I spent my early 20’s living it up in the military while stationed in South Korea.  I had my own apartment, with a $700 hooptie (everybody had one), and a new-found freedom.  Sounds fabulous right? Yeah, I must admit, it was pretty cool.  This was my first experience on my own, away from my family and friends, a new job (with lots of responsibility) and in another country. While this was a memorable experience, these life changes were stressors that propelled my irrational spending habits that drove me into thousands of dollars in debt. 

At the age of 25, I left the military and moved to one of the most expensive areas in the U.S., the DMV. No, not the Department of Motor Vehicles, but the District of Columbia, Maryland, and (Northern) Virginia.  Once again, I found myself experiencing the same life stressors –  moving to a new city, starting a new career, making new friends, and adjusting to a new life outside of the military.  Faced with the same life stressors, it’s no surprise that the same bad spending habits resurfaced.    

Here are 7 Mistakes that I made in my 20s that I hope you will avoid to save yourself time and money on your financial journey. 

Before we start, some may read this list and say, “Wait a minute, I’m doing this now in my 30s/40s”. No worries, the key is to identify the issue and apply the solutions now.  

Mistake #1 – I Spent More Than I Made

This is a classic rookie move.  

When I finally started making some ‘real’ money, nobody could tell me anything, OK!  I wanted what I wanted and I wanted it yesterday. If it was on my shopping list, “just throw it in the bag.”   I honestly didn’t realize this was financially destructive behavior for a long time; not until a few years after I left the military.  

Honestly, everyone was doing it.  At least that is what I perceived.  Everyone was at the Post Exchange (the military mall) and shopping on the Korean economy.  My job was ‘secure’ and it felt like my paycheck was guaranteed.  I mean, “who doesn’t pay the military?” 

My only concern was what was I going to buy next. I bought flat screen TVs, home décor, books, clothes, shoes, fake designer purses (don’t judge me), YOU NAME IT! There was no filter and no limit.  

The result – tens of thousands of dollars in debt, mountains of worthless stuff that I have since thrown away or donated, and zero wealth.  

Solution– Here’s the thing.  If it appears like everyone is out living their best life, they maybe, but it’s probably on credit.  Don’t follow their lead.  Create your own path.  

Establish financial goals, create a budget that aligns to your priorities, and stick to it.  

Your money should not just be for consumption, but for accumulating wealth.  Stop overspending and make your money work for you.  

Mistake #2 – Saved Money & Accumulated Debt at the Same Da#n Time

I have to admit that, even though I was a shopaholic, I knew some personal finance tips.  I knew that I needed to save money and have good credit. However, I was saving backwards. I was saving but increasing my debt at the same time.  

I didn’t realize that technically I wasn’t saving at all because I continued to accumulate more debt than I saved.  My net worth would have probably been higher had I used cash instead of overextending myself with credit.

It’s easy to lose track of your credit card spending if you are not actively managing it against a budget.  If you are unable to pay the entire credit card balance at the end of the month, you are probably doing the same thing.

While it is admirable to save, it doesn’t help if you continue to accumulate debt on the side.

Solution– If you use credit, pay off your credit card balance in full.  If you are carrying over a balance, use cash for your next month’s expenses until you pay down the balance.   

Mistake #3 – Purchased A Car that I WANTED and not what I could afford

After driving around in Korea for 3.5 years with a $700 hooptie, I decided that I DESERVED a new car with all the bells and whistles.  It needed leather seats, navigation, V6 engine, sunroof, and remote start (because what if it is cold outside?).  

Two cars met my criteria, but only one met my price; or at least that is what I thought.  The car was a 2008 Honda Accord. I got all that I wanted along with a $500+ car note.  Since I was getting out of the military, I wanted to “treat myself.”

Even though my Dad thought the car payment was a bit high, I just knew I could afford it.  Well,  I couldn’t afford it.  In addition to the car payment, I did not consider the sales tax, property tax, insurance payments, and repairs/maintenance cost.

So, in addition to the thousands of dollars in credit card debt, I added thousands more with a car loan. 

Solution– Prioritize your long term financial goals over your short-term desires.  If needed, buy a reliable used car until you have the savings and investments in place to manage the cost of a new car.  

Factor in the total cost of having a car and evaluate that against your budget.  A new car is desirable, but not at the expense of your financial future.  

How do you know if you can afford it? 

Consider the full price of the vehicle on an annual and monthly basis.  Calculate the monthly cost for maintenance, gas, taxes, registration, insurance, car payment and determine what will have to adjust in your budget to cover it.  

