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Book Giveaway #7 – Why Smart People Make Big Money Mistakes

by J. Money on Wednesday, April 28, 2010

Why Smart People Make Big Money MistakesCongrats to the winners of last week’s giveaways: Donna, Lynda, & Jen! We’ve got 4 more books to give out in the next two weeks, so stay tuned :) You better like these cuz it’s takin’ me a lot of time! haha… Here’s todays:

Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the Life-Changing Science of Behavioral Economics

This book’s brought to you by co-authors Gary Belsky & Thomas Gilovich. Here is what Amazon has to say about it:

“In their fascinating investigation of the ways we handle money, Gary Belsky and Thomas Gilovich reveal the psychological forces — the patterns of thinking and decision making — behind seemingly irrational behavior. They explain why so many otherwise savvy people make foolish financial choices: why investors are too quick to sell winning stocks and too slow to sell losing shares, why home sellers leave money on the table and home buyers don’t get the biggest bang for their buck, why borrowers pay too much credit card interest and savers can’t sock away as much as they’d like, and why so many of us can’t control our spending.”

Want it? Tell us something stupid you’ve done financially over the years, and we’ll pick the winners this weekend – we’ve got THREE to give away! I’ll go first…my stupidest move was trying to hack my HELOC to pay less mortgage interest, right before the market crashed :(

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More from Amazon: Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the Life-Changing Science of Behavioral Economics


{ 39 comments… read them below or add one }

1 Becky April 28, 2010 at 7:28 am

Something I’ve done financially stupid…. Well, I was a rep for a while, making ridiculous commissions, and instead of saving I paid off debts, and am not that better off now than I was then. I could have spent less money on silly things and saved it to make it grow. I wish I was mature then as I am now.

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2 Brandi April 28, 2010 at 8:29 am

Maxed out my credit card in my last year of college with a trip to the Bahamas, random college expenses, and a SHIT TON of shopping.

Justification at the time: I’ll have a real job in like 6 months…why not?

Attitude now: Brandi, you’re an idiot!

Of course I paid off the credit card in less than 6 months once I found Dave Ramsey…but had I not had that $4000 of stupid high interest consumer debt, I’d be farther along on those darn student loans!!

LESSON LEARNED!!

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3 Andre April 28, 2010 at 8:31 am

One financial I mistake I have made is holding onto to particular stocks for too long because I thought company had a good concept. I always hope they will recover, but they don’t. If I sold earlier I could of ended up having a significantly smaller capital loss.

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4 Tiffany April 28, 2010 at 9:06 am

Well…this is embarrassing. When I was much younger I financed plastic surgery on a 0% credit card. Now that I’m older I realized two things : 1: i didn’t need it. 2: that was a stupid waste of money!!!

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5 Sylvia April 28, 2010 at 9:19 am

Stupid moves:
1) in grad school in NYC took the maximum loan possible (because you know NYC living is expensive – what with all those drinks that need buying and and taxis! LOL) and now 10 years later have almost $90,000 of student loan debt I’m paying off.
2) Cashing out of a 401K ’cause you know I really “needed” the money..

Cheers! :-)

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6 JOB's Money April 28, 2010 at 9:26 am

In the past I was pretty good about making all of the right decisions, except for one and I’m still paying for it now. This was my education. I thought private is ALWAYS better than public, boy was I wrong and I paid for it dearly, nearly $90,000 dearly. So now I’m out of school, 25 years old, found out that I probably could have paid my whole education at a much better (public) school for under $10k and have so much weight on my shoulders. But I have a plan. I’m hoping that in 5 years all of this debt will be paid for because I’m making nearly 2 times the payments with my job and I’m continually snowballing it.

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7 Erin April 28, 2010 at 9:32 am

Started using credit when I didn’t have the money to pay off at the end of the month. Was buying too many things that weren’t needed and half the time weren’t worn. Not sure how many clothes I gave away with the tags still on them. Was over $10,000 in credit card debt a year ago and broke down, got a personal loan, with a LOT lower interest rate, to pay off the credit cards. Only $2,000 left and should be paid off a year early.

