Top 5 Ways I Make Poor Choices With Money


Nobody’s perfect. I’m living, walking, occasionally limping proof of that. I try to do most things the right way, or at least what I think is the right way, but due to some combination of laziness, inexperience, or overconfidence, I often manage to goof things up.

Sometimes it’s just small stuff. Like leaving the remote in the refrigerator or bumping my head on the stinkin’ monitor suspended from the ceiling in O.R. 6 that’s inexplicably 5’10” off the floor. Gets me every time.

I sometimes make bigger mistakes. I went over the handlebars of my mountain bike at the pump track a couple weeks ago, landing flat on my back. The scars are healing, but I can still tell which finger I stuck in the spinning disc brake rotor 9 months ago, and I just got my e-bike back from the shop after I mangled the rear derailleur and cassette by shortening the chain too much.

My first broken bone (I’ve had quite a few) was also a bike’s fault. Or the jump’s fault. Or maybe, just possibly, 8-year old me’s fault. I guess I’ve made a few poor choices while on or in close proximity of bicycles.

When it comes to money, though, I usually make better choices.

The choices I’ve made put me in a position to afford an early retirement before my fortieth birthday. I opted to work part-time instead while plotting the exit strategy that will have me free as a bird well before my 45th birthday (I retired from medicine a few months shy of 44).

But even with money, I have made and continue to make choices that many would consider suboptimal. These are my top five money mistakes.


Top 5 Ways I Make Poor Choices With Money


1. I carry no mortgage.


We acquired our current home in 2013 when interest rates were near all-time lows. At the time, conventional wisdom would suggest that we would likely come out ahead by taking out a mortgage loan and remaining fully invested in the stock market.

Hindsight shows just how right conventional wisdom turned out to be. Since November of 2013, when we sold some mutual funds to come up with the cash for our house, the S&P 500 (with dividends reinvested) has gone up about 102% as of January, 2020. More than doubled! Conventional wisdom, how right you were.

I made a similar decision when we purchased 7 acres of lakefront property last summer, and with any luck, will do so again when we build a home on it.

In spite of the math, I can’t say I regret these decisions. While I did miss out on some gains, real estate accounts less than 15% of our net worth, so it wasn’t a make or break deal. And while hindsight is 20 / 20, had the market taken a turn for the worse instead, we would have looked like visionaries.

I can say it does feel great to be truly debt-free and to be a rare “homeowner” who actually owns a home.



2. I spend from our Health Savings Account (HSA).


Once again, the math favors growing an HSA as much as possible as the Biglaw Investor recently pointed out. The optimal way to use an HSA is to invest as much as allowed each year, track health care spending, save and scan every receipt, allow the HSA balance to compound tax-free, and decades from now, withdraw a lump sum equal to the total of all those receipts.

I understand why that’s best. I actually adopted this strategy for a couple years, and I found it to  be a royal pain in the rear.

I don’t like scanning receipts and entering each one into a spreadsheet, saving the paper receipts elsewhere to cash in at some far away date. It’s a lot of effort for a sliver of optimization.

A lot can change between now and that later date, including the tax code or how it’s interpreted. I think it is pretty cut and dry as written, but the bigger risk is probably me. What if I’m no longer around at that yet-to-be-determined future date? Or I’m around but on my next trip over the handlebars, I land on my head and don’t know an HSA from an IHOP.

If we spend $5,000 from the HSA annually, and we look at that as shifting money from a tax-advantaged account to a taxable brokerage account, that $5,000 will be subject to a tax drag of about a half percent while working. That’s $25 per year and after I retire, tax drag could be next to nothing. To me, it’s not worth the hassle.

There is one smart play that I am making with the HSA. I never put any expense directly on the debit card that came with the account. I always charge our expenses to a credit card with excellent travel or cash back rewards. I then reimburse myself from the HSA; this nets me 1.5% to 2% or more, besting that smaller tax drag, and is totally worth the hassle.


3. We have a second home.


Remember what The White Coat Investor said? One House, One Spouse, One Job. I’ve got the one spouse thing figured out, but have not done so well with the other two directives.

I’ve described in the past how our second home is one of our best investments. When you can pick one up at auction, it’s possible to get a heck of a deal, which we most certainly did.

It does cost money, though. We’ve got property taxes, association dues, utilities to pay, and we make the 10-plus hour drive each way four to six times a year (just completed one yesterday and wrote this post on the way). There’s also the opportunity cost of having cash sunk into a property that could otherwise be invested in the stock market.



