How are people this bad with money?

[drinkmorejava]

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

I graduated in 2010, and one of the speakers was an astrophysicist (or something). I don't remember anything else about him, but two things have stuck with me.

1) If more people could do basic math, the mortgage crises wouldn't be nearly as bad

2) Drink an extra liter of cold water each day to lose weight.

 

[BarkingGhostar]

One only needs to look at how bad the federal government is at handling money to see they speak for all Americans. Why be surprised at someone you know when your government is as bad or worse.

 

[jagec]

One only needs to look at how bad the federal government is at handling money to see they speak for all Americans. Why be surprised at someone you know when your government is as bad or worse.

Given that the government cannot go bankrupt and faces no consequences for overspending or inefficient spending, I think that they do much better than the average American.

 

[waggy]

The "never use CC's, EVER!" rule is another one people will take a hard line with. It's popped up more than a few times right here in ATOT.

I used to say that and for years fallowed it. I did not use CC's at all. I wen tto get a personal loan (small one can't remember for what) and if nto for the fact i have dealt with them for years i would have been declined. NO revolving credit!

i have had mortgages, tons of (small) car loans. never had a personal loan though.

after that i got 2 credit cards (a neat one with capital one and discover witch i plan to cancel. id ont care for the company).

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.

same. I did purchase 1 new car. i was not impressed. I usually used and drive until damn near about to break then sell them.

I have had great luck except for one. last few cars i can remember heh.

2003 taurus paid $5k (posted about this heh) Transmission died within a month and a ton of other issues. I did pay partly for trans. but with other issues they pretty much rebuilt the engine (a ton of work i did't pay for). It runs great now. though i think i need shocks. got it at 100k miles. at 132k

2003 Ford windstar paid $5k got it at 80k miles. drove it until it had 160k. when the oil pan cracked. got a grand out of it.

2002 taurus paid 12k with 30k miles (this was in 2004). wife wrecked it in less then 4 months.

...tons of old accords. 1 though was a lemon. i paid $6k and ended up putting in another 3k and sold it after 2 years for 4k..it was bad.

I also drive far to much.

 

[Tim]

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

*teehee

 

[Destiny]

My neighbor just lit up a trash can size illegal rocket fireworks - shooting rockets for a straight 15 to 20 minutes... and the cost = $800

$800 in 15 minutes = could've been a 1 month rent money or 2 Playstation 4s that would give much more hours of enjoyment...D:

 

[mizzou]

my inlaws pulled in 200k a year, youd think they worked at mcdonalds...

 

[HumblePie]

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.

Nope. Not even close. Cars do, but most stuff that people buy doesn't depreciate at all. In fact, buying most of the items people buy in bulk right now is a better ROI than ANYTHING else on the market. For example trash bags. Buying a bin or two of trash bags right now, if you can afford it and have the storage, will have a greater ROI for a purchase today than buying trashbags the rest of your life in smaller increments. This goes for just about everything you may purchase and use.

Do many things depreciate? Sure, but the biggest is only going to be vehicles. Mostly because they are over priced really from the get go. That and they break down far too quickly compared to other items. Electronics also depreciate rather quickly if one buys things at or near MSRP for those items. Again, this is mostly due to becoming obsolete in terms of capability and the fact it will breakdown after a time span regardless. Trashbags? They neither go obsolete nor ever breakdown. Buy them today and use them 100 years from now the same way. The difference is that a trash bag 100 years from now is going to cost 50 times as much or more. I can promise you that. Same thing for most house hold items and goods people typically purchase.

Other items are more commodities that also never depreciate. Guns, ammo, tools, and other things of the sorts. In fact, well maintained guns and ammo will only ever go up in value. Even some tools.

But if you are the type of person that is buying a new car every 2-3 years... you are the type of person that tends to throw money away. People tend to spend far too much money on cars, gas, alcohol, and recreational activities. Kids can also be a big expenditure too.

 

[Red Squirrel]

I never really understood it either. You hear of people who make like 100k who have debt, it's like WTF? If I made that much I'd have my house paid off in like 10 years, and definitely would not have any other debt. Worse is when people win or make millions and somehow end up going bankrupt. WTF? I remember when the first NHL strike happened and there was stories about players having financial troubles because they were not playing that year. Dude, you made millions during all the years you played, what the hell did you do with all that money? That's some damn expensive hookers and blow. At least keep SOME money aside for emergency.

