Financial Horror Stories: Don’t Make These Life Changing Mistakes

It’s almost Halloween, and we thought we’d use the upcoming spooky holiday to shed light on some real-life horror stories.

Financial horror stories.

While everyone will make mistakes when it comes to finances, there are times when the impact on our lives goes far beyond impulse spending. We’ve all heard of them, maybe even experienced one ourselves. Many are avoidable, many are not.

Whatever the reason behind the story, the important thing is to learn from our mistakes and those of others so that we can try and avoid serious financial hardship in the future.

So, in the spirit of Halloween, we bring you financial horror stories that’ll chill you to the bone. The first is the story of a teaching colleague, while the rest come courtesy of other personal finance bloggers.

Are you being tricked or treated with your money?

Read on…IF YOU DARE!

The Tale of the Lost Pension

The first of our financial horror stories was kindly shared with me by a colleague, who I’ll call J.

It all started back in 2000 when J met a man who would become a close friend. In fact, they became such good friends that J and his wife felt that he was part of the family. They played golf together, shared meals, and socialized regularly.

This friend also had a business, and J soon began helping him keep the books for his company. He kept the books for two years, all for free while teaching full-time.

It wasn’t long after J began bookkeeping that his friend began asking him to quit his teaching job and join the company full-time. While my colleague initially resisted, he eventually began seriously thinking about joining his friend.

For one, he had put in enough time to be able to retire from teaching, and teaching had become stressful.

He couldn’t cover all his expenses solely with retirement, but with a guarantee from his friend that he would be paid enough to cover his expenses, J took the leap and retired in 2003 at the age of 55.

J had 400k in his pension, and he took it in a lump sum, which he reinvested in another company. He then began working full-time for his friend, keeping the books. The plan was for J to keep the books and learn the other aspects of the company as time went on. J also lent his friend 20k to help with business expenses.

Unfortunately, not long after he quit his job, things began to take a turn for the worse. Only a few weeks into their new partnership, the man J thought was his friend and partner took off, leaving J and his wife holding the bag.

J tried his best, but he didn’t know enough about the business to be able to run it properly. It took him a year to clean things up with the business, and then he began looking for a job. He never recovered the 20k he lent.

Although he’d been a teacher, J found it difficult to break back into his former career. It took him ten years to get back to full-time teaching, during which he held various part-time and temporary teaching jobs.

Unfortunately, this 10-year period also saw J spend his retirement to stay afloat, as well as accrue debt.

Fast-forward to today, and J is now 70 and teaching full-time. He still has a mountain of debt to climb and is slowly building back up some retirement income. Although he bought his house for 95k in the mid-90s, multiple refinances were needed to pay the bills, and it will take him at least another decade to pay off his mortgage.

J’s plan is to work as long as he can, but at a minimum, he’ll need to work until he’s 84 or 85 to be able to retire with reasonable comfort.

One decision in 2003 cost him everything in terms of his finances, but J doesn’t dwell on what happened. What is hard for him to accept is that his decision has also impacted his wife and children.

In his words, he screwed up, so why should they suffer?

But despite the hardship, J wanted to share his story in the hopes that he might be able to help others avoid the mistakes he’s made.

If you get nothing else out of J’s story, he hopes you listen to these words of wisdom:

  • Don’t depend completely on another person in business. Make sure you know enough that you could run things if necessary.
  • Don’t’ invest in a business or quit a steady job unless you’re prepared to take it over; never put your family in a bad situation, and make sure you have adequate money to cover any hard times.
  • Don’t let a temporary situation lead you to make a permanent decision. J was going through some tough times at work, but he feels that he would have weathered the storm had he waited a few months.
  • Take your time making big decisions and have a contingency plan if things go wrong.
  • If something does happen, don’t put the blame on another person. In J’s case, even though his “friend” was untrustworthy, J ultimately was the one who made the life-altering decision.

But J’s number one piece of advice?

Don’t think it won’t happen to you.

“Looking back now, I think to myself, you’re not stupid; why did you do it? What happened?”

Don’t make the mistake of thinking it could never happen to you because, with the right set of circumstances, almost anyone could potentially get roped into a bad decision.

And if you do happen to find yourself in a difficult financial situation, J has some words of wisdom for you too.

“Own it. You have to own your decisions and take responsibility. Don’t stick your head in the sand and dwell on it, but make choices to help you move forward the best you can.”

Million Dollar (Or 40K) Smile

This next story comes courtesy of Abigail at I Pick Up Pennies. Her story tells of the significant impact that health issues can have on your finances.

“My husband has severe eczema and asthma, so he’d been on steroids off and on since he was an infant. Between that and an inherited calcium deficiency (yes, apparently that’s a thing), his teeth started actually breaking off in junior high. About two years after we got together, he went in and got everything removed and got dentures. That was around $12,000. We were pretty low-income at the time ($32,000 between the two of us), so we started saving immediately for the dental implants. Things slowly improved for us financially, but we also bought a house that needed a lot of repairs. So it took us about eight years to save the money for eight dental implants and the implant-supported dentures ($26,600 total). So, all in all, my husband’s mouth has cost nearly $40,000 in the past decade!”

Diamonds Aren’t Forever

This financial horror story comes to you via Jerry at Peerless Money Mentor and illustrates the financial bind you can find yourself in following a breakup.

