Top 5 worst purchases you can make for your financial future

There are good purchases. And then there are the really bad, ugly, regretful, worst purchases that leave a close range shotgun hole in your bank account. My objective is to get your money working for you like a well-oiled machine and to save you from financial mistakes. Because you'll never reach financial freedom if you take one step forward and three steps backward. That doesn't make sense.

But millions of people are in debt over their heads—that's not an exaggeration. And the average household with credit card debt owes a balance of $16,748. That's thousands of dollars a year in interest. Wow!

So why do people continue to commit these financial sins? There are two guilty parties conspiring against your net worth. And these bandits are reckless. I mean truly despicable savages.

Criminal number one is this consumerism culture pushing the desire to always want something new and never be satisfied with what you have. This culture is so intense nowadays that people attach their identity to what they have, not who they are as an individual.

For example, they feel good the day they get the new iPhone. But then the second the next one comes out and they don't have it, they have anxiety. So they spend all their attention and money to get the newest one. That's just how they react for their phone. The same attitude exists in all of their purchases. And the bank account takes a beating daily.

You won't like to hear this, but the second criminal in the manslaughter against your bank account is yourself. That's right, the face in the mirror who has an intense desire to please and appease your loved ones and friends. This concept falls in the same bucket as the "keeping up with the Joneses" disease that sweeps the world.

Top 5 Worst Purchases For Your Financial Future

1. Home

Wait. Haven't your parents, the media, and the government told you a home was a good investment, how you signal you're an official an adult, and the path to the American dream? They're all wrong! And this 38-year-old millionaire who said buying a condo was his biggest financial regret agrees with me.

Why is a home a bad investment? There are many reasons.

First, I look for investments that get at least 7% to 10% interest annually. Anything less than that isn't worth my money or time. I bet this will be shocking news to you: Home ownership produces a big fat 0% long-term return. When you include property taxes and interest rates, your home could produce a negative return—yikes! I'm certainly never paying property taxes and interest rate taxes on my stocks, or buying stocks that get me a 0% return. And when you compare a home to a soaring investment like Bitcoin, which has more than tripled in value for me (300% return in less than a year) then buying a home looks even worse. Plus you have to pay interest on the mortgage, leaving you with less cash flow to invest in your future.

The biggest advantage to investing is getting started early and utilizing compound interest over time. But if your home sucks away that money then you can't build toward financial freedom.

And then there's the fact that buying a home ties you down to one location. This limits your mobility and your desire to take a higher paying job in another city because of the pain of moving out of your house. Settling in one place makes it easy to get comfortable and become complacent with life, instead of striving for more.

The main point is buying a home is nothing more than a savings account. It's not an investment that will consistently make you money. Meaning you're most likely sacrificing millions of dollars down the road because of your home purchase. Think about that before you commit to a 30 year mortgage and $250,000 on a house as a young adult.

2. New Car

Who wouldn't want to buy a brand new $30,000 car with a sleek design, flashy wheels, exquisite interior, and new car smell? I know I would. But buying a new car is like buying a stock on its worst trading day of the year. Because a new car value drops 11% the second you drive this shiny toy off the lot. That 11% loss is nothing to take lightly. Then when you add the interest rate to the car loan, things only get worse.

Pretty soon you have a new car but no money for gas to drive it—that's a joke but there's some truth in it. New cars are sweet until you realize they're a black hole for your money. Don't make the mistake of valuing what you drive ahead of your financial freedom and future. All cars become worthless eventually—where assets keep producing.

I recommend you follow Financial Samurai's the 1/10th rule for car buying—which states that you spend no more than 10% of your gross annual income on the purchase price of the car. Following this rule means to buy a $15,000 car you'd need to make a $150,000 income this year. Although it's controversial (864 comments arguing back and forth on the article) I'm with Financial Samurai and his frugality.

Would you rather look sweet in your whip and be a slave to your bills, or go from point A to B in a used car with complete freedom? If it's freedom you seek, a brand new car only gets in your way.

