As a nurse, you might think I have everything figured out when it comes to finances. After all, I spend a lot of time teaching fellow nurses about investing and managing money. However, the truth is that my journey is filled with mistakes that have shaped my financial philosophy today. If you’re navigating your own financial path, I hope my experiences can help you avoid some common pitfalls.
1. Falling into Credit Card Debt
One of my biggest financial blunders was accumulating credit card debt. As a new graduate nurse, I found myself with around $10,000 in credit card debt. It felt like easy money at the time, but I quickly learned that credit cards are not free money.
Many people, myself included, often think that as long as we have a high credit limit, we can spend without consequences. I used my credit card for unnecessary purchases—clothes and bags that I rarely used. The longer it took to pay off that debt, the more interest I accrued, which is currently averaging over 20%.
If you’re in a similar situation, prioritize paying off your credit card debt. But also, take a step back and evaluate how you got into that debt in the first place. For me, it was a mindset issue. Now, I ensure that I only use my credit card when I have the cash to pay it off immediately, keeping my usage below 30% of my limit. This habit has been invaluable in avoiding the trap of debt.
2. Withdrawing Retirement Funds
Another significant mistake I made was withdrawing my retirement funds when I left my first nursing job. I worked at a county hospital that offered a pension plan, but instead of letting my money grow, I cashed it out when I moved cities. This decision came with penalties and taxes that I could have avoided had I simply left the money in the plan.
Later, I returned to that same hospital as a nurse practitioner and had to buy back into the pension plan, costing me over $12,000. Had I kept my funds invested, I would have saved a lot of money and hassle.
If you’re switching jobs, consider rolling over your 401(k) or pension instead of cashing it out. There are plenty of options available to ensure your retirement savings continue to grow.
3. Taking Out an Auto Loan
Buying a new car is often seen as a rite of passage, but it can also lead to financial strain. I made the mistake of taking out a six-year loan for a Tesla, with monthly payments of $750. While the interest rate was manageable, the long loan term meant I was tied to that debt for years.
Reflecting on this, I realized that I didn’t need a new car to get to work. My current car, an older model, is paid off and serves me just fine. In the future, if I decide to buy a new vehicle, I plan to follow the 20/3/8 rule: put down 20%, pay it off in 3 years or less, and ensure the payment is no more than 8% of my income.
If your current vehicle is reliable, consider holding onto it rather than taking on new debt for a car.
4. Delaying Investment
Finally, I wish I had started investing earlier in my career. I didn’t begin investing until eight years into my nursing journey, which has made it challenging to catch up. The power of compound interest is real, and starting early gives you a significant advantage.
My hesitation stemmed from a fear of risk and a lack of knowledge. If you’re in your 20s, I encourage you to start investing now. Educate yourself through books, podcasts, or this blog Nursing FlowSheet, where I share insights on financial literacy for nurses.
Taking calculated risks can lead to substantial rewards, and the earlier you start, the better off you’ll be in the long run.
Conclusion
Reflecting on my financial journey, I’ve made my fair share of mistakes, but I’ve learned valuable lessons from each one. If you find yourself making similar errors, know that you’re not alone.
Here’s a quick summary of the mistakes I made:
- Credit Card Debt: Prioritize paying it off and change your mindset about credit cards.
- Withdrawing Retirement Funds: Don’t cash out; roll over your retirement accounts when changing jobs.
- Auto Loans: Avoid unnecessary debt by keeping your current vehicle if it’s reliable.
- Delaying Investment: Start investing early and educate yourself to minimize fear and maximize growth.
Mistakes are part of the journey, and they can serve as powerful learning experiences. If you want more content on nursing, finance, and personal growth, make sure to follow my journey. Together, we can navigate the path to financial freedom!
Feel free to leave your comments or questions below, and let’s keep the conversation going!
