20 Financial Decisions You're Guaranteed to Regret

1 | Borrowing from your 401K to buy a home.

Saving for retirement is difficult as it is, but dipping into your retirement funds early will not only incur fees but will also take years of growth away that you'll never be able to get back. Christopher Flis of Resilient Asset Management, says, "By borrowing from precious 401(k) funds, you are essentially mortgaging your retirement funds—not a good idea. If you can't afford the down payment, RENT! The carrying costs of a home—property taxes and repairs—are not appreciated by prospective buyers. Moreover, the new tax laws have devalued home ownership by limiting the deductibility of state and local income taxes." And for more great money advice, know that This Is Exactly How Much Money You Need to Make to Be Happy.

2 | Compromising your financial reserves.

Most financial advisors suggest saving enough for your household to survive for 6 to 12 months without steady income. Building an emergency fund is no new concept. Whatever you call it, financial reserve, rainy day fund, cash stash, or anything else, it's important to put some money away for emergencies.

The tricky part then comes in leaving the money alone. What constitutes an "emergency" anyway? While this might be different from person to person, don't be tricked into thinking that purchasing a car or home is a good use for this painstakingly saved money. You'll regret it if and when an unforeseen medical emergency comes up, you lose your job, or are impacted by a natural disaster.

Sam Watkins, financial planner with TrueNorth Wealth suggests that we would be better off using financing options to purchase a car or home than to compromise our reserves. Looking to save a bit of money? This is How to Cut $10,000 From Your Annual Expenses.

3 | Buying expensive investment vehicles.

Annuity products and actively managed funds all carry the same baggage. They are high-risk, and high-cost. The possible returns can be significantly higher, but much of those higher returns go to covering the costs of the investment itself—whether management fees, commissions, or covering losses.

After calculating all the costs on these types of investment vehicles, you will likely find that less expensive, more diversified options would have left you far better off, while also removing a great deal of stress. And for more ways to live fiscally smarter, here are 25 Daily Habits Rich People Swear By.

4 | Getting stuck with an annuity.

The allure of annuities lies in the fact that they have guaranteed returns. But a well-diversified portfolio of stocks and bonds can be just as "safe." It's also important to note that most annuities are not backed by the FDIC or NCUA, they are insured only by the financial security of the investment company.

The bottom line is that annuities are strapped with very high costs. Sam Watkins shared the experience of one client who had purchased 11 annuities with a previous financial agency. Since 2012, that client's return on investment amounted to only 1.5% above his initial investment. Had Mr. Watkins' client invested instead in a more efficient total stock index fund, he would have earning 15% and roughly doubled his money.

5 | Not allowing enough time.

Compound interest isn't the only reason time is your friend. History shows that markets rise and fall, and erratic trading and panic often costs investors millions. Plus, it only hurts the markets more.

Trying to "beat the market" and use frequent trading tactics usually costs more than it gains. The point of purchase and sale is when brokers charge their commissions. Start early and give it time. As the old adage goes, "good things come to those who wait." And to shine well into your golden years, follow our 25 Rules for a Wealthy Retirement.

6 | Not taking advantage of company matches.

A theme is developing—retirement is no joke, and most fail to realistically calculate their entire retirement needs. Keeping in mind that seeking professional advice is arguably one of the best ways to ensure you avoid major mistakes, almost all will say to start contributing to your work-offered retirement fund, and to meet the company match requirements.

On the topic of company matches, Robert R. Johnson, PhD, CFA and President and CEO of The American College of Financial Services states, "Perhaps the worst financial mistake someone can make is turning down free money." After all, a company match is as close to "free lunch" as it gets! And for more great self-help advice, here are 30 Genius Tricks That Will Make Your Life Easier. 

7 | Buying a new car.

Chris Whitlow, CEO of financial benefits provider Edukate writes, "One of biggest financial decisions that people will live to regret is buying a new car. It's often born not out of need, but out of car envy; people see their coworkers getting a new car and they think they need one too. According to the latest report from Kelley Blue Book, the average cost of a new car is $35,444. That means a payment of $500 or more each month for the next five years—for a depreciating asset. Then factor in insurance and upkeep."

Mr. Whitlow has sworn off car ownership and instead opts for ride-share services like Lyft and Uber. While this might not be practical for you, if owning a car is what you need, remember the average car's depreciation curve is usually steepest in its first few years.

