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Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: cheapass on August 02, 2016, 02:52:57 PM

Title: Why are business majors likely to be financial trainwrecks?
Post by: cheapass on August 02, 2016, 02:52:57 PM
I've noticed the phenomenon that there are a lot of people highly educated in business (CPA's, MBA's, etc.) who blow through money and structure their household finances to the point where any unexpected cost is an absolute emergency. The part that is so mind boggling is that of all people, they are the ones who understand finance, economics, opportunity cost, compound growth, and how money works. They sat in the same finance classes I did (I'm an engineer undergrad and finished an MBA last year).

Why in the fuck are they not realizing that they don't have to be cogs in a corporate wheel their entire lives if they just show a little restraint when it comes to spending? The math isn't hard!
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: dandarc on August 02, 2016, 02:57:25 PM
Personal finance isn't what is taught in business school.  Sure it is easy to see how a lot of the concepts overlap, but a lot of people, in my experience, lack the ability to think abstractly.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: SeaEhm on August 02, 2016, 03:00:00 PM
Math is a science
People are emotional
Spending for some is closer to a science while spending for others is closer to emotional

Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: marty998 on August 02, 2016, 03:04:46 PM
The guys at the top of business are used to abundance, or they are conditioned to believing the good times will never end (hit with an eternal optimism gun?)

There's also the "spend money to make money" mentality...
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: cube.37 on August 02, 2016, 03:05:44 PM
Maybe it's because they see their bosses making 500k-10 million and assume they'll be there soon enough. I'm in financial services, and my best friend saves $0 while making $80k/yr since he'll be making $200k+/yr in 6 years.

The mentality he has is: why save now when I can save the same amount in a month's pay when I'm 30 making at least 200k year.

That, and having upper middle-class parents means you don't need an emergency fund.

Obviously we know about this mentality of saving more when I make more being carried on into your 40's and 50's. That and lifestyle creep means you're saving $0 even if your income goes up.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: SeaEhm on August 02, 2016, 03:09:55 PM
That, and having upper middle-class parents means you don't need an emergency fund.

(http://i.imgur.com/EDi7sxb.gif)
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: jinga nation on August 02, 2016, 03:10:40 PM
When my wife worked in public accounting, many of her co-workers, from Staff/Junior accountant to managers to directors/partners drove very fancy cars. One junior partner had a sports car, a truck, a sports SUV, and a tuned minivan (natch). I think my wife and 3 others were the only ones who drove boring Hondas. Funnily, these 4 have become close friends. 2 of them married each other.

The general reasons given by all these ex-coworkers of hers (who we meet a few times a year at parties) was that they work long hours. Especially those who work in Tax. 60-70 hours weeks are common. One year, my wife calculated that 5-6 months the company catered dinners, and people has only Sunday afternoons off. "I work long hours and hence I deserve a fancy car." Mind you, they are salaried, so no overtime pay, and the shitty bonus was no more than 5-10% of annual salary.

Many of these folks have serious money woes. Oy vey!
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: LadyStache in Baja on August 02, 2016, 03:13:30 PM
That, and having upper middle-class parents means you don't need an emergency fund.

(http://i.imgur.com/EDi7sxb.gif)

+1
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: slugline on August 02, 2016, 03:13:55 PM
Many doctors and other health professionals continued to use tobacco products long after their ill effects were proven. Human beings in general are disappointing at long-range planning.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: cheapass on August 02, 2016, 03:19:20 PM
There's also the "spend money to make money" mentality...

lol this reminds me of a comment my spendypants boss made... "It's expensive to look cheap!"

Yeah, you know what's guaranteed to be expensive? Looking expensive, ya schmuck! We're married men, who cares?

The mentality he has is: why save now when I can save the same amount in a month's pay when I'm 30 making at least 200k year.

I suppose, but that "logic" ignores the time value of money and the compound growth one can yield between now and then

"I work long hours and hence I deserve a fancy car."...

Many of these folks have serious money woes. Oy vey!

I work long hours so I want to ensure that I'm chained to this job for as long as possible!! GAAAAHHHHH!!!
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Reynold on August 02, 2016, 03:20:35 PM
One particularly egregious example I saw long before this forum existed was a columnist in a financial magazine (Money Magazine?  Not sure any more.) who wrote about sitting down to really look at their several thousand dollar credit card debt, and work out a way to pay it off, and offer tips for the reader to do it.  Mind you, this wasn't hypothetical, this was debt the writer of the advice column actually had.  They didn't even know the total before doing sitting down to write the column. 

More recently, during the 2009 financial crash, I saw a story about a family where the guy had a high level job at a bank, and they had spent their entire life savings, including retirement accounts, within 6 months of when he was laid off.  NOW, as the story was being written, they were planning to cut the trips to Vail, private schools, full time nanny, cleaning services, etc. out of their budget.  It had never occurred to him that a banker might take more than a month or two to find another six figure job in the early 2009 time frame, say soon after Lehman Brothers collapsed and the government was thinking of nationalizing the big banks. . .
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Trudie on August 02, 2016, 03:26:07 PM
Math is a science
People are emotional
Spending for some is closer to a science while spending for others is closer to emotional

Mustachian here, and a CPA.  I think this explains the dichotomy for some business people.  I also think that for some in business who are so used to money coming and going through their hands each day they don't even think about it.  It's like water.  Many of them are heavily leveraged.  Your typical Mustachian isn't.

This is similar to a lot of professions -- you can't really make a generalization, though.  How many of us have known an overweight doctor?  The professional musician who smokes?  The teacher who doesn't like to read books?  Luckily, I would say such examples aren't the norm, but they're out there.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Eric222 on August 02, 2016, 03:28:31 PM
That, and having upper middle-class parents means you don't need an emergency fund.

(http://i.imgur.com/EDi7sxb.gif)
I'm going to go hang my head in shame now....
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Uturn on August 02, 2016, 03:36:51 PM
My ex is definitely someone you want to run your business finances.  However, if I gave her $1 out of the family budget she would figure out a way to spend $2.  She said the she dealt with this crap all day at work, doesn't want to deal with it at home.  If she would have stayed out of the bank account and not fuck the neighbor, we might still be married. 
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: cheapass on August 02, 2016, 03:38:09 PM
This is similar to a lot of professions -- you can't really make a generalization, though.

