Current Events > It always surprises me how many smart people suck at managing money.

(+) Yeah! (+)

One of my friends who is making ~$90k and his wife makes ~$60k told me today he is $20k in credit card debt, took out a $40k 401K loan for a home down payment, 30k in 2 car loans and ~$50k for student loans between him and his wife.

Basically other than the student loans everything he and his wife get into financial troubles come from conspicuous consumption, he is classic first in his family to go to college so he bought a house before he could afford one, bought new cars when his old one was working because he wanted everyone to see his success, etc.

And he has been stably employed since he graduated at good paying jobs, they haven't had any emergency type situations where they had to go into debt, it's really just all money management.
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People want everything now instead of saving and waiting to buy it
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They become conscious of it too late like you described.
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CADE FOSTER posted...

People want everything now instead of saving and waiting to buy it

Oh definitely, it is totally just keeping up with the joneses. I guess I normally expect smart people to make rational choices and consider long term consequences when clearly that is not the case.
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the only thing there that I find surprisingly stupid is the 401k loan bit

the rest seem like normal kind of american consumerism things, that is a bit excessive even for our excessive culture
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A guy that works with my brother is similar. Dude is a finance guy and overall smart however....

-Dude and his wife are up to their eyeballs in debt despite him making right at 100k and her making around at least 70k

- I know at one point he was paying like $900 per month on BMW but has admitted to not being able to literally save anything on a month to month basis.

-Dude would be MUCH worse off if his financially successful father hadn't bailed them out multiple times. His dad paid for all of his undergrad and graduate education at expensive schools as well as down payment on their house as well as countless other things.
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Balrog0 posted...

the only thing there that I find surprisingly stupid is the 401k loan bit

the rest seem like normal kind of american consumerism things, that is a bit excessive even for our excessive culture

their whole house thing really confused me when they were looking to buy. they bought a really nice house in a meh neighborhood that was very inconvenient for both his and his wife's commute. It's like a 3000 square foot house in Lynnwood, WA, and they seem to think it is worth like 3x what they paid for it 2 years ago now.

The cars were what got me. They had like a 2005 Ford Focus and a 1998 Honda Accord or roughly those years, both ran well, but they wanted a "new" but out of warranty Mazda 3 and pre-owned Lexus IS250 with like 1 year left on the warranty in their place.
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Being smart doesn't save you from also being impulsive.
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Lost_All_Senses posted...

Being smart doesn't save you from also being impulsive.

I should know that by now but still always make the assumption they are.
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I wonder if the idea that "I have to have everything new" is even more pronounced these days thanks to social media.
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My former neighbors (they still live next to my mom) owe more on their house now than they did 25 years ago when they bought it and they're on debt for more than it's current market value. They both work, but basically spent a shit ton of money of vacations, etc. over the years. I know they also took money for out of their 401ks for who knows what.
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KILBOTz posted...

Lost_All_Senses posted...

Being smart doesn't save you from also being impulsive.

I should know that by now but still always make the assumption they are.

You ever realize how many smart drug addicts there are too? Life is crazy.
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A lot of people would rather LOOK rich rather than actually generate wealth. Its pathetic.
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Damn_Underscore posted...

I wonder if the idea that "I have to have everything new" is even more pronounced these days thanks to social media.

Yup.
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ShotOJameson posted...

A lot of people would rather LOOK rich rather than actually generate wealth. Its pathetic.

Gotta attract a girl to have a shallow relationship with somehow
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Lost_All_Senses posted...

ShotOJameson posted...

A lot of people would rather LOOK rich rather than actually generate wealth. Its pathetic.

Gotta attract a girl to have a shallow relationship with somehow

Yeah people are sad.
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Wish my student loans were only $50k - and that's between the 2 of them.

The credit card debt seems excessive, but those finances look to be pretty average. Not seeing the big deal really.

but they wanted a "new" but out of warranty Mazda 3 and pre-owned Lexus IS250 with like 1 year left on the warranty in their place.

Lol nothing special about those cars. That Lexus in particular has an anemic V6 engine and is slower than grandma in her Camry V6.
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They’re really not that smart. They’re superficial.

I know people who want to let people know they’re rich instead of being rich. The wife want to get her Louis Vuitton’s and Phillip Pateks. The husband want to show off his gas guzzling BMW. When they make more, they want to spend more. All short-term highs with no long term planning.

Image is nothing if you’re stressed the hell out and you’re in debt.
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KILBOTz posted...

I normally expect smart people to make rational choices

this stuff isnt really common sense

it has to be taught

KILBOTz posted...

but they wanted a "new" but out of warranty Mazda 3 and pre-owned Lexus IS250 with like 1 year left on the warranty in their place.

ah the classic 'second buyer pays' cars

suckers

i was looking into a 10 year old bmw 6-series until i looked up the host of electronics issues it was having around the 100k mile mark

wound up with a corolla for the same price. i have only changed the oil on it and replaced one tire in the 2 years ive owned it.
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maybe "smart" is the wrong word to describe them
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ah the classic 'second buyer pays' cars

I'm not inherently opposed to buying used or CPO. Your money goes farther that way and you get a lot more value per dollar.

