We all make mistakes with money — but the key to building wealth is taking those mistakes and turning them into lessons.
For bestselling author David Bach, who released an updated version of his hit book “The Automatic Millionaire” in December, a bad money experience in college scared him into becoming a smart investor.
“[T]he [mistake] that’s the most painful, that shaped me as a person, it’s getting in credit card debt in college,” Bach explained on the debut episode of “Better Off,” a podcast hosted by financial planner and business analyst Jill Schlesinger.
“Because my hole that I dug for myself in college by spending money on things that I did not need, to show off to friends that did not care, was a life-changing moment because I was, at one point, $5,000 in credit card debt as a sophomore. Which felt like the entire world was on my shoulders,” said Bach, who has spent 25 years in the wealth management industry.
“[B]y the time I got that paid off I was so proud of myself. Then I did it all over again, and by my senior year I was $12,000 in credit card debt — took me another 18 months to pay that off,” he said. “I will never forget the feeling of not being able to make minimum payments and going to open my credit cards, and the room spinning because of the financial pressure on me.”
Bach said it was then, after his second bout of debt as a college student, that he finally woke up. “That moment ultimately changed my life, because after I got out of credit card debt that time, I’ve never carried credit card debt since,” he said.
Bach believes his mistake led him to adopt the investing strategy that’s made him rich today.
“I think since, really, I’m a conservative investor, that experience of being in debt and also the experience of seeing things happen to people who took too much financial risk and got hurt, led me to be pretty conservative — I’m a guy that looks for singles and not home runs,” Bach said.
But despite all his successes and wealth, Bach even thinks he may be a little too conservative at times.
“I could go through all the different stocks that I sold and made money on and have now skyrocketed. So usually [my mistake] is selling something and not just holding onto it. Actually, always. Including real estate,” he said.
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