Welcome back to another episode of the Money Mindset Podcast. I am your host Ashley with budgets Made Easy in the Money Mindset podcast. Today's episode is brought to you by the Money Success Club, which is a supportive group of women just like you, working to pay off debt and not feel so alone and full of shame and feel like they're being judged so that they can make progress. And let me tell you, they have paid off tens of thousands of dollars in debt. So Money Success Club will be opening soon at Keep an Eye Out for that. It will be@budgetsmadeeasy.com slash msc when it is open in February. So if you need a group of supportive women to help motivate you, encourage you, and cheer you on along your financial journey, this is the club for you. Today's episode, we are go, I am going to discuss my worst financial mistake, the worst advice that we followed. Now, I've heard lots of bad advice through the years, but you know when you're young and you just don't have any idea and you know people older than you, they feel, they look like they have their stuff together and you feel like, okay, if they're doing this, then it's probably a good idea. If they say to do this, then it's probably a good idea. Well, that's not always true. So I wanted to share this story with you because I was on the Investor Mama podcast the other day and it came up and I realize I have not discussed this on the podcast Now, Jen was also on last week's episode one 19 and we talked to her about things to do and how to be prepared and you know, how to take care of yourself and things like that when you're caring for a parent or a grandparent. And then I spoke to her, which is not out yet on her podcast about my journey and you know, mistakes to avoid and things like that that I made along the journey. And so I wanted to share that with you today because I haven't really talked about it here. So one of the worst mistakes, but maybe one of the best mistakes too, now that I think about it, because it brought me here to you, it really set me on this journey of being more mindful, intentional and learning more about finances. And so if I hadn't have done or made this big mistake, then I wouldn't be here talking to you today most likely. And I probably wouldn't be debt free, I would just be, you know, living a normal life with normal debt and you know, just taking things as they come. Right? But back in 2013 we, which was actually, oh my, oh my gosh, it was like 10 years ago almost already. So we had just bought our dream house in November of 2012. And so in 2013 we found out that we were gonna have another baby. Now we already had an 18 month old at that point, and our house, the way it was set up now, it was our dream home for many reasons, but the layout of the house was not one of them. It had, or it still does. The main house only had two bedrooms, which are really tiny, like in the extra bedroom. Besides our bedroom, bedroom is barely the size of an office. Like literally there's no room. Plus there's three doors in that room. The closet, a bathroom and the door to get into the room. It's very, very tight. Like you can barely fit a twin size bed in there. And some twin size beds, depending on the shape, don't fit very well. Like my, my son had a Corvette bed in there, it only fit one direction, took up half the room, like it's tiny. So with two kids, we didn't have room to put them anywhere. Now the house had a completely separate in-law suite that you had, you could only access by going outside or going through the garage. So there was no, it was not connected to the main house and we really wanted to connect it to the house, which was really just enclosing a covered porch. So we didn't have to do the roof, we didn't have to do the foundation, we just had to build the walls and you know, the finishes, right. But even back, of course nowadays it'd probably be way more than that. But even with not having to do anything structurally, we, you know, they did have to, you know, change some things to build the walls obviously. But the, you know, the structure of the house was not changed and it was still like $25,000. So we were discussing about how to pay for this, right? We just moved into this big expensive house but, and we were tapped out on our equity. Like at this time we told the appraiser like, it has to appraise for this amount. And guess what? It appraised for exactly that amount. Like there was no wiggle room to like refinance or get a home equity loan. There was no home equity. So $25,000. We didn't have that in savings. And so we had to think of a way to pay for that so that we could have our house work for us with two small kids. Well, somebody my husband works with who is or seem to be, I mean I'm sure he is, he just has a different point of view and things like that on finances. He told us our best option would be to do a 401K loan. You know, you pay yourself back, it's a low interest rate, you know, if you happen to lose your job, you know your income will be less so, so it's no big deal on your taxes, like things like that. So we decided to go ahead and take that option, which for us really was, you know, the lowest interest rate option anyway. It probably wa it was not the best option for us in hindsight at the time it was like, okay, that makes sense. This is probably our best option without really knowing much, right? So once we took out that loan, I checked our, or my husband's 401k account cuz we took it outta his and I was shocked to see that the balance was $25,000 lower. And I was panicking. So I called him, I'm like, you guys took the money out of our investments. Like this was a loan, not a withdrawal, right? And turns out when you take out a loan on your 401k, it's not just used as collateral. Like they take it out and you pay it back in with your payments, which I did not know, which means it's out of the market. So you're not earning interest, you're not getting that compound interest on that money while it is out, while you haven't paid it back yet. Okay, well we couldn't change it then, so we just decided to go with it because that was what we had done and we needed the money and so we just left it as a 4 0 1. Well, we go on to finish the project over the summer of 2013. We have our second child in September, 2013. All is good. I go back to work, I think it was in December, maybe like