Do you want to know what the worth financial decisions of all time are, and how to avoid making them? This blog is all about how to “save money”, but to save money you need to know how to avoid making costly mistakes. We all know that great feeling when you find a bargain, it’s the feeling of knowing that you saved a ton of money and you are indeed a smart shopper. On the other hand, every experienced shopper knows the exact opposite of that feeling. It’s that burning sensation in your stomach, when you realize that you have over paid for something. It is a feeling that every shopper dreads and every frugal shopper does everything in their power to avoid. That being said, think about how the following people, must have felt when they made these stupid deals!!
According to the New York Times the war in Iraq will eventually cost the US tax payers £1.2 trillion, this has got to be the most costly, stupid, unnecessary, and once again stupid decisions of all time! You can see a running total of the spend to date here. Currently it is approaching $600 billion, but is rising all the time, plus the $1.2 trillion accounts for things like the war’s veteran’s disability payments and medical care.
It’s not every day that your country loses 3.4 billion dollars – unless you’re America, circa Bush era. The UK was forced to withdraw the pound and thus resulted in a loss of close to 4 billion. George Soros, one of the currency market investors, made over US$1 billion profit in less than 24 hours! Five years later the UK Treasury produced an in-depth review of mistake, and said “if the government had maintained $24bn foreign currency reserves and the pound had fallen by the same amount, the UK would have made a £2.4bn profit on sterling’s devaluation”, but instead they lost £3.4 billion.
Gordon Brown, who was Chancellor of Exchequer at the time, sold 400+ tonnes of gold bullion in a series of auctions between 1999 and 2002, when the price was at a 20-year low. He did this against the advice of the Bank of England. In total he sold 60% of the UK’s gold reserves at $275 an ounce, the price of gold today is $833. The loss is reported to be £2 billion but considering the price rise in gold recently, I would estimate the loss to much greater. Extra reading: HM Treasury review of UK gold reserves sales (PDF).
When the UK government decided to sell of the 3G licences to the telecoms industry they recruited a university lecturer to design the auction like a game. This cleverly resulted in the thirteen bidders driving the prices up well beyond the original estimate of £5bn. The final price of £22.5 billion, worked out to be an amazing 650 Euros per capita in the U.K, compared to the poorly run auction in Switzerland which only attract 20 Euros per capita. By overpaying by up to £17.5 billion the telecoms market went into a severe recession and resulted in the 2001 Telecoms crash, with the loss of 100,000 jobs across Europe, 30,000 of those in the UK. One of the leading bidders was Hutchison Whampoa, who’s UK business Hutchison 3G UK Limited, is still loss making since it’s launch in 2002, they are hoping that the 3G unit will report it’s first operating profit in 2009! Yeh right!
Haven’t we screwed the Indians over enough? Apparently not, because I’ve heard of the “Trail of Tears” and Black Hills — where crazy horse fought his last battle — however, I never knew that Manhattan was purchased for around $24 worth of trinkets and beads. I mean, imagine taking hold of Times Square for the price of one of those stupid “I Love New York” t-shirts. It’s alright; at least they’ve capitalized on the lucrative college youth by taking all their money at blackjack tables at the many Indian Casinos. It is difficult to know how much Manhattan is worth now but according to the New York Public Library, the real estate in Manhattan in 1990 was an amazing $47 billion. It has been calculated that the land values have appreciated from a $0.05 per acre in 1626 to $827,000 per acre in 1990, an increase of roughly 17,000,000,000%.
I’ve visited the site of the Pets.com mascot’s graveyard. You can find it off La Cienega in a corner where a bum uses him as his pillow. This could’ve been prevented if it weren’t for the careless spending and unorthodox marketing that preceded the bust. When I saw an 18 year old flying down Market Street in his new Ferrari because he had just started a “new venture” selling colored scrunchies online with the help of countless angel investors, I knew there was a problem. The bust happened around mid-march of 2000 and some even speculated that along with the wild spending, crazy parties, hookers, strippers, drugs, Y2K, expensive wine, dumb marketing tactics, inflated incomes, inflated projected profits, ahead of its time companies, poor management and small customer bases – they can’t understand why it popped. Personal, I lost a bit when 95% of the share value was wiped off the dot.com I brought some shares in, damn!
Did you wait in line for hours with your macbook, leeching off the Apple Store’s wireless connection, then fork out over $600 and sign your first born to AT&T only to be fingered in the butthole when Steve Jobs decided to nearly cut the price in half two months later? Well, hahahha I point and laugh at you! Actually, I share your displeasure. Yes, I was one of the early adopters who were screwed out of our hard earned money, alas, that is the price to pay for techno-geek pretentiousness. Mr Jobs knows geeks love to get his gadgets first so he stings you every time!! Be patience and try to wait 2-3 month after launch and get yourself a bargain!
There is no doubt that very clever and informed people make stupid decisions, so what hope is there for the rest of us? Well if we try to learn from other mistakes we will have a better chance of avoid making a costly mistake. So why do people make stupid decisions? I found this great article called “10 reasons people make stupid decisions”. Give that a good read, and just remember “More haste, less speed”, simply take your time, weigh up the pros and cons and try to be “neutral” (unbiased) until you have all the facts and figures, and don’t jump to conclusions!
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Dare I add the 2012 Olympics, for those not living in London??
jejeje very funny!
The Indians selling Manhattan for $24 is a myth that just won’t die.
1) Indians never believed that land could be owned. They thought they were getting goods for transient use of that land, just like the Indians transiently used that land and all land.
2) The particular tribe that “sold” Manhattan was a hunting party from a non-Manhattan based tribe. The settlers didn’t make this deal with the actual “owners”. Though the word “owners” doesn’t really fit. See #1.
Saving and investing wisely is extremely important, thanks for interesting tips.
As Mark mentioned above, indian hunting party thought they suckered the buyers into believing the land belonged to them. it didn’t ! LOL !
I think the most stupid decision is clothing catalogues trying to sell winter clothes in summer & summer clothes in winter. Who the heck would buy summer clothes for full price in February knowing that if you wait till April or May the catalogue company will be desperate to get rid of the summer stock as they’ll be getting the winter stock in in July!
It’s sad enough when anybody puts a price on America’s safety from terrorists. It’s even worse when someone says it was a bad idea, or a terrible investment, to do so. Yea, I’d much rather have more friends/relatives dead than spend a little more on taxes to stay safe. Good logic.
We are Kathryn and Captain Frugal two money saving fanatics. Kathryn is a freelance writer living in San Francisco which means that she's had to work hard to maintain a frugal budget. Captain Frugal learned from a young age that a penny saved is a penny earned, he's made it his life's mission to beat "the system" a few cents at a time. 
"Living the high life is easy!" say's captian frugal, "all you need is a little creativity, to improve your lifestyle and still save money!
1,200,000,000 is 1.2 billion.