3. Boat / Motorcycle / RV / Plane

Buying a boat, motorcycle, RV, small plane, etc., is undoubtedly the wrong move to make as a young adult in your 20s. Save that for later when you're financially free and have more money to throw around.

Why should you wait to enjoy the pleasures of these vehicles? It all goes back to the power of compound interest. Any money you put into an expensive purchase like one of these is money that should be used to multiply your net worth. And if you really have an urge, remember you can rent a boat, motorcycle, or RV for a week. It's always cheaper to rent these vehicles than own!

This is the worst purchase on this entire list because all of them are unnecessary. The others are somewhat excusable because you need to have a roof over your head, to commute to work, to get dressed, and to not walk barefoot. Sorry, I'm not sorry about killing your fun because I'm trying to save your money and freedom.

4. Expensive Clothes

Look, I get it. Fashion is trendy, it's cool, and it inspires confidence.

Plus my sister, A Style Breeze, is a fashion blogger who loves dressing up and I sense the passion each time she talks about it. (Her and I even did a video together titled Look Good, Feel Good that explains the importance of looking good and its social benefits.)

But there's a difference between looking presentable and balling out at the mall like you're on a mission to spend as much money as possible. Surprisingly people act like that. For example, there's a cult following for these Supreme hoodies that cost around $150.

It's not the most expensive thing in the world, but it's just a sweatshirt that says the word "Supreme" on the front. And my frugal head doesn't understand why people spend $150 to buy one. Because the math and the money doesn't make sense when you could invest $150 at a 10% return and reach:

  • $389, 10 years later
  • $1,009, 20 years later
  • $2,617, 30 years later
  • $6,788, 40 years later
  • $17,608, 50 years later

You might laugh that I extended this out to 50 years later. But wouldn't you rather retire at 70 with $17,608 of cold hard cash or have bought a hoodie 50 years earlier and have no idea where it is?

By learning about Warren Buffett's mindset towards money and writing my own money book, I've learned you have to think this way about your money if you want to be wealthy.

The point is don't try to dress like Kanye unless you have Kanye money. And even he needs help with his finances apparently:

A few quick tips to save money on clothes are to:

  • Ask for clothes (and pick them out in advance) for your birthday and Christmas presents
  • Borrow roommates', friends', or siblings' clothes
  • Get steals at Goodwill, Plato's Closet, or other thrift stores
  • Buy versatile tops and bottoms you can wear with anything
  • Purchase based on need and appearance over name brands

5. High-End Shoes

Since they get worn down and lose value with each step, shoes offer weak long-term durability and that's why they're a worse purchase than clothes. You can at least resell clothes and sometimes get 50% of the purchase price. But it's extremely difficult to recover money from selling used shoes. It's best to think of your shoes like you would your car, just a resource to get you from point A to B.

Although the shoes are gorgeous, I'd never buy Yeezy's ($1,000+) or Lonzo Ball's new ZO2s ($495 retail) unless I checked my account and saw 8 figures looking back at me. And wise girls would hold off on the high-end designer heels to find knockoffs that look similar but cost $30 instead of $300.

If you put your money into high-end shoes, be comfortable putting your money in dirt, rain, mud, and snow because those are the elements damaging your shoe purchase.

Where Are Good Places To Put Your Money?

I don't want to write an article bashing places you put your money and then not give you any solutions. Negativity and problem-finding is lame. Positivity and problem-solving is the game.

Here's where to put your money if you want to financially get ahead in the game of life:

  • Invest in yourself to develop your skills or education (includes coaching, online courses, and travel)Return is unlimited
  • Buy shares of the S&P 500 Index FundOn average, you'll receive 7% to 10% return year after year
  • Start a money-making businessReturn is unlimited
  • Purchase a rental propertyReturn depends on purchase price and how many units you own

Those are four solid options right there to grow your net worth. Not a single one of them will give you 0% return on your money like homeownership.

And there are also tax incentives to putting your money in these assets. For example, capital gains from your stocks are taxed less than a W2 employee's income, businesses are taxed less, and rental property offers many deductions to save on taxes.

