Believe it or not, that's a question I got in a job interview several months ago. It's not so strange when you consider it was an interview for a financial planning position, but I've thought about the question, and the answer I gave, a lot since it happened.
Before I tell you the answer I gave, let's step through a few of the possible answers that ran through my mind (my point is that there are a lot to choose from).
- Buying an expensive condo just when the real estate market started to tank in 2008.
- Taking out $75K in loans to get my MBA.
- Taking on credit card debt in college.
The one I actually gave was "Cashing in my 401k when I left my last job".
But I could have said "Having children". And now that I've quit a VERY well-paid corporate job to start my own company, that might qualify too. It all depends on how you look at it. It depends on how you define "biggest mistake".
Is my biggest mistake the one that costs me the most money in the long-run (that's probably having children!), or the one that costs me the most in the short-run (that's quitting my corporate job), or the one the "experts" would have told me not to make (the 401k cashout)?
In the end I've decided that it doesn't matter. The best part about making mistakes is that they're already made, and now all I have to do is learn from them and live with the consequences:
- The condo is now an investment property that's actually making money.
- The college credit card debt is paid off.
- The MBA loans are halfway paid off.
- The 401k cashout enabled me to buy a home in a great neighborhood at the absolute bottom of the housing market and interest rates.
- The corporate job may not even exist in 6 months since GE announced they're selling the business I worked in.
- Having children - well the jury is still out on that one!
I can get up tomorrow and make different choices. Or I can get up tomorrow and do the same things again, because in the end, they were all just choices. They are only mistakes when you look at them that way.
So don't dwell on your financial "mistakes". We all make them. Decide that you will own your reality, and focus on how you can get from where you are TODAY, to where you want to be tomorrow.