If I would have done this analysis and not just assumed a $500 car note was ‘not bad’; I would have seen that my car actually costed upwards of $700+ a month, not $500.  

Mistake #4 – Used Shopping to Compensate for Sadness

In my 20s, the weekends weren’t meant for relaxation or catching up on housework.  The weekends were meant for shopping.  In person or online shopping was a pastime; I didn’t discriminate. I had a plan on which stores I would go to and what I wanted to buy.  

Amazon was one of my best friends.  Every week she sent me a package that I looked forward to.  

What I didn’t realize at the time was that I was overcompensating for sadness, loneliness, and lack of fulfillment.  This was the first time begin way from my family and friends in a country thousands of miles away and I was trying to fill a void that couldn’t be filled with stuff.  

Unless you are paid to shop daily, you may also be trying to fill a void.  Stop and recognize this. Do you even need or love the stuff you are buying or are you passing time? If you don’t love it, you may be trying to fill an empty space that cannot be filled with material things. 

Solution– This one is a hard one but the first step is to recognize that there may be a void.  Is it loneliness? Boredom? A rush for an instant satisfaction? 

If needed, you may need to consult with a professional to discuss what is bothering you.  

If it is boredom or loneliness, find something that you enjoy doing (other than shopping) and join a meetup to find other like-minded individuals.  

You can also establish goals for what you want to accomplish in the next 1-5 years. Working towards your goals will keep you focused on growing rather than filling your life with things you don’t need.   

Mistake #5 – I Didn’t Understand How Taxes Worked 

I worked for Uncle Sam in the military.  I thought we were cool, but after we parted ways, things changed between us.  

One of the many military benefits are the tax exemptions on income.  Uncle Sam only taxed income that has ‘Pay’ at the end of it.  For example, Base Pay was taxed, but income for housing and food are not.  

Outside the military, Uncle Sam taxes your WHOLE check.  So, while I was making more as a government contractor than as a military officer, I wasn’t making more at all.  I was devastated.  

Because I still didn’t get a handle on my overspending, this accelerated my debt problem.   

I finally realized that “Houston, we have a problem” when the money that I had ‘saved’ while in the military was rapidly depleting to sustain my lifestyle and pay debt. 

I needed to make some changes fast.  I eventually moved from my nice apartment that was walking distance to the train and moved further south to save a couple hundred dollars a month.    

Solution– Get a basic understanding of how taxes work.  Understand that you will not see your gross income. Get clear on what your net income will be and create a lifestyle below that amount.    

Mistake #6 – Dismissed the Power of Investing Early

While you are young, your greatest advantage is TIME.  By not understanding the power of compound interest you miss an opportunity that is hard to make up in the long run.  

While I ‘saved’ money, I was not serious about investing or building long-term wealth.  I barely put in 10% in the military retirement account. As a government contractor, I was so overextended and undisciplined that I withdrew money from my Roth IRA to continue to sustain my lifestyle.  

I have to admit that I was given the advice to invest 10% automatically, but I didn’t listen.  At the time, my short term materialistic needs were more important than saving for a retirement that was decades away. Unfortunately, those are decades that I can never get back.  

Solution– Automatically allocate at least 10% of income to retirement accounts as soon as you start working.  You will learn to live on the difference.  10% should be the starting point, not the goal.  

Mistake 7 – I Did Not Learn Skills That Could Make Money Outside of my Job

After reflecting on my 20s, I could have learned and grown so much more if I was focused and intentional about securing my financial future.  Don’t get me wrong, the military challenged me with more responsibility and leadership opportunities than I would have received anywhere else for my age. 

But, I only learned what the military wanted me to learn.  I didn’t take ownership of my professional growth and hadn’t developed skills outside of my job as a Soldier.

I could have completed a Master’s Degree, but I didn’t.  I could have learned Hangul, the Korean language while being immersed in the culture, but I didn’t.  I could have learned a programming language, but I didn’t.  

Instead, I worked hard, partied, traveled a little, and overcompensated with shopping. Pretty much nothing that created more wealth.     

If I could do it all over again, I would be a high tech, expert international traveler, multi-lingual, bad mamma jamma, but I can’t.  I cannot go back in time, but I can start now because the last thing I want is to write a Top Mistakes in my 30s blog post, and this mistake shows up again.  Nope. 

Solution– Learn a skill that you love and solves someone’s problem.  Create multiple streams of income and seek financial independence early.  Make this a priority.

There were probably more mistakes, but these were the more prominent ones that I hope you avoid or act now to correct them.

Hopefully, you will avoid the mistakes I made, but if you have, try the solutions and turn your mistakes into testimonies.

What are some mistakes that you have made?  Leave a comment below.