Dropping the Ball

By Daniel Kadlec

I can't get the image out of my mind: "Mr. McGwire, I think I have something that belongs to you," 22-year-old Tim Forneris, a part-time grounds keeper for the St. Louis Cardinals, proudly decreed last fall as he handed over home-run ball No. 62--and with it probably the most expensive thing he would ever hold. Consider: a few weeks ago, a mysterious bidder paid $3 million to the guy who auctioned off home-run ball No. 70. I don't mean to pick on Forneris. Giving up the baseball was an honorable gesture. And he did get some fame, a minivan and McGwire stuff worth maybe $5,000. But the way he gave away the ball dramatizes several personal-finance sins that we all commit.

For starters, Forneris was plain wrong about the ball's belonging to McGwire. Once the grounds keeper got his mitts on it, the ball was his. Says so right on every ticket to the game. He probably knew that and was thinking in grand, symbolic terms. Still, his act betrays a mind-set that leads many of us into grave errors in daily money matters. Here are Forneris' missteps and what you can learn from them:

Buying on Impulse

We all do it, whether by investing in a stock just because it has gone up or buying a leather coat just because it looks great on the model in the catalog. Impulse buys are almost always a bad deal. Sleep on those decisions, and you'll probably not spend the money. Credit cards compound the problem by making impulse buys less painful. Forneris' sin was giving away his valuable baseball the day he caught it. McGwire would have been just as pleased to get it the next day, or even the next week. You lose nothing by taking time to think. "The smartest thing the guy who caught No. 70 did was go home with the ball that night," says Michael Barnes, a St. Louis, Mo., agent who represented the seller. "There's a good chance that had McGwire looked for my client that night, he would have given back the ball."

Following the Crowd

In investing, there's comfort in buying what everyone else buys. But fads fade, and it's the last people in who lose big. I'm not saying that the Internet bubble has burst. But if you paid $199 a share for Amazon.com on Jan. 8, you know what I mean. If you didn't, here's a hint: last week the stock ended at $117. Forneris surely was influenced by herd thinking. In the weeks before McGwire's famous swat there was a groundswell of local opinion that home-run balls should be returned. "Fans who kept the balls were vilified," says Dan Paisner, who is writing a book on the subject. But it's nothing that a few mil won't fix.

"Easy Come, Easy Go"

In their new book, Why Smart People Make Big Money Mistakes (Simon & Schuster; $23), Gary Belsky and Thomas Gilovich discuss what they call "mental accounting": the penchant for placing different values on money obtained in different ways. We tend to spend more frivolously or risk "found" money (a bonus, gift or investment gain) than money earned through hard work. In casinos as well as the stock market, some folks blithely fritter away their gains, saying they're "playing with the house's money." Yet all dollars spend the same. Forneris gave big bucks to a millionaire, but it didn't feel that way because he had put the home-run ball in the found category, where it was easy to spend, gamble or give away. "It's important that you learn to view all money equally," write Belsky and Gilovich. "The more time you have to think of money as savings--hard earned or otherwise--the less likely you'll be to spend it recklessly."

See time.com/personal for more on money mistakes. E-mail Dan at kadlec@time.com See him on CNNfn Tuesdays, 12:45 p.m. E.T.