In my experience, based on the number of people age 55+ who have made high salaries for a couple decades but hate their jobs/commute/stress, the only reasonable conclusion is that they're total idiots with their money.

Based on their logical understanding of financial concepts, you would expect there to be business majors retiring early all over the place, right?

Maybe all of the smart ones just ride off into the sunset before age 45, never to be heard from again...
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: arebelspy on August 02, 2016, 03:39:37 PM
Haven't seen what I think is the answer posted yet, so I'll chime in.

Quote
Why are business majors likely to be financial trainwrecks?

They aren't.  Just just notice when they are.  It's simple confirmation bias (https://en.wikipedia.org/wiki/Confirmation_bias).
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: gooki on August 02, 2016, 09:03:17 PM
Same reason psychology majors are likely to have mental health issues.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: arebelspy on August 02, 2016, 09:06:13 PM
Same reason psychology majors are likely to mental health issues.

I think you accidentally the whole thing there.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: TheGrimSqueaker on August 02, 2016, 09:36:30 PM
Because the tie cuts off blood flow to the brain?
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: NykkiC on August 02, 2016, 11:54:19 PM
I've always subscribed to the theory that there's a certain amount of self-selection going on there. These professions have the reputation for being quite high paying, so they attract people who want/believe they need high salaries.

I also think you can separate out CPAs and actuaries from bankers and financial services professionals in terms of the severity of the effect. The later two had certain reputations for really crazy money for quite some time, and so people who wanted really crazy money went there. Of course, that often came at the expense of having a life outside of work, and so people who didn't prize money above all were discouraged.

And what do you do with money? You spend it, and money you don't actually have. Bonus points if its some status item that only someone above you in the company food chain cares about.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: ShortInSeattle on August 03, 2016, 09:50:31 AM
Haven't seen what I think is the answer posted yet, so I'll chime in.

Quote
Why are business majors likely to be financial trainwrecks?

They aren't.  Just just notice when they are.  It's simple confirmation bias (https://en.wikipedia.org/wiki/Confirmation_bias).

Agreed, ARS. I'm a business major, sitting here, rolling my eyes at all the assumption-making in this thread. But to the rest - don't let me slow down ya'lls judgement party.



SIS

Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: dcheesi on August 03, 2016, 10:03:28 AM
Why in the fuck are they not realizing that they don't have to be cogs in a corporate wheel their entire lives if they just show a little restraint when it comes to spending? The math isn't hard!
Because business majors are the folks who bought into the corporate wheel and its associated "life"style enough to want to specialize in maintaining it.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: kayvent on August 03, 2016, 10:17:22 AM
There were articles like this that MMM wrote a post about: If You Have Savings In Your 20s, You're Doing Something Wrong (http://elitedaily.com/life/savings-20s-something-wrong/1214445/). I think a similar rational holds for business majors. Despite my doubts, I am told that they are people.

If you're salary is going to double in a few years you may fool yourself into thinking "Oh, when I start making 40K more a year, I'll start saving." Or maybe you enter a treadmill of incrementally raising your (presumed) standard of living as your salary raises. It is a greedy heuristic, each step it is better to spend more because that 4K/year raise can raise your quality of life immediately if you spend it but it has a delayed affect to save it. It is a well-understood concept in economics that people hyperevaluation present day consumption, or monetary gains, over future consumption ( la savings).

Same reason psychology majors are likely to have mental health issues.

I thought the old trope is that people went into psychology to self-diagnose their health issues? Maybe people with poor financial skills go into finance while the mustachian artists who can live on 20K go for their passions?
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MgoSam on August 03, 2016, 10:42:36 AM
I can certainly understand why people that think their income is going to treble in the next few years would want to hold off saving money, but I still think it's just stupid to think that way for the following reasons

a. If you are spending all that you earn now, you are very likely to continue doing so even with a significantly higher income
b. Even if A is not true, as you climb the corporate ladder your colleagues will be making as much as you, thus raising pressure for you to spend more on clothes, cars, house, ect, thus raising expenses.
c. Unless you find yourself at the peak of your career with no upward advancement possible, you will continue to long for more salary and thus put off investing what you are currently earning.

Please note that in situation c, it is highly unlikely for someone to ever feel like they've reached the zenith of their career. People always want more and with ambitious businessmen(women) this is even more true. Let's say that they are a Fortune 50 CEO, they still will think that they can increase their income by raising their company's EPS.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Crusader on August 03, 2016, 10:47:03 AM
I also like to think people just think they can get a way with small margins over long periods of time. Most businesses are lucky to have two digit percentage profit margins. So why would you deprive yourself with to get a savings rate of two digit percentage?

Even though I went to business school, I was in the IT side so I did not really care for the flashy side of business. I always detested the crappy profit margins of businesses and I did not having to worry about my next paycheck or no savings. So try to maintain as high a savings rate I can while still buying somethings I enjoy. So far it has been about 50%~.  So I have a lot of savings to shield myself from life's unfortunate events. I also have a considerably lower stress job than what these people deal with.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: GrumpyPenguin on August 03, 2016, 11:45:32 AM
Are business majors more or less likely than average to be financial trainwrecks?  This, I don't know.

I am intimately aware of the (lack of) my heart health and the slowly growing size of my belly, yet I don't exercise enough. Still, I probably get more exercise than average.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: cheapass on August 03, 2016, 12:24:08 PM
Are business majors more or less likely than average to be financial trainwrecks?  This, I don't know.

You have a point, they may not be more inclined to be a disaster. But given the knowledge of financial concepts and the high stress jobs, I would expect many more businesspeople to have their shit together and be retiring early compared to other demographics. This does not seem to be the case.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Digital Dogma on August 03, 2016, 12:46:06 PM
I've noticed the phenomenon that there are a lot of people highly educated in business (CPA's, MBA's, etc.) who blow through money and structure their household finances to the point where any unexpected cost is an absolute emergency. The part that is so mind boggling is that of all people, they are the ones who understand finance, economics, opportunity cost, compound growth, and how money works. They sat in the same finance classes I did (I'm an engineer undergrad and finished an MBA last year).

