I’ve decided to start a series that I will call Learning from Money Mistakes. The inspiration for this series is simple: I’ve certainly made my share of money mistakes and I suspect others have as well. Mistakes become valuable lessons when we learn from them, right? So let the learning begin!
Probably one of my biggest past money mistakes was living too high on student loans back when I was in school. The crazy part of this is that I actually made it all the way through my undergraduate years without student loans; it was not until graduate school that the loans began. During undergrad I lived off scholarships and income from not 1, not 2, not 3, but 4 part time jobs at one point. Also I got a little bit of help from my mother and stepfather. I graduated with zero student loans.
Cue graduate school. It was expensive. There were far fewer scholarships available and the course load was unbelievable. Most of my fellow students took out loans since most of us were not working due to the crazy course load. I thought that I was just living “how everyone was living,” and maybe I was. But looking back I can see that I could have cut back more. I lived in a midwestern college town in a two bedroom apartment by myself for a couple years- I totally could have found a roommate, but I made excuses like I needed it quiet to study, roommates are too much hassle, etc.
Here’s the worst of it- I am ashamed to admit that I took a trip to Mexico and paid for it with my student loans. One whole week in Mexico, and my hotel, airfare and every single margarita was paid for courtesy of my student loans. At the time I justified it with all the usual reasons: I’ve been working so hard- I really need a vacation! I deserve this! What’s a few more dollars added to my student loan debt?
I recall very clearly having a classmate, “Laura,” who lived much more frugally than the rest of us seemed to be living. She talked openly about how she was trying to graduate with as few student loans as possible. While the rest of us just seemed to randomly find places to live, Laura managed to figure out that in our state students who are not earning income are eligible to live in low income housing. She took her time finding a place to live until she found a landlord who would accept her low income housing allowance, which allowed her to save a lot of money and cut down on her housing expense considerably.
Fast forward a few years. I am sure Laura is doing quite well; she is probably still living frugally and almost certainly making smaller student loan payments than I am. I took a few more years to learn the frugality lesson (starting to make the payments on the student loans was a big wake up call for sure 🙂 ), and hopefully I am now making up for it. However, because of the mistakes of my past I will be saddled with increased student loan payments for quite a few more years (unless we pay it off early, but it is actually locked at a super-low rate so we are focused on other financial goals at this point).
So what is the lesson here? Well, I have certainly learned my lesson about the responsible use of student loans, although since I am most definitely not ever going to be attending school again it is sort of moot. For me it is a lesson in the importance of living well below your means (and for goodness sake if you are living on borrowed money you need to be living a very no-frills existence in order to minimize the amount you have to pay back!) It is a very valuable lesson- it just cost me a little too much to learn it. 🙂
I also think that this experience will have a big impact on how we raise our future children. We are in the process of trying to adopt at this time. Had I myself had better financial education or knowledge I wonder if I might have made better choices when I was in school. I really think that it is so important that children receive a financial education as well as an academic education, and I hope that we can provide our children with that.
Are there any expensive lessons that you have learned the hard way in your past? If so, do you think there is anything that anyone could have said or done to change your behavior before you made the mistake?
Photo credit: Omar Reyes, http://www.flickr.com/photos/bitesizeinspiration/