Despite making the occasional boundary-pushing claim, I try to be a personal finance realist. This means admitting when I made a decision that was sub optimal to say the least and flat out terrible to at most. I figured it was time for a short, easy-read of a post. That either means a likely relatable list or one with my personal artwork such as the blog about risk and challenging dogma.

I’ll spare you all the artwork (this time) and go with 5 poor financial decisions in reverse chronological order.

Buy a New Vehicle

Yes, Mrs. TFC and I recently purchased a new 4Runner. As an obscure personal finance blog, it’s no surprise that I’m not sponsored by Toyota nor anyone else for that matter, so just enjoy the story.

Mrs. TFC was looking for a set of wheels to replace her 2010 Ford Fusion. The Fusion is/was functional with approximately 130,000 miles. We were putting a bit of money into routine maintenance. Tires, brakes, fluids, etc. Nothing crazy.

I have written about how a vehicle depreciates 20% when you drive it off the lot. It continues to depreciate an additional 20% per year for the first 5 years at which point, the value begins to plateau. This all accounts for standard usage.

This means the 2023 4Runner TRD Pro in lunar rock will depreciate from $60,000 to $20,000 over a five-year period. Granted, we find ourselves in strange times with chip shortages and odd valuations of new and used vehicles, but it doesn’t change the fact that at least half of the value will evaporate in a matter of years.  

Dave Ramsey is pretty firmly against new vehicles for anyone yet to reach the two-comma club. By those guidelines, we don’t qualify. Call it what it is -- a guideline. I recognize the rationale to avoid depreciating assets until you can sustain the financial hit.

I also recognize his audience is the American public likely earning and living off the figures from last week’s blog post. Mrs. TFC and I knowingly deviated from the Ramsey recommendation.

So why make such a purchase?

Because Mrs. TFC wanted one. Yes, what a brilliant, logical answer. Worst of all, that rationale was good enough for me.

I (we) went about making a plan where we would continue investing our standard, aggressive amount each month. Don’t deviate from the FI goal. The vehicle allotment would come exclusively from extra shifts. For everyone thinking I’m a tightwad, you are correct, but I chose to color outside of the lines using my lunar rock crayon for just a bit.

We paid by cutting a check. We don’t actually have check blanks any longer, so we used a money order. Regardless, paid in full. Make the mathematical argument all you want; I don’t borrow money for personal vehicles. Period.

At the end of the day, Mrs. TFC is delighted by her new ride. She wanted it for her, not anyone else. No one to impress.

We lit a bunch of money ablaze instead of investing it. And here we are…on to the next one.

Buying a House Sight Unseen During COVID

This was an expensive way to learn about real estate. Long story short, as I’m finishing my time as an SRNA, we accept jobs in the southwest. We tried to find an apartment or rental for about 5 months. No luck. So, we scoured the housing market.

No time to visit in person, so we trusted a realtor and made a purchase based on studying the market and a video walkthrough.

 I have multiple write ups about buying a house and why it’s a terrible financial investment. See our exact spending here. Rental property – potential for big gains. Personal residence – not so much. Always exceptions to the rule, but this is the rule.

We ended up finding a place in a reasonable price range. This place won’t succeed as a rental, but good enough to sell in most markets. Need an exit strategy, especially for a job that isn’t a 30-year gig.

We took out a 30-year mortgage at 5% interest. Monthly payment is $1,585 (mortgage, insurance, taxes, and PMI). The rest of the numbers are less important and can be found in the link above.

Because I was still an SRNA, paying for tuition and covering the 5% down payment and closing costs ran most of my accounts dry. Keep in mind that we also paid cash for a wedding, 2-week honeymoon, and a move across the country all within a matter of months. Busy times.

Anyway, there was a bit more work to be done on the house than we were led to believe. Overall, not a terrible purchase for going at it so blindly. It was the first time purchasing a house for either of us, so we learned a great deal.

It was just a matter of tying up a bunch of money that I didn’t expect to see a great return. Needed a place to live and this was the best we could do. We will be lucky to break even when we sell. I’m fortunate we had the means to make it work, but there are better uses for the money.

ROTH Conversion

Few things irritate me as much as this one. All SRNAs should be taking advantage of a ROTH conversion. That’s worth repeating and making bold – All SRNAs should be taking advantage of a ROTH conversion.

What’s a ROTH conversion?

We all worked at RNs prior to becoming SRNAs and eventually CRNAs. Most RNs work as W-2 employees and likely contributed to a 401(k)-retirement plan. Well, a ROTH conversion is where you claim your PREtax traditional 401(k) as income, thus paying taxes on it, and roll over the value into a POSTtax roth IRA.

SRNAs have little to no earned income. There will be no better time EVER to add earned income. Your income bracket will never be lower. The standard deduction for 2023 is $13,850 for single filers and double that for joint filers.

