You Really Can Recover from Dumb Money Mistakes

When I was young and stupid, I accumulated more than $100,000 in unsecured, credit-card debt. And you think you’ve got troubles?!

I didn’t get into that mess overnight. It took me 12 years and myriad terrible financial mistakes to do that and in the process, nearly ruin my life.

During the 13 years it took to get out of the mess (paid back every nickel with no concessions, settlements, negotiations—or bankruptcy) I learned how important it is to deal with mistakes as they happen so they don’t turn into major setbacks.

No one is perfect. You’re going to make mistakes, and when you do, you need to know how to react and what to do to minimize the damage.

Undo it

You may have signed a contract too hastily or agreed to terms you now regret. Perhaps it was an impulsive purchase. You may be able to cancel the agreement or return the purchase for a refund. Move quickly to make every reasonable attempt to get out of it.

Assess your options

Not every mistake can be reversed, but most can be dealt with in some way, provided you act now. Carefully assess all of your options.

Learn from it

Rather than burying yourself in guilt, take a look at what went wrong. How could you have prevented this? What can you do in the future to make sure it doesn’t happen again? Making the first mistake is understandable. Repeating it is not.

Financial mistakes come in all sizes, from a bounced check to a whopping big mortgage. But no matter the error, if you don’t deal with the mistake quickly, it will only get worse.

Here are the big mistakes I hear about most often:


It seemed like a swell idea—buy the right to stay at a resort for a week each year for the rest of your life. But now the monthly payments, maintenance costs and property taxes for your timeshare are killing you, and you haven’t been back since. You need to unload this, but how?

Online services

There are reputable online listing sites such as or where you can list your property for $60 to $550. Or you may be able to get out of your timeshare contract altogether by hiring Timeshare Exit Team to dissolve your contract.

Monster Auto Loan

All you really wanted was an oil change. Instead, you left in a brand new, $58,000 luxury car—together with 72 monthly payments or worse, a lease. How did that happen? More importantly, how will you ever make all those $800 payments?

Whether you’ve made payments for a few months or a couple of years, it’s likely the car is worth less than you owe. That complicates matters. Still, you may have options:


Interest rates are likely to be lower now than when you signed that monster loan. If your car is a late model with fewer than 80,000 miles, you should be able to refinance at a lower rate. Call your credit union or bank, or apply online at sites like Capital One Auto Financing and rateGenius.

Sell it

If you owe more than the car is worth, you may have to get a loan for the difference so you can transfer the title to a new buyer. But you’ll trade a huge car payment for a smaller payment you’ll be able to pay off quickly.

Gym Membership

You should have held out for a month-to-month membership, but you signed a three-year deal. Now you have to live with it. Or maybe not.

Find the exit

Read your contract carefully. Look for “cancellation clause” or “exit fee.” Compare that to your monthly fee times the number of months that remain. It may be cheaper to pay the exit fee now to stop the bleeding.


Most gym contracts allow you to cancel if you move out of the area, get pregnant or have a serious medical condition.

Payday Loan

You needed a quick fix. You wrote a $300, post-dated check and they handed you $255 cash. Then something happened and you did a repeat, and now you’re caught in a major bind. Things are way out of control.

Sell something

You have to come up with cash quickly. Figure out what you own that you can liquidate to begin paying off this huge debt you’ve created.

Know the law

Many of these payday loan outfits, I’m learning, do not adhere to state laws. If you can prove yours is breaking the laws of the state where it is lending, threaten them. Then, negotiate to pay only the amount of money you actually borrowed, sans fees. It just might work.

Find support

A wonderful forum, located at a most unlikely place on the Internet, may have just the information you need to fix your problem. Go to and click on “Get Started Online.” Or call 800 388-2227. The National Federation for Credit Counseling is the credit counseling organization that I trust and recommend. If anyone can help you with this huge problem, these folks can. You can trust them. It’s worth checking it out.

Home Equity Loan

It seemed like a great idea to tap the equity in your home to pay off debt, make home improvements or even take the kids to Disney World. But now you’re stuck with big payments on this home equity loan (HEL) with its adjustable interest rate for the next decade, at least. Ouch!

RELATED: Everything You Need to Know About HEL

Attack it

The damage is done. You’re in it now, and the sooner you can get out of HEL the better. Double up on the payments if you can.

Don’t fall back

If your equity loan is in the form of a line of credit, that money becomes available to be borrowed again as you pay down the debt. No matter how tempting, don’t do it.


Keep your eye on the rates and your home’s market value. You may be able to refinance your current mortgage and the HEL together into a new mortgage with a much lower rate.

I doubt if any of us will reach the level of perfection where we never make any financial mistakes. But I can tell you from my own experiences that they will become fewer and farther between.

The secret is to quickly face up to the faux pas, fix it, learn the lesson and then go on—wiser and hopefully not poorer for the experience.

PREVIOUSLY: How to Buy Carpet—What You Need to Know to Make the Perfect Decision

First published: 10-3-17; Updated 3-28-19

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