Author Topic: Care to share your ""BFM"?  (Read 7545 times)

DoubleDown

  • Handlebar Stache
  • *****
  • Posts: 1989
Care to share your ""BFM"?
« on: October 19, 2012, 01:28:14 PM »
MMM provided this very interesting and cautionary tale of his "big mistake." Kudos to him both for being willing to share it, and for showing how it doesn't have to change your overall game plan. And for letting doubters know that you don't have to lead a charmed life to reach FI early.

http://www.mrmoneymustache.com/2012/02/01/mr-money-mustaches-big-mistake/

Anyone else willing to share their own BFM just for fun or as sage advice to others?

Mine came in the form of an ex-wife, who took 600k off the bottom line and untold years off the FI plan, plus is a "gift" that keeps on giving in the form of alimony, child support, taking part of future pensions, etc! See if you can beat that! I'll bet there's someone who will make mine look like small potatoes, though.

No worries, the BFM is just a little detour ;-)  And though I have little sage advice to offer, I would invite everyone contemplating marriage to investigate the concept of "prenup."

Uncephalized

  • Stubble
  • **
  • Posts: 136
  • Age: 31
  • Location: Phoenix, AZ
Re: Care to share your ""BFM"?
« Reply #1 on: October 19, 2012, 02:03:38 PM »
I don't think I've made any BFMs yet, but I am only 25 so I've got lots of time to do so!

RoseRelish

  • Stubble
  • **
  • Posts: 179
  • Age: 33
  • Location: Chicagoland
    • RoseRelish - Slow down and Enjoy Life
Re: Care to share your ""BFM"?
« Reply #2 on: October 19, 2012, 02:36:33 PM »
I'm probably in the middle of my BFM - buying a fixer-upper house in a town where my income prospects are probably 1/4-1/2 of what I'm making now...

clarkai

  • Stubble
  • **
  • Posts: 217
Re: Care to share your ""BFM"?
« Reply #3 on: October 19, 2012, 03:04:54 PM »
After college, I bumped around a couple different jobs (with some time spent unemployed) that were a combination of low-paying, sporadic, and dehumanizing, wandering around because I didn't know what I wanted to do, just that I didn't want a typical office job. Basically, I wasted 2.5 years of my life finding out what I didn't want to do.

Now I'm back on track, and I just look at where I could be today if I hadn't gotten side tracked. It's kind of depressing, and it sure does make me feel stupid.

new2this

  • 5 O'Clock Shadow
  • *
  • Posts: 34
Re: Care to share your ""BFM"?
« Reply #4 on: October 19, 2012, 03:11:19 PM »
I borrowed $10k off of my HELOC to invest in "land in Hawaii". My coworkers had invested in it as well and had been seeing crazy returns. Needless to say, it's been over 4 years and there's no sign of my investment, let alone dividends. Thank goodness I didn't have any access to more cash than that. I know a few people that are out upwards of $50,000. Expensive lesson, but definitely learned.

CeciliaW

  • 5 O'Clock Shadow
  • *
  • Posts: 57
Re: Care to share your ""BFM"?
« Reply #5 on: October 19, 2012, 03:15:30 PM »
Marrying my first husband because it was the expected thing to do.

Took 7 years of my life. Took a decade after that to climb out of the financial hole.

Talking about money and politics with a 'date' is not sexy but a necessary thing. I wish Someone would have told me that 30 years ago.

I learned a lot and I earned that tshirt.

ErinG

  • 5 O'Clock Shadow
  • *
  • Posts: 48
  • Location: Pascoag, Rhode Island
Re: Care to share your ""BFM"?
« Reply #6 on: October 19, 2012, 04:09:36 PM »
Borrowed 10K from the inlaws. They wanted to move into my rental unit but it wasn't up to their standards. Big plan was that we'd do the demo and father in law would do the remodel and we'd pay him back the cost. Lost 10 months rental income because it took so damn long and then when they finally did move in, I couldn't raise the rent because I already owe them. Drowned in the mortgage without the rent coming in and maxed out all the credit cards.
I could have cleaned, light repairs, and painted and rented it out for the less than market value I was getting from them.
I still haven't finished paying them back.

