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We all make mistakes. Today I share the top 10 financial mistakes we’ve made on our journey to financial independence. More importantly, I’m sharing the advice we’d give our younger selves to avoid those mistakes with the hope that maybe we can help you avoid them too.

1. Getting into Debt in the First Place

It’s easy to get in debt and much harder to get out. I entered my adult life with student loans and quickly added credit cards, two cars, and a first and second mortgage. We’d have come out far ahead earlier if we had not gone into debt in the first place and had to climb our way out. If you’re already in debt, don’t wait to start getting out. It’s best to not get into debt in the first place but once you are, it’s best to get out as fast as you possibly can.

Our advice to our younger selves: Debt is dumb. Don’t do it (except for maybe a first mortgage and then only get a 15-year loan for a home that is well within your means, not the max of what the bank says they’ll approve you for). If you find yourself in debt, start today and attack it aggressively.

2. Not Firing Our Financial Advisor Sooner

This was such a big mistake, we have a whole post on Why We Fired Our Dave Ramsey ELP.  One of our biggest financial mistakes was not doing it sooner. We were being charged a total of 2.2% in fees that eroded the growth of our investments over decades. For that money, we got a picnic once a year and twice-a-year reviews of our portfolio, which we barely understood and never changed. We’d probably be retired now if we had just invested in VTSAX with a 0.04% expense ratio for all those years. It’s too late for us to re-live it, but maybe if you’re reading this you can take a good hard look at your fees and change course. We wish we had much sooner.

Our advice to our younger selves: Know what you are paying in fees. Know what you are invested in. For us, this is low cost (0.04% expense ratio) index funds through Vanguard. Hire a fee-only certified financial planner for a once-a-year (or once in a while) review of your strategy.

3. Hiring Low Gumption CPAs

We’ve had a series of tax preparers over the years. When things got marginally messier than TurboTax would easily handle with things like stock options at work and running a small business, we started hiring CPAs. Unfortunately, the really good one that we started with passed away and we made a series of three or four poor choices from there. They prepared our returns no problem, but we didn’t really get any advice and that was our error. We needed short-term and long-term planning from a tax perspective, and it would have been very worth the time to seek out a good one and the money to have them on our team, not just at tax return time. We are also probably too kind to our CPAs. Jennifer’s mom is one and she remembers the late nights she spent around tax time, so we tend to be not too demanding and don’t take up too much of their time or ask questions that time of year.  That’s our bad.

Our advice to our younger selves: Get a high-octane CPA on your side and don’t just see them at tax time. Ask lots of questions – not only about your tax return but on long term tax strategies.

4. Losing Intensity When We Had Kids

Our plan was to get out of debt to afford a stay at home parent and once we had accomplished that goal, we let our foot off the gas. Yes, we were following the baby steps, we just weren’t as intense as we had been in the early days once we met this milestone. Because of this, our long-term results slowed down. Especially when your kids are young, they don’t care if they have the new highchair or a used one off Craigslist. We made some good financial choices during this time, but for the most part we took a break.

Our advice to our younger selves: Watch out for major life inflection points and don’t let your foot off the gas when you transition or when you’ve achieved one of your goals.

5. Getting Lazy During Baby Step 7

Once we cleared Baby Step 6 (pay off your house early) and were firmly in Baby Step 7 (live and give like no one else), we took a break. Yes, for us, this is unfortunately when cancer struck our family. But even before that, we entered an aimless phase of our financial lives where we didn’t really have money goals. Our goals ended with a paid for house and when that ended, we didn’t have a next thing. We didn’t know about FIRE back then, but that would have been the natural next step. I would turn Baby Step 7 into “Increase your savings rate and work toward financial independence to enable you to retire early.”  We ended up there, but we took a 7-year break in the process until we figured that out.

Our advice to our younger selves: When you hit Baby Step 7, celebrate like crazy, but then buckle down again and keep pressing toward your long-term financial goals.