We didn’t exactly spend a fortune on our other home, though, either. Now that we’re retired (from medicine) and traveling extensively, we like having a small home footprint. In the summer of 2019, we purchased and moved into a $90,000 home. I can’t say which is our primary home, exactly, as we’ll probably spend more time at the lake, but at least this one has a garage to keep our cars and crap.

Having a second home hasn’t made us wealthier, but it has given us the opportunity to spend more time with my wife’s family without taking over their homes (although we do that, too) and brings us close to friends we made when living nearby. Again, with this money mistake, I have no regrets.




4. We don’t always itemize deductions.


Another first. At least for the first time in more than ten years, we did not itemize deductions in 2018.

We obviously have no mortgage interest to deduct. Our combined property tax and state income tax deduction is limited to $10,000. The vast majority of our donations come from our donor-advised fund (DAF), and we’ve already collected the tax deduction on those.

With a $24,000 standard deduction for joint filers in 2018, we were about $14,000 shy of having enough deductions to itemize. We continued to donate some items we no longer need to the Salvation Army or Goodwill, but we would have been hard-pressed to come up with $1,400 in receipts for the year, let alone $14,000.

For some, itemizing makes no sense to do after the latest tax reform. If this site continues to be profitable, I’ll eventually be in a position to donate again to our donor advised fund, and I’ll probably wait to make another six-figure donation. The first $14,000 donated won’t receive any preferential tax treatment. [Update: We itemized again in the 2019 tax year after making the anticipated six-figure donation]

Am I really doing the wrong thing with money here? Not exactly. If you are planning to take the standard deduction, you might as well not have almost $24,800 in deductions (or $12,400 for single filers in 2020. This is where the bunching of deductions can make sense, which is essentially what we do with our DAF.



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5. I am likely retiring early.


Make no mistake; this is a money mistake. A $10 Million mistake. And a mistake I’m happy to make.

I could probably continue as an anesthesiologist for another 25 years if I really had the desire. And if the future looks anything like the past, I could probably average $400,000 a year. $10 Million is a lot to walk away from.

I’ve gone into detail as to why I want to retire early and why I chose not to pursue the $10 Million dream. The closer I get to making early retirement my reality, the more I dwell on whether or not this is the path I want to choose. I’m not saying I’m questioning the decision. I am asking questions, but the answers continue to confirm this as the choice I’m ready to make.

I’m ready to sleep more, stress less, travel longer and farther, and to finally be in charge of where and how I spend my days.

I do feel I’ve had a great, albeit short, career as an anesthesiologist. I believe it has been the best doctor job for me. The job has its perks, but one of those perks is not autonomy. I spend my workday running from one place to another to meet the needs of many patients, surgeons, and nurses. I have no say in what happens or when. I’m at the mercy of the schedule and the unscheduled emergencies.

Of course, I may miss it. I know I’ll miss some aspects and I’m leaving the door open just a crack by keeping my licensure and certifications for a year or two after I’m done.

I’m also not walking away from earning money entirely. While I have donated half of my profits from my online income, I have kept the other half, and that’s getting to be a decent sum. Eventually, I’ll retire from this, too, though. Probably plenty early.



Tell me about your money mistakes. Do you intentionally do the wrong thing (or suboptimal thing) with your money? I’ll see you in the comments.


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47 thoughts on “Top 5 Ways I Make Poor Choices With Money”

  1. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  2. Hi want to sort out our finances and our problems with the budgeting of money and debts and bills and then start saving some money.for our future finances and retirement.

  3. Number 5 is the biggest one for me. I’m a pharmacist not a physician, but I have a strong desire to retire early even though it is the easiest 120k+ I could make.

  4. 1. Paid off the house, no regrets
    2. Don’t have an HSA, no regrets
    3. Don’t own the 2nd or 3rd home, done the math, renting is way cheaper and less hassle for us, no regrets
    4. We have itemized deductions to this point, 2018 it won’t matter, so it will be the new standard deduction, at least for one year but likely forever from now on, no regrets
    5. Retire early? Maybe, not there yet, doubt if I ever pull the trigger I’ll have any regrets

  5. I largely share all but number 3. For me, having two houses is like having two dogs, one and one-half too many! (Hmm, I do have two dogs…)

  6. Regarding #1, we bought our house in 96 at 6% and paid off a 15 yr mortgage in 11-12 years, through the market crashes of 2000 and 2008. Very glad we put most of our spare money there, rather than the market. Fortunately, our timing worked out well. Plus, there is a lot to be said for the peace of mind of being mortgage-free

  7. 1. Not making Roth contributions in residency.
    2. Got talked into a whole life policy while in residency.
    3. Same ‘advisor’ sold me a disability policy in residency that became useless as an attending as it had a clause that reduced its payout value by an amount equal to any future disability policies that go into effect.
    4. Not opting for PSLF but ended up working for a nonprofit hospital.
    5. Not finding White Coat Investor earlier. ( I found your site pretty shortly after you started it… a big financial win!)

