Financial Mistakes I have Made in The Last 7 Years (Part 3)

Have you ever made money mistakes so dumb that looking back you wonder what was wrong with you? In the final post on this series, I look at two excesses that have been costly for me.  Read Part 1 here and part 2 here.  As you read my mistakes, share your insights, experiences and lessons we could draw from them in the comments section. We are all learning after all!

My last two mistakes are similar and involve excesses that I took on for various ego reasons:

1. Keeping a bigger car than I needed for longer than was necessary;

2. Buying stuff I did not need

When I set out to buy a car, I had a farm and for that reason a station wagon made a lot of sense. I bought a relatively rare model (then), which meant I didn’t spend much on the car, which was a good decision because I ended up not needing to take a loan for it. I however was young and enthusiastic, so I bought a sports model of that car, which consumes double the amount of fuel the regular equivalent does. Even after moving away from the farming business, I  kept my car, and hardly used the additional space it had and rarely experienced “the sportiness” because Nairobi is one big traffic jam of late, but my ego felt the need for this. Lessons:

• As much as possible, avoid buying cars on loan. Unless you will use the car in business and it will pay for itself, buying a car on loan is always a double (or even triple) expense, in that you repay the loan, service the interest, insure the car and while you are doing this the car steadily loses value. This is one thing I have avoided, and even as I replace my car with a smaller car, I have made the decision not to borrow to “upgrade” the car. It is not worth it. I’ve written a bit more about buying cars here and here.
• Ego fulfillment is a stupid reason to buy anything. Really, it is. There are a few people who have so much in assets, that they can afford to buy cars as a sport. I am not one of them. Over time, I have been working on achieving consciousness, and deriving satisfaction from within, and owning less stuff.
• Above everything else, a car is supposed to be functional. To take you from point A to B safely and at a reasonable speed. Instead of spending extra on fuel to run a guzzler, save up and go backpacking across Europe, or take a holiday to Seychelles  Use that money to build experiences that last.

The final mistake I have made is related to the last post. By living in homes bigger than I needed, I over time acquired more stuff than I needed, especially clothes, shoes, and random home nick knacks. I can’t tell how much these cost me over time, but they’ve cost me in space, inefficiency and clutter.  The more the stuff you own, the more time it takes to maintain, and the more it complicates your life when moving house or even hosting.

This year, I embraced the minimalist lifestyle, and I have reduced my possessions a great deal by giving away most of what I had stored up. On a day to day basis, I started by reducing the size of handbag I carry, from a regular bag, to one slightly bigger than a purse, reducing the quantity of shoes I own, now I’m slowly working on my work attire to own few but excellent quality pieces.  It is a work in progress.

There you have it. We all make money mistakes, the most important thing is to learn from our mistakes. In conclusion, I share something my mentor likes to tell me every so often:

In life, you can’t avoid making mistakes, but mistakes are worth it if they are unique ones. Learn from others.

Here’s to a great 2013!