Biggest Financial Mistakes When Trying to Retire Early

Last week we shared all of our very best financial decisions, the ones that helped us get to where we are today: early retired and traveling the world. This week we’re sharing all our embarrassing financial blunders, the money moves that we’d much rather forget. However, in the spirit of learning from our mistakes, we’re putting aside our egos to share them with you. 

We cover everything we did wrong, from investing to real estate to lifestyle inflation and more. Our hope is that by sharing our mistakes, it might inspire you to look at your own financial journey and see what you might change or improve.

High-fee mutual funds

Let’s kick things off with a mistake that many of us have made, especially when we first start investing. Early in our relationship, we decided to look at our investments as a couple. We met with an investment advisor who assessed our risk tolerance and recommended a plan.

We ended up buying high fee mutual funds. These were very generic mutual funds giving us slices of the US, Canadian and bond markets. Ultimately the funds didn’t outperform the market average and therefore didn’t really merit the management fee we were paying.

We held those funds for a couple years until the day we did the math and realized that we were overpaying. Those management fees were just going to chip away at our returns over the years.

We decided to exit those funds, which meant paying a penalty to leave early. It was painful to hand over even more money to leave but we felt better knowing that our investments were now in our control.

We talk more about this investing mistake and others that we’ve made in a recent post and video about our investing strategy. 

First home

Our next big mistake was in real estate. When we got married, we decided to do what every other young couple does and immediately buy a home that we could just barely afford.

We had a very specific idea of what we wanted to buy, specifically a warehouse space converted into a loft. We never really considered resale value or whether such a specific type of space was a good investment.

Instead, we bought a home that expressed our unique style and taste. It was a spacious, open concept loft that was really only good for a single person or couple. 

Once we moved to Singapore, only then did we realize how difficult it would be to sell our condo because it really only appealed to a limited number of buyers. Even in Toronto’s sizzling hot real estate market, it took six months to sell, by which time we had already moved to Singapore so we were paying both rent and mortgage.

In the end, we didn’t lose money but we just barely broke even after five years of home ownership. We really enjoyed living there and will always think of our first home fondly. However buying this particular home was not a savvy financial move and we learned a lot from the experience. 

Two-bedroom apartment

Our next mistake also has to do with our choice of home. When we moved to Singapore, we decided to rent not a one-bedroom apartment but a two-bedroom apartment. Our rationale was that, living so far from home, we wanted to be able to host friends and family when they visited.

In fact, we did have many visitors in the time that we lived in Singapore but that second bedroom was still sitting empty for 10 months of the year. We would have spent less putting our family up in a hotel when they visited instead. We talk about renting more space than we needed — and subsequently downsizing — in this post and video about how to save half your income. 

Next, onto our worst lifestyle inflation mistakes, the ones that chipped away at our bank accounts month after month.

Fancy vacations

While we were living in Singapore for six years, that’s when the lifestyle inflation really started to creep in. We were making higher salaries and paying less tax and therefore had more disposable income. Yes, we were saving a lot but we were also spending. One of the things we were spending on were fancy vacations. 

We had a lot of stress from our high pressure jobs and saw our vacations as a way to get some relief. I got through every work week by fantasizing about my next vacation and counting down the days.

When we first moved to Singapore, we started with simple trips on budget airlines to low cost countries like Indonesia, Thailand and Vietnam. Eventually we graduated to more elaborate, expensive trips: hiking in Japan, campervaning in New Zealand, touring the Baltic countries, the list goes on.

We justified these trips to ourselves by saying that we needed them for our mental health and we were still saving quite a bit of money anyway.However if we had stuck with the budget trips, we would have been further ahead financially. 

This was not the only area where we experienced lifestyle inflation. It also crept into our day to day in the form of luxuries like a lunch delivery service. 

Lunch delivery service

Food was one of the ways we coped with high pressure jobs that had us working longer and longer hours. In particular, I went through a phase where I no longer wanted to make my lunch everyday but still wanted healthy food. So I signed up with a fancy paleo lunch service through my gym so I could pick up my lunches when I worked out.

I told myself this was something I needed to make my life easier while I was working so hard. But when I added up the cost of lunch by five days a week for months on end, I was embarrassed to realize how much I was spending on my lunches.

More generally during this period, we were turning to food delivery services and restaurant meals for both convenience and entertainment. When we finally started tracking expenditures, we were shocked to discover how much we were spending on food from outside the home.

Expensive crossfit gym

Another poor financial decision was to go to increasingly expensive crossfit gyms over the course of eight years. We started in a reasonably-priced gym in Toronto but eventually ended up in the most expensive gym in Singapore.

We had a lot of rationale for choosing the most expensive gym. This particular gym had the best trainers in the city and, even better, was around the corner from our home. We also felt that going to a crossfit gym was an important part of our social lives; we met most of our friends through the gym.

We have since learned that it’s possible to make friends outside of a crossfit gym and that we can stay fit in other ways, not just doing one particular form of exercise. 

Storage locker

Now for the one financial mistake that we’ve just finished paying for. And that was keeping a storage locker for over seven years. When we first moved to Singapore, we didn’t know how long we would be there. So we rented a furnished apartment and put our entire household in storage in Toronto.

We started with a very large and expensive storage locker that could hold all our household goods. It was so large that we didn’t need to spend much time sorting through our possessions; we just put everything in and closed the door. 

On subsequent visits back to Canada we reduced the amount of stuff in storage and along with the size and price of the locker. With each round of downsizing, we looked at what we had in storage and were baffled by much of the junk we decided to keep.

That said, seven years later, we still had a small locker that we were paying for month after month. Just last month, we finally managed to reduce our possessions down to a few bins that we could store with family. And we could finally say goodbye to an expensive seven year relationship with Public Storage. 

The lesson we can share from this is not to put off tough decisions that cost money. Put in the effort early on because it can really add up over the years. 

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