Nobody is perfect and that includes me. I thought I’d share my financial blunders. We have all made mistakes. The good news is despite making (some big) mistakes, you can still come out the other side!
I’ve estimated that these mistakes have cost me at least $350,000. Meaning that if I didn’t make them, I’d have at least that much more money saved. Big sigh.
#1. Cashing out my old work’s 401(k) plan & selling company stock
I started a coveted job at Morgan Stanley in 1999 right after college. It was the height of the tech boom. My starting salary was $50,000 + a small guaranteed bonus. (I made the same as a resident in 2012!)
My first 6 months was in London all expenses paid
. I was an ex-pat there – meaning I was paid my U.S. salary but received free housing (picture beautiful 2 bedroom, 2 bath furnished apartment with marble bathtub, heated towel stand across the street from Hyde Park, neighboring the Grosvenor House) + a generous cash
per diem. I did not have to spend any of my actual salary to live in London.
Now I don’t totally regret this part – I was able to explore Europe on the weekends – weekend trips to Paris, Spain, Amsterdam. Priceless. Back then, friends and family from NYC could visit me in London for < $400 roundtrip.
I had access to a 401(k) plan for the four years I worked there. I’m pretty sure I didn’t max it out, but I still had a nice chunk in that account. I cashed it out in 2004.
It gets worse. In addition to a company match we also got free stock as part of our retirement plan.
I sold it.
#2. Barely saving despite high earnings as a 22 year old
I listed my starting salary in mistake #1. About 1 year later I got a $22,000 raise and a $25,000 bonus. This meant I hit 6 figures at the tender age of 23. Wish I had some savings to show for that! I lived paycheck to paycheck despite a high income. I guess I can blame NYC.
#3. Racking up $20,000 in credit card debt before starting dermatology residency
Yeah …. someone went a little nuts during intern year in NYC. I had awesome clothes though.
I paid it all off before graduating residency. I no longer carry any cc debt and pay off cards in full every month.
#4. Not funding a Roth IRA until 2014
The Roth IRA was enacted in 1997. I’ve been earning money since at least 1992 so I’m not even counting opportunities to fund a regular IRA prior to that!
I actually never heard of the Roth IRA until sometime during residency so I feign ignorance prior to that. I couldn’t imagine forking over $5,500 a year as a resident, but I totally could have. I moonlighted most of residency.
#5. Not paying off student loans during residency
Every year during internship and residency I meticulously applied for deferment or forbearance on my student loans. Isn’t that what everyone does? Apparently not.
By the end of residency in 2015, I had almost $50,000 of interest capitalized onto my loans.
Despite these awesome mistakes, I should be able to reach Financial Independence within 15-20 years and pre-Financial Independence within 10 years or less.
Feel free to share your mistakes below!