Financial Mishaps: Real Stories of Money Mistakes and Lessons Learned

Jessica Quindlen: [00:00:00] Welcome back to the Sound Cents Podcast. I'm Jessica Quindlen. Today we're switching up our format a bit and we're actually going to hear from some folks here at Ent who have experienced some financial fails, financial fiascos, some sort of lessons that they've learned on their financial journey.

I think it's important and really valuable to hear from others, they're struggles with money, be it credit cards or loans or emergency funds or any of those things to realize that it's not just you. We are all on different journeys. We all come from different backgrounds. We all maybe learned things at a young age and that's really great, and others, you know, maybe not so much.

And so I wanted to bring a few folks in and to share some stories. And I see this, you know, becoming a series down the road as I get to talk to more folks here at end and we can share more stories. First up we have Sara McKinney. You have heard her before on our podcast discussing saving for college and first cars. Sara is our [00:01:00] VP of Legal and Regulatory Compliance, and she is here to share her story about her financial fail.

Sara McKinney: My financial fail began in college. When I was a freshman in college, there was a credit card company in the lobby of my dorm, who were giving out t-shirts for a free credit card that had 19% interest.

And because 19% interest was a lot less than 100% interest, I thought it was a screamin’ deal. So, I got the credit card and the t-shirt, which I don't think I own anymore.

Jessica Quindlen: I was going to say do you still have it?

Sara McKinney: I do not. And then I proceeded to buy a whole bunch of things, including several rounds for everyone at the college bar on that credit card because it was such a low interest rate.

Then flash forward 10 years, post law school and I was very, very, very high in credit card debt. And still had a19% interest rate.

Jessica Quindlen: Did you have more credit cards after that initial first one?

Sara McKinney: I [00:02:00] did not. I kept that one. And it just got really, really high. I went to college way back in the day when checks did not cash immediately.

So you could write a check and there was a couple days, so I never kept track of my bank account. I just assumed there was money in there, which was, you know, I wasn't really working that hard, so I don't know why I had made that assumption. So, I went to lunch at Boston Market. Anyone know Boston Market?

Jessica Quindlen: Yes, absolutely.

Sara McKinney: And I got a turkey sandwich, and it cost, I will never forget what it cost, $5.65. I wrote a check because I did not have $5.65 in cash, nor in my account. So that check bounced a few days later. Boston Market, I think, charged me a $30 fee. My bank charged me a $20 fee. So in the end, it was a [00:03:00] $55.65 turkey sandwich.

So, I very much mismanaged money in my youth, including racking up the credit card debt, buying almost $60 turkey sandwiches from a chain restaurant and then realized what I had done. So, I spent probably a good eight to 10 years paying off my credit card before I bought my first house.

Because I made that a priority of something to do and I did it and now I have learned that lesson and when I charge on my credit card, I just pay it off every month.

I think the biggest thing I could have done differently or someone in my life could have done differently is teach me about finances earlier in my life. My parents never really taught me that I had a checking account and it had a debit card. When I put the debit card in, if it spit money out, I just assumed there was money in there. Unknowingly, my parents had backed up my account with their account, so it was spitting out their money, not mine. But no one ever taught me this.

No one ever taught me a [00:04:00] 19% interest rate is high. No one ever taught me that a check’s going to bounce and you're going to have to pay 10 times the amount for your sandwich for that. I wish I would have known it younger.

I am doing that with my kids. I'm trying to teach them a little earlier what things mean, what a good interest rate is, what interest does, how much interest adds up on a credit card, so they don't make those mistakes because I think it was just lack of knowledge on my part.

Jessica Quindlen: Absolutely. I really appreciate Sara telling that story. In my 20s, I also got quite a bit into credit card debt pretty quickly. It was very intoxicating to sort of have what felt like this extra money. And for a year, I really just went for it in a lot of ways. And then that intro 0% interest rate dried up a bit. So that was a nice reality check.

I will say something that I learned on my credit card journey was about balance transfers and that credit cards will for a small percentage fee, typically 3-5%, you can [00:05:00] transfer the balance of one credit card to another for a interim period of a 0% interest rate. And that can really help you pay down your debt faster.