  8. I kept the mortgage till the bitter end and invested the tax break. This is known as free money. Homey likes him some free money. I don’t know how it’s a loser and I don’t really understand throwing away free money. If you bought too much house that’s a problem of the deal and not of the mortgage. I also see the blogoland misunderstanding of this. Dave Ramsey koolaid. I timed the expiration of my mortgage to match the matriculation of my oldest so I could just divert that cash flow from housing to education with no perceptible change in living cash flow, but my other education funding plans worked out so that cash flow just started going into the market. Upon retirement I did consider taking out another loan on my crib but decided we would likely be moving on at some point soon enough to not make the differential between mortgaged and not mortgaged worth it. If I move to the beach I will remortgage then, so timing and convince is an issue. If I was going to stay 15 years likely the writeoff of a 30 year mortgage would pay me back. In 2025 the present tax law expires.

    I did not make the 10M dollar mistake but I probably stayed too long. I’m good with my life and how I spent it and had the chance to retire earlier in fact I did retire earlier, but this really good deal showed up on my doorstep… The bottom line of that is I wasn’t ready. You retire when you are ready to stop trading one more second of your time for money. That last line is bedrock. All the rest, 4% x 25 etc etc, is pipe dream.

    I have a HSA, never use it, it just sits there and grows. I look at it a little like waiting to take SS till 70 and pocketing the 8% growth on the annuity. Healthcare inflation isn’t going anywhere, I can afford the out of pocket now, so I’ll let the HSA ride and inflate right along with Healthcare. Eventually bad stuff will happen. So I won’t nickel and dime it now.

    I don’t itemize either. It’s glorious! I did my taxes in 2 hours last year and even got a college write off and opened a Roth for my wife and myself. I was a middle class writeoff/Roth virgin! The bonus? I got a dab of money back! I like moving up the bell curve away from the 1%. Comports more to my lifestyle.

    • Glad to see we have at least one thing in common!

      Be sure someone besides you understands that HSA money can be taken out tax-free someday, at least to the tune of the family’s medical expenses since you opened it. Have you tracked those receipts? Or do you plan to spend it all down when out-of-pocket expenses become large?

      I also think there’s some risk that out-of-pocket medical expenses could shrink, not allowing you to take the tax-free withdrawals you planned upon. Single payer could cause people to rethink HSA strategy in a hurry.


      • I’m on medicare but my wife and kids are on liberty health share and there are some things liberty does not cover as well as I would like, so I want the HSA as a buffer at least till my wife gets on medicare which is in about 6 years. It acts like some background co-insurance in case something I didn’t think of crops up. I don’t have a huge HSA maybe 35K, but enough to make a dent if some badness arrives on my doorstep between now and then. When she gets on medicare I’ll start spending it down. By then the kids should be on their own. Healthcare is in too much flux to waste the resource on nickle and dime stuff. She’s fully in the loop on the HSA in fact she manages it, but that’s excellent advice to include her in the loop. We have a lot in common PoF!

        • When you hit 65 you can pay Medicare parts A B and D using HSA money, also you can just pull the money out penalty free but it gets taxed as ordinary income. You can also use it for co-pay, deductible and for medicine. I figure when she hits 65 there should be enough HSA to pay for A B and D for both of us for about 15-18 years. I have a UHC Medigap policy because it covers me at any medicare hosp, while traveling and even out of the county whereas Medicare Advantage (HMO) has limitations. The HSA will allow Advantage premium to be removed, but it deny’s Medigap to be paid from the HSA. I prefer having travel coverage. One way or another the money will get spent.

  9. It’s great to see the mistakes of people who are generally great with money. I’ve had a couple of posts along the same lines, but I think I win (?) the money mistakes competition! Thanks for opening up about your non-ideal money decisions. As math oriented as I am, a lot of times the best decision for you is not the “best” decision on paper. You have to live life for yourself! This list is a great reminder of this.

  10. Job Interview:
    “And what would you say is your greatest weakness?”

    “I’m a perfectionist and I try to hard.”

