How are people this bad with money?

[Doppel]

At the end of the day realize that some people waste/blow/throw away money on new cars, others on vacations, others on furniture. Living beyond means is stupid, but spending on something that YOU may consider frivolous is not, because everybody I know spends some money on frivolous crap; basically it's gotta go somewhere.

 

[OlafSicky]

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.

That is all well and good but it's going to suck when you get a heart attack or a stroke and say to yourself I wish I went to Paris I wish I bought that Xbox 1 when it came out. Saving is great but it won't be any use to you when something serious happens.

 

[madoka]

I'm pretty bad with money, but fortunately I have a job that allows me to simply work more hours to make as much as I want.

 

[Vic Vega]

...

 

[Raduque]

I'm starting to care a little more about my finances these days. I'm leaving the money in my savings account, IN my savings account and I shopped around for cheaper insurance (saved $50/mo).

I cleaned up my credit reports and picked up a couple of 1-3% cash reward cards that I'm using for everything. I got a couple raises at work so I've also been paying a little more on my truck every month.

 

[jagec]

Saving is great but it won't be any use to you when something serious happens.

The opposite is true. Saving is what will SAVE you (see what I did there?) when something serious happens. It's what allows you to shrug off the unexpected repair bill/hospital stay/loss of job and keep on living, instead of having to panic, stress, and divert money away from stuff that you were really looking forward to before the crisis.

Obviously you have to budget some "fun" money and ensure that you aren't becoming a miser...but it turns out that most people spend lots and lots of money on things that they won't even remember a few months later, and that can be cut RIGHT out without any real pain.

 

[PenguinPower]

Don't worry. Some day you will grow up and your opinions will change.

I don't know...my last CFO was like that. Hope he doesn't make it to retirement.

 

[Lean L]

I locked in 1.95% on my car. Full coverage warranty for 6 years, and GAP coverage. Those two reasons alone make it worth the investment.

I was reading that and agreeing that it was not a bad decision since it would save you a great deal of headaches but then you called it an investment...

It's purely an expenditure imo. Yes it could bring a smile to your face if it's a fun car but you bought the excitement, it's not increasing any numbers.

 

[scorer]

people spend money cause they are looking for happiness to compete with others/solve depression/disappointment and other related stuff. My best friend at one time, blew 150K on prostitiutes/dymanatrix..spelling..worse part was he just spent it mostly for companionship..mothers inheritance no more

 

[RockinZ28]

Yea I don't know how people can live with the stress of counting on that next paycheck to arrive without delay. Even when I made just over minimum wage at my first job, I still saved plenty of money relative to my income.

Saving just comes naturally to me I guess. No one taught me or led by example. Every person I know that has shared their financial situation with me does not save, period. Half the time asking for money a day or two before payday, or checking their bank account online to see if they can afford to buy a cheeseburger at McD's.

I live comfortably, buy most of what I want, and still save plenty on a modest income.

 

[bradly1101]

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?

Stop needing the latest thing, rather put it away in savings, but mostly stocks for the looooong term. Trust me, I'm old.

 

[IGemini]

In my family there are a few of us that disdain credit in general. I'm one of them. Compared to most of those my age, I'm pretty sure I have little debt in comparison. At the same time I'm used to a much lower cash flow. I'd like to get into actual investments, but that's sometime down the road.

Never spent more than $4k on a car and always less in total repairs and maintenance, and usually last for years. Only time I took out an auto loan was because I didn't have enough to buy outright, but still needed a loan for the difference. Would've paid it off in a month instead of the year contract had the car itself lasted that long. That was my fault, though.

Finished college with <$18k in loans and now halfway through that. Had a credit card but never used it. Last opinion I heard was my credit rating was "perfect." Made minimum payments or better whenever I was comfortable but asked for deferment when I needed it. I don't believe in spending I don't have, but if I absolutely have to, I'll spend what I can. I tend to have enough to buy what I want. At the same time, my savings level is higher than it's ever been.

I kinda wonder what kind of debt some people take based on the spending habits I hear about. I've never really considered my cars "beaters" as I only buy those that have been well-maintained. Each had ~50k in miles in the time I used them and only had to switch when there was an accident.

 

[CraigRT]

Bingo on the last part.

I'm going to blow some minds here and admit that not only do I have a large car payment, I'm only LEASING it. That's right... I'm just dumping money down the drain until I can give the car back, and I like it. Why would I do this? Well, it's a new thing really but I'm finding I get bored of cars really quickly. I get a certain amount of satisfaction by having bleeding edge technology, and that includes my car. Honestly I might actually find a car I want to own forever and drive into the ground, but until then I'm going to switch cars every 3 years until I find one I like.

Plus, I'm a young guy with hobbies that change all the time. The type of car I need currently might not be the best car for me in a few years. It's just more useful and enjoyable for me to have a new car right now.

I totally agree with you except for the bleeding edge part. I prefer older cars, but the fact is, I get bored of cars insanely fast, and I feel like I should have switched cars long ago, by the time I finally do. I have had my current car over 2 years which is the longest I have kept a car since I was a teenager. (0% loan which is awesome)

If one only looked at my finances in terms of cars, I would be a train wreck, but I am like you. I only really spend money on a few things, and cars are one of them. It's part of the hobby and it is a waste of money. You just have to be OK with that. I am frugal everywhere else, I virtually never buy anything that isn't on sale, grocery flyers, cross border shopping, etc etc. But a car that I enjoy is important, and I've wasted a dollar or 2 in my day on them, that's for sure.

 

[kranky]

Grow up poor, and see the downward cycle it creates, it motivates you to save when you can.