Why in the fuck are they not realizing that they don't have to be cogs in a corporate wheel their entire lives if they just show a little restraint when it comes to spending? The math isn't hard!
They haven't learned how to sandbag the budget to give themselves a buffer :)
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Chris22 on August 03, 2016, 12:59:20 PM
I've noticed the phenomenon that there are a lot of people highly educated in business (CPA's, MBA's, etc.) who blow through money and structure their household finances to the point where any unexpected cost is an absolute emergency. The part that is so mind boggling is that of all people, they are the ones who understand finance, economics, opportunity cost, compound growth, and how money works. They sat in the same finance classes I did (I'm an engineer undergrad and finished an MBA last year).

Why in the fuck are they not realizing that they don't have to be cogs in a corporate wheel their entire lives if they just show a little restraint when it comes to spending? The math isn't hard!

Are you sure those two are both true and related?  You have to remember, there are a lot of highly paid businesspeople, and if they don't have the whole RE thing as a goal, it's perfectly possible they are "blowing through money" from your perspective BUT not to the point of irresponsibility or recklessness.  They may just be able to afford more, and since they aren't trying to hit some 30-40-50%+ savings rate, they "can afford" (depending on your values and definitions) to spend some money.  Not everyone with nice things is a walking financial disaster ready to implode.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: SeaEhm on August 03, 2016, 01:40:57 PM
Not everyone with nice things is a walking financial disaster ready to implode.

(https://media.giphy.com/media/ceeN6U57leAhi/giphy.gif)

Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Undefined on August 03, 2016, 01:43:00 PM
It's still mind-boggling sometimes to realize that people who you assumed had their shit together, in all reality, don't.  Business majors, for one, but I'm sure if you look too hard at any group you'll find some of the same issues.

Still, it blows my mind.  My dad is a tenured professor at a private university in their school of business.  He's been there for 30 years.  On his salary - which I have no idea what it is or was, but now that he's got seniority, I'm fairly sure it's into six digits - he and my mom bought a house, raised four kids in private, religious schools, and didn't have my mom work until the youngest was in high school.  Were mom and dad frugal to get by on that salary?  Oh yes.  We were the odd family out as far back as I can remember - no cable, no AC, no new cars...

My mom retired early; he put in for phased retirement last year, where it's some kind of phased thing that he'll get less and less duties until he's done in three or five years or whatever.  He told me that he should have retired years ago, back when he still whole-heartedly loved work, but he wasn't sure then that he wanted to be retired.  Now he's sure.

My mom was frankly appalled at the comments from his coworkers when he announced he was going into phased retirement - tenured, respected professors of business, who have Ph.D's and teach folks going for their MBAs, etc - who stated they'd be unable to ever afford to retire.  Her exact words: "What have they been DOING with their money for the past thirty years?"  The people who think they are able to retire - much less retire before age 65 - are in the utter minority out of these people.

And these are the people who teach the businesspeople of our country.  I see a slight flaw here.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MgoSam on August 03, 2016, 01:53:39 PM
Not everyone with nice things is a walking financial disaster ready to implode.

(https://media.giphy.com/media/ceeN6U57leAhi/giphy.gif)

Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

What is  your definition of "financial disasters?"
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Frugal_NYC on August 03, 2016, 02:02:08 PM
Not everyone with nice things is a walking financial disaster ready to implode.

(https://media.giphy.com/media/ceeN6U57leAhi/giphy.gif)

Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

Is this mostly sarcasm?  I hope anyway
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: jinga nation on August 03, 2016, 02:08:14 PM
Haven't seen what I think is the answer posted yet, so I'll chime in.

Quote
Why are business majors likely to be financial trainwrecks?

They aren't.  Just just notice when they are.  It's simple confirmation bias (https://en.wikipedia.org/wiki/Confirmation_bias).
I agree. I have plenty of co-workers who are Engineering/IT and total financial fuckups. I mean FUBARs. They fuck the fuck outta their fuckups. But I making fun of fuckups in my wife's profession is funner. Dunno why, but it is what it is.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: charis on August 03, 2016, 02:20:58 PM
Not everyone with nice things is a walking financial disaster ready to implode.

(https://media.giphy.com/media/ceeN6U57leAhi/giphy.gif)

Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

Hmmm, this is extreme.  I can check off most of these, except 3 and 6, with qualifiers (out to lunch or happy hour only occasionally, cars are 10 years old, rings collectively cost just over 300, preschool = daycare).   I'm still a bit of a disaster, but not for these reasons.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: kayvent on August 03, 2016, 02:35:08 PM
It's still mind-boggling sometimes to realize that people who you assumed had their shit together, in all reality, don't.  Business majors, for one, but I'm sure if you look too hard at any group you'll find some of the same issues.

Still, it blows my mind.  My dad is a tenured professor at a private university in their school of business.  He's been there for 30 years.  On his salary - which I have no idea what it is or was, but now that he's got seniority, I'm fairly sure it's into six digits - he and my mom bought a house, raised four kids in private, religious schools, and didn't have my mom work until the youngest was in high school.  Were mom and dad frugal to get by on that salary?  Oh yes.  We were the odd family out as far back as I can remember - no cable, no AC, no new cars...

My mom retired early; he put in for phased retirement last year, where it's some kind of phased thing that he'll get less and less duties until he's done in three or five years or whatever.  He told me that he should have retired years ago, back when he still whole-heartedly loved work, but he wasn't sure then that he wanted to be retired.  Now he's sure.

My mom was frankly appalled at the comments from his coworkers when he announced he was going into phased retirement - tenured, respected professors of business, who have Ph.D's and teach folks going for their MBAs, etc - who stated they'd be unable to ever afford to retire.  Her exact words: "What have they been DOING with their money for the past thirty years?"  The people who think they are able to retire - much less retire before age 65 - are in the utter minority out of these people.

