, what would it be?

About the author:  debtdebs is a fifty-something wife, mother and new grandmother, who admits to having her “head in the sand” about their financial situation until amassing $247,500 of consumer debt for a total debt of $393,500.


Photo courtesy of: BK

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and regularly contribute to GoBankingRates, Investopedia, Lending Tree and more.


  • Nicola says:

    Great post! I think as soon as I stop tracking my spending, I get all spend-y and buy things I wouldn’t normally buy, because I’m not really thinking about what I’m buying and if I really need that item. If I could redo one financial decision, it would be to go back to when I was a student and not do all the mindless spending I did on rubbish I didn’t need. Although I came out relatively unscathed from the process, I could have saved more and had less stuff to deal with. But hey, you live and learn, I guess.

  • WOW, you really learned the hard way BUT you learned and likely won’t ever make those mistakes again. It’s good that you are sharing them with others as well so they get a grip on what CAN happen. Tracking expenses is paramount to budgeting money. I know people who refinance the mortgage because the bank tells them it’s the best option and then they get themselves back into the same problem again with credit cards. It can certainly be a revolving door and a scary one at that. I would never pull investments to renovate but my wife has a friend who depleted her investments just to pay bills which for some is their only option I guess. Money is simple but we have to make it simple by applying basic mathematical skills to our finance on an ongoing basis. It’s not something we tap into once in a while, it’s our life. Good to hear you are back on track.

  • Hmmm… not sure I would redo much except for the occasional stupid purchase in my youth. I’m with you on tracking spending. Still the most important thing you can do in my opinion. Can’t plan a future if you don’t know where you stand.

  • I dipped into my retirement to help pay for our home, and it is a financial regret of mine. We should have been saving more aggressively along the way. Financial mistakes are painful, but only if we keep making them. You have come a long way in turning things around and you are turning these mistakes into valuable lessons not just for yourself but for plenty of others just like you. Thanks for sharing Deb!

  • Kipp says:

    The only thing I have done was cash in my 457 when leaving my previous job, just to have cash on hand for closing on the mortgage. After that was all said and done that money went all against debt. Maybe not the best return on my money considering how the stock market has done, but it would have been better rolling it over. But I have made other financial mistakes… but I am luckly that I have stopped myself early before continuing down this path. Debt that is growing like a snowball is NOT good, you want to use the snowball for you not against you.

    • You’re young enough that you can recover relatively easily from any financial mistakes you’ve made, Kipp. I must admit I do appreciate the snowball I’m seeing in my net worth. As our debt goes down and our investments go up, it has a big impact, even on a daily basis.

  • I’ve never done a mortgage refinancing but I know of several friends who did this a couple of times. All are still in debt and added more to the plate 🙁 I did make the mistake of cashing out a work RRSP when I was young after I had quit a job. It was a couple grand but if I had let that sit and compound… Not much we can do about the past but when it comes to our money we can control what we do with it today and for the future.

    • As we have demonstrated, it can be a hard habit to break once you start. {eek} I hope your friends see the light and get on track sooner than we did. That’s my message (…tell your friends… ha ha).

  • Holy wow! Powerful story, great lessons – thanks for being so open about this! We also refinanced consumer debt into home equity, probably the biggest mistake of our lives. It was probably this single act that pushed us over the edge into recognizing that we had a problem – but unfortunately that wasn’t until a few years later…

    If there’s anything positive to take away from that, it’s also what got us to realize that we didn’t want our kids to follow in our footsteps one day, and to help them to learn to manage money more wisely than we had.

    • We feel exactly the same way. Thanks for sharing your story, Bret. Sounds like it took you guys a little while to reverse your ways. Good that you did finally recognize it and take action.

  • We consolidated a few times to lower payments, but never address the real problem of over spending, that would be my do over.

    • Exactly, addressing the overspend is what’s required and the first thing needed is to track that spending to figure out where the overspend is coming from. Whenever we added on to mortgage, we increased our payment because we didn’t want to increase the amortization period. But then we kept overspending and so could not ‘afford’ the new mortgage payments without going onto LoC again. It was a vicious vicious circle and one that I am so glad to be done with. Now everything is going down.. except our investments and net worth that are nicely going up! Thanks for sharing your experience too, Brian.

  • thanks for sharing your story! It’s not easy to own up to our financial mistakes, but glad you are taking control now. I wish I could go back and change how much I spent when I just started freelancing because I had a lot saved and could have carried that with me so much longer. Instead I took tons of volleyball classes, and ate out all the time. Now I’m in a tough position work wise, but I’m also very, very cautious about spending.

