Handling financial mistakes

This is a hard one for me. I made too many financial mistakes. Yet somehow I am still OK. What did I learn, and what can I tell about it? Is anyone safe at least financially? More reading here, here, here, here, here, and here.

No safety net

To be honest, we buy many safety nets of different kinds, only all of them have their limits. A perfect storm can come at any time, and each line of defense is limited. Some people have a natural talent to keep and multiply their money, others do what they can. I will discuss more below.

Here are some practice questions:

  1. How long can you survive with the money you have?
  2. Are you insured against sickness, theft, and accidents?
  3. Do you have a plan in case of inflation or financial crisis?
  4. What will you do if you lose your main job?
  5. How will you age in due time?

Nobody has great answers, but some answers are better than others.

Hedy Lamarr

Each time I think about money, luck and fate I think about Hedy Lamarr. Her story is a very interesting tale, only I am not sure what we can learn. A lady of breathtaking beauty and genius-level intelligence, Hedy Lamarr used to gain and lose money and fame very fast.
Hedy Lamarr

Act 1

When she was 18 years old she played in a film called Extasy with minor nudity. The nudity was seen due to unusually powerful lenses used by the director. The film was infamous. A very wealthy older man saw the film and felt overwhelming lust. He decided the actress and held her almost hostage in his house. She left everything behind and barely escaped without any possession.

Act 2

Hedi is on a ship from UK to US, when a studio exectuve notices her. She is given various mood-altering drugs to be cheerful and several roles as a seducer. Hedi becomes famous and makes a lot of money.

Act 3

Hedi is bored by Hollywood parties and between the roles tries to invent. She meets a piano player and they try to help the allies win the war. Their ideas are ridiculed. So she raises funds for the war effort instead.

Act 4

As Lamarr ages, she cannot anymore play seductive roles. Hedi tries to produce her own films, investing most of her fortune. The films are commercial failures. To appear younger she undergoes cosmetic surgeries, inventing entirely new procedures, but one of the procedures fails and she becomes disfigured.

Act 5

Poor, lost, and forgotten, Hedi lives in the middle of nowhere. She does not go out of the house because she hates the way she looks. Suddenly her idea she submitted during the war is reinvented as one of the basic technologies allowing mobile phones. Lamarr is heralded as a forgotten genius, but she hates the person she became so much that she sends her son to accept the price instead of her.

Emotional resilience

Here are my lessons from Hedi Lamarr’s story:

  1. Fame may actually limit your choices, especially the wrong kind of fame.
  2. Money does not make you happy, especially if you are not free.
  3. Cinderella stories are actually likely to happen if you have something very special, patience, and willingness to pay the price.
  4. Never despair and always look for a new opportunity. Be very active.
  5. Being very intelligent and extremely successful does not make you a good investor. I anything, you are likely to risk more than you should.
  6. Even if the risk pays off a few times, eventually you will fail. Do not risk something you cannot afford to lose, like your beauty.
  7. Avoid substance abuse. Mood swings and bad decisions go together.
  8. Do good things as you live. When everything seems long lost, they may save your soul and legacy.

Learning does not save

I have a sort of MBA: I took all the MBA courses but not in the University. My PhD deals with trading. I read the common wisdom books before I took any practical steps. Yet I made my share of mistakes.

I am probably not as smart as Hedy Lamarr, and definitely not as beautiful, so my mistakes are less impressive.


My biggest mistake was overconfidence. When I was 32 years old I opened a startup company and did not close it in time. There was always a promise of a lucky break in the future. By the time I realized the lucky break is not coming, I lost a lot of time, and time costs money when you have a family.

Between the age of 18 and the age of 32 everything I tried worked, usually not from the first or the second attempt. I started to believe that if I try long enough I will succeed in anything I do. Only with my startup I was way over my capabilities at the time. I did not even understand the gaps until it was too late.

Today I understand that I am a lousy leader and frontman but very good behind the scene. I would look for the best team to join instead of trying to build something of my own.


When I started my business I insured I have a part-time job, and I had money for four years. Only my family grew and with that my expenses. The company where I had part-time job went broke and my ability to get a new job or investment was reduced due to financial crisis. By the time the financial crisis was over, so were all of my savings and a lot of my confidence. It took me three more years to recover before I was ready to build the next business.