DocCyane

  • Bristles
  • ***
  • Posts: 390
  • Location: USA
  • Keep going. You're doing just fine.
Re: Care to share your ""BFM"?
« Reply #7 on: October 19, 2012, 04:41:22 PM »
I thought I'd met the person I'd spend my life with, and I gave her a lot of support. She was young and starting out, so I helped in various ways with a car, computers, and student loans.

Then she realized I was serious about saving and investing -- as well as her going to work every day and paying her share. When she was certain there was no more to get out of me, she was gone.

Epilogue: My present girlfriend also thinks I'm a little odd for following the Way of the Mustache, but she gets the big picture and doesn't expect to freeload.

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 39
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Care to share your ""BFM"?
« Reply #8 on: October 19, 2012, 05:01:22 PM »
It wasn't one dramatic BFM.
It was spending the first decade of adulthood without thinking about saving.  I was happy to never pay a bill late, and pay relatively little interest by playing the introductory no interest balance transfer deals.  If I had extra money I'd pay extra, but if the credit cards were close to zero, I'd start seeing what might be fun to buy.  I was never particularly consumeristic (always lived in an RV, never owned a smart phone, almost never bought clothes new), but I still managed to find ways to spend all I made.

I was 30 before I finally paid off all debt and opened an IRA.

I mean, I did do everything that the posters above mentioned...
Repairing cars that should have been scraped, going back to school (getting 4 degrees, and immediately beginning a career in manual labor), and getting divorced (and buying her out of our shared RV and truck) all contributed to my debt, but I don't actually regret any of that, nor do I regret spending the first 7 years post-college bouncing from random job to random job. 
If I had it to do over, I'd do all of it the same.  Including marrying my first girlfriend, the pointless degrees, and the 30 jobs (none of which lasted more than 10 months).  In fact, I'd do them more than ever.  That's what made life great.

I might not be FI by now, but I think I'd be a lot further ahead if I had found ERE and MMM back when I was 19, and had just changed the little things, and been consistent about them.

mustachecat

  • Bristles
  • ***
  • Posts: 398
Re: Care to share your ""BFM"?
« Reply #9 on: October 19, 2012, 06:49:24 PM »
One year in a master's program that I was clearly attending to avoid real life and responsibility. $20,000 later...

The only useful thing I got out of it was understanding and avoiding the sunk cost fallacy. I pulled the plug one year in. But I think about that $20K allllll the time.

ketchup

  • Magnum Stache
  • ******
  • Posts: 3952
  • Age: 28
Re: Care to share your ""BFM"?
« Reply #10 on: October 19, 2012, 06:53:44 PM »
Lending money to an (ex) girlfriend that put paying me back at the bottom of her priorities, way below wasting money on candy and concert tickets and other stupid crap.  Three years ago.  Still trying to get the last bit back.  Don't lend money to someone unless you know they legitimately will pay you back without you prompting and before buying useless things.

thrifted

  • 5 O'Clock Shadow
  • *
  • Posts: 77
  • Location: New York City
Re: Care to share your ""BFM"?
« Reply #11 on: October 19, 2012, 07:04:24 PM »
If you feel like throwing up, read on. But don't say I didn't warn you.

Though my salary has jumped from $28k to $45k to $60k over a 10 year span, my expenses have followed suit.  I have always been able to save for vacations (7x abroad), but not for much else. For years, I was did not use credit cards, diligently paid down my student loans, but lived pretty much pay check to pay check.  I was a Suze Orman fan at one point but didn’t take any of her advice and got greedy… I mean, real greedy.

BFM : i bought a 2/2 condo for $435k in summer ’05 with a 8.5% option ARM loan plus a 12% interest loan. The household income was $45k pretax me + $31k pretax boyfriend.  By summer ’07 the value dropped to $375k and by winter ’07 the value dropped to $335k.  I foreclosed spring ’08, as my banks refused short sales at that time, and by then had racked up $5k in cc debt on spending sprees and to make ends meet – so I was living way, way, way above my means.  The cc interest rate jumped from 5% to 26% so a family member paid off my debt and I in return paid them 5%.  My final loan payment to them was early 2011.  Earlier this year, my old neighbor short-sold his 2/2 condo at the same complex for $280k.  Yikes is an understatement.

