Confessions of a Gadget Junkie

Ah, April Fool's Day. Such a special day at Get Rich Slowly. Every year, I share a story of my own foolishness with money. And there are so many stories to choose from! Stories like The $1500 Frisbee and How to Turn $500 Into $7 the Hard Way. This year's story is about my love for computers.

When I graduated from college and went to work for the family box company, I had no concept of setting financial goals or saving for the future. I spent each paycheck as it came in — and more. I liked the idea, though, of investing my money. In my naive little mind, I imagined that the stock market made people rich.

So, when my cousin Nick — who is five years older than I am — took the time to explain what he was doing with his money, I did my best to listen. (I didn't listen well, though, and didn't really understand what he was saying.)

Nick told me about mutual funds, pools of stocks and bonds that made it easy for small investors to own a lot of companies at once. He told me that he was investing his money with a company called Invesco, buying funds of medical stocks and technology stocks. “I'll do that, too,” I said.

Investing made stupid
This was back in 1992. I had the beginnings of a credit-card problem (about $12,000 in debt), no savings, and was making $30,000 a year. I was also spending more than I earned. To find the initial contribution to my mutual funds I had to — no joke — take a cash advance on my credit cards. It never even occurred to the 23-year-old J.D. that he was paying roughly 20% to chase uncertain returns in the stock market. This just seemed like the thing to do.

I sent in my $1,000 initial deposit, and then signed up for $50 automatic monthly contributions.

Sometime soon after, my Apple Macintosh SE died. I can't remember why, but I know that I was convinced I needed a computer, so I did the only thing I could. Because my credit cards were maxed out, I cashed out my mutual funds to get the cash I needed to buy a Macintosh Classic II. (Kris contributed half of the funds, which she simply pulled from her ample savings.)

Looking back, I weep at how stupid I was. But there was plenty more to come.

How not to spend a windfall
My father died on 21 July 1995, ten days shy of his fiftieth birthday. When he died, he left each of his sons $5,000 in life insurance and 10% of the box factory.

By this time, my credit-card debt had grown to just over $20,000. If I'd been smart, I would have taken the life-insurance proceeds and used them to immediately pay off $5,000 in debt. But I wasn't smart. I'm sure you can guess what I did.

I used $1,000 to pay off debt (and patted myself on the back for it), but took the rest to purchase a Macintosh Performa 640CD DOS-compatible personal computer. The machine was awesome. And expensive. And because it ran both Windows and Mac OS, that meant I spent twice as much money on computer programs.

My father had gone to a lot of trouble to set aside a bit of life insurance for us (he didn't obtain the policy until after he discovered he had cancer). He wanted to give each of us a little boost so that we wouldn't make the same mistakes he had. It was a nice idea, but it didn't work.

Cash is king
I could go on and on, of course. For instance, after I'd cut up my credit cards in order to avoid new debt, I still found a way to buy a new computer on credit. I applied for a consumer loan directly from Apple, which gladly gave me the rope to hang myself. In 2003, I borrowed $3,000 to buy a brand new Power Macintosh G5 tower.

But eventually, as I started my financial turnaround, I learned to resist the lure of the money-saving gadget. In fact, when Apple first released the iPhone, I was in full debt repayment mode. As much as I wanted one, I resisted. It wasn't until I'd paid off the last of my consumer debt that I finally gave in. But when I bought the phone, I paid cash.

Now, of course, the Apple iPad is just days away from launch. And yes, I've ordered one to be delivered to my door on Saturday morning. Is this just as stupid as all of my other tech purchases? Perhaps. But there's one key difference. This time, instead of cashing out my mutual funds or using a windfall to fund my purchase, I'm using money I've put in my savings account for this very purpose.