The difference is all four of these investments are assets that will pay you money, where the home, car, boat, clothes, and shoes are all liabilities that will suck your money dry. You have the information. Now the choice is yours. Do you want short-term comfort and to feel proud in front of your family and friends that you can buy nice things? Or do you really want to commit to financial freedom and a successful future?

This answer is a foregone conclusion for me. I have all my chips in the pot, I'm all in, for financial freedom. And that's why I'm going to get there soon.

If you want to join me, order my Amazon bestselling book Freedom Money. This will help make investing simple for you to understand and do yourself. I believe in you. You can reach financial freedom!

Final Words

Not everything's about money. If you really want a home or a motorcycle because it's always been a dream of yours, then just because it's not a good investment doesn't mean you shouldn't get it. For cases like that, I recommend you compromise and here's what I mean.

Say your motorcycle costs $300 a month. To make up for this fun purchase, you increase your monthly investment contribution by $300 a month. Or you save 10% more of your income each month to counteract this splurge. That way you're not sacrificing your future. The motorcycle cuts away at your entertainment or eating out budget, not your money for investing or saving.

However, in terms of strictly a financial perspective, none of these purchases—home, car, boat, clothes, shoes—will be bank account positive. And all of them (maybe besides a house), whether you admit it or not, are short-term moves for instant gratification. Cashing in for the short-term is no way to build wealth.

The way to get rich is to invest in assets, be patient, and continue to pour money into those investments like gasoline to a fire. If it helps, I'll be right there with you on the journey to financial freedom.

The post Top 5 Worst Purchases For Your Financial Future appeared first on Take Your Success.

RELATED: #32 is so common

50 everyday expenses you need to stop spending money on
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50 everyday expenses you need to stop spending money on
ATM fees

"Take a bit of extra time to withdraw money from your bank's ATM and save on the cost to withdraw your own cash or if your bank has a mobile app, use it to find an in-network ATM near you."

Credit: My Debt Epiphany

Lottery tickets

"According to the Powerball, the odds hitting the jackpot are 1 in 292,201,338.00, and CNN cites that Americans spent $70.15 billion in 2014. Let's save our hard-earned money."

Credit: My Debt Epiphany


"A daily cup of joe adds up if you purchase it at places like Starbucks and Dunkin Donuts. Save by brewing at home."

Credit: My Debt Epiphany

Credit card interest

"Maintaining a balance on your card usually you to pay interest each month. Try to pay off your credit card balance in full each month or send more than the minimum payment. As always, use your credit cards responsibly."

Credit: My Debt Epiphany

Kids meals when dining out

"When you do dine out and if you have kids with you, be sure to take advantage of 'kids eat free' specials. Most restaurants have specific days of the week when they offer free kids meals."

Credit: My Debt Epiphany

Gas station food and snacks

"Although it may be convenient, prices are always marked up when compared to other stores. So take the time to shop for food in advance at your grocery store and pack emergency snacks in your car."

Credit: My Debt Epiphany

Pumping premium gas

"Some vehicles may not require premium gas, which is the most costly of the gasoline grades. Stop trying to be fancy, check the owner's manual, and save."

Credit: My Debt Epiphany

Banking fees

"Don't pay to manage your money at a bank. Find banks that offer free banking or bank online for free like CapitalOne 360. Earn $25 when you open a free checking or high-yield savings account."

Credit: My Debt Epiphany

Change-counting machines

"Many of us like to keep our loose change in a jar and let it collect over time. Once it's full, don't pay machines to count it for you, go to your bank to deposit your savings or have it exchange for cash."

Credit: My Debt Epiphany

Wasting gas due to low tire pressure

"You may not know this, but having low tire pressure affects your mileage significantly. Save gas and money by improving your gas mileage by simply checking your tire pressure and maintaining it at the proper level."

Credit: My Debt Epiphany

Single car washing

"Many car wash places offer a flat monthly rate for unlimited washes, so check with your local car wash to find out if they offer a monthly rate and cash in on a clean car. Or, you can get a discount when you pump your gas."

