Sasha over at Consumerism Commentary is actually working on a list of five stupid mistakes from last year, but she’s uploading them one at a time and we’re getting tired of waiting. We’ll post a quicklink or something to the remaining two in a few days. Anyway, here are mistakes one through three, another person’s financial self-flogging in public for your edification, or grim enjoyment.
Mistake #1: Failing to Utilize the Energy Tax Credit
There was a $500 tax credit shared between 2006 and 2007, and Sasha kept putting off some badly needed home purchases that would have qualified for the credit, because she was waiting for a “dirt-cheap” sale.
Mistake #2: Failing to Establish a Spending Budget
I tried to spend less, consider my purchases more, and get the best deals possible when buying things in 2007. While I did halfheartedly inventory my spending and try to get my costs down for each category, I did not establish a budget for these categories at all.
This means that things like restaurant spending and even the occasional clothes shopping spree can get a bit out of hand–I don’t even have an idea of a spending limit, I just go by what feels reasonable at the time. I need to get on top of this for 2008.
Her possible solutions for 2008: a spending plan worksheet, some Excel templates, and Yodlee.
Mistake #3: Underutilizing Financial and Tax Advisors
Sasha developed an asset allocation model with her financial advisor, then never read it. “I skimmed the hefty report, then tossed it aside. It’s hard to explain this incredibly lax behavior on my part. I called my advisor and asked her to summarize, then acted on what she said, yet the report remained shut.” When she had questions about the market later in the year, she didn’t bother to call the advisor.
She also did her own taxes this year but didn’t call her tax advisor, with whom she has a good relationship, to ask questions or advice.
Not this year: “I’ve started a running list of questions for my tax and financial advisors which I keep on my desktop so I can jot them down as they arise. By March, I’ll schedule a meeting to address all the queries I’ve gathered to date.”
“5 Stupid Financial Mistakes I Made in 2007: Failing to Utilize the Energy Tax Credit” [Consumerism Commentary]
“5 Stupid Financial Mistakes I Made in 2007: Failing to Establish a Spending Budget” [Consumerism Commentary]
“5 Stupid Financial Mistakes I Made in 2007: Underutilizing Financial and Tax Advisors” [Consumerism Commentary]