It may be that I'm paying a penalty for being an early adopter, but one thing's for certain: Because I no longer finance these sorts of purchases on credit, there's no compounding on my stupidity. What I pay is what I pay. Now if only I could learn to be satisfied with last year's model…

Okay, it's your turn. I know I'm not the only April fool out there. Tell us about the stupid things you've done with money. What'd it cost you. What'd you learn? How you turn things around?

More about...Debt

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basicmoneytips
basicmoneytips

Good story here. I am glad you turned your finances around. I do not really have a turnaround story but do have a friend who influenced me in investing. In grad school I had a really good friend who had a subscription to the wall street journal. I thought that was odd for someone in their early 20s. He helped educate me on the concept of mutual funds, retirement accounts, savings, etc. When I got my first job at 24, I immediately opened a 401K and mutual fund account. I have really never been gadget crazy, so I cannot comment… Read more »

John
John

In the 80s and 90s I bought hundreds of music CDs while I was carrying a bunch of credit card debt. I eventually saw the error of my ways. For 5+ years now I have been out of debt, and have switched to buying the other kind of CDs (the ones from a bank). I have been watching the music CDs collect dust for the past 3 years since I put the music on my hard drives, and sometimes regretting having spent almost $10k on them, plus lots of credit card interest. Last week I decided to send 600 of… Read more »

Carl
Carl

Nice story JD–for me, I convinced my wife to join me in a pyramid type business focused on military auctions—buying military old supply and then re-selling it. We had to drop $500 to get in (that should always be a clue–“hey, I have a great job for you; you just have to pay me to get in”–duh, I can see who’s going to really rake in here). This came when I was in seminary and we were living so cash-strapped (though out of personal debt—kind of a focus for me) that we had about $25 a week for groceries. Plus,… Read more »

D.J.
D.J.

I grew up in the 60s and 70s watching my mother pay for all my school clothes with her Visa (it was Bankamericard then). What I didn’t see was her writing a check each month to pay off the card. She never carried a balance, but I didn’t know that until years later. So, I came out of the gate charging everything but groceries and rent and the car note when I graduated from college. Because I only made the minimum monthly payment, my balances crept ever higher, of course. Some 20 years later, I was able to pay off… Read more »

DJ Wetzel
DJ Wetzel

My first car in high school was a Jeep Wrangler. My parent’s took out the loan in their names, and I made the payments. I struggled with the $99 payment each month, but I made it, and I paid the car off myself without missing a payment and had the title transferred to my name in the end. The sad part was, I put about $5000 into a stereo system, oversized tires, a winch, a chrome grill, new seats, and all sorts of other shennanigans. All told, I spent $8000 total on the Jeep, and sold it three years later… Read more »

ArandomPerson
ArandomPerson

At the end of last year I counted my DVDs. I have 102 of them (some multiple disc). At an cost of 5 to 19 dollars each I estimate that I spent about 1,000 dollars. I realized I was watching a previously-seen DVD only once or twice a month. What a waste of cash. I decided that I would not spend any new money on DVD’s for this year (except for one b-day present for myself). I am allowed to trade or sell my current DVD collection to get different ones though. So far this year I have not bought… Read more »

Jan
Jan

My broker (who accepted our money $10 at a time)retired . Her son took over her accounts. We had lots of dollar over dollar money in Worldcom. I went in to take it out. Gut feeling He had a great sailing boat picture on the wall, ” I just bought it.” “Don’t take your money out- the company is fine.” Easily embarrassed and a teen outside on the side walk I left without taking it out The NEXT DAY I lost a large chunk of our life savings when it went under. Still writing it off – 14 years later.… Read more »

Molly On Money
Molly On Money

I bought a Toyota Camry for $1800, sold it for $1200 to buy a VW Jetta Diesel for $9000 IN ORDER TO SAVE MONEY ON GAS.
Nearly two years later I’m still paying on the car loan!

Kathy
Kathy

I cashed in a mutual fund to buy a Mac. I wish I’d kept the stock in an IRA — it is a good company. But I can only move forward with the knowledge I gain from sites like yours. AND I bought my iPhone with cash this time. I learned something! Thanks.