Credit: My Debt Epiphany

Bottled water

"Unless you live in an area where potable water isn't safe, don't waste your money on bottled water. Often times, it's simply bottled tap water. Buy a reusable water bottle or invest in a quality water filter, and save (plus you'll reduce plastic waste)."

Credit: My Debt Epiphany


"It's a tough addiction to beat, but it is a very expensive to purchase cigarettes daily. Aside from causing deadly health effects, according to Time, smoking can cost you $1 to $2 million in a lifetime. Make an effort to better your health and wallet."

Credit: My Debt Epiphany

Gift bags and wrapping

"Reuse bags from previous occasions if they are still in good condition. We started doing this last year and no longer have to run out and by $3+ gift bags when we go to events or parties."

Credit: My Debt Epiphany

Plastic bags fees

"For those living in an area where stores charge for plastic bags (*cough cough Chicago*), bring your own reusable one. Those cents add up!"

Credit: My Debt Epiphany

Utility bill payment fees

"Skip the line at the currency exchange or grocery store and pay online using checking account or debit card. Some companies charge to use a debit card, so schedule e-check payment, which is typically free."

Credit: My Debt Epiphany

Travel size toiletries

"For the frequent traveler, you should buy empty travel containers and refill with shampoo, lotion, etc. as needed."

Credit: My Debt Epiphany


"Unless you're a student, you probably don't really need to buy a lot of paper – reuse already printed pages and use both sides."

Credit: My Debt Epiphany

Magazine and newspaper subscriptions

"Save money and paper by keeping up with free online news services."

Credit: My Debt Epiphany

Paying for premium streaming music services

"In the digital age of music, don't pay for premium services. Streaming companies like SoundCloud and Spotify allow you to listen to music for free."

Credit: My Debt Epiphany

Buying books

"If you'd like to truly own a book, then save on the paper and extra cost by purchasing the digital version, or go to your local library and check them out for free."

Credit: My Debt Epiphany

Library late fees

"Remember to return all materials on time. It'll save you money and allow for other library patrons to enjoy the material in a timely manner. If you do have library fees, wait for a month when they accept canned goods as a payment method (usually around the holidays)." 

Credit: My Debt Epiphany

Brand new video games

"Skip the early release and commotion of having the latest video game. Save major bucks by purchasing a used version of the game online or at stores like Game Stop."

Credit: My Debt Epiphany

In-app purchases

"Gaming apps are meant to entertain, and while most of them are free, don't fall for the "purchase bonus lives" trap. In-game purchases add up."

Credit: My Debt Epiphany

Greeting cards

"Take some time to make your own personal cards or send an eCard and skip on the expense."

Credit: My Debt Epiphany

New phone chargers

"If you forget your charger and your phone needs to be charged, some time you'll be inclined to purchase a new one, but it can be costly or even poor quality. Always keep your charger handy, look for a charging station where you're at, or simply ask to borrow one."

Credit: My Debt Epiphany

Expiration dates

"Sometimes, expiration dates may not reflect the true shelf life of a product. Don't waste food (and money) by throwing out a product which may still be fine to consume. Check out Eat By Date and see for yourself the true shelf life of your groceries."

Credit: My Debt Epiphany

Stuff on your birthday

"When you're heading out and can't or don't want to drive, consider calling Uber or Lyft instead of calling a cab so you can save money on the ride. You can use my linkto get $20 off your first Uber ride."

Credit: My Debt Epiphany


"Save on disposable batteries and purchase rechargeable ones. They can last up to two to three years."

Credit: My Debt Epiphany


"Many offices, banks, insurance companies, etc, give them away for free. Save them and skip on the purchase."

Credit: My Debt Epiphany


"Be sure to get the best rate for your individual needs, whether it is car, health, home or life insurance."

Credit: My Debt Epiphany

Garbage bags

"If your area doesn't charge for using plastic bags, reuse the ones you get from shopping as garbage bags. I do this all the time."

Credit: My Debt Epiphany

More house than you need

"While some families "grow into" their homes, sometimes less is more. Save on mortgage and the possibility of purchasing more for a larger home. Downsize and save."