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8 Josh April 28, 2010 at 9:38 am

After I got out of school I got a ton of papers talking about my student loans. Because there was a huge stack of them, I threw them in with my moving boxes and thought I’d get to them eventually. Unfortunately, in the mix of moving, I forgot to change my address with the 5 different places holding my loans. This resulted in me not getting the notifications that I now owe a significant amount of interest and overdue late fees on the payments I didn’t know I was late in making.

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9 Danielle April 28, 2010 at 10:54 am

There are sooooo many…. Bought myself diamond earrings (on credit, of course) because I fulfilled my civic obligation of jury duty; cashed out 401(k) to pay for wedding reception for a marriage that lasted three years (good party though, but I’d rather have the $25k back); purchased 5 cars within a five year period, trading in one because it got a flat (seriously – a flat); charged ridiculous amounts on jewelry and shoes because they made me feel pretty when I was sad – should have gone to doctor for stronger meds; the list goes on and on.

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10 philip April 28, 2010 at 11:06 am

Going to college and not caring enough to give the effort, wasted plenty of time and lots of money just hanging out and hardly passing a class. Guess it was still fun, but certainly not very smart!

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11 Anne April 28, 2010 at 11:41 am

I’m going to have to go with taking out over $150K of student loans to finance 4 years of graduate school. Then purchasing a home, adding another $130K of debt two weeks after graduation. Add moving expenses and the costs of furnishing a home when the first paycheck doesn’t come until 4 months post-grad. Yikes.

At least I didn’t take the loan officers up on their 0% down ARM with an interest rate that more than doubled after year #3 when I know I will be here for longer than that.

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12 Betsy April 28, 2010 at 12:23 pm

I’ve done a lot of stupid things with money. But the one I that came to mind first was paying my taxes with a credit card that already had a huge balance on it. STUPID

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13 Gretchen April 28, 2010 at 12:34 pm

Going out for drinks too much with friends. It is super expensive!

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14 Stephanie April 28, 2010 at 12:54 pm

Stupid money moves:
1. Took out the maximum amount possible in student loans to attend an Ivy League University (about $65,000) and didn’t use money from my 2 jobs during college to pay off the accruing intrest! What was $39,000 in debt for my private student loans turned into $47,000 after interest capitalized!
2. Took a job in NYC and lived in a nice part of Manhattan even though I couldn’t really afford it; cost = $25,000 in rent for 19 months! (I now live in upstate NY where the cost of living is SIGNIFICANTLY lower :)

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15 Meghan April 28, 2010 at 1:22 pm

I got tricked into buying one of those ‘extended warranty’ programs for my new car. It was a few thousand dollar learning experience for me.

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16 Jersey Mom April 28, 2010 at 1:32 pm

I honestly cannot think of one example but please don’t use that against me. I would LOVE to read this book!!! =)

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17 Jennifer Lissette April 28, 2010 at 1:33 pm

I’ve made my peace with most of my stupid money moves. The one I’m still kicking myself over is spending $1100 to pay off my mom’s overdue electricity bill. Wouldn’t have been so bad except she used the money she saved to buy herself a new computer, a fancy new hairdo and some new clothes. Thanks, Mom!

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18 DD April 28, 2010 at 1:59 pm

One example that I can think of now & hate to admit because I absolutely LOVE the vacations that I take; but purchasing into Starwood Vacation Ownership (timeshare) was a big NO-NO. Especially when I was already carrying other debt. I use it every year, but its a big thorn in my budget right now.

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19 Donna April 28, 2010 at 4:20 pm

The stupidest thing I ever did was to put all the budgeting on my husband. With a very demanding career, he let things go, did not balance the checkbook, etc. One day, thru a fluke, I found out we were 40,000 in credit card debt and in the red checkbook wise!!!! The happy ending is we worked, sold, cut back and today we are debt free except for the house. Moral to the story? Never expect one spouse to do all the money matters alone. It takes a united front to accomplish any task well. :-)

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20 Mike April 28, 2010 at 5:50 pm

I would have to say buying a house I could not afford at the peak of the market…

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21 Cheapskate Sandy April 28, 2010 at 7:03 pm

Went to grad school spending 40K on top of the 20K I already owed from undergrad and the resulting degree hasn’t advanced me any more than the B.S. would have. Nice one, huh?