Twin
Twin

I love computer technology but I have not purchased a computer in many years. People give away the “old computers” that are running Microsoft operating systems and are full of virus and spy-ware. I wipe the disk drive and install Ubuntu and other free, open source software. The free computer suddenly runs as fast at an i4 and has cost me nothing. Now people are starting to give away multi-core computers! Recycle and reuse. Keep your money in your investments.

Jeremy
Jeremy

When my wife and I decided to start a college fund, we made an appointment to sit down with a financial advisor. Thinking ahead, I took out a cashier’s check for the amount we were planning to invest. When it came time to give the advisor our initial investment, he said a personal check would work just as well — so I wrote a personal check instead, wrote VOID across the $5000 cashier’s check, and put it through the shredder. Since it was about full, I dumped the shredder’s contents into the kitchen trash and took it out to the… Read more »

Brian
Brian

What advantage did you see to writing a personal check instead of the cashier’s check you already had prepared?

Gui
Gui

That’s just funny but I feel the same, 5 months ago I had a 19,000$ debt, and I was merely doing 24,000$ a year. Now imagine, I couldn’t even rely on myself to buy food I was always late in my payments and somehow I always managed to find excuses to spend more money. I was full in debt when I got the iPhone but felt like it was worth the money. 5 months layer I got rid of my car, I asked someone to take over my iPhone, payed entirely one of my 2 credit cards and now I’m… Read more »

Sara
Sara

I got a full college scholarship that was contingent on maintaining my GPA above 3.5. I kept the scholarship for 2 years, and the first foolish thing I did was allow my GPA to drop below 3.5. What really makes me kick myself, though, is that there was an appeal process for extending the scholarship for one year in the event of extenuating circumstances (for example, a death in the family or serious illness). I didn’t have much of an excuse, so I didn’t even try to appeal. I later found out that almost every appeal was approved, even if… Read more »

Slackerjo
Slackerjo

In the early 90s spent $240 on a pair of nice leather, fur lined, cowboy boots. They did not fit as well as they should have so I only wore them a few times. A few years later I came to my senses and realize that I am too boring and conservative to pull off the cowboy boots look and donated them to charity.

KC
KC

I took out a $5,000 personal loan to invest in the stock market towards the end of 2008. We all know what happened to the stock market in late 2008…
It felt so good when that loan was finally paid off…

Rob Bennett
Rob Bennett

It may be that the money you “wasted” on gadgets helped you develop the technical competence that allowed you to push this blog to the top of the heap.

Life is funny that way. We do dumb stuff and are rewarded. We do smart stuff and it kills us. This sort of thing happens all the time.

Rob

Sunny
Sunny

I got rid of a terrific, paid-off ’02 Chevy Impala for a less than great ’07 Ford Mustang with a car loan and high insurance. I’ve since vowed to be more shrewd with car choices.

Brian
Brian

I’ll second post #2 and #6 about the CD’s and DVD’s. From the time I got my first job in high school, I would get my paycheck and then go to Best Buy to buy CD’s 2 or 3 at a time. I’d also go to movies almost every weekend. When I got into college, I got back in to comics and baseball cards. After college, I moved to Books, magazines, and DVD’s. One day, you look at all that stuff, shelves full of CD’s, DVD’s (many unopenned), and books (many unread) and boxes of comics and magazines along with… Read more »

B Locke
B Locke

I am over $47000 in debt getting a BA and MA in Theology and an MLIS. Funny thing is: I’m not even that religious anymore (although I do enjoy the study of religion) and a job in a library, even one specializing in theological resources, barely pays a decent salary without adding the cost of the loan on top. Oh well.

