Have you ever made an investment and the instant you did it, you knew it was a mistake? Have you ever loaned money to somebody knowing you’d never see that money again?  Ever been tempted to throw yourself in front of a rushing semi-trailer truck 3 minutes after making a particularly stupid purchase?

Some folks never forgive themselves (let alone forget the mistake).  They feel so badly about what they’ve done and they never want to repeat the error.  They refuse to forgive themselves, thinking that will prevent a repeat performance.

I go the other way on this one.  I think the best way to prevent future train wrecks is to forgive yourself for the past.

Let me explain by way of example.

(I wish I could use somebody else as an example for this particular point but unfortunately, I don’t know anybody who has done anything as dumb as I did 20 years ago.)

My wife and I owned a rental property but had no equity in it because the real estate market was so bad at the time.  We had great renters and things were peachy.

After a few years, I wanted to sell the rental – and that made no sense. We had no equity in it and we had wonderful renters.  We could have easily waited out the market.

But I desperately wanted to sell because my business was still in its early stages. I was afraid of having increased expenses should the renters move out.  There was logic to that – but not enough .

Even though I really didn’t want to pay the mortgage on the rental, I could have afforded it for a few months if the renters moved out.  My wife pointed this out time and time again but I was stubborn and demanded that we sell anyway.

Needless to say, soon after we sold it, the home’s value increased over 100%.

I never really forgave myself for doing such a dumb thing. Subconsciously, I wanted to make up for it.

When my business was mature, I started looking into real estate again.  I spent lots of time on this and almost bought another property at the very height of the market a few years back.

I’m not saying that real estate is good or bad.  I am saying that my fear clouded my judgment 20 years ago which cost me a great deal of money. And because I wasn’t willing to forgive myself, I almost lost even more money.

Making a smart investment is difficult enough.  Doing it with passions from the past makes it almost impossible. Are you still making mistakes because you’re tring to make up for something?  Have you stopped investing completely because you got burned some time ago? Are you making agressive investments now to make up for past losses?

Like this article? You will love getting my free brilliant financial updates! No spam, and I won't give your email address to any other person or company.That's a personal promise. Neal Frankle, Certified Financial Planner, Los Angeles, California

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