Credit: My Debt Epiphany

Club/bar full cover charges

"While having a spontaneous night out is fun, if you RSVP when possible, arrive early, or take advantage of online ticket sales, you can skip out on paying in full at your favorite nightlife places."

Credit: My Debt Epiphany

Leaky faucets

"If you pay for water utility bill, according to the EPA, fixing leaky faucets saves you 10% on your bill. By ignoring it, you not only lose money every day it goes unfixed, but you also waste clean water, at a rate of 10,000 gallons per year."

Credit: My Debt Epiphany

Fast food restaurants

"Improve your health and wallet by not eating fast food often. It may be cheap, but it adds up, especially if you eat out a few times per week. Instead, spend the money and the time to grocery shop and prepare meals."

Credit: My Debt Epiphany

Cool drafts

"Save on heating and electric bills by fixing drafts and keep the warmth and cool in your home during the winter and summer."

Credit: My Debt Epiphany

Unnecessary data phone plans

"Unless you need unlimited data for work, you should not spend much on your cell phone bill. I save a ton of money on my cell phone bill by using Republic Wireless."

Credit: My Debt Epiphany

Pet food

"You may not be able to cut out this expense completely if you have pets, but you can score free cans of pet food with coupons occasionally so you won't have to spend as much."

Credit: My Debt Epiphany

Buying lunch

"Sometimes you're running late for work and don't have time to pack a lunch. Buying lunch often costs much more than preparing and bring a meal to work. Spend some time planning, purchasing and preparing meals ahead of time so they're ready to go, even when you're in a hurry."

Credit: My Debt Epiphany

Leaving electronics plugged in

"Even though you may not use them often, electronics that are plugged in still consume energy. Unplug appliances you don't you often and keep other electronics on a power strip, turning them off when not in use."

Credit: My Debt Epiphany

Prepared grocery store meals

"When you do go grocery shopping, sometimes the already-prepped sub or diced fruits and veggies tempt you to buy them and save time, but you'll be paying top dollar for those products. Plan a list ahead of time and buy the individual food items, then spend the time prepping them yourself in order to save.

If you have trouble making grocery lists and figuring out what you're going to eat each day, I'd highly recommend trying out the $5 Meal Plan so you can receive healthy meal plans and recipes to your inbox."

Credit: My Debt Epiphany

Vending machine snacks

"Not only are these snacks typically unhealthy (there goes your healthy habit), they are typically much more expensive than their grocery store counterparts. If you find yourself buying vending machine snacks, try to save the money instead and see how much you have leftover at the end of the month. You can probably invest it."

Credit: My Debt Epiphany


"When you're heading out and can't or don't want to drive, consider calling Uber or Lyft instead of calling a cab so you can save money on the ride. You can use my link to get $20 off your first Uber ride."

Credit: My Debt Epiphany

Brand name items

"Save money by skipping on the brand names, like medicine, toiletries, and certain foods. Remember that healthier options with fewer additives may cost more and in that case they may be worth it. Otherwise, generic is the way to go."

Credit: My Debt Epiphany

Buying smaller/single packs

"Save money by skipping on the brand names, like medicine, toiletries, and certain foods. Remember that healthier options with fewer additives may cost more and in that case they may be worth it. Otherwise, generic is the way to go."

Credit: My Debt Epiphany

Purchasing paper towels/paper napkins

"You are purchasing these to eventually throw them out. Save on the waste and save money by buying reusable, washable towels and napkins. Your wallet and the environment will thank you."

Credit: My Debt Epiphany

Paying extra for night time movie showings

"Primetime showings are typically 2x higher than those during the day. Go to morning matinees or take advantage of weekly specials ($5 movie nights during the week)."

Credit: My Debt Epiphany

Movie theater food

"Often times, movie theater food can cost more than the ticket to get in. Try to keep food purchases to a minimum when you can or eat a filling meal before you go see a movie."

Credit: My Debt Epiphany

DVDs and On Demand

"Instead of spending money on purchasing the movie, subscribe to streaming services and find an alternative or go to your local library."

Credit: My Debt Epiphany


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