With all this talk about early retirement and the hilarious financial mistakes that I made in an earlier life, it is tough to consider the possibility that maybe, just maybe, all that money that I recklessly blew through in my 20s might actually turn into a good thing.
I have written before about how imperfect I truly am. Throughout my life, I have made some pretty common financial mistakes that I am literally paying for to this day. While I never saddled myself with high interest credit card debt, my spending habits were, shall we say, less than frugal.
For example, a year out of college I bought a used Corvette convertible for $25k, which happened to be just under a half year’s salary at the time. Just months out of college and BOOM, I had already blown through nearly half of my salary.
I also thought about my budget all wrong. Yes, I actually had a budget, but in some ways it was enabling me to spend more money because I thought of the money in each budget category as money that I should be spending rather than the upper limit of what CAN be spent should the need arise.
For example, if I had an extra couple hundred in one of my “fun money” pots, I made guilt-free purchases of completely unnecessary bullshit. A new camera here. A supercharger for my Vette there. And hell, who didn’t need an Xbox 360? I mean, come on…
I also went out to eat…like, a lot. I went out to eat with my roommate generally two times a day, every day. We grabbed lunch during the day because we worked together, then went out for dinner, sometimes driving 30 miles or more to get to the place that we wanted to go.
The fact is I knew that the cost of all this eating out was adding up, but I did not care. When you’re in your 20s, it is typical to throw caution to the wind and have some fun with the money that you’re now making. At that point in my life, I truly did “live a little” as defined by the typical societal definition of the phrase.
And while I am looking back at all this as examples of what I should not have done, I also can’t help but think how glad that I am to put all that behind me and move on. I know what it is like to spend heavy. I’m glad that I went through it.
That experience taught me that spending large amounts of money does not bring me the happiness than I expected.
Get spending out of your system
Learning from your mistakes is the very best way to not repeat them, right? I tend to agree with this statement, but there is a very important key in the reality of how this phrase works for the majority of us.
We have to make mistakes first. Then, we learn.
Maybe my spending habits back in my 20s are helping me to save more today. I learned first hand that more spending on frivolous crap does not bring the happiness that we expect, and I have definitely taken steps to turn that ship the-hell around. Been there, done that. I know it doesn’t work.
Maybe, just maybe, I got all that spending out of my system when I was younger, allowing me to not only put those habits behind me and move on, but also enabling me to recognize when my spending might be getting more frivolous today.
Had I not spent like a sailor in my 20s, it rings as possible to me that I’d still be spending a lot more today than I currently am because I would not yet have learned that typical American spending brings nothing but debt to so many people.
Of course, one could make the argument that if I saved more in my 20s instead of spend like I did, I may have a net worth now that would enable me to retire even sooner than 2018.
And while that may be true, the lesson of money, and what ultimately buys true happiness, would probably still remain unlearned.
Based on my spending in my 20s, I have a powerful and substantial foundational understanding of what brings me true happiness. If I were a person who just naturally spends less and saves more, I probably would not have learned that lesson at such a young age.
And as a result, I may very well have learned that lesson, the hard way, later in life after retirement. Perhaps it would come in the “mid-life crisis” phase that gets people thinking about their lives and realizing that they probably won’t go down in the history books after all for some great accomplishment.
I know myself. Sometimes I’m a hard learning – I need to touch, feel and experience things in our world before I truly understand them…or, perhaps more appropriately said, before I am willing to accept them.
Today, I know that installing a supercharger in my truck won’t bring me true happiness. I understand that the latest cell phone or video game console will probably just sit there collecting dust. I now realize that spending every dollar of our budget is a great way to waste money, even though it may technically be “budgeted for”.
I understand all these pitfalls because, well, I’ve fallen into each and every one of their traps. I’ve made all of these mistakes, repeatedly.
I have learned from those mistakes…mistakes that are now very much in my past. Today I have moved on to bigger and better things, and my pocketbook is much happier because of it.
So is my future self.
Steve is a 38-year-old early retiree who writes about the intersection of happiness and financial independence. Steve is a regular contributor to MarketWatch, CNBC, and The Ladders. He lives full-time in his 30′ Airstream Classic and travels the country with his wife Courtney and two rescued dogs.