How are people this bad with money?

[Lean L]

I really have to wonder recently with how people manage their money. Here I was having a conversation with a person who I know makes more money than me and he is always complaining about not having enough to get by when I can get by comfortably without even trying.

Things like being in debt or rather putting yourself in debt for no good reason is foreign to me. I managed to survive half a year from the money I have from a half year internship while others who should be much better off than me are living large paycheck to large paycheck. It baffles me.

It's the bad habits... Don't finance cars when you can get by with a car you can actually afford... Don't spend great deals of money on partying every day. Don't pay for unlimited everything plan for your phone when you talk 300 minutes, send 2000 texts and use 200 MB of data...

 

[TheSiege]

Mo' money mo' problems

 

[Tim]

Some people just aren't good with much of anything, including money.

I know there has got to be somebody here that can give us all sound advice on being alpha and being awesome with money.

Ånyone?

 

[edro]

It's not that you have bad luck, it's that you're a dumbass.

 

[Vdubchaos]

It's not about what you make, it's about what you spend.

People lack discipline and are continuously pressured to purchase bunch of worthless BS by our society.

 

[JM Aggie08]

I'm sick of hearing about 'not financing a car.' Fuck off - if I can get a 1.9% interest rate over the course of 3-5 years with a low payment, why not?

Nope. Instead, I'll drive a beater and fork out cash monthly for repair costs.

 

[PenguinPower]

I'm sick of hearing about 'not financing a car.' Fuck off - if I can get a 1.9% interest rate over the course of 3-5 years with a low payment, why not?

Nope. Instead, I'll drive a beater and fork out cash monthly for repair costs.

Because you're spending extra money on something that depreciates. If I don't have the money for a nice car, I can drop ~$5,000 on a Civic that doesn't need any more maintenance than is standard. That's a bit more than a down payment, and I'm not wasting $300/mo for the next 5 years on something that won't give me a return.

 

[geecee]

I'm sick of hearing about 'not financing a car.' Fuck off - if I can get a 1.9% interest rate over the course of 3-5 years with a low payment, why not?

Nope. Instead, I'll drive a beater and fork out cash monthly for repair costs.

I'd agree with this. If you need to buy a car, and you can get the 0.9-1.9% deals that some places offer, you absolutely should do it, even if you have the cash. Why not? You could easily invest/save that money at a higher rate than you're paying. I'm not saying that you should get a $75k car that you can't afford, but if you need to buy a car, financing it can actually make sense.

 

[hans007]

I'd agree with this. If you need to buy a car, and you can get the 0.9-1.9% deals that some places offer, you absolutely should do it, even if you have the cash. Why not? You could easily invest/save that money at a higher rate than you're paying. I'm not saying that you should get a $75k car that you can't afford, but if you need to buy a car, financing it can actually make sense.

The reason is most people if they have money saved in their checking account are too stupid to know what to do with it.


The average person in America is a damn near moron. If they were given $10k to buy a car and offered 0% loan on a car.... they'd buy a car on the loan and with cash in hand do something stupid like buy a boat or go on vacation. In this case its better they just pay for the car in cash and have no money to lose.

 

[purbeast0]

I'd agree with this. If you need to buy a car, and you can get the 0.9-1.9% deals that some places offer, you absolutely should do it, even if you have the cash. Why not? You could easily invest/save that money at a higher rate than you're paying. I'm not saying that you should get a $75k car that you can't afford, but if you need to buy a car, financing it can actually make sense.

yeah my buddy's 12 year old civic that he bought brand new finally died with 220,000 miles on it. he ended up getting a brand new toyota corolla with 0% financing for 60 months. great deal.

op sounds like your friend wants to live beyond his means. but i would rather be in his shoes, enjoying his money in his youth, than being a penny pincher saving all of his money to spend when he is 65 years old and gray.

 

[Train]

I'm sick of hearing about 'not financing a car.' Fuck off - if I can get a 1.9% interest rate over the course of 3-5 years with a low payment, why not?

Nope. Instead, I'll drive a beater and fork out cash monthly for repair costs.

On the same note of people being bad with money... it is an unfortunate related effect that a lot of people live by "rules of thumb" one being "the only good debt is a mortgage".

