Get ready for another installment of Money Mistakes. Everyone makes mistakes, and financial bloggers are no different. This week we’ll find out about the dangers of gambling and how it can quickly get out of control.
Tell us a little about yourself.
I’m a 26-year-old Asian American dude who came to the United States when I was ~10 years old. I’m currently working in finance and have a blog over at Filled With Money. I have built up a net worth of about $400,000 so far and I want to be a millionaire before I turn the next decade (30 years old). I didn’t have any inheritances to speak of, but I’m just a guy who likes to work hard and achieve my own success.
I used to have an income of $52,500 straight out of college and after 401(k), HSA, and insurance contributions, I lived on an income of between $20,000 – $25,000 for about 2 years. Therefore, to save money, I lived in a very run-down apartment in which the toilet didn’t even work properly. “Friends” who visited my apartment called it a “sh*thole” (her words, not mine). She is no longer in my life and I’m very happy about that.
Now, I make six figures and have ample room in my budget to spend on rent. It makes me proud that I’m slowly building my life up to where I want it to be. It’s taking me quite a while and I know it’s going to take me more time in the future. However, when I get there, it’ll all have been worth it.
What was your money mistake and when did you make it?
My money mistake was when I lost ~$20,000 gambling in the casino when I was 22 years old. I made many more money mistakes in my life such as attempting to day trade, not investing my money starting from when I first got a paycheck and giving up on my first blog after just seven months of working on it.
What led you to making the mistake?
When I was 20.9 years old, my friends and I planned a Vegas trip, just in time for me to turn 21! We researched the ways to make money, what Basic Strategy was, how counting worked, what gamblers we’ve actually seen, etc. In that trip, my friend lost ~$300 and I won about $1,600. I was thrilled. Especially when I vividly remember that trip. My friends don’t know this story but I was literally down to my last $30 and I put the bet down and got up to go back to the hotel room. However, I won that hand and ended up going on a winning streak the likes of which I’ve never seen and thought was mathematically impossible.
That’s how I grinded up $30 to a $1,600 profit. I thought that’s when I figured out the system! I had no idea what mathematical possibility meant back then. I won when I should not have. I thought it was because of me that I won. It wasn’t. But anyway, I was therefore hooked and decided that when I graduated, I would frequent the casinos so that I can make something like an extra $1,000 per month on the side. And I successfully did.
I was successful for about 5 months. I actually ran up my $2,000 bankroll all the way up to $20,000!! That doesn’t even count the free hotel rooms, free perks, and free food the casinos gave me. I’m a person of interest when I go to a casino that I used to frequent now. Pit bosses watch my play very carefully and I wouldn’t be surprised if the cameras in the ceiling solely focus on my play for an extended period of time.
However, guess how long it took before I lost all that money? 2 months. And I didn’t just lose the winnings, I lost an additional $20,000 on top of that before I called it quits. I have NOT touched a single casino chip since then. Do I think that I’ll gamble sometime in the future? Yes. However, that’ll be way into the future when I actually have money to lose and truly not mind losing.
The $20,000 was something like 15% of my net worth at the time. It was not an insignificant amount of money. I felt dejected, down, and out. My heart would hurt and my psyche wasn’t in the right state of mind at the time.
How did you recover from it?
I recovered from it by not going to the casinos since then and just saved and invested as much money as I possibly could. I maxed out my 401k and HSA, and didn’t spend any more money on gambling. I practiced brutal honesty on myself and realized that gambling wasn’t profitable for me.
I cut my losses and moved on. Additionally, it was back to square one and back to the basics of saving and investing with no excuses. I invested my money into the S&P 500 without fail all of these years since then. I’ve since 3 – 4x’d my net worth.
If I hadn’t lost the $20,000 in winnings plus an additional $20,000, I estimate I would have an additional $60,000 or so added to my name today. Man, how great that would have been. I would have actually already been financially independent or very close to it. I estimate I have to work an additional 9 months to even start thinking about financial independence now.
What would you have done differently?
What I would have done differently is not let my ego get the better of me. Quit while I’m ahead and recognize when something is a nearly mathematical impossibility versus me making sound decisions. $40,000 could have been a down payment to a nice house in my city. Instead, that is gone to thin air. Just like that. Poof.
Now, if I had that level of returns, I would have tried to turn the money into assets that would make me passively money over time. Invest the money into proven index funds and sit back and relax while I make my money do all the work for me. That would have been the life. To put lucky money into serious income-generating assets.
How can others avoid the same money mistake?
DO NOT GO INTO A CASINO TO MAKE MONEY. Go into a casino because you want to have fun. AKA, if you will care about losing the money you bring, don’t step foot inside a casino. While $2,000, my starting bankroll, would not have made a huge difference to my life if I lost it all, I still would have cared. That was almost my entire paycheck at the time.
A good position to be in is to just bring “fun money” to a casino that you wouldn’t care about losing. And not just that, remember that casinos spend billions of dollars figuring out what makes you tick. They have psychologists figuring out how to make you addicted in ways that you didn’t even know. There’s a reason why shining lights and loud music is there to distract you. Therefore, not only should you bring money that you don’t mind losing, you have to know yourself that you WON’T be convinced and get sucked into the clever marketing tricks employed by the casinos.
The best position to be in is to never step foot inside a casino.
Most importantly, what did you learn from your money mistake?
I learned money is an emotional subject. And when feelings are involved, we start to make irrational choices. I thought I could separate my money from my emotions. I literally couldn’t. Whether we like it or not, money is a part of our ego. Whether we have a lot of it or whether we don’t have a lot of it, it will always be a part of our ego and we will have an emotional connection to it.
This information can be either good or bad for your situation. Use this information wisely.
I kept equating my ego with money and once I started to make more money from gambling, the more it fed my ego. The more it fed my ego, the more dopamine that my brain received. The more dopamine meant the more that I wanted to do more of.
These days, dopamine is the enemy and not the friend. Take careful consideration of dopamine, it’s what makes or breaks lives.
Anything else you want to say?
Please accept responsibility for your decisions. I could have blamed my friend for introducing me to gambling in the first place. However, I never, not once, did I ever blame my friend for introducing gambling to me. I enjoyed gambling and I liked gambling and he never forced me to gamble.
I accepted responsibility for that and he’s still one of my best friends to this day. I failed through my own choices and I win through my own choices. That’s how it should be for you as well. Lose because you made the wrong choices and win because you made the right choices. Don’t let someone else make the choice for you. Make the choice because you want to.
Jeff is a fan of all things finance. When he’s not out there changing the world with his blog, you can find him on a run, a Mets game, playing video games, or just playing around with his kids.