View Full Version : Wrong Way To Handle Money - (Stories)
What is the wrong way to handle money? How do most people handle money that leads to so many problems? I am thinking this may help solve what further we can do to be good with money.
Not tracking I am sure. Like some people check their balances to see how much they have instead of knowing how much should be in the account.
Spending what one thinks one should be able to spend instead of actually looking at what is there to spend.
Buying in the moment instead of planning things out. I need it now, so I need to buy it regardless of what the money picture is?
How about assuming that your income stream will go up and up, without any breaks or sudden disconnects? Even today there seems to be people who can't fathom they may have to be without a job for a while, and so don't put aside anything while they can.
A few I've had friends do/say. Not saving for retirement because one "doesn't think I'll live that long". Going on vacation on credit. Maxing out credit cards, then emptying 401K to pay credit cards but not cutting up credit cards so winding up with no 401K AND high credit card debt. Buying a vehicle for one's child who has never, ever shown the slightest modicum of responsibility. Having so many vehicles that one's insurance is what many people pay for a car payment. Buying a house at the very upper limit of what one can afford (or more than one can afford when they were giving those loans out). Having unplanned children because one can't afford birth control. Lending money to relatives. Asking relatives for a loan. Failing to figure out that a weekly paycheck means one will have to save some out from more than one check for rent because a single week's pay is not enough. Buying one's child a red sports car as a high school graduation gift. Buying a large vehicle, then being surprised at how much gas it uses, then selling it less than a year later. Having a car payment for more than 3 years. Cigarettes. Failing to deal with a bladder infection, because one is concerned about the cost (or has no emergency fund to cover such things) that then turns into a raging kidney infection requiring hospitalization and beaucoup bucks on medical bills. Getting all the way through medical school, then not actually practicing medicine because one doesn't want to. Signing up with the US military in a program that pays for college, then deciding at the end of college that one really prefers not to be in the military. Buying a house without knowing too much about the location or market. Moving for a job to a place where one doesn't particularly want to live because one is stuck in a career where there aren't many openings. Being too chicken to take advantage of opportunities. (OK, the last couple are me)
Using credit. Or simply living right up to one's means (i.e. not putting anything away for the future or emergencies--a good way to get into debt). Also, being penny wise and pound foolish.
Great topic!
When shopping, concentrating on savings instead of spending. Getting $600 worth of groceries for $200 after coupons isn't saving $400, it's spending $200.
Justifying little expenses. "I deserve Starbucks becuase I don't really want to work today but am still going into the office." Those expenses add up. I have used this excuse myself a lot.
Blaming big corporations or the government for all financial problems. Yes, they have power, but they don't have all the power. When the housing bubble burst, there were many news stories about evil mortgage brokers that tricked unsuspecting people into bad mortgages. No one really talked about the people that volunteered for a bad mortgage because they wanted a new, cute McMansion. I bet those people out number the evil mortgage by at least 100 to 1.
loosechickens
5-3-11, 3:36pm
having checks bounce and incurring high fees because "well, the money was in there when I wrote the check....you waited two weeks to cash it and the money was gone"....I have NEVER been able to understand how people can miss the connection between writing the check and taking that amount off your balance RIGHT THEN, because the money no longer belongs to you. Just because you go to the ATM and it says your balance is XXXXX, means nothing, if you've written three checks that haven't yet been cashed.......
guess you can tell that somebody's check to me bounced recently, hahahahaha with just that "excuse" . It wasn't a huge deal to me because I keep enough money in the account that their check didn't endanger any that I had written, but it cost the person some good bucks in overdraft charges, caused them embarassment (I hope), and showed me that they really don't have their financial life under control.
flowerseverywhere
5-3-11, 5:00pm
Getting a $2 soda out of a machine instead of buying a six pack and taking one with you each day.
Not getting cash when you are near a bank or your bank's ATM and having to use one that has fees.
Being out and not packing snack or lunch for you and/or family and kids so you end up at McDonalds.
Not making coffee at home and stopping at Dunkin
Not saving for emergencies in the good times
Buying clothes, shoes, earrings etc when you have a sufficient amount unless you are totally loan free and have been saving for retirement.
Buying clothes that don't fit you because you are going to lose weight.
Not realizing how mortgages work and the fact if you pay a little more each month in the beginning you can easily shave years off a mortgage.
Only buying houses and cars that you can really afford, not what people who stand to make a profit tell you that you can afford.