Jason
Jason

I have a good one I purchased a brand new car in 2002 (a 2003 model) with the intent of turning it into a show car. Which I did I took a 21K car and over the next 18 months added between 25-30K of Rims, stereo, suspension, engine work and body mods you name it I had it on this car. I won multiple trophies at some big national car shows, but I wanted more. I sent it to a shop halfway across the country to “develop” some prototype parts for it. Well 6 months later when i took the… Read more »

Maharani
Maharani

I havent done anything this stupid. but I will tell you what I think of the iPhone, iPad and such. I dont really want to make whats-his-face-Steve Jobs, I guess, any richer. He is rich enough without my adding my nickel to his pile. That idea really stops me in my tracks. My celphone, a blackberry, is paid for by my employer-I dont need it much and rarely use it-a waste of time and money. Perfectly happy with a landline. The office pays for my home computer too. I will not buy another, and may go computerless when I retire-its… Read more »

Moneymonk
Moneymonk

Sorry to hear about your Dad. He was young.

I have been pretty good with money. Unless you factor in eating out. I’m not big on homecooked meals.

My mistakes with money was menial. Enough to make up for it later

Surreption
Surreption

Mine is definitely pianos. I know how to fix them up and I like doing that but I now have 5 pianos in various forms (organ, electric piano, acoustic)….and I don’t even know how to play that well! It’s not a big deal because I have friends that can play well that I play along with, but I still feel sheepish when I think about it or tell anyone about my “gadget” obsession.

Amanda
Amanda

I funded my entire undergraduate degree myself with private and federal student loans. Unfortunately, I also racked up credit card bills on frivolous stuff (none of which I still own today), and then took out larger student loans to pay off the credit cards. To make matters worse, over the years I would use any excuse to defer payment of the loans, such as when I took a couple college courses just for fun in my spare time. Eventually I had to defer again for a full year when I went back to school full time for a new degree.… Read more »

Kandace
Kandace

Back in 2000 I was purchasing my home. I did have 20% down from the sale of my condo, but I had no emergency fund and was living on the edge.

A friend of mine living in San Francisco working for a tech company. For the years she worked there she told me what a great company it was. I didn’t have much money, but scraped together $750–the last of my savings to buy stock. The bubble burst and the stocks were worth nothing within a few months.

Dee
Dee

When I got engaged to the man of my dreams I had already dreamed what my perfect wedding would be. As we started the planning process my parents offered to give us $25 000 as a wedding present, either to pay for the wedding or to use as a down payment on a house. I convinced my fiance that we would only have one wedding, but we had many years to save for a house. He agreed and we stayed in our little apartment while I planned a grandios wedding for 400 people. It was a beautiful wedding! 8 bridesmaids,… Read more »

jeffeb3
jeffeb3

I used to have the bug of getting the latest computers. For me, it wasn’t macintosh, it was a build your own PC. I would upgrade stuff way too much. We all know how much you regret those purcahses eventually. What cured me, aside from getting older and wiser, was to start using Linux. For one thing, there’s constantly things to learn, so I don’t feel like I’m bored with technology. For another thing, there’s a new version every six months, which is about how fast I used to upgrade my computer wanting the fastest, greatest hardware. Lastly, Linux doesn’t… Read more »

kaitlyn
kaitlyn

My biggest financial mistake was not being ontop of my paperwork in college. There’s one year I didn’t even apply for FAFSA, just took out a loan for the full amount. Yes, absolutely beyond stupid.

Beth
Beth

Bought my condo with no money down (100% financing). Looking back, it was a dumb move. I’m miserable in that condo and having a horrible condo association/management company that bleeds money, cannot tell us where our money is going, then try to get us each to pay 4k up front or 46 bucks a month for 10 years for brand new siding (in this economy) doesn’t help. We had to petition and go door to door to get homeowners signatures so we can veto the board’s unilateral decision…when in the condo bylaws, it states that for something like this (a… Read more »

RMoM
RMoM

I have too many financial horror stories to think about but I would just like to say that I wish I’d never plundered the 401K ….or bought the 1966 Thunderbird home from Solvang on a flatbed for ‘restoration’ ….or bought more house than I needed…and so on.