Next up we have Stephanie Coon. Stephanie is our Digital Marketing Senior Specialist here working on email and marketing automation.

Stephanie Coon: So, one of my financial fails happened when I was a college student and it pertains to my student loans. Basically, I needed to have student loans for education and housing and oftentimes at every semester I'd have a hundred to even up to a thousand dollars of leftover money from my student loans.

And instead of, in my opinion, doing the smart thing and turning around and putting it right back on my student loans, I spent it. And so, new clothes, going out with my friends, things like that. It was that instant gratification of having extra cash in my wallet. And I think now, looking back, if I would have turned around and [00:06:00] put that immediately back on my student loans, my balance would be a lot smaller today.

So, one of the lessons I've learned is just, if you're looking at spending money, and especially money you don't have, whether it's student loan payouts, credit cards, whatever, take a deep breath because that instant gratification doesn't always pay off.

Jessica Quindlen: I love that. Did you have to use it for books as well?

Stephanie Coon: Yep. I used it for books and housing. And at the end of the day, I always had a little extra.

Jessica Quindlen: Nice. So did they give you an amount each semester and you would kind of agree to the full amount or would you, okay. And then the full amount was the danger zone?

Stephanie Coon: Oh yes. Definitely a danger zone.

Jessica Quindlen: I get that for sure. Well, thank you so much for sharing. I appreciate that.

Stephanie Coon:Yeah, you bet. Hopefully it helps others in the same situation.

Jessica Quindlen: Yes, agreed.

And finally, we have Andre Siegrist. He is our Mortgage Marketing Manager here at Ent Credit Union.

Andre Siegrist: So, when you're 18 years old, I mean, you don't have a very firm grasp necessarily of what your personal finances look like. [00:07:00] And then also at the same time, for many at that point in point in life, you're looking at colleges and starting your career path and what that may look like.

So for me, jumping into the world of college tuition and taking on those college loans, that was a bit of a slap you upside the face moment where you realize how much money you're taking on, how much the emergency fund or lack thereof of emergency fund you may have can contribute to that.

Because really, that can help reduce your payback periods. It may reduce the amount of interest you may be accruing and have to pay back as well. And so for me learning that when I was 18 and going into college and then figuring out student loans and then figuring how long you have to work to pay that back and how long it just takes in general that was a lot.

Because something, not only for college tuition, but also I went through a sports car phase where I wanted to you know, all the European sports cars could name them all and [00:08:00] went through a certain phase there and saving up for those or thinking about saving up for those something that.

Someone taught me that after a while, I needed to frame it in the sense of how many days, weeks, or sometimes even months, maybe even sometimes years it takes to purchase or pay back this certain item. And that really put in perspective, would I really want to work two years to be able to purchase this car? Would I really want to work six months just to be able to afford this vacation, whatever it may be, whatever you're interested in.

So don't get me wrong. Those things are all great, but contrary to our social media and consumer culture that we're often inundated with here in the U.S., it was a little bit of a light bulb moment for me where you really just reframe your mindset in the sense of how long it takes to pay these things back.

And then also having a plan to pay them back and not going blind just taking on more loans, taking on student loans specifically and just jumping into that.

Jessica Quindlen: So I have to ask you how many [00:09:00] sports cars did you go through in this lesson?

Andre Siegrist: All of them. No. No, actually not that many. Yeah, there was a phase where I really loved BMWs. I had a couple BMWs. Those were great. But looking at others specifically, I love Jaguars. I love UK-specific.

Jessica Quindlen: Did you ever have any of those? Are we just talking about BMWs?

Andre Siegrist: No, not those.

Jessica Quindlen: Okay. You learned before.

Andre Siegrist: I learned. Yeah. I met in the middle in a way.

Jessica Quindlen: You're good. I mean, my problem is a little cheaper, but I mean, I have a shoe issue and we've talked about it on previous episodes, so I feel it where you keep going. So, you learned these lessons how do you operate now?

Andre Siegrist: Yeah. So, for me now, it's something that I've been implementing in my life often. A lot of experts will say that you usually want an emergency fund of three to six months.

That's currently where I'm building towards and what I have. And for the starting phases, you don't have to start with that because it can seem really daunting to think about, “okay, what are my monthly expenses,” and then [00:10:00] multiply that by three. That can be a lot of money for people of varying tastes and incomes and all of that.