Nords

  • Magnum Stache
  • ******
  • Posts: 3187
  • Age: 58
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Care to share your ""BFM"?
« Reply #12 on: October 19, 2012, 08:57:46 PM »
Back in 2001, at 17 years of military service, my spouse got the "unrefuseable offer" from the assignment officer.  We'd had several "unaccompanied tour" close calls over the years and we'd become skilled negotiators, but this time the gloves were off.

A distinct undertone of the assignment "discussion" was "You're close to retirement, you need the pension, you'll do as we say."  Well, sorry guys, but by then we knew that I'd have my own military pension-- and our savings was enough to cover the gap.  Assignment officers still don't understand dual-military couples.  We were dealing with senior officers who'd been spending their paychecks as fast as they appeared and who were only able to retire from the military if they immediately started a civilian career.  It was like trying to negotiate with the Klingon Empire-- neither side appreciated the other's culture or goals.

Spouse put in her resignation papers, which is traditionally the starting point for military assignment negotiations.  Then she used the accounting data on her separation orders to move our household goods to a new home.  To the assignment officers, that meant we were cutting costs and getting ready to see things their way.  The reality was that we'd found our dream home and had decided that we were never leaving Hawaii.

Her command begged the assignment officer to extend her on active duty so that they could find her relief.  Even on her last day in the office (no terminal leave) she was still getting "offers" from the assignment branch.  Her final day of active duty was three weeks short of 18 years-- you veterans appreciate that significance.

We'd been discussing this situation for years, and at one point we were actually ready to take the assignment orders.  But when we found ourselves contemplating a year of separation (I'd be with our daughter) and discussing the quality of the family-counseling psychologists at the military base, we realized that this was nuts.  We decided "It's only money."  Our conservative estimate of the foregone pay & pension was $750K. 

When spouse stopped going to work, our salary income dropped by 60% and our quality of life shot up about 300%.  She affiliated with the local Navy Reserve unit, started pulling in a little drill pay to paper over any gaps in our financial planning, and was having a wonderful time in her new command.  She even got a Reserve promotion that never would have come from the smoking rubble of her active-duty assignment negotiations.  She retired from the Reserves in 2008.  Her Reserve pension starts 20 years later than her active-duty pension would have started, but she wouldn't have traded any of that time for any of the $750K.

"It's only money."

Maybe that wasn't such a BFM after all, but I have another.  Does anyone remember the value investment of a Canadian company called "Nortel"?

I borrowed $10k off of my HELOC to invest in "land in Hawaii". My coworkers had invested in it as well and had been seeing crazy returns. Needless to say, it's been over 4 years and there's no sign of my investment, let alone dividends. Thank goodness I didn't have any access to more cash than that. I know a few people that are out upwards of $50,000. Expensive lesson, but definitely learned.
Um, just out of curiosity, where in Hawaii is that land?
« Last Edit: October 19, 2012, 08:59:35 PM by Nords »

Aloysius_Poutine

  • Stubble
  • **
  • Posts: 127
  • Age: 2014
  • Location: canada
Re: Care to share your ""BFM"?
« Reply #13 on: October 19, 2012, 11:47:32 PM »
I've gotta be honest Nords, the Klingon reference was the only part of your post I understood.

My BFM was a decade of racking up student loans and credit card debt, dropping out of college multiple times, and deciding to complete a degree that ended up putting me deep into a hole with no career/skills training to dig myself out. Oops. Never to late to smarten up I reckon.

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 39
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Care to share your ""BFM"?
« Reply #14 on: October 20, 2012, 08:53:42 AM »
I've gotta be honest Nords, the Klingon reference was the only part of your post I understood.

Enlisted military jobs are always under contract.  Every 4-6 years you have a choice to either quit, or sign up for another 4 year minimum contract.  If you take it, they can decide to send you where ever they want, regardless of how it may impact your life.  The Navy wanted to send her somewhere she didn't want to go, and where she would be apart from her family for the next 4 (or more) years, and she was trying to use threatening to quit as leverage for them to agree to send her somewhere better (or better yet, stay where she was - for some bizzare reason the military likes to make everyone move every few years, regardless of how good they are doing in their current position).
But the catch is, the military retirement system is set up so that you don't get any retirement benefits unless you stay in 20 years.  At 20 years you are pretty much set for life (free health care, and the up to 750k Nords mentioned) but if you quit after 19 years and 10 months you get nothing.
The Navy thought she would never give up that retirement when she was so close to it (2 years), so they wouldn't negotiate, and so she quit.  Being a mustachian means not bluffing

