Finances are a complicated area for many people. After all, many of us struggle with math at school. If you can't add up, how are you supposed to manage your money?
Well, some of us do OK anyway. Others, not so much. Recently these people came together to share their insights into the things that make some people terrible money managers.
Some of these won't come as any surprise, some are oddly specific, others are things we've all been guilty of once until we've seen what a bad idea they could be.
So, come and take a look at the things that bright individuals says will ruin your financial life.
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thebalance.com
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#25 The Game Of Swap Is A Bad Idea
I used to work at GameStop. I had a customer that bought a PlayStation because a particular exclusive game came out for it. About a month later, they would then trade in the system and game to buy an Xbox when a new exclusive for it came out.
.. and would go back and forth trading the respective consoles and games in every few months.
I tried to convince him to just own each system and buy the games for each when they were released, because he was losing so much money doing what he was doing.
His response was that he couldn't afford to buy both at the same time. I didn't have the brightest customers!
#24 You Might As Well Go All In
In Western Australia it looks like this: get laid off by a mining company that was initially paying you well (specifically because it isn't a secure position, but never mind that).
You've already taken out a $600,000+ loan on a house, an $80,000 loan on a "sick" V8 Commodore (plus another $10,000 putting in performance cams and a straight through exhaust so you can pull mad skids).. this is all on the justification that "I'll be able to smash these loans out in a couple years on this salary". Oh, no.
What to do now? What's that? Tickets to Bali are $300 return? Better take the family for a booze-fueled cheap-time buying bonanza. It's fine, we'll just remortgage the house.
#23 Love Is Not Financial Wisdom
We've been dating for 3 months... of course, let's join bank accounts!
#22 Spend What You Earn, Not What The Bank Loans
Treating the limit on their credit card as money they have.
Example: They have a $5,000 limit on a new card and immediately think of what they could buy with $5,000.
#20 GoFundMe Is Not A Substitute For Work
Setting up a GoFundMe account to get their Facebook friends to pay for their wedding, instead of opting for a simpler wedding... or having a longer engagement... or eloping now and having the big party later.
This, of course, while still going out to dinner every other night, and taking expensive trips.
#19 When You Measure In Monthly Payments
When you ask them how much they paid for something, and they only know how much it costs them on monthly payments.
#18 Don't Rent What You Could Buy For Much Less
Rent-A-Center. Heard a coworker talking about their new pan and she showed me a picture of it on a table with burn marks.
I asked why the table was so burnt and she said “Ugh, the Rent-A-Center's on my back because I haven’t paid yet, but I don’t want to. I shouldn’t have to pay for a burned table”. I replied, “Why would they even rent it to you like that”? She says,”Well, they’re jerks! I told them I burnt it and they won’t even give me a discount or anything, they want more”!
This lady's new toy cost more than a table I now own off Craigslist.
And she’s $200 in debt for a table she can’t even keep. I still think about that interaction maybe twice a week.
#17 Easy Finance Won't Be Easy In The Long Run
I used to know a guy who was renowned for making bad decisions in general. To be fair, he was funny and had a heart of gold, he just wasn’t a logical thinker. He never had any savings, he was always buying his girlfriend of the month pretty/expensive things, and always mooching off his mom.
One of the more flawed decisions that has always stuck with me was when his car broke down. It was a piece of junk so it was bound to happen, no biggie. He was feeling pretty blue because of it, as well as a collection of other things that had happened around the same time (largely through his own choices).
So he decided that in order to finally become a winner he needed to look and feel like a winner. And do you know what makes you look and feel like a winner? Owning a brand new Chrysler.
He was so excited about it, he could feel good things coming his way already.
He’d picked the one he wanted ($70,000 AUD), he’d spoken to the dealer and organized when he was going to come in and do the paperwork. Everything was looking great for him!
Then when he went to the dealership to sort it all out it turned out that he hadn’t been in his current job for long enough so the loan/finance (which he elected to go through the dealership) couldn’t be approved.
He came back looking pretty defeated but, in my opinion, being declined that loan was one of the luckiest things to ever happen to him.
This man should not be in charge of his own money.
#16 Coffee Gets Expensive
Complaining on Facebook that you can’t afford the $200 it will take to cover your kid's school supplies this year... but also posting a daily pic of your Starbucks drink.
#15 The Market Can Go Down As Well As Up
In my part of the world, it's the newly hired on the oil rigs, when the market is booming.
They go out and buy a truck with a $1,000 monthly payment, then buy a house with a $3,000 monthly payment.. then when the market drops, they lose it all, and their credit ends up ruined so it's harder to find a decent car/place to live.
#14 A Sale Isn't Always A Bargain
Buying things you don't really need, just because it's on sale.
To clarify, I am talking about non-necessity items. Food, hygiene products, etc. are a good idea to buy when it's on sale, even if you don't need it at the moment!
#13 Pawning An Xbox Means The End Is Nigh
An old friend of mine (we'll call him Friend A) was in a rough place. He had a job but couldn't really afford to get out of the slump he was in (living paycheck to paycheck), so my other friend (Friend B), who owned a house, offered to let him stay for free for a few months.
All Friend A had to do was pay the internet bill ($70/month).
Easy enough, right?
Well Friend A decided that since he no longer had expenses, he would just quit his job and play Friend B's Xbox all day long and join a band.
Lo and behold, Friend A ran out of money eventually.
Now he owed Friend B the internet bill and simply couldn't pay it. Instead of getting a job and paying it, Friend A stole Friend B's Xbox and pawned it, then used the money to pay Friend B's internet bill.
