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I'm on track to retire with millions: Here's how I bounced back from my 3 biggest money mistakes

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Chloé Daniels is the founder of Clo Bare Money Coach.
Courtesy Chloé Daniels
Key Points
  • "My mistakes were costly in the moment, and there are times I wish that I used that money for other things, like investing. But those setbacks did not define my financial future," writes Chloé Daniels.
  • "In 2018, I was financially lost. I had about $10,000 in my 401(k), almost no cash on hand, zero emergency fund, and nearly $70,000 of combined debt from my car loan and my remaining student loans."
  • "Today I have a multi-six-figure net worth, a year's worth of expenses in my emergency fund, and a thriving business teaching other people how to feel in control and confident about their money."

Before I finished college, I dreamed of getting a big job and salary, and taking luxurious Instagram-worthy vacations with my somehow unlimited paid time off. But I graduated into an economy recovering from the Great Recession, with an English degree and about $80,000 in debt.

I was feeling pretty stuck, and my $700 a month student loan payment was only one part of my financial struggles. Well into my twenties, I lived beyond my means, bought a car worth half my salary, engaged in risky investing, and had a diet of take out and $13 cocktails. 

I know that my experience isn't unique. So many of us never get a formalized education about our finances. When mistakes do happen, there is often so much shame around them. But there doesn't need to be. 

My mistakes were costly in the moment, and there are times I wish that I used that money for other things, like investing. But those setbacks did not define my financial future. Today I'm still on track to have millions in the bank by the time I retire at 65, even if I don't invest another dollar between now and then.

Here are some of my biggest mistakes, and how I turned them around to become confident about, and successful with, my money.

1. I bought a new car instead of a used one

When I moved to Chicago in my early twenties, I was making $42,000 a year, more money than I had ever before, but the bulk of it was eaten away by my student loans, rent, and unsustainable spending habits. Case in point, my decision to get a new car. 

In the winter of 2015, after a few months of a two hour round trip commute, I decided my Chevy Lumina wasn't going to cut it anymore. It was old, ugly, the windows wouldn't all roll down, and the AC was broken. At the time, I was home for the holidays and on December 23, with $1,000 in my bank account, I turned to my parents and said, "I'm going to go buy a car today."

Off I went to the Toyota dealership, where I had the choice between a used 2013 Prius C for $13,000 or a new 2015 Prius C for $20,000. Even in my limited understanding of what a financially responsible person did with their money, I knew the used car was the smarter choice. 

But when I went over financing options at the dealership, I learned that if I bought the new one, I would be paying about $30 more a month on a car loan. So, with all the confidence of a 24 year old with $1,000 to her name, I said, "Why not?"

Which I quickly regretted. Ultimately, this car ate up enough of my monthly income that I wasn't able to save much. Because of those expenses, I went for nearly a decade without an emergency fund. Throughout my twenties, even a $100 expense could throw me into a panic, and I never felt like I could catch up, especially when I was also trying to get rid of my debt. 

If I had bought the used car and invested the $7,000 difference, the money could be worth nearly $12,000 now. 

2. I thought I needed to pay off debt before I started building wealth 

In October 2018, I got a job that gave me a $20,000 pay bump, and with my new salary I wanted to pay my student loans off as quickly as possible. I thought doing this, even if I had to scrape by and sacrifice some of the things that brought me joy temporarily, it would help me create that happy and nomadic life I had once pictured. 

So I refinanced my student loans down to 3.54% and started dedicating about $2,000 a month to my debt. During this time, I was reading all I could about personal finance, and came across the FIRE movement. That completely changed my perspective. I realized that I didn't have to wait to pay off all my debt before I started building wealth through investing.

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During the nearly two years I focused only on debt freedom, from October 2018 to January 2020, I paid off $40,000 of low-interest debt, and saved about $5,000 in interest. However, if I had invested that $40,000 instead, I'd have over $278,000 invested right now instead of $228,000. 