    And here I was hoping for a juicy story about a leveraged real estate purchase gone bad. Six figure losses and all. Oh well, survivor bias – I guess the people making truly awful money mistakes don’t end up running really successful financial blogs.

    Thanks for the share, and good luck on your next big mistake!

  11. Some of these are mistakes I would be willing to make (and some I have). The HSA is a tricky one and one I continue to debate (not that it matters at my current employer). As for retiring early…no mistake there. Go enjoy life brother!

  12. Don’t see any “mistakes” here that would get you tar and feathered by the FIRE community. Most of these things I would file under the heading of “personal choices”.

    From a strictly financial standpoint, some of my greatest “mistakes” were getting married and having children as both of those things have pushed back financial independence by years. Of course my wife and kids are also the best things in my life, so its hard to say that was really a bad decision.

    Personal finance is more than just math, and there are lots of grey areas. You have to factor in things like the peace of mind you get from being debt free, how much enjoyment you and your family get from your second (and potentially third) home, how valuable all that extra time in early retirement will be to you and your family.

    All these things are difficult to put a monetary value on, so you can’t really call any of these decisions mistakes, just personal choices.

  13. Great post and it reads almost identical to our story. My last math had me walking away from over $10mil in earnings without adjusting for inflation or the likelihood of another level of the ladder. That’s just obscene to me.

    Agree on the mortgage too, big mistake of ours from 2008-2013, but did correct it after that.

  14. I have always been a car guy. The place we waste the most money is in our hobby. We have two cars that we autocross with the SCCA. We travel some when racing and I hope to carry this hobby into retirement. I do almost all of the work on the cars. I suspend the insurance when we are not using the cars even if it is only for a few days. It is a family hobby with my wife and oldest son. We do save 40% of gross income. I am a medical physicist so not quite doctor money, but I finally feel l like we are making true progress towards fire.

    • Well, you’re definitely not wasting money if it’s a hobby you enjoy while saving 40% of your gross income. I’ll bet the money spent not only brings you closer to family, but also helps you meet many new friends.


  15. Risk versus Reward…..

    I recently did the same thing reference the mortgage….pulled money out of the market to pay off my house. Strictly by the math…it was wrong. A couple hundred thousand left “to ride” would have made more money than the 3.5% interest saved. That, however, is only clear in retrospect. The “risk” was the unknown of the future. The “reward” was/is knowing I don’t have to be concerned about the mortgage payment. The risk eliminated, the reward continues.

    By reducing/eliminating the medical practice you have reduced the “risk” of being sued (been sued twice, dropped both times as in neither case was I remotely connected to the actual medical care given…) and the very real cost of time off for depositions, the emotional cost of the suit hanging overhead (a guy named POF wrote a great article about how much fun being sued is….), as well as the ongoing PITA factor of privileges/licensure. You do lose the monetary “reward”…but once you have enough…it isn’t nearly as appealing a carrot.

    • Great points all around. I don’t talk about it much, maybe because my reach extends beyond physicians, but the end of the risk of malpractice suits is not a small factor in my decision-making. I did have that nasty lawsuit as a result of being on the Board, but I have yet to be involved in any kind of malpractice suit [knocks on wood].


      • I was much happier once I got away from OB and that “extended liability tail”…

        Perhaps we should talk about the impact of “threatened liability” more? I have read your account (more than once) and the impact of it “hanging over your head” is much larger than most (un-sued) people realize.

  16. Hi POF,

    I think we make similar bike choices. I am working hard to pass that on to my children also. Last week on our way out the door to go mountain biking, my wife said to my daughter, “Remember. If Dad thinks it looks fun and you think it may be dangerous. Don’t do it.” Good advice.

    I agree that you were right to make the mortgage “mistake”. We hammered down our mortgage previously. However, when we renewed it at a ridiculously low rate a few years ago we decided increase the loan amount and invest it. The reason for that was it could save us a bundle in taxes by investing in my wife’s name to income split – on top of investment returns. The other time that I would consider leverage to invest would be after a major market crash when prices have been “de-risked”. For you, looking at retiring soon and already having made enough money, I think you were wise. Risks are only worth taking when you need to in order to reach your goals (or intrinsically fun like on a bike ;). Since you are already winning the game – why risk it?

  17. Those monitors in the OR are some of the worst-designed equipment I’ve ever encountered. They frequently attack me also.

    All those “bad” money decisions strike me as good personal/emotional decisions. Good reminder that those two don’t always correlate.

  18. Interesting thoughts on the HSA, we will consider switching to one next year (passed this year as I knew we were going to have a ton of medical costs with the kid coming) – saving receipts also sounds terrible to me, not sure we will play that game

    Quite the tax assessment! Hope you gain some ground on the appeal.