kudy

  • Pencil Stache
  • ****
  • Posts: 945
  • Age: 36
  • Location: RV Traveling the U.S.
Re: Care to share your ""BFM"?
« Reply #15 on: October 20, 2012, 09:49:54 AM »
I'd say I have 3 - maybe they aren't "big", more "medium"?:
  • dinking around in school, spending 6 years to get a BS.  Also did not find and complete an internship.
  • spent 4 years after school working part-time in my field, and not jumping in and really trying to work more hours, get more pay, and move up to better things (this was a good work/life balance, but I traded getting well established in my field immediately for a more flexible schedule and lower yearly income)
  • buying my house with an ex. I've made the best of it since, I have roommate income and the value has increased, but it's been an unnecessary burden for a few years

Nords

  • Magnum Stache
  • ******
  • Posts: 3187
  • Age: 58
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Care to share your ""BFM"?
« Reply #16 on: October 20, 2012, 10:02:13 AM »
I've gotta be honest Nords, the Klingon reference was the only part of your post I understood.
Enlisted military jobs are always under contract.  Every 4-6 years you have a choice to either quit, or sign up for another 4 year minimum contract.  If you take it, they can decide to send you where ever they want, regardless of how it may impact your life.  The Navy wanted to send her somewhere she didn't want to go, and where she would be apart from her family for the next 4 (or more) years, and she was trying to use threatening to quit as leverage for them to agree to send her somewhere better (or better yet, stay where she was - for some bizzare reason the military likes to make everyone move every few years, regardless of how good they are doing in their current position).
But the catch is, the military retirement system is set up so that you don't get any retirement benefits unless you stay in 20 years.  At 20 years you are pretty much set for life (free health care, and the up to 750k Nords mentioned) but if you quit after 19 years and 10 months you get nothing.
The Navy thought she would never give up that retirement when she was so close to it (2 years), so they wouldn't negotiate, and so she quit.  Being a mustachian means not bluffing
Yep. 

Many in the U.S. military don't realize that they can reach financial independence in 10-20 years.  The assumption is that you'll serve for at least 20 years, retire to a military pension (with cheap healthcare), and start a civilian career for another 25+ years before retiring on that pension (or 401(k)) to start Social Security.  With that culture, there's no incentive to save because the pension(s) and SS will take care of your retirement expenses.  (Your kids?  Eh, they'll join the military too or go to college at a service academy.)  Nobody thinks of giving up an active-duty pension for quality of life because many don't have enough savings to go more than a few months without a paycheck.  Many servicemembers just aren't sure that they can make the transition from uniform to civilian career without that military pension as fallback.  Nobody thinks of retiring before age 65 because you might need the money while you're healthy enough to earn it, or you might feel a strong commitment to service.  The culture breeds that fear, mainly based in ignorance, and fed by daily media reports of unemployed veterans.

Of course not every servicemember thinks that way-- only 15% serve at least 20 years to qualify for that pension.  The other 85% leave the service after one or two contracts and figure out their civilian careers.  But once you stay in long enough to hit about 12-14 years of service the assumption is that you'll do just about anything to stay on active duty and earn that cliff-vesting pension at 20.  There's a huge industry of books, Linkedin groups, coaching, seminars, and government programs to help the other 85% of active-duty servicemembers make the transition to a civilian career.  There's another industry to help the 15% make the military-retirement transition to a civilian career, too.  But none of those materials address reaching financial independence-- either while in the military or after a short civilian "bridge" career. 

In the Navy Reserve my spouse was "part-time" military-- serving for one weekend a month and two weeks a year of active duty.  We'd always been saving at least half our pay, and near the end of her active duty our savings rate was even higher.  After six years of the Reserves (plus her 17+ years of active duty) she was eligible for a Reserve pension, which starts at age 60 and includes the same cheap healthcare.  Someone retiring from the Reserves can live off their savings (or perhaps continue their civilian career) for the years until the Reserve pension kicks in at age 60.  I know a number of people who have left active duty after 5-8 years and started a civilian career while drilling with the Reserves or National Guard.  They eventually reach a total of 20 years of military service through the Reserve/Guard to qualify for an age-60 pension, and plan to stretch their savings (or multiple streams of income) until the Reserve/Guard pension starts at age 60.  All they have to do is achieve FI through their civilian career-- the same way any other civilian does it-- but the military has given them a huge boost on pay, pension, and skills.