    • Your learnings are very valuable to share too, Tonya. I’m so sorry you are in a tough position work wise. I know how that is based on hubster’s work which varies. Right now he’s working his a$$ off because a lot of work is coming in (thankfully) but it’s almost too much. He’s working from 7 a.m. to 9 p.m. and he is exhausted. I worry about him. But then, we both worry about when it slows down so I certainly understand your challenges as a freelancer.

  • Mike Craig says:

    Good list of the really bad thinggs that people do financially to really get into trouble. Watch the spending and reduce the debt. Work on both simultaneously.

  • What matters is that you’ve learned from them! Years ago, my dad received a little inheritance from his step-mom’s passing, and I know my parents have dipped into it more than once to cover some more expensive things. I’m just glad they left his 401(k) alone. My biggest regret is not starting to pay off my student loans right away. I took full advantage of the grace period, but I could have made some decent progress in those six months.

    • You’ve got a helpful message to share there, Erin, re paying your student loans back ASAP, saving the money while waiting for interest free period to expire. The debt debs of today would almost be tempted to invest that money to try to grow it before I had to pay it back. I hope your folks have learned from their money mistakes. There’s always something to learn so let’s just say, evolved. 😀

  • Kirsten says:

    We are right there with you, Deb. Our debt is all student loans, but I think if we had just tracked our spending, we would have paid them off a long time ago. It’s easy to justify purchases or activities or meals – until you realize what they are REALLY costing you.

    • Right you are, Kirsten, once we stop and think about it. We spend too much time looking at what others are doing and using that as our benchmark instead of our friggin’ bank account. :'(

  • Noonan says:

    Great list of what to avoid. Hopefully, many others can learn from this (and thus become indebted to you).

  • I agree wholeheartedly Deb, tracking spending is key. And so many of us don’t do it. I hear it all the time – I keep track in my head. Unfortunately most of us don’t keep as accurate mental accounting as we believe we do. These were definitely some painful lessons but you learned from them and have turned around how you think about and handle your money. And that’s what matters most.

  • What a great post. Its honestly nice to hear that you’re not the only one who has made mistakes. When I was younger I repeatedly skipped credit card payments and racked up quite a bit of useless spending. Luckily I met my future wife soon after who was great at budgeting and finances. No major damage was done and the rest is history. Now we’re in a much better financial place.

    • She’s worth her weight in gold I bet now! 😉 I bet her ways rubbed off on you too. Thanks for sharing, Thomas. It is embarrassing but I’m over that now for the greater good. I know I’m not the only one in debt.

  • Human nature is such that we are biased such that we will over or underestimate something depending on our vantage point. That is, if we tend to spend too much and shouldn’t be we downplay it and therefore underestimate if we are only doing mental math. Conversely, if we are super frugal and spend a bit more than usual, we will catastrophize it. We don’t see the real impact until we look at the facts – and then we get sticker shock or see it’s not that bad.

  • Mackenzie says:

    We’ve all made financial mistakes, but the important thing is that we learn from them. I had to short-sell my house several years ago, and that was definitely an eye-opening moment.

    Keep up the good work! You are doing awesome 🙂

  • Kara says:

    Wonderful post, Deb! I also took advantage of my “grace” period while in grad school and since I was working FT I could have easily kept paying. But, I didn’t. And, now I sure am!
    Thanks for sharing 🙂

    • I’ll put you in the category of been there, done that, bought the T-shirt! 😉 Thank you for sharing, Kara, and all the best while paying off those grad school loans. I’m not going to say good luck because you don’t need luck, just focus. Am I right?

  • May says:

    Been there, done that. I did weekly refinancing via the heloc though. (Heloc headlock) Still doing but now making sure that the inflow to the heloc is greater than the outflows. It is so easy to lose track because life is busy and money feel complicated. Great progress though!

    • HELOC Headlock! Love the nickname, hate the vice it represents! It is easy to lose track if you are not watching it. Glad you’re managing to make sure your inflows > outflows on HELOC, May.

  • Ive been too easy on my finances lately and I plan to start trackiny my spending again. Its weird but it really does help.

    • When I don’t update my budget spreadsheet or look at MINT for more than a few days, then I start to dread looking at it and that’s a slippery slope. Doing it at least every three days is best, takes less time, takes the drudgery out of it and no surprises! Good luck, Spunky!

  • Michelle says:

    Your not alone in your story. I think it be shocking to see how common this is. I am especially proud of you for knocking out the $121,000 you are a MACHINE!! Feel proud and stay focused!

    • What a wonderfully supportive comment! Thanks, Michelle!

      • Michelle says:

        Why is the grammar in my comment all jacked up??! Uggh. Let’s do this again.

        You’re not alone in your story. I think it would be shocking to see how common this is. I am especially proud of you for knocking out the $121,000 you are a MACHINE!! Feel proud and stay focused!