Not taking advantage of a 401K match
taking money out of a 401K before retirement
Not letting your children become independent as adults
so much good advice and most of it learned over the years I'm sure. I only wish I had back a portion of the money I blew in my 20's. Shopping was a recreational event, seems if you shop enough, you always buy.
rodeosweetheart
5-3-11, 8:16pm
Look at your income as gross rather than net. Put anything on a credit card. Attempt to keep your old house in a divorce (for many of us, anyway.) Feel guilty after your divorce and try to keep the kids' lives/school/house intact at the expense of financial reality.
Thinking about your personal finances on a month to month basis rather than year to year. Monthly thinking doesn't allow you to build net worth because you aren't thinking about net worth.
People who plan what they can buy based on the monthly payment. Anyone who is making time payments is paying money to interest, and interest is The Enemy.
I've had two friends talk about carefully planning expenditures based entirely on the monthly payment. One in particular shocked me because she was talking about buying a vacation house and said )it's only $850 per month--isn't that a great deal!!!???" and I was paralyzed because I had no idea if it was a "great deal" or not because I didn't know the sale price of the home.
People who plan what they can buy based on the monthly payment. Anyone who is making time payments is paying money to interest, and interest is The Enemy.
I've had two friends talk about carefully planning expenditures based entirely on the monthly payment. One in particular shocked me because she was talking about buying a vacation house and said )it's only $850 per month--isn't that a great deal!!!???" and I was paralyzed because I had no idea if it was a "great deal" or not because I didn't know the sale price of the home.
Yes yes yes! My parents were/are very good with money and successfully taught my sister and me how to handle it. This was one of the most important lessons they taught me. If someone's advertising something based on the monthly payments they're probably doing it because if they told you the actual price and interest rate/total amount of interest over the course of paying for it you'd probably think "Wow! That's a lot of money!"
Another one: "I don't need to save for retirement. My inheritance from (insert one) mom/dad/rich uncle/etc will be my retirement." I actually got this one from an otherwise rational and reasonably frugal woman I know.
I'll offer up a couple from personal experience, one chronic, one acute. I think the biggest chronic financial problem I've had stems from taking WAY too long to work out a way to discuss, plan and deal with money with my spouse. Thankfully, we've addressed most of that.
The biggest, single dumb thing I've done with money was to buy a Rolls Royce on eBay.
My worst one: taking a big cut in income (health issues) and not cutting the expenses to match, because "it's temporary". 5 years and $80K of consumer debt later, I finally wised up.
Assuming your spouse will always provide for you financially, including retirement.
Assuming your employer will never let you go.
I think it helps to be a worst-case scenario thinker.
My biggest personal financial mistake - buying a (too new) car, when I should have just taken cabs more often.
Kevin, are you out of debt now, or getting there? I'd be interested to know your story... K.
My worst one: taking a big cut in income (health issues) and not cutting the expenses to match, because "it's temporary". 5 years and $80K of consumer debt later, I finally wised up.
Single worst money mistake? Buying a house when we 1) weren't sure how long we wanted to live here and 2) bought on a whirlwind long-weekend trip without knowing the city very well.
My biggest money mistake was to buy a house at the age of 23, during the housing boom, with no money down. Then I went out and bought a too-new car and changed to a lower paying job. You live and learn!
Oh, I forgot to mention marrying a man who wouldn't get off his bum and get a job to help pay for said house and car also. When I bought the house I had planned on two incomes to pay for it all, but he apparently he thought it was my job to support him. (This would be the ex)
Kevin, are you out of debt now, or getting there? I'd be interested to know your story... K.
Yes - I sold my city townhouse in 2003, paid off the mortgage and all the debt, and moved to a small town with much, much lower real estate prices. I was very lucky that I owned property that had appreciated enough to get me out of the hole.
These are all of my personal favorites from DH's bro who is really bad with money despite having a great income.
Buying furniture on credit, then "letting the furniture store talk you into" taking out extra money into the loan...then using that money to go to Vegas.
Living in overdraft, relying on overdraft protection.
Ignoring bills...let them pile up unopened because you don't want to think about it.
Cosigning on a car with a girlfriend (or boyfriend, or child for that matter).
Not taking unemployment after a natural disaster (hurricane) wiped out your job.
Knocking up the bartender at Applebees, when you have no plans for a relationship or child.
DH and I have made some biggies...we bought our first house because that is what you are supposed to do right? Luckily we sold it right before the decline and lost a couple thousand after all was said and done. We did buy another one but we knew we would be there long term (still are 6 years later).
We bought a rental property in 2009 that is worth 30,000 less today, ugh. Its a solid rental that cash flows but we'd be up a creek if we had to sell it right this moment. I guess we tried to "catch a falling knife" as they say.
Not tracking our spending...we tracked off and on, and we do so much better financially when we are tracking.
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