Learn From Financial Mistakes

I tend to think more about the past and future than I do the present for some reason, and today I was thinking through some of the financial mistakes I’ve made. This could be a long post if I tried to list them all!

One of the items I was thinking about was my wife’s wedding ring. Although we were both very happy with the purchase, I just can’t get past that I could have gotten a better deal if I had shopped around a bit.

Before getting married or even looking at rings my wife and I reviewed our financial situation and discussed what what important to use. We decided to pick just a few things and focus on making sure those things were perfect. These were our lists:

My List:

• photos (getting digital photos)
• giving my future wife the wedding of her dreams

My wife’s list:

• wedding ring (she wanted a ring she loved, not a ring with a specific size of diamond)
• wedding dress
• honeymoon

So clearly the ring was one of our “important” items.

Mistake #1: I started looking at retail stores first

I think my wife and I both get into trouble when we start looking at top-of-the-line goods rather than starting by looking at a mid-range option. Although we are both frugal and cost-conscience, I should have investigated discount diamond brokers and sellers to get an idea of prices and expectations before taking my wife on a ring shopping trip. This would have equipped me with the knowledge of current prices for diamonds at a minimum.

Mistake #2: I took my wife with me before looking around on my own

I would have felt less pressure if I had started shopping by myself at first.

If you haven’t gone ring shopping what you’ll find is that first the retail sales person will ask what kind of ring you’re looking for. Then they show you something way out of your price range as a starting point. For example, if you’re looking for a 3/4 caret ring, they’ll say “let’s see what a 1.5 caret ring looks like”, etc. Although we ended up buying the size of diamond we originally planned to purchase, it was much less likely that we would have purchased a smaller diamond than expected given this type of sales pitch.

Mistake #3: I failed to realize I was buying a commodity

The other thing I now realize is that, without my knowing, the retail salesperson did a pretty decent job of convincing me that their diamonds were of higher quality than those that others sell. This came through several different ways. They told me that they only carried diamonds of a certain quality (clarity, cut, etc.). They also showed us some diamonds with a patented cut style, that is supposed to increase the amount of light reflected from the diamond (i.e. more sparkle). All of these things kept me, at least in small part, from looking for a wholesale diamond.

Mistake #4: buying retail

When we finally found the ring we wanted, we ended up purchasing it from a retail outlet. The engagement ring was a solitare, and the wedding ring was nice and unique as well.

What we should have done is shopped for the diamond we wanted by itself (since we were planning on buying a solitaire engagement ring anyway) first. This would have allowed us to be more picky and get a better price.

Morale: I shouldn’t dwell on my mistakes, but I should recognize mistakes and learn from them. And I did learn from this mistake. When we went looking for our first home I set our sites low initially, and insisted that our realtor show us homes at the low end of our price range first. Note that this is something that the realtor did NOT want to do. She actually mentioned that she didn’t think we’d find much on that end of our price range. This approach helped us concentrate on what we needed rather than just seeing what we wanted. There are tons of houses on the market that provide much more than we need or want. It’s much easier to take a few steps up in house without breaking the bank than it is to convince ourselves to step back a few notches from a McMansion.

Everyone makes mistakes. Recognize them. Learn from them. Then move on.

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