And these are the people who teach the businesspeople of our country.  I see a slight flaw here.

That story didn't come out like I expected. I was thinking you were going to end the story saying that despite your parents being frugal, some how they have no option of retirement. It is good to hear they were responsible. Having financial stewards as parents is a gift in and of itself; the lessons I presume they have taught and not having to worry about (financially) taking care of them for the next few decades.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: RosieTR on August 03, 2016, 05:47:25 PM
I know one person IRL who was an MBA and retired in his 50s, and my dad did accounting and also retired in his 50s. One other FIREd person I know was an engineer.
I also know a lot of the opposite. It would be interesting to compare field vs savings rate, controlled for income.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Cpa Cat on August 03, 2016, 06:22:48 PM
I agree that confirmation bias probably plays a part. But so does school and firm culture.

There's a lot of ra-ra in business school about earning potential. If you wind up in a firm that has a high earning potential AND a bunch of spendy employees, it can seem normal to spend your way to success and cry in the bathroom when you're working 80 hours a week.

On the other hand, if you end up at a drab down-market accounting firm, where everyone brown bags their lunch and drives 10 year old cars, there's very little pressure to "keep up" with the cubicle Joneses.

True story: As a tax professional, I was only brought onto audits during the off season. On one such occasion, I was with a team of 5 accountants. I was looking at our 401(k) booklet and changing my investments. One of the other people inquired about it and said she was intimated by the choices, so hadn't done anything with her 401(k) funds, they were all in cash. Two more chimed in and admitted that they hadn't really understood what to do - one was in the default Conservative portfolio, despite being 25 and the other one was engaged in some other type of ridiculousness like 100% bonds.

I told them they all ought to be ashamed to be accountants who audit 401(k)'s while being too intimated by their own 401(k)'s to make reasonable investment choices. The fifth person was the manager, and he was equally horrified. He and I helped them pick appropriate funds and make the changes. Two of them just went into Target Retirement funds (which is fine), and Default-Conservative decided he liked the look of Default Aggressive Portfolio instead, but made some changes to it after we had a talk about expense ratios.

I was relieved that they were all at least contributing to their 401(k)'s, even if none of them were doing anything with it.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: kayvent on August 03, 2016, 06:51:36 PM
I agree that confirmation bias probably plays a part. But so does school and firm culture.

There's a lot of ra-ra in business school about earning potential. If you wind up in a firm that has a high earning potential AND a bunch of spendy employees, it can seem normal to spend your way to success and cry in the bathroom when you're working 80 hours a week.

On the other hand, if you end up at a drab down-market accounting firm, where everyone brown bags their lunch and drives 10 year old cars, there's very little pressure to "keep up" with the cubicle Joneses.

True story: As a tax professional, I was only brought onto audits during the off season. On one such occasion, I was with a team of 5 accountants. I was looking at our 401(k) booklet and changing my investments. One of the other people inquired about it and said she was intimated by the choices, so hadn't done anything with her 401(k) funds, they were all in cash. Two more chimed in and admitted that they hadn't really understood what to do - one was in the default Conservative portfolio, despite being 25 and the other one was engaged in some other type of ridiculousness like 100% bonds.

I told them they all ought to be ashamed to be accountants who audit 401(k)'s while being too intimated by their own 401(k)'s to make reasonable investment choices. The fifth person was the manager, and he was equally horrified. He and I helped them pick appropriate funds and make the changes. Two of them just went into Target Retirement funds (which is fine), and Default-Conservative decided he liked the look of Default Aggressive Portfolio instead, but made some changes to it after we had a talk about expense ratios.

I was relieved that they were all at least contributing to their 401(k)'s, even if none of them were doing anything with it.

Would you classify this as a paradox of choice?
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: SeaEhm on August 03, 2016, 07:07:32 PM
I agree that confirmation bias probably plays a part. But so does school and firm culture.

There's a lot of ra-ra in business school about earning potential. If you wind up in a firm that has a high earning potential AND a bunch of spendy employees, it can seem normal to spend your way to success and cry in the bathroom when you're working 80 hours a week.

On the other hand, if you end up at a drab down-market accounting firm, where everyone brown bags their lunch and drives 10 year old cars, there's very little pressure to "keep up" with the cubicle Joneses.

True story: As a tax professional, I was only brought onto audits during the off season. On one such occasion, I was with a team of 5 accountants. I was looking at our 401(k) booklet and changing my investments. One of the other people inquired about it and said she was intimated by the choices, so hadn't done anything with her 401(k) funds, they were all in cash. Two more chimed in and admitted that they hadn't really understood what to do - one was in the default Conservative portfolio, despite being 25 and the other one was engaged in some other type of ridiculousness like 100% bonds.

I told them they all ought to be ashamed to be accountants who audit 401(k)'s while being too intimated by their own 401(k)'s to make reasonable investment choices. The fifth person was the manager, and he was equally horrified. He and I helped them pick appropriate funds and make the changes. Two of them just went into Target Retirement funds (which is fine), and Default-Conservative decided he liked the look of Default Aggressive Portfolio instead, but made some changes to it after we had a talk about expense ratios.

I was relieved that they were all at least contributing to their 401(k)'s, even if none of them were doing anything with it.

Would you classify this as a paradox of choice?

Great book!

(https://upload.wikimedia.org/wikipedia/en/7/70/Paradox_of_Choice_cover.jpg)

His Ted Talk was nice as well.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MrsPete on August 03, 2016, 07:43:19 PM
My father was one of those people.  I think part of his issue was that he grew up with a surplus of money, so he didn't really learn to prioritize and needs vs. wants.  I think he also assumed that the gravy train could never end. 

I thought the old trope is that people went into psychology to self-diagnose their health issues?
It's a stereotype, of course, but some of my most messed up students opt to go into psychology. 
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MgoSam on August 03, 2016, 08:38:38 PM
My father was one of those people.  I think part of his issue was that he grew up with a surplus of money, so he didn't really learn to prioritize and needs vs. wants.  I think he also assumed that the gravy train could never end. 