I just don't think there's anything luxurious about an IS250 that might struggle to pass your average V6 minivan.
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Butterfiles posted...

maybe "smart" is the wrong word to describe them

No, he had the right idea by not discrediting people for petty reasons
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Super Saiyan 3 Goku posted...

Wish my student loans were only $50k - and that's between the 2 of them.

The credit card debt seems excessive, but those finances look to be pretty average. Not seeing the big deal really.

but they wanted a "new" but out of warranty Mazda 3 and pre-owned Lexus IS250 with like 1 year left on the warranty in their place.

Lol nothing special about those cars. That Lexus in particular has an anemic V6 engine and is slower than grandma in her Camry V6.

They are like 31 and 32 so they have been paying off student loans for a while.

The cars are really the ones that got me, their new cars are no better than their old ones that were paid off. I thought the lexus actually had an I4, if it is a v6 even more lol because it is about as fast as my 2001 4Runner.
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His wife probably doing majority of spending lol.

Super Saiyan 3 Goku posted...

I'm not inherently opposed to buying used or CPO. Your money goes farther that way and you get a lot more value per dollar.

I just don't think there's anything luxurious about an IS250 that might struggle to pass your average V6 minivan.

it's good to do this with economy cars like corollas.

it's dumb to do this with marked-up luxury vehicles that are really no more luxurious than an economy car that's 2-3 years younger (and thousands cheaper, and in better condition, and can be self-serviced far more)
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SomeGuyUO posted...

His wife probably doing majority of spending lol.

from what I can tell the day to day bad money habits are her, the big decisions that are poorly made are him.
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KILBOTz posted...

Super Saiyan 3 Goku posted...

Wish my student loans were only $50k - and that's between the 2 of them.

The credit card debt seems excessive, but those finances look to be pretty average. Not seeing the big deal really.

but they wanted a "new" but out of warranty Mazda 3 and pre-owned Lexus IS250 with like 1 year left on the warranty in their place.

Lol nothing special about those cars. That Lexus in particular has an anemic V6 engine and is slower than grandma in her Camry V6.

They are like 31 and 32 so they have been paying off student loans for a while.

The cars are really the ones that got me, their new cars are no better than their old ones that were paid off. I thought the lexus actually had an I4, if it is a v6 even more lol because it is about as fast as my 2001 4Runner.

That IS250 is most certainly a V6 (2.5L, hence the name). Makes something like 205 horsepower.

no more luxurious than an economy car that's 2-3 years younger

Depends on the car. No way am I spending 18 grand on a new Corolla when that money can put me in an Infiniti G37 with 300+ horsepower.
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KILBOTz posted...

from what I can tell the day to day bad money habits are her, the big decisions that are poorly made are him.

this is common

most of the huge financial mistakes my wife and i have made, like not going long immediately after trump was elected, are my fault
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Darkman124 posted...

wound up with a corolla for the same price

*fist bump*

I drive a corolla too. Love it love it love it. It's good for gas and has needed repairs maybe once or twice in the whole time I've had it (going on 8-9 years now).

It drives like a toy car too, which I love.
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DON'T BLOW IT.
Keep it simple.
Count yo money.
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Most people live above their means. We live in a culture that promotes instant gratification.

Darkman124 posted...

KILBOTz posted...

from what I can tell the day to day bad money habits are her, the big decisions that are poorly made are him.

this is common

most of the huge financial mistakes my wife and i have made, like not going long immediately after trump was elected, are my fault

I made the same mistake.
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This always ticks me off too because I would love to have a 90K income. I could do so much with that.
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There are none. If you can't manage money, you're not smart.
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Imagine being married to someone who is completely opposite of you when it comes to finances.
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I was going to mention if he drives a 328i but the is250 is a lol car made to appeal to people compensating for something, same with the cla 250
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judasmaiden15 posted...

I was going to mention if he drives a 328i but the is250 is a lol car made to appeal to people compensating for something, same with the cla 250

The 328i is also a secretary's car. The REAL 3 series starts at the 335i/340i range.
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I work hard everyday, but I hate money, I see it as a necessary evil. Some say I'm cheap, but I say I'm a minimalist as far as everyday things go. I just don't like to live easy it seems unfair to me when there's so much oppression. I don't like to spend money on myself. I have 100s of thousands saved up but I don't want to touch it. I want to buy a house once the market fluctuates but that's it. I hate buying shit, consumer culture is a boon on society imo. My girl is trying to convince me to be more materialistic but I just can't get with it. As far as I'm concerned its just more money or her to spend right so fuck it.
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KILBOTz posted...

I made the same mistake.

idk what i was thinking.

remedied the decision after one of the dips, though i am out again and looking to use the present dip to buy in again. just want to see one more big drop.
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