6. Never Figuring Out The Right Answer: Traditional vs. Roth

When we started our working careers, there was not a Roth 401k option, so workplace retirement accounts were all traditional (pre-tax) 401ks. Roth 401ks didn’t come around until 2001. But Roth IRAs have been around since 1997. One of our financial mistakes was not having a clear answer on whether we should have been investing in traditional or Roth at any given time. This may once again go back to our poor ELP and CPA decisions, but we never had a clear path for which would be best for our financial goals. We’ve ended up with a combination of funds in each, but we probably have paid (and will pay) more taxes than we needed to. 

Our advice to our younger selves: There is an answer to the quandary of Roth vs. Traditional. For future early retirees, the Traditional is almost always the best choice. The Mad Fientist has an excellent explanation here.  See also Physician OnFIRE’s take.

7. Buying a Land Rover

We knew this was a bad idea. Mrs. onFIREfamily has always wanted one, and at the time I owned two of my dream vehicles (a 1971 VW Bus, and a Jeep Wrangler), and oh yeah, multiple boats. So, we bought a Land Rover. It was a poorly engineered luxury vehicle and we paid luxury prices for parts and service. My wife still mourns the loss of this car which lasted all of a year and was in the shop most of that time. We did buy a 17-year old used model, so the initial investment was low, but that did not compensate for the lost time and money in repairs. Our philosophy is, usually, to buy good, serviceable used vehicles. We’ve only bought one new vehicle together and it was when we were newly married and didn’t know any better. We botched it on the serviceable front with the Land Rover.

Our advice to our younger selves: Don’t buy new cars. Buy good, serviceable, used vehicles and have them checked out by a mechanic. Don’t buy luxury vehicles (the parts and service are also expensive). If there are red flags about the quality of engineering on a model or year of car that has caught your eye, run away.

8. Buying Used Appliances on Craigslist: Fridge and Dishwasher

We had a few successes and a few failures in this area. When we were getting out of debt, we didn’t slow down for a fridge, dishwasher, or microwave replacement with a new suite of matching appliances. We replaced them piecemeal with used appliances from Craigslist from folks who were upgrading, and we installed them ourselves. We had some very good experiences doing this, but two in particular didn’t work out so well. One was a dishwasher that would drain onto the floor periodically (we replaced it with a brand new one later). The other was a series of refrigerators. When our original died, it took with it the contents of our freezer. We replaced it with a used one from Craigslist. That fridge didn’t last long before requiring parts to repair it and ruining the contents of our freezer. Again. We replaced it with a scratch and dent unit that also didn’t last long. We’ve got a new one now, but it’s the 4^th in recent history, which in retrospect wasn’t worth the time and hassle for the amount of money we saved.

Our advice to our younger selves: Used appliances might be a good way to go in some cases but be warned. With hindsight, we wouldn’t have ever bought the matching suite of appliances all at once but may have bought new one at a time as they needed to be replaced. One thing’s for sure, when you’ve had a poorly performing appliance for a long time while getting out of debt, you sure appreciate a new one, fully installed, when you can afford it!

9. Inflating Our Lifestyle

When we were young and before all this financial stuff really sunk in, we inflated our lifestyle when we got raises and tried to keep up with the Joneses. We bought a house when it seemed to make sense, bought cars, went on vacations, and acquired toys. If we had just continued to live like we were in college (poor) during those early years of our career and saved the bulk of our salary instead of inflating our lifestyle, we would have had a solid foundation to grow on. With the magic of compound interest, dollars saved when you are young are so much more valuable than trying to catch up later.

Our advice to our younger selves: When you’re just starting out, live like you’re still a poor college student. Put salary increases into savings rather than inflate your lifestyle. You’ll be glad you did later in life.

10. Not Embracing Minimalism

We have accumulated so much stuff that our stuff has its own stuff. We have to invest time and money into cleaning, organizing, and maintaining all of our stuff. I have 10 internal combustion engines to maintain at any given time. Had we held to some simple minimalism principals early and often in our lives, we’d have freed up lots of time to be able to enjoy life and time with family rather than work on our stuff.

Our advice to our younger selves: Develop good minimalism and simple living habits early. We’re old dogs so these new tricks come hard despite seeing the value in living with less.

I hope this has provided some humble insight and advice while you’re going about your own financial journey. Hey, we all make mistakes. Hopefully we learn from them and do so early enough to correct our course without doing too much damage to ourselves. If there’s something you need help with or wonder how we would deal with, hit us up!