mid-December. Well I'm back to work for like a week or two and I get home and my husband's already home, which is very unusual because he literally never beats me home. I'm always the first one home. And it turns out he got laid off that day. So now we have this 401K loan. The, the additions already done, the remodels already done, the loan has already been, you know, we've made a few payments on it less than a year and well we still owed like $20,000. And at that time, whenever you got or lost your job or left your job, you had a very short period of time to pay the money back and we're talking $20,000. At this point we had paid off a couple thousand through that. Those couple of payments I, I don't even remember. It was less than a year or maybe right at a year that we had paid on it. So it was still $20,000. And where he worked, you had 60 days. The, the employer can decide if you have up to like 90 days. Ours was 60 days and we didn't have the money and my husband didn't have a job. So how are we gonna get a loan for $20,000? Like that made no sense, right? Well so we just kind of ignored it. This is like we couldn't do anything about it at the time, time, especially not within 60 days. And then the next year, so 2014, my, oh wait, no, no, no, no, no. So that was 2014, January, 2014 that my husband lost his job. So cuz we had our baby in the fall of 2013. Then January, 2014 he lost his job. Well you know, that's the beginning of the year. We go on, he gets another job, he gets a raise, he still has his severance. So you know, he made actually more money than he normally does because there was no lapse in pay and then there was double pay for a little bit. And then, you know, different bonuses and things that he gets through the year and the end of the year, welcome 2015 when we go to do our taxes, we get a nice little note saying that, oh your 401K loan Canada has a withdrawal. And we went from normally getting around, you know, three to $4,000 or so every year in tax tax money back. We went from that to owing 6,000. So you're talking about a $10,000 loss, which was half of the loan. So you're talking about a 50% penalty basically on a 401K loan because my husband lost his job, which is why I hate 401K loans along with you. You're literally taking money out of the market. So I clearly do not like that either, but in hindsight I would, you know, it would've been cheaper to just put it on a credit card, 50%. I mean you're talking 26, 27, maybe 28% on a credit card. Or we could have done a 0% interest credit card for so long, you know, and kind of played that game would've been better than 50%. So, you know, we paid the IRS with a 0% interest credit card for 18 months and then the next month when I got the bill, I'm like, hmm, I don't know how I'm gonna pay this, especially within the 18 months so I don't get charged a whole bunch of interest. And that is what started our journey for paying off debt and then teaching others how to pay off debt. You know, cuz that was like, okay, how am I gonna pay this off? And that got me looking for ways to pay off debt. And so, you know, it's the worst decision that we've probably made, but also one of the best decisions that we have made as well. We learned a lot from that experience. But also, you know, when I have, when I've done the math based on the rule of 72, so we were in our twenties when we did this, okay? And we had money invested obviously in our 401k, but taking out 25 th well 20,000 cause we had paid back a couple thousand dollars back into the 401k. So we're talking $20,000 that was no longer being invested. When we get to retirement age at 65 or 70, they have have these little handy dandy calculators online to figure out like how much money that would be at retirement age. And we're talking almost a million dollars. We obviously we've, you know, invested in the market, we're gonna be fine. But if you think about that $20,000 in our twenties that we took out of our investments, oh my gosh, we are losing almost a million dollars at retirement time. So I don't know, that's a very, very costly, very costly mistake. But there are, there are some silver lining to it of course cuz I love you guys, I love supporting you and teaching others not to make the same mistakes that I have, but it cost us a lot. So let me know what is your biggest financial mistake you've ever made? Send me a message on Instagram or tag me on Instagram. But if you don't wanna share it, you know, with the world, I'm really curious what your biggest financial mistake is because we all make mistakes. So don't be ashamed, don't feel like I'm gonna judge you. Obviously, I just told you my biggest one that cost me almost a million dollars. But you know, we all make mistakes and we learn from each other. So I would love to hear your biggest mistake and maybe you know, what you've learned from that mistake because that's where we really grow and that's where we make the biggest progress in our learning and our journey because we're like, hmm, never wanna do that again. Right? We learn more from our failures and our mess-ups than we do from our successes. And that's just how our brains work. So I would love to know so I can share, you know, you can be anonymous of course, but you know, so I can share with others, you know, some of the mistakes that other people have made so they don't feel dumb or like they're not a good enough adult or you know, things like that. Cause I hear that all the time from my listeners. You know, we feel like everybody's gonna judge us and why did we do that? And you know, we, we should know better, but you know, we don't know until we don't know or until we know. We don't know until we know, right? So, you know, things happen. We all make mistakes. Nobody is perfect. And that is, you know, one of the core tenets of the Money Success Club. We are all here to support each other through the ups in the downs because nobody is perfect and we all make mistakes. So I hope you have a great week and of course if you would love to come on the Money Mindset podcast and share your journey, you can save your time@budgetsmadeeasy.com slash strategy and come join me for a budget strategy session. It doesn't cost a thing but your time and I would love to talk to you and just kind of see how I can help you and help you along your financial journey. Have a great week.