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I am excited to kick off a new weekly series today called Friday “Financial Foul Ups”.  The series will be here every week and will outline financial mistakes that myself or other bloggers have made (with their permission, of course).  If you have a mistake you would like others to learn from, please contact me to write a guest post for this series.  It should be fun – or painful!

My most recent screw up, and yes, it was a grand daddy screw up that cost me the opportunity to earn $2788.80, happened just last week.  As my readers know, I totaled my car about 3 months ago.  In turn, I bought a new car a couple weeks ago.  This was not the mistake.  The mistake was what I did with the insurance money from my totaled car.

The Situation

I financed my new car, and put no money down.  This left me a big windfall of $4,200 (the money I received from the insurance company from my totaled vehicle).  I had big plans for this $4,200.  Almost all of it was going to go into the market somehow.  So I started to analyze where I should put it; my brokerage account, my Roth IRA, etc.?  My Roth IRA needed about $3,000 to be maxed for the year.  I was on pace to max it out by April 15^th next year anyway, but I wanted to speed up the process.  I put $3,000 of the insurance money into my Roth.  Like that, *poof* its gone!

Where I Fouled Up

I didn’t see the big picture and I sure as hell didn’t think outside of the box.  I didn’t look at how my money flows from account to account.  Let me explain.  Currently I have an incredible 401(K) match from my employer.  Unfortunately, I can’t take advantage of all of it because the 401(K) limit is unattainable for me at my current income level.  The match that they offer is $.50 on the dollar up to the maximum allowable contribution.  For those that aren’t in the know just yet, that means I can put in $16,500 pre-tax and my company will put in $8,250.  That is a sweet deal.

Before, I digress too far (and I am sure some of you can see where this is going), I will say that I currently put 20% of my income from my employer into my 401(K).  Now, if I would have used that $4,200 of insurance money as income for 4 pay periods (which is about what I would have earned) I could have upped my contribution to 100% receiving a HUGE boost to my 401(K) as my employer would have matched 50% of my entire salary for 4 paychecks!  Just take a look at the chart below.  Not seeing the big picture, not taking an extra few minutes to analyze the situation cost me $2,788.80 of employer match.  Almost $3000 of free money!

Yeah, I messed up.  I am ashamed to say it, but a bit of shame never killed anyone.

What I Learned

This situation was an oddity.  For those that are in my situation and can’t afford to fullly contribute to our 401(K) but have a great match offer from your employer, I hope you can learn from this.  Please, think about how to use those windfalls to improve your financial situation for today and for tomorrow.

I will say, I didn’t fail entirely.  I didn’t spend the money on frivilous goods or unnecessary luxuries.  Maxing out my Roth was one of my goals for this year, and I accomplished it in September.  However, that goal was to be accomplished regardless of me finishing it early.  I failed to recognize the opportunity to receive an additional $2788.80 and I am still struggling with that fact.  This was a royal mistake for a personal finance guy, but I have already learned from it and I can promise you, I won’t let an opportunity such as this pass me by again.

Six years to the day yesterday I turned 19 (legal age to gamble in Canada).  My father and I took the twenty minute trek to Niagara Falls and we sat down at a blackjack table.   An hour later I was $600 richer and a gambler for life.

College – My Dumb Years

I went to school in Indiana, luckily there were no casinos around and Internet gambling was just becoming a fad.  I would go home on occasion specifically for the casinos.  I will be honest and tell you I came out ahead at live casinos playing blackjack, but along the way I broke some of my own hard and fast rules for not losing my shirt at a casino.  These rules:

• Don’t ever go to the ATM, bring what I am willing to lose.
• Don’t chase lost money with bigger bets
• Don’t overreach (walking into a casino and playing a single blackjack hand for $300, losing, then spending the next four hours trying to get back even, is not advisable)

About the tail end of college I started to play Internet poker.  I had a good year at live casinos so I was willing to have fun with my money.  I am not a poker player, I like action and poker is a slow game.  I probably lost $2000 over the course of a few months before I left Indiana for grad school.

Grad school – My Really Dumb Years

I made some great friends while at grad school and we all loved to hang out and play cards.  Usually we played for small amounts because it was social.  This got my blood pumping for more and I proceeded to start playing online poker about as much as I was studying.  Again, I am not a poker player.  Over the course of two years I lost $6000 took an 8 month break and lost another $4000 when I felt I could come back and control my habit.

I would constantly stress about money, dipping into my savings to pay my gambling bill.  It never became debt, but it was scary.

Employment – My WTF Brian! Years

A friend asked me for my newspaper to check the lines of opening NFL weekend and then placed a call to his bookie in front of me.  I had never bet on football before with any real money, but I know the game and I liked his bet.  I told him to throw $200 extra and I was good for it.  At this time I hadn’t placed a bet in about a year.  I lost that $200 but started to look at football as a way to make some extra cash if I got good at reading the lines.  The next week I placed a few bets and won about $550.

With money flush in my account I was looking at the lines for the following week with excitement to make some money.  But when it’s Tuesday, NFL Sunday seems so far away.  In the corner of my eye I saw the online blackjack tables.  To pass the time I was playing $1 and $2 hands.  Again, I like action.  This eventually turned into $25 hands which turned into three $25 hands at a time.

The blackjack hands at an online casino take about three seconds to play.  A couple mouse clicks and it’s the next hand.  My blood was pumping so fast while playing I would mis-click buttons and lose money.  There were times when I would have three hands of $300 playing at the same time.

This behavior lasted for about three months.  It finally concluded when I placed one large (over $2000) bet on a football game.  It was a smart bet and i won it.  All told, when i called the website this past week they said in that four month period i had deposited over $8500 into their system.  Luckily I had cashed out with almost $11,000.  I really thought I had made more (any surprise their?).

Present Day – The Responsible Years

I have had quite the turnaround in the past year.  My cash flow is out in the open and it’s all from reliable sources (employers).  I haven’t placed a bet since that large bet in early December.  I have made a permanent change for the better.

One of my brothers and i made a commitment to each other that we would not place a single bet this year (table games or football).  I don’t know how he is doing with his end of the deal but I have not made one single bet (even a friendly wager amongst friends).

I also discovered the power of personal finance and the knowledge that one can really win the race with a slow and steady approach.  They may not know it, but several personal finance bloggers have been an inspiration to me and have kept me on a path towards accumulated wealth.  I thank each of them for that.  (Going to have to give thanks in particular to J. Money at Budgets are Sexy.  Without his advice I wouldn’t have written about this topic and maybe one of you wouldn’t have had the opportunity to learn from my mistakes.)