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22 Cheapskate Sandy April 28, 2010 at 7:05 pm

Now that I look, DANIELLE with that cashing out the 401K for a short marriage takes it.

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23 Britt April 28, 2010 at 7:28 pm

I spent my early adulthood (18-30) spending every cent that I made on useless, meaningless and valueless stuff. I never saved a penny and totally destroyed my credit. The worst part is that I haven’t taught my children anything useful about the value of money or the importance of saving/spending wisely. Now I am in the long uphill process of restoring my credit and putting away some savings. Taking baby steps now. This book might help.

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24 Wealthy Immigrant April 28, 2010 at 8:18 pm

My mistake: not starting a ROTH IRA right after college. Thanks for the giveaway!

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25 Ernest S. April 28, 2010 at 11:26 pm

Not paying the interest on my student loans while I was in school. I wish I had been financially wiser in my younger years.

Also, I bought my house when the market was near its peak. I subscribed to the “house is a good investment” mantra, but now I know better.

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26 Vanessa R April 29, 2010 at 4:34 am

Taking out more in student loans than I really needed. I’ll be so thrilled when that (and my other debts) are FINALLY paid off. Thanks :)

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27 Elvis R. April 29, 2010 at 7:45 am

Got suckered by my ex to meet with a whole life insurance agent. Paid 100 bucks a month for three years and then cancelled to received a big fat 0 back. He sold me by saying it was a savings account with life insurance all in one, but he left out that I had to wait 10 years to see a dime of that money.

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28 Anon April 29, 2010 at 7:52 am

There are two things in particular I kick myself for: Not starting a Roth IRA until I was 27 years old, and cashing out my first 401k at age 24 just because I was too lazy (or intimidated) to figure out where to roll over the money. (I just let the money sit until my former employer sent me a check.) Ugh.

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29 AceKen April 29, 2010 at 10:11 am

I still can’t believe my first auto loan had an interest rate of over 20%. What was I thinking?

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30 Rob April 29, 2010 at 12:26 pm

Easy: payday loan!

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31 susan April 30, 2010 at 7:48 am

this is easy.. maxing out a credit card.. such a stupid thing to do!

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32 Miss Lissy April 30, 2010 at 1:19 pm

I think the biggest financial mistake I made was to not save enough. I’m working on it!

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33 Kelli April 30, 2010 at 2:01 pm

Racking up credit card debt and doing two years of college at an expensive private school that I didn’t even enjoy attending.

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34 Michele April 30, 2010 at 11:23 pm

I was stupid when I set up to pay my bills online through my bank. I didn’t read it all very closely and didn’t realize it didn’t automatically go to where it should go. So I was paying them on the day they were due and they were all coming up two to three days late. It took a couple of months to figure out why. Whoops!

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35 chontz May 1, 2010 at 8:21 pm

hmmm, that timeshare i bought 6 months out of school was a bad idea.

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36 jennydecki May 2, 2010 at 4:35 pm

The biggest financial mistake I made was going to a hoity-toity expensive school when it wouldn’t have mattered a lick if I’d gotten my degree from a community college. Now I have student loan debt a million years later because it, like, NEVER seems to go away. Gaaah! LOL

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37 J. Money May 2, 2010 at 11:43 pm

Wow, you guys sure learned a LOT of lessons! :) The giveaway is now *over* and your winners are…

1) Danielle
2) Vanessa R
3) Brandi

CONGRATS guys! I will be emailing you shortly for you addys…to the rest – we’ve got a few more lined up so stay tuned :)

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38 FinEngr May 3, 2010 at 12:09 am

O-M-G….

This is EXACTLY why I need to check your newsletter like we talked about! What a worthwhile book and right up my alley.

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39 J. Money May 3, 2010 at 12:19 am

Agreed :)

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