But the well informed/halfway decent with numbers crowd can see that while a 5.99% car loan is bad, a 0.9% car loan can be pretty kick ass.

 

[ThinClient]

I'm not good with money at all. I need a hot sexy suga mama to take care of it for me

 

[SunnyD]

Because you're spending extra money on something that depreciates. If I don't have the money for a nice car, I can drop ~$5,000 on a Civic that doesn't need any more maintenance than is standard. That's a bit more than a down payment, and I'm not wasting $300/mo for the next 5 years on something that won't give me a return.

Granted, you can get a lemon off the lot with a new car but there's a lot more recourse if you do... but you most definitely can't say a $5,000 Civic won't cost you more than oil changes, tires/breaks and maybe a tuneup. You're putting inherently a LOT more risk on that $5,000 car than you are on a new car.

Will you break even over the long run? Maybe.

 

[purbeast0]

Granted, you can get a lemon off the lot with a new car but there's a lot more recourse if you do... but you most definitely can't say a $5,000 Civic won't cost you more than oil changes, tires/breaks and maybe a tuneup. You're putting inherently a LOT more risk on that $5,000 car than you are on a new car.

Will you break even over the long run? Maybe.

another problem is that he's looking at a car as an investment when it's just a tool to get you from point a to point b. pretty much everything you purchase, other than a house and stuff for retirement, depreciates.

and he also says "it wont give a return" but for many many people, the joy of having a nice car is "the return" that they are looking for.

 

[homercles337]

...snip...

Do you think money management was something you learned, or was it just something you were born with? If you believe the prior, do you think it is possible that some people just never learned that? Many people grow up without learning these things, they are rarely taught in school, and people like you just write them off as "stupid?" How much do you know about higher order statistics? I know quite a bit, and assuming you know nothing, i am going to call you "stupid" for not learning it. How is that?

 

[PenguinPower]

Granted, you can get a lemon off the lot with a new car but there's a lot more recourse if you do... but you most definitely can't say a $5,000 Civic won't cost you more than oil changes, tires/breaks and maybe a tuneup. You're putting inherently a LOT more risk on that $5,000 car than you are on a new car.

Will you break even over the long run? Maybe.

I drove a '91 Civic with roughly 125k miles that I bought for ~$4k for about 5 years with only standard maintenance. I had it checked out before I bought it, so that cost me another ~$200.

Another problem is that he's looking at a car as an investment when it's just a tool to get you from point a to point b. pretty much everything you purchase, other than a house and stuff for retirement, depreciates.

and he also says "it wont give a return" but for many many people, the joy of having a nice car is "the return" that they are looking for.

I don't look at it as an investment...that's kinda my point. Why pay interest on something from which you won't see a return? While most everything depreciates in value, you usually don't take out a loan to pay for it.

If you enjoy spending your disposable income on a fancy car, more power to you. I drive a Boxster, but I didn't take out a loan for it. Buy what you can afford.

 

[Ksyder]

If you want a new car that is fine, but don't try to act like it will cost the same as a good used car in the long run. You have the depreciation as mentioned, plus the comprehensive insurance coverage that you are required to have on a financed vehicle.

Sure, repairs will cost money on a used car, but you also have the option of doing your own mechanical work to some degree, or find a friend that does it or an independent mechanic on craigslist, or simply pay a shop to do the work. But to say that the long term repair costs will eat the savings compared to a new car is an unsubstantiated claim.

 

[SlitheryDee]

I'm not opposed to financing for very large purchases, but I think you should stick to one thing at a time. If you're paying on one loan, pay it off before you get another. For most people it's more realistic to say one loan besides the home loan, anyway. You can have all the nice things you want if you're patient, but a lot of people aren't like that. The guy with the big 4x4, the boat, the house, the furniture and the mercedes for the wife with a separate note for each one is doing it wrong. They were trying to get the whole "good life" at one time. Get everything up front, and scrabble to pay for it all for the years it will take afterwards. That's unrealistic, and if you manage to do it it'll be by the skin of your teeth. If you hit the slightest bump, it doesn't just overturn your applecart; it blows it to smithereens.

Patience is all it takes to avoid all that.