That's a good point, my dad and his dad grew up affluent. During the recession, his company barely scrapped by. I'm slowly taking over control from him, and have helped him bring back stability so I know how hard it can be to make money. This has helped inspire me to be a mustacian. My mom also helped as she's extremely frugal and has imparted this on me.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Goldielocks on August 04, 2016, 10:26:58 AM


Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

That's a little harsh!   you just listed 98% of the working population.   
I suppose dry humour doesn't always translate well on the 'net.


Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Goldielocks on August 04, 2016, 10:37:27 AM
Back to the original question about why some professions seem to be more spendy (business majors named)... 
  (although the whole thread has been great).

I have a MBA and am an engineer.   What is taught is very different, and attracts different people.

Engineer -- learn to improvise and create novel solutions, while padding a huge safety factor in and getting everything double checked before it goes out the door.  Lots of discussions in school about the impacts to society and public safety focus in the professional charter.    (and If you are a person without that safety factor, you aren't an engineer, more of a daredevil.)

Business person -- CPA, Controller - very conservative operational line accounting.  These guys conserve money like you wouldn't believe.  Some smaller bankers are also like this. Those that do not work at it at home likely still have a pay yourself first plan, then spend the rest.   Not the person the OP was thinking of.

Business - MBA, Finance, Business degrees -- they teach you in school and work how to shave safety for profits and optimize for everything.   Options, going into debt to expand, taking risks with minimal backup if the upside is larger than the downside.  This actually mirrors the personal behaviour. Attracts people who see others in a flashy lifestyle and want the same, etc.   

Think about it -- entrepreneurs are often struggling badly or they have "hit it big", and the business /finance people are trained to help them in that.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Making Cookies on August 04, 2016, 12:00:09 PM
Haven't seen what I think is the answer posted yet, so I'll chime in.

Quote
Why are business majors likely to be financial trainwrecks?

They aren't.  Just just notice when they are.  It's simple confirmation bias (https://en.wikipedia.org/wiki/Confirmation_bias).
I agree. I have plenty of co-workers who are Engineering/IT and total financial fuckups. I mean FUBARs. They fuck the fuck outta their fuckups. But I making fun of fuckups in my wife's profession is funner. Dunno why, but it is what it is.

I once thought that the USA was mostly Mr. and Mrs. Cleavers. Mostly doing okay, mostly making reasonable choices matching their spending with their income. Then I grew up a little and started reading this forum.

Now I assume 90% of the population is $150 from bankruptcy. Alot more people around us (DW & I) just barely getting by than we thought before. It isn't a topic we openly discuss but tuned in we hear lots of little indicators. Someone buying something they can't afford (look at my new thing, two weeks: is it payday yet?).
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: runningthroughFIRE on August 05, 2016, 10:28:07 AM
Back to the original question about why some professions seem to be more spendy (business majors named)... 
  (although the whole thread has been great).

I have a MBA and am an engineer.   What is taught is very different, and attracts different people.

Engineer -- learn to improvise and create novel solutions, while padding a huge safety factor in and getting everything double checked before it goes out the door.  Lots of discussions in school about the impacts to society and public safety focus in the professional charter.    (and If you are a person without that safety factor, you aren't an engineer, more of a daredevil.)

Business person -- CPA, Controller - very conservative operational line accounting.  These guys conserve money like you wouldn't believe.  Some smaller bankers are also like this. Those that do not work at it at home likely still have a pay yourself first plan, then spend the rest.   Not the person the OP was thinking of.

Business - MBA, Finance, Business degrees -- they teach you in school and work how to shave safety for profits and optimize for everything.   Options, going into debt to expand, taking risks with minimal backup if the upside is larger than the downside.  This actually mirrors the personal behaviour. Attracts people who see others in a flashy lifestyle and want the same, etc.   

Think about it -- entrepreneurs are often struggling badly or they have "hit it big", and the business /finance people are trained to help them in that.
I'm not sure I would say that CPAs and Controllers are taught to be conservative, although many are.  I'm a CPA applicant (passed tests but not officially licensed yet) and I think it's overly generous to say they all have their shit together.  I do know that the CPAs/Controllers I work with are big on hard numbers and don't care for estimates that aren't backed by data.

I do kind of agree with your assessment of MBAs though.  Many of the MBA students I interacted with while getting my masters seemed willing to take on more risk than I would be comfortable with, and had an "earn it and burn it" attitude.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: kayvent on August 05, 2016, 06:03:30 PM
Haven't seen what I think is the answer posted yet, so I'll chime in.

Quote
Why are business majors likely to be financial trainwrecks?

They aren't.  Just just notice when they are.  It's simple confirmation bias (https://en.wikipedia.org/wiki/Confirmation_bias).
I agree. I have plenty of co-workers who are Engineering/IT and total financial fuckups. I mean FUBARs. They fuck the fuck outta their fuckups. But I making fun of fuckups in my wife's profession is funner. Dunno why, but it is what it is.

I once thought that the USA was mostly Mr. and Mrs. Cleavers. Mostly doing okay, mostly making reasonable choices matching their spending with their income. Then I grew up a little and started reading this forum.

Now I assume 90% of the population is $150 from bankruptcy. Alot more people around us (DW & I) just barely getting by than we thought before. It isn't a topic we openly discuss but tuned in we hear lots of little indicators. Someone buying something they can't afford (look at my new thing, two weeks: is it payday yet?).

In people's defence, they aren't being extremely illogical. Just slightly. A person, depending on the state/province/country may have a third or more of their employment income supplied by government programs when they reach age 65/67. If their employer gives any retirement benefits (401K or RRSP matching), the rest may be covered. So saving for retirement? For some, that may already be covered by them doing nothing. And if its not, politicians can be trusted to exploit them as a talking point pity them to increase the benefits1. Saving for emergency? Only a 'few' of use have issues that would drastically exceed our insurance or government coverage.