I hit bottom, resolved to change my ways, and the past 3 years have been much better.

doh!
doh!

Am I a fool or what?

This past year, I put my annual tax withholding, $20 K, into a stock for a company with a unique energy storage product that was going to launch in December 2009 and save the world. As April 15 approaches, I am still waiting and there is no new news. 🙁 Now I am working 60 hour weeks to make up the taxes by April 15th. Even though the stock is worth half of what I bought it for, I am still holding out hope. Go Zenn Motor Company!

elena
elena

Yes, thanks for the stories. Dee, #26, that’s a heartbreaker of a story and you are brave to share it. My idiot story is using my credit card to eat out all the time. When I grew up it was a special treat to go out. For several years I “treated myself” almost daily using my credit card, with no regard to the debt I was accumulating or the type of food I was eating. Needless to say it was embarassing to spend money later–and on my credit card- to pay for personal training and Weight Watchers to take off… Read more »

JefferyK
JefferyK

I could have made a down payment on a house with all of the money I have spent on compact discs over the past ten years. I love listening to music — I do play them — and I have enjoyed the collecting aspect, but I can tell it is time to leave the buying behind and focus on enjoying what I own. The dumbest thing I have spent money on is cigarettes. That’s another thing I will soon be leaving behind.

Crystal
Crystal

Oh I have one that still stings- we bought a house, a TINY house worth $68K in a bad neighborhood, and somehow ended up with $960 in monthly payments. !!?!?!?!! My real estate agent told me that the ‘big secret’ that nobody was telling me was that we’d get all teh interest back in taxes, so the trick was to take the tax return and divide it by 12 to help with the monthly payments. Everybody does that-didn’t you know? She also advised us to refinance THE MONTH AFTER WE MOVED IN. Well, re-fi requires more $ that we didn’t… Read more »

Gholmes
Gholmes

My April fool was borrowing money on my 401k to buy a “cant miss” triplex, The tenants never paid rent and I had to do 3 evictions; that took weeks and weeks. One decided to take everything down to even the door knobs. Then yes, I got down sized at work where for 8 years I thought I was too valuable to ever be replaced. Not replaced but consolidated. Ouch. I was so leveraged trying to get rich quick in real estate that I couldnt pay back my 401k. Never again, no debt, no credit cards, no trying to leverage… Read more »

annabelle
annabelle

Great topic for April Fool’s Day. Thanks for initiating it; it helps one see the wisdom of good financial skills as well as making you feel a little less like an idiot. Others have done similar things too. I think the biggest foolish thing I did was to be the “spender” in a “saver” marriage. My husband always told me that if we could carry $3-5000 in credit card debt, we could equally as easy save $3-5000 instead. I grew up in a large family and while I didn’t feel especially deprived, I couldn’t wait to get a paycheck and… Read more »

Pam
Pam

I married a man who was a financial disaster (and still is)with HUGE earning potential. Our entire marriage he spent every penny we earned and all available credit to get gadgets and keep up with his friends (who earned a QUARTER of what he, as an engineer with no student loans, did and had NO debt) — computers, video games, consoles, DVDs, cameras, clothes, cars… it seemed that every time I got us consolidated and had a plan in place to get out of debt, he applied for another credit card or store card!! I believed I could change him.… Read more »

chacha1
chacha1

I guess I should feel bad about spending a metric ton o’ money on CDs, DVDs, and books, but I feel like I’ve gotten a lot of value out of them – and they’ve kept me content to not go out much for concerts, the theatre, first-run movies etc. I didn’t even have cable till five years ago. The thing that’s a *headdesk* for me is the digital piano in my dining room. It’s an excellent instrument, but at the time I bought it I hadn’t played regularly for over ten years. And I’ve had it over six years and… Read more »

