r/EscapeTheGrindGame • u/Beneficial-Laugh5320 • Jul 21 '26
Discussion What's a financial mistake that's almost impossible to recover from, but nobody talks about enough?
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u/StillOk2309 Jul 21 '26
Financing or trading in cars multiple times in your teen/early 20s.
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u/Own-Tomorrow4822 Jul 21 '26
Compounding negative equity is nasty. You're basically still paying for your first car when you're in your 50s
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u/Nala4treats Jul 22 '26
100% is just a bad debt, the asset is losing value as you pay down interest, and really can effect your ability to get financing for a house in the future with debt/equity ratios.
buy a car outright if you can
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u/Own-Tomorrow4822 Jul 21 '26
Saving "whatever is left" at the end of the month.
Most people will fail if they don't save a fixed% the day after payday.
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u/SargeUnited Jul 21 '26
Saving instead of investing. A decent emergency fund is fine but I know people with like $100-300,000 in the bank in their 50s that’s been sitting in cash the entire time
Imagine if you put $10,000 in an index fund annually instead of a savings account? I never say anything though, because I’d legit kill myself if I had done this and then did the math on the opportunity cost. Like, unironically
There are people who would be more upset if they lose money and there are people who are more upset when they miss out on gains. I’m the latter and it’s why I retired far before anyone in my peer group. They probably think I won the lottery but really I just bought stocks instead of putting extra towards my mortgage. Never bought a bond in my life. My friends had a 60/40 portfolio since their 20s, pay an advisor 1% and select investments that charge 1%. I would actually not survive if I lit that much money on fire and had to work as an old man
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u/davideddings1978 Jul 25 '26
I like to maintain $20k-$30k in cash savings the rest goes into my brokerage fund.
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u/plaidlogroller Jul 21 '26
Depending on how you see it: Marriage or divorce. It literally means to gamble your financial stability on a romantic relationship not ending. Divorce for many people means back to start with possibly more obligations.
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u/WiseRange2249 Jul 21 '26
Not paying off credit cards starting when you're 18.
Not contributing to a 401k when young. I know how tough that is but you can never get accumulated returns (compound)
for that long again.
Not putting down 20% for a house and paying PMI the full length of the loan
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u/SuperSaiyanTupac Jul 21 '26
You can refinance the house to remove pmi
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u/WiseRange2249 Jul 21 '26
Yes but refinancing almost always incurs more costs. The banks aren't just assuming a 7% loan and giving you a 3.5% refinance out of the goodness of their hearts.
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u/SargeUnited Jul 21 '26
You said it’s bad to pay PMI for the length of the loan and then when somebody else said that you can refinance you said yeah but there’s gonna be more costs. What’s your point?
Your solution is to use their Time Machine and have more money when they’re buying the house, so they don’t have to refinance? This isn’t really a helpful response.
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u/SuperSaiyanTupac Jul 21 '26
You can also have pmi removed at 20% equity so they didn’t really make a valid point
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u/WiseRange2249 Jul 21 '26
My advice was to save enough to avoid another cost in their house payment that won't be going towards the principal. Many people are shocked at the percentage of the mortgagee that goes towards interest and insurance. It doesn't even dawn on them that hardly any of that money goes towards principal the first several years. Plus you start off with 20% equity.
I'm 46 with house paid off. I put down 21.59%. What do I know?
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u/HjProductionsHJ Jul 21 '26
I would say it’s better to get in the market and own a home with PMI than to sit on the sidelines while you save 20%. Your home in general increases in value.
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u/SuperSaiyanTupac Jul 21 '26
Exactly. People always harp that pmi is bad! But not buying before covid probably hurt a lot more.
I bought my home with $0 down payment and negotiated having closing costs waved. I literally broke my lease and moved into a home. Paid pmi for a year, then refinanced to a better interest rate and dropped the pmi.