 

[Svnla]

I never really understood it either. You hear of people who make like 100k who have debt, it's like WTF? If I made that much I'd have my house paid off in like 10 years, and definitely would not have any other debt. Worse is when people win or make millions and somehow end up going bankrupt. WTF? I remember when the first NHL strike happened and there was stories about players having financial troubles because they were not playing that year. Dude, you made millions during all the years you played, what the hell did you do with all that money? That's some damn expensive hookers and blow. At least keep SOME money aside for emergency.

It is NOT how much you make but how much you save/have left over after you paid all your bills.

Joe makes about $50K/year and spends about $25K. Bob makes $5 million but spend $6 million.

Joe >>>>>> Bob.

 

[Red Squirrel]

It is NOT how much you make but how much you save/left over after you paid all your bills.

Yeah, but how much you make allows you to save more. Problem is though, lot of people go overboard and use up what they make on stupid stuff instead of saving.

 

[kranky]

I never really understood it either. You hear of people who make like 100k who have debt, it's like WTF? If I made that much I'd have my house paid off in like 10 years, and definitely would not have any other debt. Worse is when people win or make millions and somehow end up going bankrupt. WTF? I remember when the first NHL strike happened and there was stories about players having financial troubles because they were not playing that year. Dude, you made millions during all the years you played, what the hell did you do with all that money? That's some damn expensive hookers and blow. At least keep SOME money aside for emergency.

That is because of the way different people look at finances.

Your view is from the big picture - everything you owe is debt.

Their view is as long as they can make the payments, there's no debt. There's only payments. If they earn $10,000 a month, and have to make payments of $8,000 a month, there's no problem. These people never consider the implications of what happens when there is no $10,000 a month income.

It's how people get into trouble with credit cards. The overall balance doesn't really register as debt. Only that monthly payment amount matters to them - if they can pay that, they don't have a problem in their minds. So why not buy another $500 worth of new clothes... it's only another $8 a month.

 

[Red Squirrel]

That is because of the way different people look at finances.

Your view is from the big picture - everything you owe is debt.

Their view is as long as they can make the payments, there's no debt. There's only payments. If they earn $10,000 a month, and have to make payments of $8,000 a month, there's no problem. These people never consider the implications of what happens when there is no $10,000 a month income.

It's how people get into trouble with credit cards. The overall balance doesn't really register as debt. Only that monthly payment amount matters to them - if they can pay that, they don't have a problem in their minds. So why not buy another $500 worth of new clothes... it's only another $8 a month.

Yeah that's scary. Guess people are just that dumb. Or is it smart, because they don't let the overall debt bother them and make the most of what they have? You only live once? lol

 

[Fritzo]

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.

You do know that they make up that extra cash from free financing by tacking on to the price of the car, right? A car that might have sold for $25000 will go for $27000 with 0% financing. That's the trick on how they can offer free loans.

 

[highland145]

That is because of the way different people look at finances.

Your view is from the big picture - everything you owe is debt.

Their view is as long as they can make the payments, there's no debt. There's only payments. If they earn $10,000 a month, and have to make payments of $8,000 a month, there's no problem. These people never consider the implications of what happens when there is no $10,000 a month income.

It's how people get into trouble with credit cards. The overall balance doesn't really register as debt. Only that monthly payment amount matters to them - if they can pay that, they don't have a problem in their minds. So why not buy another $500 worth of new clothes... it's only another $8 a month.

And that's how I make a living.

 

[xeemzor]

That is because of the way different people look at finances.

Your view is from the big picture - everything you owe is debt.

Their view is as long as they can make the payments, there's no debt. There's only payments. If they earn $10,000 a month, and have to make payments of $8,000 a month, there's no problem. These people never consider the implications of what happens when there is no $10,000 a month income.

It's how people get into trouble with credit cards. The overall balance doesn't really register as debt. Only that monthly payment amount matters to them - if they can pay that, they don't have a problem in their minds. So why not buy another $500 worth of new clothes... it's only another $8 a month.

Basically this. I do consulting work for a large pay day loan place and the financial ignorance of their customers is astounding. I wonder if they even read the terms of their loans sometimes.

Lack of financial knowledge usually represent the lack of an ability to plan ahead or thinking of the future. These people are content to live in debt slavery for the rest of their lives.

 

[Ksyder]

Basically this. I do consulting work for a large pay day loan place and the financial ignorance of their customers is astounding. I wonder if they even read the terms of their loans sometimes.

Lack of financial knowledge usually represent the lack of an ability to plan ahead or thinking of the future. These people are content to live in debt slavery for the rest of their lives.