How he ever thought it would work, who knows?
But that's the definition of terrible financial decisions.
We don't talk to Friend A anymore.
#12 Shout It Out, Sister
People questioning you about why you're saving money are crazy.
When you let a friend know how much you have saved and they ask why you aren't spending more? BECAUSE IF I SPENT IT I WOULDN'T HAVE ANY SAVED, THAT'S HOW SAVING REALLY WORKS.
#11 The Sound Of Poverty
When someone rents an apartment in a terrible part of town but drives a very expensive car. Complete with a stereo setup that you can hear, nay, feel, from half a mile away.
#10 The Wrong Way To Run A Business
When you are part of MLM company and you “own your own business”. Bonus points for using guilt.
MLM is “multi-level marketing” company.
#9 Credit Cards Are A Nightmare
$20,000 in credit card debt at nearly 20% APR (Annual Percentage Rate).
#8 You Have To Learn To Say "No"
One of my colleagues is probably the nicest man on the planet. He's kind, considerate and loyal, you couldn't write a movie script for a better person. No Rhodes scholar, but very hardworking and liked by everyone.
Almost every person in his life takes horrendous advantage of him. I can tell that he deeply fears being rejected by his loved ones and craves their approval and acceptance, but it has crossed a line.
They have a joint income of over $150,000, and yet are circling the drain in debt and can barely pay any bills.
They live on credit. His wife is usually a decent person, but when she says jump, he asks how high.
This has resulted in numerous luxury shopping trips, her mother moving in and being a complete leech on their lives, vacations, and they just had to buy two brand new vehicles last year with all the bells and whistles. They can barely pay the mortgage and the house is a mid-sized fixer-upper.
At least every week or two he comes in and I force out of him the latest thing they spent way too much money on. Almost everything is in paid installments, even their utility bills. He pays for 5 cell phones.
He usually can't drive his truck because there is no gas in it.
In the summer we have barbeques every week for about $3-$5 a person (hot dogs are cheaper than burgers), and there are times he doesn't have the $3... a 45-year-old man with a 6-figure income doesn't have $3 two days after payday...
Thankfully his kids are clueless that there is a problem (as it should be, they are kids and don't need adult problems), they get whatever they need for school.
My concern is that one day the bubble will burst. Repo companies will come in, creditors are calling, they are precariously close to the edge at all times.
All I can do is encourage him to get therapy and learn to say "NO!"! But I can't force it.
#7 Food Should Come First
I worked at a grocery store for eight years and the one thing I saw a lot of, unfortunately, was people putting food back for cigarettes when they have kids. We didn't sell lottery tickets or alcohol, but other stores in town did and heard the same stories.
#6 Sometimes It's An Oddly Specific Warning Sign
Buying a run-down hotel with bedbugs, mold and a broken pool. Then spending $27,000 on new signs with over half your savings.
#5 Write Things Down
People unable to remember what they wrote checks for and/or unwilling to write down what they wrote checks for.
My boss' charity just sent out the legally required receipts for charitable donations.
Each receipt says "Thank you for your donation of X to Charity Name".
It's so people can list it as a charitable donation on their taxes and so we have a list in the event of an audit.
I have fielded no fewer than a dozen calls this week along the lines of "What is this receipt for? I didn't write a check"! And no one is polite about it either, they're all in full-blown panic mode.
I have photocopies of their checks with the check numbers. Which I send them. Suddenly they remember that check they wrote all of a week ago, but somehow never wrote down in their checkbook or whatever system they use.
Seriously people, pay attention!
#4 Don't Invest In Animals
A guy that I worked with sold his phone to pay his rent.
He got like $40 for it. Spent the next month without a phone unable to do business properly because he didn't have a way for people to contact him.
Told me he was short on rent and he was living check to check every month. Later told me he plans on taking out a $4,000 loan.
$2,000 of it was to buy an old car he liked and the other $2,000 was to revamp it.
Decided he wanted to start breed pit bulls, so he paid $300 for a pit bull that then wouldn't mate with a female, and was later run over.
Decided to buy two Indian ringnecks (birds) because he wanted a pet.
But then he had to buy proper cage and toys and he has to buy bird food and do general upkeep on them, etc. He later sold one to cover his rent.
Told me multiple stories about how whenever he came upon some extra cash he'd spend it by the next day.
He was proud of this too. He told me how he once got a $100 from a family member and then used it within the same night to have a steak dinner and go out for desserts afterward. When customers would leave him tips he'd use it to buy takeout food that night.
He bought a cat!
When he eventually got a phone, he bought one for about $500 (that's more than his paycheck).
Told me he once wanted to give his wife money but she told to keep it because she didn't want to spend it, so he literally threw it away.
#3 Keep What You Buy
Buying something really expensive like a motorcycle or a nice rifle, then deciding you're "tired of it" and reselling it for half the price only a week later. I knew a guy who did exactly that...it was astonishing. It's like...dude... you just lost thousands.
#2 You're Being Judged When You Buy A New Car
Any time that I see someone who makes less than $25,000 a year buy a brand new car rather than a well-cared-for used one, I judge them a bit.
#1 Look To Your Food Spending
I work at the bank. Literally, 95% of people's expenses come from food and eating out.
Now that doesn't mean someone is necessarily financially illiterate, but by simply making your own food and getting a coffee machine, most people can save the majority of their paychecks.
Also, quit having a credit card that offers no rewards. There are so many cards, with no annual fee, that offer rewards.