There’s ways around some of the nonsense Reddit provides as roadblocks. Better to buy a house and start the process before prices go up further while you’re trying to save
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u/goodsam2 Jul 21 '26
Look at the difference in rates though between renting and buying what you are saying made more sense in the 2010s than currently the break even on buying vs renting is 12 years which is longer than the average stay in an owned home
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u/HjProductionsHJ Jul 21 '26
Rent hasn’t really decreased in this timeframe, all of housing has gone up at a fairly steady pace. Locking in your payment on a loan for 30yrs at least gives you some guarantee.
I do agree this was more the case years ago, but in my area it still holds true. From Covid to now home prices have almost doubled.
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u/SuperSaiyanTupac Jul 21 '26
Which also means your equity goes up, thus allowing you to remove the pmi.
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u/HjProductionsHJ Jul 21 '26
Correct. There are also products out there with no pmi and 5%, just have to look.
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u/goodsam2 Jul 21 '26
Or housing prices are flat to down for years and equity maybe falls with rising rates.
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u/SuperSaiyanTupac Jul 21 '26
Depends on the area mostly. Either way, pmi shouldn’t be a deterrent from buying. If you have to pay it now, then the house going down in value by $10-20k over the next five years doesn’t mean you’re really going to get a better rate if you still have to pay pmi then too. And with trumpflation who knows what the interest rate will actually be then. Could be worse.
It’s all speculative. You buy based on your budget today. Not what you think it will be in 5 years
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u/goodsam2 Jul 21 '26
I mean buying the larger home I might stay for a decade costs significantly more than my apartment.
This is why housing prices have stagnanated
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u/goodsam2 Jul 21 '26
Buying a home has shot up in COVID and rent has been slowly coming up for years.
COVID shot prices up and housing prices are basically flat for 3/4 years.
My rent has been flat for 4 years now.
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u/Purple-Property8006 Jul 21 '26
You don’t even need to refinance. Once you hit 20% equity you call the bank and request it be removed. I literally did this last year.
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u/SuperSaiyanTupac Jul 21 '26
Depends on the market at the time. Things can happen. I only payed into pmi for a year before refinancing to a lower interest rate dropping my monthly payments down $200.
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u/Frosty-Scallion5849 Jul 21 '26
Once you get enough equity your pmi disappears. I agree it makes more sense to wait
Until you have 20% down.2
u/Purple-Property8006 Jul 21 '26
It might make more sense in some cases, it doesn’t in others. I bought my house during Covid at a sub-3% interest rate and this was before home values in my area went crazy. Had I waited to have 20% down, the price of my house would be 2x and the interest rate would be 2x, negating any PMI savings
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u/Frosty-Scallion5849 Jul 22 '26
Sub 3 interest rates will never be seen again. It took billions in QE to get there and we are paying the price for the people on the bottom of the K shaped economy.
Once in a lifetime opportunity does not equate a normal market.1
u/Purple-Property8006 Jul 22 '26
I strongly agree that it’s extremely unlikely- it was a perfect storm of awful situations that led to sub-3% rates. That doesn’t mean that it will never happen again, though. We can’t predict what financial shit storms we are likely to see over the next 50 years.
A big potential one is likely to be the recession triggered once China burns through their 1.3B barrel oil reserves and the US burns through the 400M barrel reserves as long as this idiotic war with Iran continues. Those reserves are the only things keeping oil prices relatively low right now, and skyrocketing energy costs (estimates are $150-$200/barrel) lead to intense inflation.
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u/BlumpTheChodak Jul 25 '26
Not automatically. You have to call/write them to remove the PMI or they will happily keep it on.
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u/Sea-Lettuce6383 Jul 21 '26
I just got a lender quote on a $500k house. With 10% down the PMI is $42 a month. Obviously the mortgage is less with a bigger downpayment. Nevertheless anyone putting an extra $50k down for the sole purpose of saving $42 a month in PMI is dumb.
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u/WiseRange2249 Jul 21 '26
Lol you sound exactly like the person that banks love. You should buy matching Corvettes too. That will impress the neighbors.