        Much better-Michelle

  • Michelle says:

    Great post. I think it’s great that you have been doing the “right” thing for so long now that you have forgotten some of the financial mistakes.

    • You have a point there, Michelle. I don’t think I could have written about it before two years had passed though – I could barely talk about. A lot of shame, guilt and embarrassment, but I’m over that now.

  • This is such a great example of people not being overly extravagant, but just trying to live life and finding its a lot more expensive than they thought. I love you, Deb, and thanks for sharing your story! You guys are rocking the pay off, and sharing your experiences will help so, so many people.

  • I think it’s really awesome that you’re so open about your debt and how you got there. Your turnaround is inspirational and you have such great insight and advice to offer. I totally agree that tracking spending is pretty much the number 1 way to gain control of your finances. The numbers just don’t lie!

    • I figure I can’t be the only one, and even if there are others who have lots of debt and find it stressful, maybe they will find motivation and comfort to not ignore it any longer and start today. You are a great inspiration for frugal living Mrs FW, and I get lots of motivation from you to do even more!

  • If I had to redo one financial decision, it would be to change my silly investing mindset in my 20s. I was all about making fast money, trading single stocks and options…I lost so much along the way. It hasn’t turned out to haunt me that much because I got my act together before it was too late. But I would be much further ahead now had I started properly earlier in life.

  • I know it’s hard to put all those #s out there but I’m so proud of all your hard work!!!

  • We’ve done all these things as well…the first one is very different than the last two. There are (in my opinion) valid reasons to borrow against your retirement and refinance your home. If you find yourself in financial hardship, I personally believe you use whatever resources you have to get back on your feet. Once you are standing again, then you try to right the ship. Tracking your spending, however, is a proactive measure that can prevent problems from forming.

    • Hi Travis ~ I think there are valid reasons to borrow against your retirement but one of them is not to finish a basement. Likewise, putting debt at a higher interest rate against your mortgage at a lower interest rate is a good strategy if you only do it the one time. If you keep repeating it, then that is dumb… and yes, I’m calling myself dumb, but I’m a lot smarter now. The tracking of spending will avoid repeating the same mistake or even getting into too much debt in the first place. Thanks for weighing in.

  • Kim says:

    Thanks for sharing. I’m sure that wasn’t easy to look back and call yourself out, but it really does help others to see all is never lost. My inlaws did the consumer debt into the mortgage thing and then lost jobs and their house to foreclosure. That really woke us up and was a huge reason why we got out act in gear.

    • That’s really scary, Kim. I’m sure when the US housing market fell, there were a lot in this situation. Tough to watch and go through and hopefully did get a lot to be proactive like yourselves.

  • Great post Debs! I’m glad you’ve managed to turn your finances around 🙂 everyone makes mistakes.

  • My regret is not saving more for retirement in my 20s. I have a friend who is on this cycle you describe above. I’m concerned for him but he just doesn’t want to make a change. Tracking your spending is probably the single best thing you can do get organized with your personal finances. Thanks for sharing your story.

  • Mrs. SSC says:

    Wow! That is a great story of how easy it is for finances to just slip out of control, slowly over time. My husband cashed out his 401k once (way before he met me), and he regrets it. He was in his early 20s and now he can’t even remember exactly what he spend the money on.

  • Thanks for sharing your story here Debs. You’re making up for lost time now and in four years, your financial picture will be a lot different.

    I almost remortgaged for home improvements and to pay off all our unsecured debt. I’m so glad I didn’t now because the housing marketing in the UK dropped dramatically and we’re in negative equity anyway (like a lot of people here!).

    If we’d remortgaged as we’d been tempted to, we’d have been in a whole heap of trouble – even worse than before! Thank goodness for procrastination for once…

  • Debbie says:

    So glad you survived that financial horror story, Deb! When we were young, we always lived beyond our means and racked up about $30,000 in credit card debt. Then WE BOTH LOST OUR JOBS in the same year. Took us several years to climb out of that hole and now we just have one credit card and pay it off in full every time. Still not that great at tracking our spending though. I really need a better system. Thanks for sharing your experiences. This is such a good lesson.

  • Squirrelers says:

    Excellent post and thanks for sharing the story of how you got into debt. This is a very good example of how people can find themselves in quite a bit of debt even if they don’t live extravagantly. Sometimes it’s a matter of keeping track and knowing what’s coming and going, which could possibly make all the difference in the world in terms of guiding behavior.

  • Everyone makes these kind of financial mistakes, the difference between the winners and losers are the winners only make them once. We need to adjust our lifestyles accordingly and stop creating debt and live within our means.

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