Those assignment officers my spouse was negotiating with?  They eventually retired from active duty to start drawing their pensions.  They all started civilian careers.  They're still working.  They'll be working for another 10-15 years.  We see their grumpy commentary occasionally in the alumni magazine or on Facebook or Linkedin.  I don't think they're surfers, either.

The U.S. military teaches you financial responsibility (pay your bills, don't go into debt).  However it does not teach financial independence.  Yet ironically the military's pay & benefits make FI easier than doing it as a civilian.

So we wrote the book.
« Last Edit: October 20, 2012, 10:14:46 AM by Nords »

Sparky

  • Stubble
  • **
  • Posts: 163
Re: Care to share your ""BFM"?
« Reply #17 on: October 20, 2012, 10:33:28 AM »
My BFM is pretty minor compared to some, but I bought a new car in 2009, and left the country in mid 2010. I lost my shirt selling the car, but in the long run, I'll save it in not paying for insurance, registration and sitting depreciating......


plantingourpennies

  • Bristles
  • ***
  • Posts: 441
  • None.
    • Money, Kittens, Happiness
Re: Care to share your ""BFM"?
« Reply #18 on: October 20, 2012, 10:40:34 AM »
@nords

What you said about the Military enabling financial independance while simultaneously keeping its service members ignorant of this power goes double for sales! I am in enterprise sales, where you have the ability to make silly amounts of money, yet the balance sheets of my fellow account executives are really just sad. I interviewed a (very hungry!) sales rep who boasted that she made 350K in 2006, and similar sums there after. I wanted to ask her "Well why the hell do you still need a job?"

RE: BFM

In my youth I spent thousands of dollars on drugs, women, and liquor. The rest I just wasted =)

Nords

  • Magnum Stache
  • ******
  • Posts: 3187
  • Age: 58
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Care to share your ""BFM"?
« Reply #19 on: October 20, 2012, 04:34:15 PM »
In my youth I spent thousands of dollars on drugs, women, and liquor. The rest I just wasted =)
The Navy saying is "Eh, that's what submarine pay and sea pay is for..."

ShanghaiStashing

  • 5 O'Clock Shadow
  • *
  • Posts: 51
Re: Care to share your ""BFM"?
« Reply #20 on: October 20, 2012, 07:38:07 PM »
Ha,

This is a great topic. Mine was quitting an exceptionally high paying profession after 1 year in the workforce because I "didn't like the work" (it was my first job, how was I supposed to know?) and starting a business with my now ex-gf.

We started a flooring company in '08 3 weeks before Lehman went bankrupt. Not our greatest move. The stress became too much because the business was losing money like a sieve and we ended up breaking up shortly after, she bailed on the business since she's kind of like that, and then being slightly younger and more foolish I 'did the right thing' by making sure the business became successful enough to sell so I could go back to work.

The only positive side was that it cost her $125K and me $45K in debt. Took me 2 years to pay off the debt but that was when I first became 'mustachian'. Stopped going out, no meals out, took as many travel assignments for work as possible so I didn't have to spend my own money and used ~70% of take home income to pay the mortgage and the debt down as quickly as possible.

On some levels, a BFM, on other levels I was 23 and learned a few hard lessons early enough in life that I came out the other side a much better person as a result.

JT

  • Stubble
  • **
  • Posts: 146
  • Location: NZ
Re: Care to share your ""BFM"?
« Reply #21 on: October 20, 2012, 07:48:02 PM »
Not checking citizenship status of children born in NZ before moving here.  I'm Australian and am required to reside in NZ until my son is nearly all grown up.  The dollar is low, saving for retirement has only just started to feature, employer matching is only 2%, finance houses have been going bust, the stock exchange has a small percentage of companies listed compared to the total number of companies here, financial advisors have recently required registration (!!!), the lack of investment opportunities has seen a lot of sustained property investment.

To make up for this, our monthly spend has been screwed down to under $2,000, ride the bike everywhere and am learning the art of frugality in day to day life.   MMM is right, it does empower you and bring quality to life.  Thanks MMM :)