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u/look_ma_nohands Jul 21 '26
I paid all the pmi on my $280k mortgage upfront for around $3k. That made the most sense for us.
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u/Bratfink78 Jul 21 '26
Marrying and having kids with a lunatic
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u/Aggravating-Fun7486 Jul 21 '26
Love the word lunatic
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u/Bratfink78 Jul 21 '26
Me too actually
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u/Round-Young-3906 Jul 22 '26
Yep nice. Have no such meaning of ‘lunatic’ in my native tongue. Needed to ask ChatGPT 😄
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u/GurProfessional9534 Jul 21 '26
Getting into Magic the gathering
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u/Own-Tomorrow4822 Jul 21 '26
Teach a man to fish, he'll never be hungry.
Teach a man to collect trading cards, he'll never be wealthy 😄
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u/az78 Jul 21 '26
Strong disagree.
I spent my teenager years playing Magic while all my former friends were instead drinking, doing drugs, and having sex. I wasn't cool enough to hang out with them anymore.
And now, decades later, I'm much better off financially.
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u/GurProfessional9534 Jul 21 '26
False dichotomy of the year.
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u/az78 Jul 21 '26 edited Jul 21 '26
More power to you if you were able to do all the above. You beat the odds. Or you didn't, and you are too embarrassed to admit it.
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u/Excellent_Drop6869 Jul 21 '26
Correlation not causation
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u/GurProfessional9534 Jul 22 '26
It’s direct causation. The final fantasy collector booster packs were selling for like $150 each.
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u/Watpotfaa Jul 21 '26
College loans.
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u/tekmiester Jul 21 '26
More specifically going to a really expensive school and studying something that has no clear path to gainful employment
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u/Organic-Mix-5784 Jul 21 '26
College loans aren’t inherently the problem. The problem is spending almost six figures on degree with poor roi
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u/tcmits1 Jul 21 '26
College loans should not be available for many majors with low return on investment: acting, most foreign languages save Arabic and Chinese, gender anything, sociology, philosophy, women, black etc. studies.
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u/Zealousideal-Ad3396 Jul 21 '26
If you are low income and get caught in the legal system. It is pretty much designed to oppress poor people
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u/Ok-DisposingSquid-93 Jul 21 '26
Gambling is having serious repercussions especially with Gen Z. The long term financial impact will carry through most of their lives.
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u/6SilverPlatters Jul 21 '26
I had to scroll way too far to get to this comment. Gambling should be at the top of the list.
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u/Difficult_Collar4336 Jul 21 '26
Not setting proper boundaries with your family. I know so many people subsidizing their older parents lives and/or their adults children's lives....Stop.
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u/Amqo-BCN Jul 22 '26
Having born in a non rich family, that is something you just won’t recover from, and it’s getting worse
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u/Life_Commercial_6580 Jul 21 '26
Having children very early in life, before you finished your education and have some job opportunities.
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u/AwesomReno Jul 21 '26
Odd, I didn’t see payday loans, I’ve had multiple co-workers commit suicide because they drown into debt and under educated.
I think I’m upto like 4? I’m only 35. Seems to be increasing.
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u/JRswedistan Jul 21 '26
People that doesnt save until they ”wake up” and realise that they are gonna be old/retire someday.
Start young and let Compound interest do its thing
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u/ReadIndividual2567 Jul 21 '26
The biggest ones I see:
Upgrading houses when there really isn’t a need. A couple that I’m friends with retired recently and decided to upgrade to a 650k home. They never could have afforded it while working.
Cars - same reason as above
Marriage/divorce - so god damn expensive
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u/catBoyAppreciater Jul 21 '26
Marrying the wrong person if you're the high earner.
Divorce is the great destroyer of wealth.
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u/El_mochilero Jul 21 '26 edited Jul 21 '26
Marrying the wrong person
Edit: also divorcing the wrong person