Well, from what I've seen, people that have never had any money don't know anything different. They don't know what its like to have even a few thousand in the bank, and its impossible for them to, because they only make a couple hundred a week and it all gets spend quickly.

One time a couple years ago I had a neighbor that needed a new graphics card and PSU so he could play wow. He went and borrowed money from a payday place so he could get 200 or whatever it was. I don't know what that loan cost, but he wouldn't even wait till the end of the week when he actually had the money.

Nice guy that I am, I even drove him to Microcenter, advised him on what he needed that would work with his pc that was from a rent to own place, and installed it for him. All just for gas money. The things you do for idiots.

 

[jagec]

Other items are more commodities that also never depreciate. Guns, ammo, tools, and other things of the sorts. In fact, well maintained guns and ammo will only ever go up in value. Even some tools.

But if you are the type of person that is buying a new car every 2-3 years... you are the type of person that tends to throw money away. People tend to spend far too much money on cars, gas, alcohol, and recreational activities. Kids can also be a big expenditure too.

Yup, any parent will tell you that kids NEVER appreciate.

 

[sourceninja]

You do know that they make up that extra cash from free financing by tacking on to the price of the car, right? A car that might have sold for $25000 will go for $27000 with 0% financing. That's the trick on how they can offer free loans.

So my bank knew I'd buy a car and where and told the dealer to charge me more?

I negotiate price before financing.

 

[Fritzo]

So my bank knew I'd buy a car and where and told the dealer to charge me more?

I negotiate price before financing.

When you get 0% financing, it's through the dealership. There are no banks that give you 0% on their own.

 

[geecee]

You do know that they make up that extra cash from free financing by tacking on to the price of the car, right? A car that might have sold for $25000 will go for $27000 with 0% financing. That's the trick on how they can offer free loans.

As sourceninja said, you negotiate the price before any mention of financing comes into play. Also, there are times when a dealership just needs to move inventory and thus is willing to put the no/low rate financing out there to stimulate sales.

However, financing does force you to fully insure the car, which costs more, although on a new or fairly new car, you probably are looking to fully insure for at least a little while.

 

[KlokWyze]

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.

Yuuuuuuuuup.

Consumer society. Gotta have the latest everything. People are also generally just suckers for rip offs that aren't even clever about it. Dre Beats headphones? Give me a fucking break. "Free upgrades" from your cell phone provider. Children are targeted and trained to be consumerist suckers from the beginning. These habits will continue to exist well through adulthood.

 

[Red Squirrel]

You do know that they make up that extra cash from free financing by tacking on to the price of the car, right? A car that might have sold for $25000 will go for $27000 with 0% financing. That's the trick on how they can offer free loans.

Pretty much. New cars are way overpriced, and depreciate way too fast. I could never justify buying new unless I had the cash so I'm not putting myself in a situation where I'm paying for something that's not even worth what I owe on it. The instant you drive off the lot with a new car you owe more on it than what it's worth. I would rather pay 10th of the price for a car that's like 5-10 years old that is still reliable, and take that saved money and put it towards something I will actually see, like server equipment, or home renovations. Basically, a more expensive car wont really do much more than a cheaper one. Might have more bells and whistles but overall as long as a car can move you around reliably, has heat and air conditioning and the basics, it's all that matters. I guess if you're a car enthusiast that's a different story and it becomes a hobby you are willing to spend on, but I'm talking more about the average joe that just needs their car to get to work.

 

[Spungo]

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.

Houses depreciate too if you don't take care of them. They need constant maintenance. Stupid people don't factor in repair costs then it floors them when they can't afford to fix certain things. As soon as there's some extra cash, they buy a new a car. Then suddenly the basement is flooded and a bunch of stuff needs to be fixed. Oh crap, we don't have any money for that! We just spent it on a new car! Better second the mortgage the house! Durrrrr

 

[Red Squirrel]

Houses depreciate too if you don't take care of them. They need constant maintenance. Stupid people don't factor in repair costs then it floors them when they can't afford to fix certain things. As soon as there's some extra cash, they buy a new a car. Then suddenly the basement is flooded and a bunch of stuff needs to be fixed. Oh crap, we don't have any money for that! We just spent it on a new car! Better second the mortgage the house! Durrrrr

Yeah definitely need to keep up with that stuff too, though often if you simply maintain the house in the same state it goes up. Add anything and it goes up even more. But so do taxes... My taxes are almost as much as the mortgage payment.