20 savings mistakes people make

At the end of my second year, I rented one of three apartments in a converted Victorian house. My plan was that if that experience worked out well, I would invest in a home in the neighborhood. On the night that my niece and I were moving the last of our belongings into the house, I was mugged by a stranger with a knife. I was so angry that I fought the man and took the knife. In the process of our struggling over it to get it back, he cut me in the chest. I spent days in the hospital with a collapsed lung.

When I got out of the hospital, I learned that an upstairs neighbor had heard me scream but had ignored it. She had also at first refused to let my niece use her phone to call the police because she thought we were "playing." In what kind of neighborhood are screams in the night mistaken for "playing"? Further, the owner of the house was less than horrified about the mugging, and even grumbled before letting me out of the lease.

I learned from police and others that a certain "I mind my own business" mentality and callousness about crime were common in many neighborhoods. That knowledge profoundly shook my confidence about investing in a home in any neighborhood. Although I did not want to let the mugging control me to the extent of driving me completely out of the area -- I moved to another complex in the area -- it affected me enough to make me feel that I always needed to be able to pick up and move at a moment's notice if I saw danger or problems. Consequently, I never felt confident enough to buy a house.

Now, 10 years from retirement age, I want to buy a house; after all, I have to live somewhere for the next 10 years and might as well invest in myself. However, I am wondering what the best option is for me at this point with my having wasted so much time. Can I catch up? Is it too late? What are my options?

There is one positive lesson. As I prepare to guide my students in a study of the causes and effects of crime, I realize that I am Exhibit No. 1 of one of the major economic effects of crime. It is well known that neighborhood crime rates affect macro issues like rates of homeownership and property values. Often, even homeowners who can afford to fix their property in crime-affected areas may decide not to do so because they fear that looking more prosperous may result in their being targeted by criminals. But crime also affects micro issues like individual net worth.

In my case, given that homeownership is a major route to wealth, crime/fear of crime interfered with my taking advantage of that route.

I enjoy and appreciate this opportunity. I could use some advice!
-- Sonja

(Editor's note: Thanks for taking the time to write about your experiences. With so many foreclosures still working their way through the system, real estate prices are depressed, which makes it a good time to invest in real estate. The worst time would have been at the top of the booming real estate market in 2006, when homes were overvalued. So it's not too late, but don't expect to get wealthy in a few years.)

10. Too many eggs in one basket

I would make sure my husband listened to my advice on diversifying his 401(k). He had it all in one stock and we lost $225,000.
-- Name withheld

11. Spent instead of saved

My biggest savings regrets are using my various savings accounts like they were cash cows. I would be much more in control of my life had I not consistently raided my savings whenever I mismanaged my spending. At 46, I shudder to think of the money I could have amassed had I left my savings intact over the past 36 years. As it stands now, the only savings I have is my 401(k) plan, which I owe approximately $20,000 to (that I borrowed to pay down credit debt). In fact, three years ago I had $18,000 in savings which have now morphed into approximately $28,000 in debt (not including mortgage debt).
-- Leonora Brooks




12. Don't borrow from self

I would not borrow against my 401(k) or withdraw money for nonemergency reasons.
-- Dorothy Singleton


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