A friend of mine's parents inherited 425K last year from a relative. They are both in their late 50s and early 60s without a pot to pee in (they currently live in a not-so-nice trailer and are always living on the financial edge). The area they live in has a ridiculously low cost of living. As in, you could buy 5 acres of land and a 2000sf house for about a 100K or less. This money could have easily bought them a nice, comfortable home and given them enough to live on for the rest of their lives if they lived modestly. Instead, they decided to take vacations, buy expensive farm equipment, buy a bunch of furniture, and build a 4300sf house (for two people). My friend found out today that they no longer have money to finish the house and are taking on a reverse mortgage to finish it off. She is not supposed to know but found out when her brother (who is the general contractor on the house) called to asked her to borrow money from her because they haven't paid him what they owe him because they ran out of money.
I am just floored. They are both well-educated people that had professional careers so ignorance shouldn't be an excuse. I feel really bad for my friend because she wants to talk them about it but feels she can't because she isn't supposed to know in the first place. She said her brother mentioned just selling the house when it was completed, but they adamantly said no.
It just made me sad and sick at the same time. They are genuinely nice people, and it's a shame that they wasted such an opportunity.