If you're poor, you don't have good credit and most certainly no cash cushion. An emergency forces you to deal with whomever will extend you credit at horrendous rates. You set up an even worse future to squeak by today. You have no bargaining power.

When I was a kid, we needed new windows desperately for our house. My parents found a guy who would finance for 10 years(!) through a finance company. Six years in to the loan the total of the payments was already double the cost of the windows, and they still owed half the money due to the way the financing was structured (rule of 78's, which I don't think is legal any more). Total rip, but it was that or nothing.

You see a few things like that, it makes you want to save. For people who grew up relatively affluent, I can understand why they are poor money managers. They have no idea how badly (and how long) it can affect you when you screw up or find yourself having to deal with an emergency.

 

[Hayabusa Rider]

You didn't say why he was in trouble. Does he not understand how to manage money or was he living within his means and circumstance adversely affected him?

I make a decent living and being higher on the food chain than many I don't complain and there have been things which I could not avoid which make things tricky, but what would be the point to cry about it anyway? "It's not your business" seems a foreign concept. Hell, I don't know my facebook password and that's because I don't use it. The only reason was because someone else put up something they wanted me to see.

 

[TXHokie]

Apparently people who makes bad financial decision are also likely to suck at math -
http://money.cnn.com/2013/06/25/real_estate/mortgage-math/index.html

 

[brianmanahan]

I'm going to blow some minds here and admit that not only do I have a large car payment, I'm only LEASING it.

but... is it an m3? :colbert?

 

[Harrod]

I saw my parents struggle growing up, this is pretty much the thing that made me not want to worry about money. I sometimes refer to college as the funnest part of my life, this is not because I was a wild college student or anything. I was riding a fine line between going in debt with school and leaving college without any debt. I did fine until my last semester, when I said screw it and got a loan as a buffer so I could quit worrying about money.

I always treated my weekly expenses like a game, and I knew I could spend 7 dollars per day on anything I wanted. I miss those days, now the game is to see how little I can spend per day, and I make sure that any frivolous expenses are paid for with overtime pay or holiday pay.

Every once in a while I run into people who went to the private college across the street from me, I find it funny that most of those students acted elite 10 years ago, now when I hear them talk about how they are struggling with their student loan debt, I say, "Yeah, but at least you can brag about how you went to OBU".

 

[PlanetJosh]

Bankruptcy/debt relief agencies run tv ads saying most people get in debt not from spending problems but from emergencies. So is this true or are they just trying to make us feel good about bankruptcy so they will get our business?

Would be scary if most debt is from things beyond our control. I don't know which it is and maybe it would take a lot of studies and hassles to find out. If the research is clear about it then I'd like to know.

 

[alkemyst]

How many of you ballers are living in your parent's basement and paying no bills?

 

[purbeast0]

I saw my parents struggle growing up, this is pretty much the thing that made me not want to worry about money. I sometimes refer to college as the funnest part of my life, this is not because I was a wild college student or anything. I was riding a fine line between going in debt with school and leaving college without any debt. I did fine until my last semester, when I said screw it and got a loan as a buffer so I could quit worrying about money.

I always treated my weekly expenses like a game, and I knew I could spend 7 dollars per day on anything I wanted. I miss those days, now the game is to see how little I can spend per day, and I make sure that any frivolous expenses are paid for with overtime pay or holiday pay.

Every once in a while I run into people who went to the private college across the street from me, I find it funny that most of those students acted elite 10 years ago, now when I hear them talk about how they are struggling with their student loan debt, I say, "Yeah, but at least you can brag about how you went to OBU".

heh i am actually very much like you with the bolded part, as far as just spending money to spend money. but the reason i do that for the most part is so that i can have as much money as possible to spend when i go on vacations.

i will still buy stuff that i want, like a game or movie or just something of that nature, but i won't spend money just to spend money for the most part.

 

[PlanetJosh]

@alkemyst, I live alone live in a condo my dad owns. He lives 10 miles away and pays me an allowance if I'm out of work. And since I'm not working then you're right, I'm basically not paying any bills. The condo is not a shack though. It's two bedrooms, two baths to myself.

And I raided my retirement funds (I'm in my 50's) to buy an i7 pc system and two lcd pc monitors at $1k each Usd: the relatively new Samsung 27" monitor and the 27" Apple Cinema Display. My dad said if people find out I'm not working to tell them I live on a periodic advance from my inheritance.

 

[gorcorps]

Those '14 Grand Cherokees are pretty dope, what kid of mileage is it getting?

I've been talking about it here:
http://forums.anandtech.com/showthread.php?t=2326875

 

[jagec]

Bankruptcy/debt relief agencies run tv ads saying most people get in debt not from spending problems but from emergencies. So is this true or are they just trying to make us feel good about bankruptcy so they will get our business?

If you don't have an emergency fund, then you have a spending problem IMHO.

The exception is probably medical bills...with a bit of bad luck, those can easily wipe out an emergency fund and still drive you into bankruptcy.

 

[brianmanahan]

@alkemyst, I live alone live in a condo my dad owns. He lives 10 miles away and pays me an allowance if I'm out of work. And since I'm not working then you're right, I'm basically not paying any bills. The condo is not a shack though. It's two bedrooms, two baths to myself.

And I raided my retirement funds (I'm in my 50's) to buy an i7 pc system and two lcd pc monitors at $1k each Usd: the relatively new Samsung 27" monitor and the 27" Apple Cinema Display. My dad said if people find out I'm not working to tell them I live on a periodic advance from my inheritance.

not sure if serious

or just trollin