So starting with that a thousand dollar emergency fund. I think that's a great start. Then working your way up to that three to six month of expenses, I think that's a great place to be as well.

And, what I'm trying to work into my life as well, but also just in general, is framing your savings goals in terms of what makes sense to you, can make it a lot easier because, you know, the cliche saying of “I don't want to log into my bank account because I don't want to look at the numbers and see what's there,” and that’s true, but I think when you're aware of what you have, what you make, what you're saving. And then having a goal, whether it's a weekly goal, a bi-weekly goal that syncs with your pay period, or a monthly goal, I think that time period and framing it in a sense that works for you. That can make it a lot more attainable and, and not as daunting.

Jessica Quindlen: Right. So outside of your sports car phase, have you [00:11:00] ever had a moment maybe when you were younger where you did not have an emergency fund and something came up and therefore a credit card or a parent or something had to get involved?

I know I can speak to something. I won't go too far into detail, but something medically happened when I was in my twenties and I had no fund and I had a bill that had a couple of zeros. And so, you know, that was a real wake up call for me. Especially because I'd also had some fun with some credit cards because your twenties are fun.

So, I'm just curious if you ever had a specific moment of you were having fun and yes, you might've had your sports car, but then something happened and you're like, “wait a minute, where's my money?”

Andre Siegrist: I would say definitely in the car phase. Not necessarily the sports car phase, but like those first initial cars that I bought.

Again, several zeros attached to that and parents having to help and step in, just because you don't have that fund. You don't have that emergency fund to fall back on. And that's the thing - somebody said this and I really like this and kind of resonated with it - where life is going to [00:12:00] happen.

You know, you can prepare for it or you can be caught off guard. And you know, that's for me, thinking about emergency savings fund. Saving doesn't have to be a burden. It oftentimes is just a mindset change and a lifestyle change, but when you can accept that and kind of change some of the methods and habits you have, I think you can actually have a lot more peace about saving and just finances in general.

So that was something going through the car phase as well.

Jessica Quindlen: Yeah. And I agree. And I love the idea of not starting at zero and being like, I need $20,000 in savings. That's daunting and terrifying. But starting with $1,000 or even $50 a month or $25 a month, putting it in a way that isn't so terrifying.

And then, as you grow and figure things out and get bonuses or whatever happens in your life, you can take those larger steps. Because I know I'm someone who really struggles with that, where I'm always looking to the big. You know, “I want my next car to be X,” and I just look at the price tag and that's [00:13:00] terrifying, but then I don't need a new car.

I mean, knock on wood, I don't need a new car for a while. So when you do that math, you're like, “oh, I guess I could save up actually.” You know, those kinds of conversations.

Andre Siegrist: Yeah. And it's not the fun thing to do by any means, don't get me wrong.

Jessica Quindlen: Spending is so fun.

Andre Siegrist: Yeah. What are you going to do with your bonus?

“Oh, I'm going to put it to my emergency fund.” It's not the fun thing to do by any means. But something else as well, we see a lot of data with this. It's like people have to keep in mind. I think sometimes this can help when those emergencies come up so that they don't turn into a crisis, is having that emergency fund is so much better than relying on a credit card. Those types of scenarios can often turn a problem into a crisis. When you have that emergency fund, you just have so much more peace of mind.

Jessica Quindlen: Right? Well, you know if it happens, I've been there no shame. But it makes the problem more expensive unless you can pay it off in a month for sure, whereas a fund obviously, you're just starting from zero or whatever amount you need.

Andre Siegrist: Definitely.

Jessica Quindlen: Well, that brings us to the end of [00:14:00] our three initial financial stories for all of you today. I want to encourage all of you, we do have free financial coaching here at Ent Credit Union for members and non-members. The link will be shared in our show notes. We also have webinars that we do monthly on various financial topics, as well as a full education center on our website with articles pertaining to all things financial. All of these will be linked in our show notes.

Thank you for listening to Sound Cents from Ent Credit Union. Please be sure to follow us as well as rate and review us. My name is Jessica Quindlen. I'll see you next week, same time, same place.