Green’s Dictionary of Slang

1. (US) to squander foolishly; to make a foolhardy mistake.

1976		R. Price Blood Brothers 241: You knew better, you bastard, an’ you fuckin’ blew it right out your ass ’cause a your goddam family.
2001		K. Sampson Outlaws (ms.) 42: They pull down places like Tommy White and do what? Fishing villages. Blowing out of their arses, they are.

2. (also blow it out one’s barracks bag) to boast, to talk emptily.

1989

H. Harrison Bill [...] on the Planet of Robot Slaves (1991) 38: You ain’t just blowing it out your barracks bag, buster.