It’s essentially a free pass to pay taxes on your PREtax account so you can withdraw the principle and earnings  later in life tax free.

No one told me about this and I missed out big time.

Anyway, if you work with SRNAs, please share this information with them.

Certificates of Deposit

I am eternally grateful for my childhood financial education. It boiled down to working hard and spending less than you earn. Straight forward really.

My parents were conservative and owned a small business. This means a great deal of their income went back to supporting the business. The remaining money was placed in Certificates of Depression.

Children often follow their parents, so naturally, that’s what I did. All of my investable capital earned through my youth went into CDs which were earning next to nothing. Until recently, fixed income products were earning next to nothing for decades. They miserably failed to keep pace with inflation.

This “saver” mentality was fantastic because I spent money selectively. Much of that selectivity went towards self-funding my undergraduate and graduate education. Major accomplishment, but at what cost?

The downside of this investment approach is that I was not utilizing tax advantaged accounts such as a ROTH IRA. I was also not investing in the stock market, which just happened to have the greatest decade long bull run in history.

My parents grew up witnessing an age where the stock market didn’t perform well, so they didn’t utilize it, even after fixed income products were about as good as buying money in the back yard. Their understanding of risk was the potential to lose the investment.

They did not acknowledge the other side of risk being that inflation will chip away at buying power unless sufficient returns are produced. The missed opportunity of seeing an annual 12-15% return on your money in the stock market during my upbringing, which not only outpaced inflation, but would have grown their portfolio exponentially.

I don’t fault them for their investing strategy because much of their investments were with themselves and their business. Hard to argue with that. And it’s no surprise that small business are extremely risky. Through many late nights and calculated planning, my family defied the odds by operating a profitable small business for two decades.

Looking back, avoiding the stock market was a real missed investment opportunity for me. By investing with the same style I use today, I would have paid for school and had a low to mid six-figure net worth upon graduating.

That being said, we can hypothesize and speculate all we want. I can’t argue with my results and current standing, so I’ll take the situation for what it is and move along.

Planning my Financial Future

This is my most laughable fault. I created a plan for financial independence (FI) for Mrs. TFC and I at age 35. Yep, this means a nest egg sufficient enough to support a respectable lifestyle without the need for earned income – at age 35.

Considering we don’t want a “lean FIRE” or bare bones type of life, we accounted for significant expenses including vehicles, campers, boats, and the ability to travel within reason. And to think this can be done by age 35 is a stretch. Strangely enough, we are slightly ahead of schedule.

That won’t last long because it’s only a matter of time until life throws a curveball we don’t hit. I’m aware that 35 is unlikely and I’m okay with that. However, being financially aggressive early allows for a buildup of capital I can put to work over my lifetime.

Even if my capital doesn’t return the 6-8% I account for, it’s better than nothing. Compounding is amazing. It’s pretty cool seeing our current investments doing work on a monthly time frame. Sure, we expect to see changes year over year, but to be this young and see 4-figure monthly dividends is neat-O.

It’s not nearly enough to live off, but it’s rewarding to see the money tree beginning to bear fruit. Fruit sweet enough to cover our mortgage payment. Pear this with a part time CRNA gig -- leaves a lot of time to cause trouble.

Get it…Plant Theme

I don’t plan on retiring upon reaching FI because I would lose my sense of purpose. But money would be a significantly lessor factor in my decision making.

I enjoy being a gas man, but I work an undesirable job, so that would likely mean a job change. Think practice type or location. Likely working 1 or 2 weeks per month.

Money is a factor in most decisions. Not even debatable.

If I offered you a pair of grain colored, full quill ostrich boots for no charge, would you accept them? The kind with the 12” supple calf skin shaft. They have the round toe and obviously the roper heel. And the leather soles which cause you to slip all over the place.

 Would that answer change if I requested $250 in exchange for the western wear? What about $3,000? Or $15,000?

You get the idea. Free is great, but where to draw the line? If you accept something free but have a limit as to how much you would pay for it, then money is a factor.

Fortunately for you, these boots can be had for just over $500 plus tax. I’m definitely a “read a menu from RIGHT to left” kind of guy, but when it comes to boots, if they fit perfectly, they are priceless.

And no, these boots are not part of the bad financial decisions list…obviously…

What if you could live more of your life reading from LEFT to right. FI isn’t about spending frivolously, but about minimizing money’s role in decision making. Maximizing purpose and enjoying life. That’s the beauty of FI.

Even if we don’t make 35, it will still be earlier than age 65. I’d rather aim ambitiously and miss the mark than be age 60 and behind the 8 ball. Life is short and unpredictable. Life without regrets. To each their own.

May you have a short list of poor financial decisions. Thanks for reading.