“When purchasing a diamond ring, no one (at least I didn’t) considers the risks of such a big purchase.  What happens if you have to resell the diamond ring?  Where do you sell it? Who the hell wants to buy a used diamond?

Diamond sellers may have convinced you that diamonds are forever.  While that may be true, sometimes relationships are seasonal.  You will lose money if you ever have to resell an engagement ring.”

Read the rest of Jerry’s story here:

Reselling a Diamond Ring After a Breakup

Requiem for a Drug

Our next story comes courtesy of Fred at Money With a Purpose. Fred’s story shows the devastating impact drug addiction has on family and finances.

“One of my hopes in talking about our experience is to educate. In the end, I’ll tell you what we’ve learned from our experience dealing with a son who’s an addict. I also want to provide tools to help you or anyone in your circle avoid making the mistakes we made, personally and financially.

And there were many. It’s not a pretty story. Addiction stories never are.”

Xrayvsn vs. Ex-xrayvsn

The next of our financial horror stories comes to you from XRAYVSN and details his experiences going through a difficult divorce.

“I tolerated the marriage as long as I could because in our custom, divorce is shunned upon and quite rare. I also wanted my daughter not to have to endure her parents getting divorced.

However, after eight years of marriage, the behavioral changes of my wife got worse, and I just could not remain married to her. I was actually doing my daughter a disservice by allowing her to witness an unloving home.

I, therefore, filed for divorce in 2010. Apparently, by doing this act, I woke the sleeping giant, and a truly vindictive person came out.”

Read the rest of his story here:

I Have Pretty Much Made Every Mistake in the Book – Part IVa

The Great Recession

Our next financial horror story comes from the co-bloggers at The Money Vikings and details the impact of the recession of 2008 and how they’ve healed.

“It’s been over ten years since the Great Recession, and like many such existential traumas, many of us have a story. We can vividly remember where we were and how the events impacted us. In many ways, those of us who lived through it will never be the same and will manage our finances differently. The economic implosion resulted in job losses, massive asset devaluations, forced moves, etc., highly disruptive stuff. Many have bounced back after a long 10-year stock market bull run, housing at an all-time high, etc., BUT many have not. Many are still strapped with huge school debt, car loan debt, and struggling with steady employment. The disparity causes many of the huge populist frustrations people have at the moment, it is the way folks feel when left behind.”

Read the rest of the story here:

3 Ways to Finally Heal from the Trauma of the Great Recession

House Horrors

Next up is Josh from Josh Overmyer, who relays his tale of a real estate investment gone bad.

“As a total FIRE enthusiast and fledgling member of the PF blogging world, I am a member of several private Facebook groups and regularly chime in on posts where overly-excited real estate investors/hopefuls talk about the can’t-lose opportunities available only through real estate investment. They spew crap like “only 3% down, and then someone else pays off your mortgage for the next 15 or 30 years,” OR the infamous “the house will appreciate, so I can sell it in a few years and pocket the difference.” Inevitably, I have to post a quick paragraph about my own “can’t lose” opportunity that blew up in my face shortly after buying in 2006 and which I am still working on recovering from to this day…”

The Lost Payments

The next financial horror story comes courtesy of Leslie at Laying Down the Law Debt. Leslie discusses a situation with a client struggling with student loan debt.

“In short…client came to me with a Fed student loan whereby they had paid the servicing company over $25k worth of payments that were “lost.” Even though the client had proof of payments, the original agency was closed down, and the new agency refused to credit them. Nightmare!”

Read about Leslie’s own financial horror story with medical bills here:

Medical Bills, Part 2

Soul-sucking Job

Next up, we have Kelan at The Savvy Couple, who relays how a house purchase forced him to remain in a bad job situation.

“I was a jail deputy before starting our blog. We bought our house at 22 with an acceptance letter into the academy, not even one paycheck yet. Turns out the job sucked the soul right out of me. I fell into a deep depression and had no other choice but to stay for close to three years.”

3 Credit Card Horror Stories

Lastly, we have three credit card horror stories coming to you from Finder, who curated these stories to help
you avoid feeling haunted while managing your finances. Read about:

  • Credit Card Couple Catastrophe
  • Credit Card Conundrum
  • The Debt Demon

Check out these credit card horror stories and the lessons learned.

Moral of the Stories

While the title and headers were meant as light-hearted fun for Halloween, there was nothing funny about the situations these people found themselves in.

These real-life financial horror stories are meant to teach, inform, and offer advice for anyone going through their own horror story, or who might be contemplating a decision that could lead to one.

Financial hardship is no laughing matter and can significantly impact your life for years to come.

We’ve compiled a set of 10 financial horror stories covering various topics, along with lessons to be learned.

Now it’s up to you. Will you become a character in your own financial horror story?




Tawnya is a 34-year-old Special Education teacher in the sixth year of her career. Along with her partner, Sebastian, she runs the blog Money Saved is Money Earned. Tawnya has worked extremely hard to reach her goals and remain debt-free.

She holds an Honors BS in Psychology from Oregon State University and an MS in Special Education from Portland State University and has had a pretty successful writing career, first as a writing tutor at the Oregon State University Writing Center, and in recent years, as a freelance writer.

Tawnya and Sebastian have a wealth of knowledge and information about personal finance, retirement, student loans, credit cards, and many other financial topics. It is this wealth of tips and tricks that they wish to pass on to others.