Credit & Debt
Our Most Expensive Mistakes: By theSkimm Founders
There are a lot of things that can be considered expensive mistakes: taking cabs frequently; paying for cable (even though we have subscriptions to other services); the dress-with-the-tag-still-on in our closet; the pair of shoes we bought when we really, really shouldn't have.
But there are a few mistakes that really stand out.
Getting a Credit Card to Pay For Spring Break
As a college senior, Skimm 'A' didn't have a flush bank account but really, really wanted to go to Mexico for spring break. So the only reasonable thing to do was to apply for a credit card to finance the trip.
Instead of comparison-shopping for the credit card with the best terms for her, Skimm 'A' merely applied for the one issued by the bank whose branch was closest to school.
The trip was great and gave 'A' lots of memories (that she won't share here). But it also left debt. And that interest kept on accruing year after year until it was paid off about six years after the trip.
While it wasn't the best financial move, taking the trip isn't a regret. Not bothering to search for the right credit card and failing to save to pay off the balance right away . . . big mistake. Huge.
Keeping a Storage Unit After Moving
Skimm 'B' wasn't sure she really, really wanted to move from Washington, D.C., to New York City long term. So, rather than make a choice that seemed very overwhelming at the time, she found it much easier to leave some furniture in D.C.—just in case.
Fast-forward four years. It turns out New York worked out. And the stuff in that storage unit? Still in D.C.
theSkimm started and life got very busy—too busy for Skimm 'B' to just make a trip to another city to unpack a unit in the middle of nowhere.
But the charges kept coming . . . and coming . . . and coming. The storage company was unwilling to empty the unit and Skimm 'B' felt it would be weird to hire a stranger to go through it. So the charges continued. This mistake cost thousands of dollars over some five years. Money better spent anywhere else.
Not Paying Up for a Lawyer
When we started theSkimm, we needed legal help: to form a company, to fundraise, to give us advice. We had lots of questions about basic matters, and those questions came with billable hours. We didn't want to just use legal templates passed on to us by friends. We wanted to learn about all our legal options and we wanted to develop a relationship with someone in the legal field. So we were willing to pay. Just not a ton.
We had two choices: Go with the dream lawyer or go with the one who was on sale (well, "on sale" for an attorney, anyway).
We like bargains. But by going with the on-sale lawyer, we ended up spending more than we would have had we gone with the more expensive attorney. Why? Because legal work needed to be redone, or there was too much back and forth, or things weren't explained clearly, causing us to burn through lots of dollars when we asked questions.
We've since learned to pay up for quality, even though it hurts to open the bills.
theSkimm: Think about how the financial decisions you make now can hurt or help down the road, then plan for the cost. Burying your head in the sand only makes you sandy.
For more tips and resources on mastering your finances, visit chase.com/financialfitness.
Carly Zakin and Danielle Weisberg are the co-founders of the daily email newsletter theSkimm.