I just came back from visiting friends, who have downsized to a smaller city to reduce their debts due to spending habits--
--Apparently they were $2k per month in the negative for cashflow, even with their three rental incomes, his steady job, and her business "start up" that was about 30 months old.
--They had no more credit room or equity remaining, and had been spending inheritances off and on. Needed to downsize in order to regain equity and credit room, I think.
We had a good conversation about how they are in the right place for them now, and able to pull finances together with only one property to cover, that suits her (I think she was depressed in the city) and the equity from the last sold property about to be handed to them, and the fact that she is working full time now along with DH.
She mentioned she was glad the last place sold, as they were down to only $10k left. This is after selling a couple of other properties, too. Includes all credit available. Whah? I know they received at least $80k in the past few years from three different inheritances... They were making over 100k per year...
Anyway, I had read that people justify spending as they need to "live life now"... but this was the first time I heard it rationalized this way in person.
She mentioned that because her dad and uncle died early (heart failure), that there was no point in scrimping and saving for retirement if they would never see it. So wanted to live life now with the money they have.
At 45 years old, this was an eye opener. People really do try to justify anything.
I was thinking that her other uncle, who just passed, was 80 years old, and her mother is still alive at 72... so maybe she is not doomed to die before 65, and may be short sighted? Kept my mouth shut. Her hubby does get frustrated sometimes with the spending excess over income, but I think he would be fine spending everything, with no retirement other than govt pensions, if they just had an emergency fund and kept it at zero, instead of negative...
Have you heard anyone vocalize this rational before?