It is a smart idea to have a diversified investment portfolio. Also, we tend to overestimate our earning potential and underestimate future costs. When we feel that we do not have enough money we start to worry and make mistakes.

Being in the “survival mode” makes some people more energetic and creative, while others get depressed and paralyzed. If you intend to take risks, make sure that both you and your loved ones have the right mindset.  Today, I am less likely to take chances.

Trusting others

Dealing with money do not trust other people. Do not trust your partners, your parents, your spouse. Everybody has a different agenda and money is a legitimate way to wield power. As long as you do not need them, people are great. When you are weak, people change. What you perceive as theft they may perceive as justice and vice versa.

At the same time, not trusting others is a bigger problem. We need to trust people to achieve common goals, communicating situation, and progress. More often than not people will do the right thing. Even those people who misbehave multiple times may show noble and loyal behavior when we least expect that or when your life depends on it. People are deeply decent, they simply seize an opportunity when they can.

I guess the idea is having backups for everything that can go wrong and everyone that can turn against you. If you have any computer experience, you understand that this is hard or almost impossible. Checking status very often is also a great idea, but it may backfire since not everybody is open.

I know that I used generic formulation, but here I prefer to preserve some level of discretion. Use your imagination if you want…

Health is volatile

When Anna became pregnant she changed. Effectively she could not work during the first two pregnancies until the kids went to a kindergarten. I am talking about five years of health issues and postnatal depression.

We do not expect ourselves or our loved ones to get sick. Ever. Anna had a great insurance plan, but we could not activate it because our accountant made a mistake. We went to court against the insurance company to get the insurance, because this was an honest filing mistake but eventually we lost.

We could not sue the accountant because he went to jail for some other mistake he made. This was a reputable accountant, a partner in an office with 40 different accounting specialists. He got overconfident and lost his freedom. We only lost some insurance we believed we had.

Every time a professional says “Trust my qualification, knowledge, and experience” I ask for a second opinion. And I make sure as far as I can, that the insurance coverage is not compromised due to incompetence.

I do not want to think about what would happen if we had a more serious issue…

The opportunity comes when you least expect it

Not only I messed up and lost a lot of money I also messed up and lost many opportunities. Opportunities are highly illogical and unpredictable. The situations where I made a lot of money look highly unlikely even in hindsight.

I had tons of opportunities to invest in cryptocurrency when it was cheap. I was simply too fearful to do that. I thought of investing in Google in 2004, when it was very cheap, yet I did not do that because I thought that working in high-tech and investing in high-tech would not be sufficiently diversified.

Basically, I always wanted to decide “Now I am looking for the perfect opportunity” and find that opportunity. Life never worked this way.   Sometimes I simply opened up and waited. If I was lucky people approached me with some ridiculous ideas and I said “why not”, not really understanding why this makes sense. These were my best decisions.

We always work in a situation of limited information. If the risk is low and the potential benefit high, and the team looks good – then we should at least try. The focus here is on following the right kind of people, who are usually much more financially successful then we are.


When my financial status went into positive territory and kids were big enough to stay with grandparents, Anna asked me to go for a couple of travels. For several years I spent a large part of my free revenues to travel, twice a year. My travels were relatively expensive since I need comfort and want to see a lot of things in very little time. So all elements become expensive: transport, hotels each day in a new city, food to sustain a high level of activity. I think I spent too much on these travels. But this is understandable: when the kids were small we did not travel at all and used to dream about it.

A lesson here is simple: do not develop a huge gap between what you have and what you want. If you developed such a gap, do not try to actually close it.




budgeting mistakes http://twocents.lifehacker.com/the-most-common-budgeting-mistakes-and-how-to-fix-them-1748191499
financial stress http://lifehacker.com/10-strategies-for-handling-the-stress-of-a-financial-cr-1717757173
happiness https://www.psychologytoday.com/blog/what-mentally-strong-people-dont-do/201507/what-your-financial-health-says-about-your-mental
reframing money issues http://lifehacker.com/how-emotions-drive-bad-financial-decisions-and-how-to-1637678746
financial savings encouragement https://www.psychologytoday.com/blog/consumed/201802/how-seizing-the-moment-can-help-secure-your-financial-future
Wierdos http://techcrunch.com/2015/02/28/beware-the-pretty-people/

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