I could go on. At this point in my life, the spendy people in my life don't bother me. They're unintentionally being logical in a way. Debt is cheap. Retirement is covered or subsidized. Work is fairly easy. Marginal consumption does give marginal benefit. The people who complain and don't seek a solution (ex. income supplementing or cost cutting) are the only ones that bother me. And even then only sometimes and having a bad day.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Chris22 on August 05, 2016, 07:57:26 PM
I wonder two things:

1.  How many people on this forum think "not pursuing RE/MMM path" = "pending financial disaster". There are lots of people who can save 10-20% AND live a "flashy" life with a little leverage (car payment, maybe carry a small CC balance for a splurge occasionally) but who aren't $500 away from living in a van down by the river. I sometimes wonder if MMMers can tell the difference.

2.  How many people, here and IRL, take at face value statements said in jest. I say all the time things like "my wife took my daughter shopping this weekend; I never wanted to retire anyways" as a joke but it has zero actual bearing on my real financial situation. It's just empty talk. Or "got no money till Friday again!" But that really means "because I don't want to transfer any out of savings."  It really can't be that everyone you know is a walking financial disaster, I think people downplay stuff all the time, or they say they "can't imagine retiring" because they don't want to think about retirement not being a million dollar beach house, not because they'd be eating cat food in week two.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: gggggg on August 05, 2016, 08:38:07 PM
It is funny. My big boss has a couple of business degrees (including a master's), and couldn't even get a car loan because of bad credit. His cards were frozen once, and he asked me if he could borrow some cash to get him by. It's laughable that he makes twice what I do, and his net worth is probably negative. This isn't due to a divorce/kids/medical either, it's pure spending.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: pancakes on August 05, 2016, 09:22:22 PM
My big boss manages a region that averages over $200k in sales per day however the situation came up once where he couldn't get $200 out of the bank because he was "a bit tight that month".

No idea how he thinks his employees function on what we get paid.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: SeaEhm on August 05, 2016, 11:18:08 PM
I wonder two things:

1.  How many people on this forum think "not pursuing RE/MMM path" = "pending financial disaster". There are lots of people who can save 10-20% AND live a "flashy" life with a little leverage (car payment, maybe carry a small CC balance for a splurge occasionally) but who aren't $500 away from living in a van down by the river. I sometimes wonder if MMMers can tell the difference.

2.  How many people, here and IRL, take at face value statements said in jest. I say all the time things like "my wife took my daughter shopping this weekend; I never wanted to retire anyways" as a joke but it has zero actual bearing on my real financial situation. It's just empty talk. Or "got no money till Friday again!" But that really means "because I don't want to transfer any out of savings."  It really can't be that everyone you know is a walking financial disaster, I think people downplay stuff all the time, or they say they "can't imagine retiring" because they don't want to think about retirement not being a million dollar beach house, not because they'd be eating cat food in week two.

Great points. 

If I talked about some of the things I purchased, I think some people here would have a heart attack, haha.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: clarkfan1979 on August 07, 2016, 09:42:36 PM
An undergrad degree in business is not very difficult and does not pay well, when first out of school. However, I would predict that CPA's & MBA's would have a better head on their shoulders.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Making Cookies on August 08, 2016, 08:38:05 AM
I wonder two things:

1.  How many people on this forum think "not pursuing RE/MMM path" = "pending financial disaster". There are lots of people who can save 10-20% AND live a "flashy" life with a little leverage (car payment, maybe carry a small CC balance for a splurge occasionally) but who aren't $500 away from living in a van down by the river. I sometimes wonder if MMMers can tell the difference.

2.  How many people, here and IRL, take at face value statements said in jest. I say all the time things like "my wife took my daughter shopping this weekend; I never wanted to retire anyways" as a joke but it has zero actual bearing on my real financial situation. It's just empty talk. Or "got no money till Friday again!" But that really means "because I don't want to transfer any out of savings."  It really can't be that everyone you know is a walking financial disaster, I think people downplay stuff all the time, or they say they "can't imagine retiring" because they don't want to think about retirement not being a million dollar beach house, not because they'd be eating cat food in week two.

I was making use of a little dry humor in my post. To be serious I have seen people face a car or house repair bill and panic over a few hundred bucks. 

Lately I've been trying to unravel the median income stat I've seen a few times. People making ~$50K a year in the USA. I can see all the tax brackets around my town (by neighborhood) but it seems to me the well to do ought to drag that number up to at least $75K a year.

Must be alot of 72 month car loans and 30 year mortgages?
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Chris22 on August 08, 2016, 09:06:57 AM
An undergrad degree in business is not very difficult and does not pay well, when first out of school. However, I would predict that CPA's & MBA's would have a better head on their shoulders.

That's very degree specific.  An accounting degree is fairly rigorous and if you land with a Big 4 or Big 8 (? next step down) firm you can expect a starting salary around $60k +/-.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MgoSam on August 08, 2016, 01:13:20 PM
An undergrad degree in business is not very difficult and does not pay well, when first out of school. However, I would predict that CPA's & MBA's would have a better head on their shoulders.

That's very degree specific.  An accounting degree is fairly rigorous and if you land with a Big 4 or Big 8 (? next step down) firm you can expect a starting salary around $60k +/-.

Yup, and you generally don't need to have passed the CPA to earn that salary. The big 4 (and I presume the next level firms) will pay for your courses and give you study time to help you pass. Or I've heard of some firms giving a bonus if you have already passed (because you did so on your own dime...plus they don't need to worry about you not passing).
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Chris22 on August 08, 2016, 01:38:58 PM
An undergrad degree in business is not very difficult and does not pay well, when first out of school. However, I would predict that CPA's & MBA's would have a better head on their shoulders.

That's very degree specific.  An accounting degree is fairly rigorous and if you land with a Big 4 or Big 8 (? next step down) firm you can expect a starting salary around $60k +/-.

Yup, and you generally don't need to have passed the CPA to earn that salary. The big 4 (and I presume the next level firms) will pay for your courses and give you study time to help you pass. Or I've heard of some firms giving a bonus if you have already passed (because you did so on your own dime...plus they don't need to worry about you not passing).