    • My wife just called on the tax assessment today. We’re in the queue and it should head to hearing, which we don’t have to be present for. Sending the pics of the demolished building and partial wetlands determination should act in our favor.

      But we did find out today that we can build, so that’s good news!

      I love having an HSA, but don’t care to bother with the whole scanning and saving of receipts. It sounds like some vendors are making it easier to automate and upload, so there is a chance I’ll change strategies in the future. To be truthful, it is ideal to save receipts for 7 years anyway in case you get audited.


  19. You can make #5 because you learned what ‘enough’ is. Enough is not wanting more. It’s not falling prey to hedonism and it’s adaptation. Enough is gratitude. It’s understanding that trading your time for money is a devils bargain that you no longer have to make. It’s learning that the 10million you aren’t going to make wouldn’t have made you any happier anyway.

    As you can guess I just finished Your Money or Your Life 🙂

    I look forward to making this “mistake!”

  20. I view the mortgage issue like this. Would you take out a mortgage on a fully paid home and invest the proceeds in the market? I think anyone who has a fully paid off home would think that is ludicrous. That in itself should show that there are far more benefits to having a fully paid off home than just monetary.

    I paid off my home fully and it has been one of my best decisions (and one of my first good ones after making every other financial mistake in the book).

    The walking away from the job and leaving amazing money on the table will be a decision I will face in a few years too. As much as I want to retire early there is no denying that the money I make now is incredibly easy (no manual labor) and even I am astounded how much I take home with what I do (which is basically looking at pictures all day).

    However again money is not the bottom line for every decision. Have to figure out what is enough and then enjoy life while you can (no guarantee of future)

    I don’t itemize either (and apparently for the past few years before I finally did taxes on my own last yr) I was paying a CPA $600 each time to just get standard deduction

    • “Would you take out a mortgage on a fully paid home and invest the proceeds in the market?”


      I love inverting the question to get to the appropriate answer. It’s like trying to figure out whether or not to get rid of something. Would you buy it if you didn’t have it? If you’re contemplating parting with it, the answer is almost always no.


  21. On the mortgage, I think you’re being a little unfair to yourself. I don’t recall your asset allocation, but you need to ask yourself if you were carrying the mortgage, how would you structure your overall portfolio and what would you effectively be investing that leveraged money in.
    If you would tilt more conservative (a reasonable response), perhaps you should be comparing it to some other investment, such as an intermediate term bond fund (5 year return ~ 3%).

    • Good point, m. Do you know q?

      It’s only a known “mistake” after the fact, and although I could be a bit wealthier if I had held onto the mortgage, I haven’t regretted the choice to be debt free one bit.


  22. I think it’s funny that you list not carrying a mortgage as a money mistake. I agree since the math is the math. Of course the market ultimately will tell you whether it was a good or bad decision.

    But every week I see a few more blog posts saying why carrying a mortgage is bad – even if your rate is super low like mine (3.33%). I guess these are the same folks who also defend getting a big tax “refund” from Uncle Sam every year. The math just eludes them.

    Sounds like you have lots of MTB issues. Go easy on that pump track!

    • You’re right about the math. The original title of this post started with “Screw the Math.”

      Regarding the MTB, I got to the top of about a 5 foot tall double bump and the space between the camel humps was just right for my front tire. With a 29er, I probably would have rolled right through. Or I could do like the big boys and just launch right over that bump, but I’m not that ambitious.


  23. I guess you can say that living in California is a huge money mistake. The cost of living is really high and I’m at the highest tax bracket in the state with the highest state income tax (13.3%). If I didn’t have family or friends here, I would definitely consider geoarbitraging to the Midwest or the mountain states.

    It looks to me that all 5 of the ways in which you have made a poor choice with money are actually excellent choices with respect to life. Sometimes we have to make choices and decisions based on our money or our life; and while sometimes they are congruent, often times they are not.

    When faced with situations and choices in which they are not congruent, I almost always choose life! 🙂

    • “Choose life.” A great line straight out of the opening of Trainspotting.

      I can identify with paying a high state income tax. Minnesota’s got a 9.85% bracket that starts at $250,000 for married couples. California’s top bracket doesn’t kick in ’til you’re making a million or more, so if you’re in that bracket, you don’t have much to worry about. Of course, you’d keep at least $133,000 more making the same across the border in Nevada (as I would in South Dakota).

      It’s all about choices and understanding the consequences.



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