With an average annual return of 10%, that $228,000 I currently have invested could turn into $3.9 million in thirty years, but $278,000 could turn into almost $4.9 million. That's a million dollar difference. Seeing those numbers laid out like that was one of the things that helped me start focusing on investing. But it did take some time to get over fears I had about it.  

3. I didn't understand my risk tolerance 

One of my most embarrassing money mistakes happened long before I knew anything about investing. In 2018, I was 27 and had just started my debt-free journey. I had also saved a small $5,000 emergency fund, which was more money than I'd ever had in my bank account at one time.

I had an ex who flipped houses in the Chicago area. His investors boasted 20% returns on every project, and while we were dating, I'd seen him somewhat successfully flip a home a few times. So, of course, I decided to invest my entire life savings, at the time, in his business.

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It started with my $5,000 emergency fund, and then I saved up another $5,000 to give him, and eventually, I had about $25,000 of my own money invested with his company. For a while, things went well. He'd use my money to invest in a new flip property and when it was over, I'd receive the principal and interest on my loan, with an option to reinvest. I kept reinvesting until he owed me about $58,000

Then 2020 hit, and payments fell behind. At this point, I've been told that the payments will be coming next month for over a year. Right now, despite claims I'll get paid, I've mentally written the money off as a loss. 

One of the biggest things I learned from this experience is don't invest in things you don't understand. And with riskier investments, only put in what you're willing to lose. 

Overall, this mistake taught me how to gauge my risk tolerance so that I can understand how an investment option fits into my overall portfolio for the long term. This is key for any investor, no matter what you're investing in.

I learned that my mistakes don't define me 

In 2018, I was financially lost. I had about $10,000 in my 401(k), almost no cash on hand, zero emergency fund, and nearly $70,000 of combined debt from my car loan and my remaining student loans. 

But as lost as I felt, I realized in the fall of that year, that I didn't want to beat myself up any more and only focus on the mistakes I had made. So I started making some changes. 

By April of 2019, I had paid off the car, but it was costing me nearly $4,000 a year with fees, parking, and insurance. Four thousand dollars a year for a car I rarely used just didn't make sense. In December 2019, I sold it for $10,000 and invested that money instead of buying another car.

In 2020, when I turned 29, I decided to stop working solely on debt freedom and instead focused on wealth building through investing. At this point, my student loans were down to less than $50,000 with low-interest, so I decided to stop the extra payments and pay the minimums.

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That year, 2020, I understood for the first time what my 401(k) was, and what it was invested in. I began putting the remaining $1,600 a month I had been throwing at my debt into my investments, increasing my contributions, and maxing out those retirement accounts for the first time. 

In that first year of consciously investing, I invested almost $26,000. Prior to that, had only invested about $15,000 through a 401(k) match from 2015 to 2020. In 2021, I maxed out my 401(k), IRA, HSA, and contributed to a Solo 401(k) and have continued this approach into 2022. 

I currently have over $200,000 invested. If I get an average annual return of 8% for the next 30 years, I'll have more than $2 million waiting for me in retirement, even if I never contribute another dollar.

After a few years of focusing on increasing my income, decreasing my spending, and investing the rest, today I have a multi-six figure net worth, a year's worth of expenses in my emergency fund, and a thriving business teaching other people how to feel in control and confident about their money. 

None of this would have been possible without forgiving myself for my mistakes and deciding to take ownership of my future. 

Chloé Daniels, founder of Clo Bare Money Coach and The Lazy Investor's Course, is a personal finance creator, blogger, and coach focused on helping people learn how to manage money and build wealth without shame or judgment. She aims to provide education in a fun, easy to understand, and accessible way, and is known for her reels and TikToks that showcase her terrible dance moves while also providing finance tips. She's based in Chicago and can be found on Instagram and TikTok @clobaremoneycoach or at clobare.com.

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The views expressed are generalized and may not be appropriate for all investors. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. This information is for illustrative purposes only and shows a hypothetical projection that assumes an 8% fixed annual rate of return over a thirty-year period. Actual results may be different than those portrayed.