8 | Purchasing a "project home."

If you listen to the radio, you're probably tired of hearing advertisements of how much money you can make buying and flipping houses. It's a pretty basic concept, and while it's true that house flipping is proven to work for many DIY-ers, you should fully scope things out before you dust off your old hammer (if you can remember where you put it, that is).

We all have that one neighbor with the half-finished fence, all-but-forgotten yard, and 4-years-and-counting kitchen renovation. No one knows better than you how precious your time is, and unless you already have all the resources and skills to finish the job, you're bound to end up with more headaches and sleepless nights than it's worth. Save yourself the hassle by not buying a project. You'll end up spending less than you will when you finally give in and hire a pro to finish the job. And for more at-home advice, here are the 20 Genius Ways to Make Household Chores More Fun. 

9 | Paying too much for your education.

Your education is probably the most important investment you will ever make. It will define your future and become an important part of who you are. A common misconception is that a person's career success is only as good as the prestige of their college education. While there is plenty of clout to be given to degrees from Ivy League schools, the reality is that the majority of the most renowned companies of our day—Google, Apple, Amazon, Nike, Microsoft, General Mills, and many more—turn down Ivy League graduates for candidates from other schools in every hiring cycle.

Weigh your education costs against your projected income—what will be your return on investment? Paying $100,000 for a degree that will bring you an annual salary of $60,000 at your career peak is a sure way to spend your entire life financially underwater. Oh, and for more on Ivy League schools: Here are 20 Celebs You Had No Idea Graduated from Ivy League Schools. 

10 | Getting unjustifiable student loans.

Jordan Linville from BrightRates.com says, "The promise of more schooling is enticing. It's the promise of a job you'll like more than the one you have today, the promise of more money, and the assurance that you're investing in yourself. Plus, the government will give you low interest loans to pay for it! This has been the sales pitch that for-profit and some not-for-profit universities have used for years, but students often don't get jobs that are any better after graduation, and many don't graduate at all but still have to pay for the classes they took. Government loans are not free money—you still have to pay it back. There are certainly situations where education can be the right answer, but the $1.2 trillion student loan crisis in the U.S. shows that the promises many universities have made just do not match the value of their education."

11 | Getting an interest-only home loan.

In our culture today, loans are extremely commonplace. The downfall here is that people tend to overlook the risks involved. Borrowers should remember that borrowing money always involves risk, and interest-only loans are among the riskiest.

What are the benefits? Interest-only loans mean you'll have lower monthly payments, and you can purchase a larger or more valuable home. But don't forget that after the interest-only period is up, you'll still have the entire principal amount left to pay.

Yes, you can simply sell the home, but what if the home value has depreciated? You'll have to pay the difference out of pocket. Just about everything to do with interest-only loans piles on more risk for the borrower. It's true that if the stars align just right, interest-only loans have the potential to bring large financial benefits to the borrower. But borrowers should remember that both the potential benefits and the potential losses are based on factors that are highly volatile and often completely out of their control. And for more high-level money advice, here are 5 Millionaire Money Secrets You Can Use.

12 | Hiring an advisor for the wrong reason.

Many people hire advisors to make them rich. It is the American dream, after all. But remember that advisors ought to be hired for their expertise, not promises of returns. Hire an advisor to avoid failing mistakes like not diversifying your portfolio. Your advisor should be hired to manage risk, and to minimize costs. Let them help you make the right decisions. Getting rich is up to you.

13 | Keeping up with the Joneses.

You know the Joneses, who vacation 3 times a year, have a boat, and drive shiny new cars. According to Billy Funderburk: "I've noticed that one of the most common reasons that people have trouble delaying gratification is their need to keep up with their neighbors and friends. We tend to think that our friends judge us more than they actually do based on our 'visible' financial wealth—or the appearance of wealth." Stop comparing and start living for you. Chances are, the Joneses are on the verge of bankruptcy.

14 | Not maintaining your largest asset—your home.

For most Americans, housing costs make up our largest expense, taking anywhere from 30% to 50% of our monthly income. However, our homes are also our largest and most valuable assets. Yet John Bodrozic, co-founder of HomeZada suggests that many homeowners fall short on proper home maintenance. This leads to inflated repair costs and devaluation.