My background is accounting, I never even took the CPA because by the time I had the hours I had progressed to a more finance-y type role and no one cares anymore if I have a CPA.  Accounting is a great way to lever yourself into finance or other related roles as well.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Taran Wanderer on August 08, 2016, 01:53:41 PM
The funny thing about these different educational backgrounds and viewpoints is that they assume everyone else thinks like them. So, MBA folks assume everyone plays fast and loose, and they don't trust anyone. Meanwhile, engineers assume that people look at things logically and comprehensively. It would be nice if everyone thought like engineers, or at the least appreciated and valued the way engineers think.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MgoSam on August 08, 2016, 01:56:49 PM
The funny thing about these different educational backgrounds and viewpoints is that they assume everyone else thinks like them. So, MBA folks assume everyone plays fast and loose, and they don't trust anyone. Meanwhile, engineers assume that people look at things logically and comprehensively. It would be nice if everyone thought like engineers, or at the least appreciated and valued the way engineers think.

Actually I believe that most things would be better if everyone thought like an Economist...but yeah, I think thinking like an engineer might be better.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Taran Wanderer on August 08, 2016, 02:07:10 PM
I find that many economists assume everyone tries to optimize economically. There is actually a lot more emotion and sentiment involved.  Thinking like an engineer isn't best for every situation, but engineers have to actually think and plan out how things will work. Motivational speeches, vision, and goals can be helpful with people, but they don't work on equipment and electronics. The fundamental laws of physics and chemistry apply. Engineers win by working through those details and making things happen. Meanwhile they are criticized for being too literal and detail oriented.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Chris22 on August 08, 2016, 02:24:18 PM
I find that many economists assume everyone tries to optimize economically. There is actually a lot more emotion and sentiment involved.  Thinking like an engineer isn't best for every situation, but engineers have to actually think and plan out how things will work. Motivational speeches, vision, and goals can be helpful with people, but they don't work on equipment and electronics. The fundamental laws of physics and chemistry apply. Engineers win by working through those details and making things happen. Meanwhile they are criticized for being too literal and detail oriented.

As a business person who supports engineers, I find too often engineers get caught down in the weeds on stuff that doesn't really matter, and on many occasions can fail to see the forest.  I also see engineers who ask very specific questions, get very specific answers to them, and fail to solve the problem because a broader question would have given them the answer they were looking for.  Many times I've written the email that said "you asked me for X, the answer is Y, but what I think you were after is Z and the answer to that is A, B, and C."
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: yuka on August 08, 2016, 02:47:49 PM
If she would have stayed out of the bank account and not fuck the neighbor, we might still be married.

Said every divorcee ever.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: runningthroughFIRE on August 08, 2016, 04:33:21 PM
I find that many economists assume everyone tries to optimize economically. There is actually a lot more emotion and sentiment involved.  Thinking like an engineer isn't best for every situation, but engineers have to actually think and plan out how things will work. Motivational speeches, vision, and goals can be helpful with people, but they don't work on equipment and electronics. The fundamental laws of physics and chemistry apply. Engineers win by working through those details and making things happen. Meanwhile they are criticized for being too literal and detail oriented.

Engineers have the same issues with people as economists.  You just criticized economists for not taking emotions and sentiments into account, then praised the engineering mindset for focusing on the details of hard science.  Nothing and no one operates in a perfect vacuum, although I agree with you that it is frustrating when you're relying on people who don't think things through.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Taran Wanderer on August 08, 2016, 07:20:44 PM
I find that many economists assume everyone tries to optimize economically. There is actually a lot more emotion and sentiment involved.  Thinking like an engineer isn't best for every situation, but engineers have to actually think and plan out how things will work. Motivational speeches, vision, and goals can be helpful with people, but they don't work on equipment and electronics. The fundamental laws of physics and chemistry apply. Engineers win by working through those details and making things happen. Meanwhile they are criticized for being too literal and detail oriented.

As a business person who supports engineers, I find too often engineers get caught down in the weeds on stuff that doesn't really matter, and on many occasions can fail to see the forest.  I also see engineers who ask very specific questions, get very specific answers to them, and fail to solve the problem because a broader question would have given them the answer they were looking for.  Many times I've written the email that said "you asked me for X, the answer is Y, but what I think you were after is Z and the answer to that is A, B, and C."

As an engineer/business person with engineer tendencies who manages engineers, I hear you.  I am fortunate to work with a group of generally experienced engineers who are thinking broadly but don't communicate well sometimes and unfortunate to be working with a group of business people who are new to the business and uninformed in the technical areas, so my frustration is mostly with the business side but also with the communication challenges of the technical folks.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MgoSam on August 08, 2016, 07:35:46 PM
I find that many economists assume everyone tries to optimize economically. There is actually a lot more emotion and sentiment involved.  Thinking like an engineer isn't best for every situation, but engineers have to actually think and plan out how things will work. Motivational speeches, vision, and goals can be helpful with people, but they don't work on equipment and electronics. The fundamental laws of physics and chemistry apply. Engineers win by working through those details and making things happen. Meanwhile they are criticized for being too literal and detail oriented.

Engineers have the same issues with people as economists.  You just criticized economists for not taking emotions and sentiments into account, then praised the engineering mindset for focusing on the details of hard science.  Nothing and no one operates in a perfect vacuum, although I agree with you that it is frustrating when you're relying on people who don't think things through.

Not to mention that behavioral economics is growing in popularity.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Taran Wanderer on August 08, 2016, 07:43:18 PM
I find that many economists assume everyone tries to optimize economically. There is actually a lot more emotion and sentiment involved.  Thinking like an engineer isn't best for every situation, but engineers have to actually think and plan out how things will work. Motivational speeches, vision, and goals can be helpful with people, but they don't work on equipment and electronics. The fundamental laws of physics and chemistry apply. Engineers win by working through those details and making things happen. Meanwhile they are criticized for being too literal and detail oriented.