Joshua
Joshua

My wife and I recently went onto the Dave Ramsey program just under a year ago, and it has really opened our eyes to the kind of “smart” decisions we made. I love to ride bikes, and one of my pride and joys is my Orbea Onix TDF that I have been riding for 2 1/2 years. I did all kinds of work, and sold off a lot of extra stuff I had lying around the house in order to pay for it. I walked out of the store with a brand new $2000 dollar bike paid for in cash.… Read more »

Jason
Jason

Probably the biggest one for me was skipping out on the $5k/year in-state tuition of the state school and selecting instead the $25k/year private school. I did receive scholarships and grants that dropped that tuition rate — but I also took on a hefty amount of loans.

In the end, for my chosen major, the state school would have been a better choice.

Pete
Pete

Had to post mine…

In 3rd year University I bought a $3000 engagement ring for a girl that cheated on me in 4th year a month before we were to be married. I still have the ring (~10 years later), and I’ve been told by pawn brokers etc. that it’s worth about $60 to $300. And yes, I’d paid for it with student loans which I am still paying off.

J.D. Roth
J.D. Roth

@chacha1 (#38)
You just inspired a post! I’ve had writers block all frickin’ week, and now in the matter of fifteen minutes, I’ve outlined three posts, the longest of which is based on your comment. Thanks.

Lizard
Lizard

Pretty much everything I did with money between 18 and 28 was stupid. The smartest thing I did was doing well in school and getting lots of scholarships. Even with $40k of free money for school, I still ended up with $24k of student loans. How? I would overspend every semester and pay off my credit cards with student loans at the beginning of the next semester. I kept my overspending, no-clue-with-money ways after graduating from college and landing a decent paying job. At 27, I cut up my credit cards. At 28, I started aggressively paying off my debt.… Read more »

Robert Muir
Robert Muir

I think Dee takes the cake on this one. As for me, my April fool was DVDs. I have over 1300 DVDs, many of them unwatched. I would guesstimate that they totaled about $20k, not including lost interest.

Of course via Netflix, we have access to more movies than we would ever have time to watch for $9/month.

brooklyn money
brooklyn money

How about just years of not paying attention, not really knowing where my money was going and if i was saving or not. Just living in a financial fog. I always contributed to my 401K and never touched my investment account, but I don’t think I really saved anything for about 10 years. Oy vey!

Stephanie
Stephanie

Let’s just say someone convinced me (and I convinced myself) that investing my savings in Washington Mutual before the crash in September 2008 would double my investment in a few months…

Wayne K
Wayne K

My biggest mistake was marrying a “spender” and not keeping a close watch on her spending. $30k in credit card debt at one point. I put my foot down and began tightly managing the finances (she eventually left) and I am now debt free (except for a mortgage). I have a nice emergency fund and am aggressively saving for retirment and other things. Regarding gadgets, specifically cell phones. I find that these little toys are a huge drain on a budget. I have one. And, I actually only use it as a phone. I bet most people with Smart phones… Read more »

Michael Crosby
Michael Crosby

Stupid things I’ve done. Let me count the ways.

OK, enough counting already. Don’t need to beat myself up too much.

Thanks to great blogs like this, I’m learning though.

Slow and steady wins the race. A penny saved is a penny earned. Get rich slowly.

We can’t go wrong.

Curious
Curious

Pam (#37), were you on Til Debt Do Us Part, with Gali Vaz-Oxlade? I saw that episode; and the whole time could not believe anyone (much less a husband) was that cruel and demeaning, as was that husband.

Brad
Brad

I decided to go back to school and get my degree when I was 24 and thought it would be wise to move out so I could better concentrate. I have 3 younger brothers and we lived in a smaller house at the time. On top of regular government loans for tuition I was very easily able to get a 20K private loan to pay off my car so I didn’t have a car payment and another 7K loan for living expenses. I’m 29 now and done with school but I have learned alot since then and am in the… Read more »

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