By keeping up on routine maintenance measures like tune-ups in the utility closet, fixing plumbing leaks, and maintaining the driveway and yard, we can avoid costly replacements while ensuring the home value's appreciation.

15 | Paying hundreds of dollars for cable.

Remember the days you lived for Saturday morning cartoons? It was the only day of the week that you got up before 8am just so you could watch Power Rangers. Unlike your friends at school, you had to wait until Saturday because that was the only day that it aired on the free local channels. You didn't care, though, because there were so many other ways you liked spending your weekday afternoons.

Now here you are, 20 years later, paying through the nose for hundreds of channels on your cable subscription. You don't even watch them—it's practically a donation. How generous of you! (Though it's doubtful the IRS will see it that way, so don't try to deduct it.) Jeff Proctor from DollarSprout.com proposes that cutting cable can save you over $1,000 per year, and will probably lead to more fulfilling hobbies. Besides, nothing is more frustrating than flipping to find that one movie you've been wanting to see for months, only to find that it's PPV.

16 | Not managing your subscriptions.

Monthly subscription service charges are all the rage these days. Many software programs have even foregone their traditional purchase structures for monthly membership fees. Clever marketing ploy or not, there are plenty of user benefits as well.

The trouble is that with so many—Netflix, Amazon Prime, Apple Music, cell phone plans, internet service, and more—it gets difficult to keep track. You can avoid over-spending and still enjoy your services by finding bundled deals. Several of these services partner up to offer customers both services together at a discount, especially for students. Emily Stanley, finance expert with Business.org says, "Even for personal use, customers who bundle their internet and cell phone plans can find themselves saving anywhere from $50 to $100 per month."

17 | Buying a gym membership that you don't use.

According to Statistic Brain, the average gym-goer only goes about twice per week, and 67% of gym memberships never even get used. Scott W. Johnson of Whole vs. Term Life Insurance recommends instead going to a gym where you can pay per visit.

"This eliminates the useless month of December when no one has any time to go, as well as automatically eliminates your payments when you stop working out."

18 | Trying to use debt to build your personal financial portfolio.

It's simple, really. Don't buy stuff you can't afford. Even SNL got on board with this one. It's easy to justify and say that investments in your future are responsible ways to use debt. That's how businesses are so successful, right? This is dangerous territory. Financial management for a business is a completely different ballpark than personal financial management. Besides, it's also how so many businesses fail. You'll do best to minimize your personal financial risk. A failed investment could mean personal financial disaster.

19 | Using your credit score as a measure of your financial security.

Hooray! You've finally reached a score of over 750! Congratulations, you borrow a lot of money. Hmm, ever thought of it that way? The truth is, credit scoring is a made-up system meant to help lenders make educated decisions about to whom they should lend, and how to define the terms of the loan. Nothing more.

You might say that a high credit score means that you are really good at getting into, and paying off, debt. If that doesn't sound so bad, then you are likely part of our $13 trillion debt crisis. All this being said, it's important to note the significant role that your credit score plays in your finances—especially when it comes time to purchase a home. However, there are far better ways of measuring your financial security. For example, measuring the value of your assets against your total liabilities.

20 | Not starting early to save for retirement.

It's true, you've got a lot of years left to go till your 60's. There's a lot of time to worry about retirement, and right now, you've got rent, car payments, insurance, bills, and so many other non-negotiable expenses that your meager salary barely covers as it is.

Our retirement years are a hard concept to give even a few minutes of our precious time and thought to. And it's true that for the rising generations, living costs are increasing. In fact, the National Institute on Retirement Security reports that 66.2% of working millennials (those born between 1981 and 1991) have nothing saved for retirement. But while finding the funds might call for some creativity, starting early to save for retirement can change your financial future by hundreds of thousands of dollars.

How? It all comes down to that middle school math term compound interest. Timothy G. Wiedman, PHR Emeritus and Assoc. Professor at Doane University explains that 44 years—age 23 to age 67—of investing $3000 per year ($132,000 total investment) in a Roth IRA can expect to yield over $1 million. In contrast, waiting until age 43, investing $5,500 per year until age 67 (also $132,000 total investment) will yield only a little over $350,000. So, while millennials have some ground to cover, there's one significant win for the largest generation in America—time is on your side.

For some serious personal finance inspiration, meet the man who made $16.5 million on YouTube just last year.

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