 

[Lean L]

Do you think money management was something you learned, or was it just something you were born with? If you believe the prior, do you think it is possible that some people just never learned that? Many people grow up without learning these things, they are rarely taught in school, and people like you just write them off as "stupid?" How much do you know about higher order statistics? I know quite a bit, and assuming you know nothing, i am going to call you "stupid" for not learning it. How is that?

Huh? This does not match OP at all.

 

[Midwayman]

I have family that is constantly whining about money problems. They got a couple million inheritance, blew through it on god knows what and still have a mortgage on their house. Everytime someone helps them out after complaining, they always seems to be going on a Disney cruise, etc within a month or two of that.

 

[DrPizza]

I'm sick of hearing about 'not financing a car.' Fuck off - if I can get a 1.9% interest rate over the course of 3-5 years with a low payment, why not?

Nope. Instead, I'll drive a beater and fork out cash monthly for repair costs.

Granted, you can get a lemon off the lot with a new car but there's a lot more recourse if you do... but you most definitely can't say a $5,000 Civic won't cost you more than oil changes, tires/breaks and maybe a tuneup. You're putting inherently a LOT more risk on that $5,000 car than you are on a new car.

Will you break even over the long run? Maybe.

Some of you guys must have the shittiest luck in the world with cars. I've driven "beaters" for 25 years. The *only* "major" repair beyond routine maintenance has been a blown head gasket. Oh, and a pita to change out leaking oil pan. The last vehicle I drove into the ground was $1k; and I got 80k miles out of it with zero repairs other than oil changes, tire changes, and brakes (did the brakes myself). So, my cost worked out to be about 12 1/2 cents per mile, plus routine maintenance. If you purchase a new car, you're going to need to drive it a million miles to catch up to me.

The only reason to get a new car is if you prefer to drive newer vehicles. Financially, it really isn't a wise "investment." On the other hand, I prefer to sink [see what I did there] the saved money into other things, like boats.

 

[brotj7]

On the same note of people being bad with money... it is an unfortunate related effect that a lot of people live by "rules of thumb" one being "the only good debt is a mortgage".

But the well informed/halfway decent with numbers crowd can see that while a 5.99% car loan is bad, a 0.9% car loan can be pretty kick ass.

I would like to qualify that:

If you take the 5.90% you would have spent on the car and invest it the whole time you are making car payments at a higher % than the .09% loan,

and you do not pay a loan origination fee
and there is no loan termination fee
and you never have to pay a late fee
then a .09% loan is kicka$$.

otherwise you are throwing away fees and .09% of the loan for no reason whatsoever.

For the same net result as the loan, pay off the car and find a tax deductible way to give away that $30/month for every 20K you spent on the car for whatever the time frame the loan would have been. Maybe a charity instead of some corporate a-hole....

 

[Via]

You can buy a decent Civic for $5000 these days? Has the used car market finally stabilized?

 

[Vdubchaos]

I have family that is constantly whining about money problems. They got a couple million inheritance, blew through it on god knows what and still have a mortgage on their house. Everytime someone helps them out after complaining, they always seems to be going on a Disney cruise, etc within a month or two of that.

And you still call them your family?

 

[radhak]

...
Here I was having a conversation with a person who I know makes more money than me and he is always complaining about not having enough to get by when I can get by comfortably without even trying.
...

What people say, and what they actually mean can be pretty different.

My daughter asked me the other day why was it that I always complained about being short of money, particularly when it came to buying some new gadget (the new 3DS! the new Galaxy S4!) while her close friend always got all these stuff just by asking for them, and her parents never complained about anything. "They simply walk into Best Buy and purchase the latest movie DVDs, Dad! They don't wait like us to buy later, online, to get it cheaper..."

I wouldn't presume all the time, but it so happens that I have exact knowledge of that friend's parents' financials, having helped them restructure their loans recently. So I showed my daughter that I save around 26% of my annual gross - goes into retirement funds, college funds, even a special 'emergency fund'. And my wife's entire salary goes into savings, not used at all, unless for really big tickets that are very carefully thought out for need and bang-for-buck (eg - our recent Alaska cruise). After all that, the money left over is what I 'complain' about, which too is mostly for effect so my kids can appreciate that being short of money is a fact of life !

So on the outside, that friend lives comfortably while we count our pennies. Truth is, they are embarrassed to live within their means, while I'd be embarrassed to live just in the present with nary a thought of the future.