Engineers have the same issues with people as economists.  You just criticized economists for not taking emotions and sentiments into account, then praised the engineering mindset for focusing on the details of hard science.  Nothing and no one operates in a perfect vacuum, although I agree with you that it is frustrating when you're relying on people who don't think things through.

My point was that economists develop models based on expected rational behavior, but the models are inexacy because behavior is not always rational in the way assumed by the model, and sometimes not rational in any discernible way at all. An engineer, on the other hand, develops a technical solution while focusing on details with technical constraints. So, say you're programming a control system to automatically control a process. You are either successful or not in keeping the process operating within defined control limits. From a technical standpoint, it either works or it doesn't. Now the human interface (screen) is a different story as it involves the operators' needs.  And the programming style and documentation can be done a number of "right" ways. But the process is either in control or it's not.  So, the engineer either got the details right or he/she didn't.

None of it works if you don't get the human factors right, but some of the engineering work is fairly deterministic.  And for those that live in a 100% human factors world, the deterministic stuff is something they don't seem to understand or appreciate (sometimes).

Now, can we switch to my complaints about lawyers?
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Indexer on August 08, 2016, 08:39:47 PM
Why do you get an MBA?

The passion for management... or the assumption of a high paying job?

I have a business degree, finance to be specific. The most financially irresponsible people I've met are people I've worked with.

One guy went to close a deal with a Mercedes dealership. He went to have them sign papers. He came back with a Mercedes SL550(insanely expensive sports car). After everyone congratulated him on the new car I asked how he was going to handle it. He admitted he was already regretting the decision. He also owned a brand new SUV. Last time I talked to him he had a high end sports car and a luxury sedan, both brand new.

I know one that was flabbergasted that someone making 50k a year could have a million dollar portfolio. I've also overheard a conversation where someone with a CFP designation is only contributing 2% to his 401(k). The match is 6%...

I'll admit I went into that career with the same mindset. Make tons of money, buy a Porsche!  However it hit me in a finance course. I could have a job just managing my own portfolio if that portfolio was big enough. What I needed to get there was saving more now. No Porsche for me...
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: FiguringItOut on August 09, 2016, 07:46:52 AM
My ex is definitely someone you want to run your business finances.  However, if I gave her $1 out of the family budget she would figure out a way to spend $2.  She said the she dealt with this crap all day at work, doesn't want to deal with it at home.  If she would have stayed out of the bank account and not fuck the neighbor, we might still be married.

This is my ex.  He is a CPA and Sr Manager of Finance and he can't figure out how to keep his own accounts in the black.  What I've learned over the years is that his mentality has been that he viewed personal accounts as business accounts, credit card debt was "accruals" and "debt leveraging", new electronic toys were "investments"/"fixed assets" and so on.
As for the  neighbor random stranger, well, that is the whole 'nother story which I won't get into here.

Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: cheapass on August 09, 2016, 12:20:20 PM
I have a business degree, finance to be specific. The most financially irresponsible people I've met are people I've worked with.

It is pretty remarkable. The cobbler's children have no shoes.

One guy went to close a deal with a Mercedes dealership. He went to have them sign papers. He came back with a Mercedes SL550(insanely expensive sports car). After everyone congratulated him on the new car...

I always find it hilarious when people congratulate someone on a massive purchase. "Congratulations on sinking a shitload of money into a depreciating asset, probably financed!" "Great job sacrificing your family's financial security for a toy to boost your ego!" "Hey, your credit wasn't abysmal, congratulations!!"

Now if someone graduates college, climbs Mount Everest, or some other feat worthy of congratulation that's another story. Pat on the back, buddy.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MgoSam on August 09, 2016, 02:12:40 PM

One guy went to close a deal with a Mercedes dealership. He went to have them sign papers. He came back with a Mercedes SL550(insanely expensive sports car). After everyone congratulated him on the new car...

I always find it hilarious when people congratulate someone on a massive purchase. "Congratulations on sinking a shitload of money into a depreciating asset, probably financed!" "Great job sacrificing your family's financial security for a toy to boost your ego!" "Hey, your credit wasn't abysmal, congratulations!!"

Now if someone graduates college, climbs Mount Everest, or some other feat worthy of congratulation that's another story. Pat on the back, buddy.

The sad part is that I know that if I had posted pictures of me buying a house I would have gotten way more likes than me posting pictures on top of Everest. I think people like applauding commercial "achievements" over real actual ones.

That said, I know that when I FIRE, if I chose to post it publicly I'll probably get an insane amount of likes (and possibly an equal amount of hates).
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: franklin w. dixon on August 09, 2016, 08:26:55 PM
I wonder two things:

1.  How many people on this forum think "not pursuing RE/MMM path" = "pending financial disaster". There are lots of people who can save 10-20% AND live a "flashy" life with a little leverage (car payment, maybe carry a small CC balance for a splurge occasionally) but who aren't $500 away from living in a van down by the river. I sometimes wonder if MMMers can tell the difference.

2.  How many people, here and IRL, take at face value statements said in jest. I say all the time things like "my wife took my daughter shopping this weekend; I never wanted to retire anyways" as a joke but it has zero actual bearing on my real financial situation. It's just empty talk. Or "got no money till Friday again!" But that really means "because I don't want to transfer any out of savings."  It really can't be that everyone you know is a walking financial disaster, I think people downplay stuff all the time, or they say they "can't imagine retiring" because they don't want to think about retirement not being a million dollar beach house, not because they'd be eating cat food in week two.
but, but that means im not a brilliant iconoclast whose enormous brain towers over the mere peasants who surround me

and THAT means im actually a smug obnoxious asshole who lords his weird thrift store nykes over everyone like an unrelateable space alien

no no im pretty sure everyone else is stupid and im v. smart and handsome and have a huge weiner
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: kayvent on August 09, 2016, 08:50:37 PM
I know one that was flabbergasted that someone making 50k a year could have a million dollar portfolio. I've also overheard a conversation where someone with a CFP designation is only contributing 2% to his 401(k). The match is 6%...

I work for a Fortune 500 in a development office (only developers and project managers in the office, and one admin executive). Except for one person, I am a decade to two younger than everyone else in the office. During my first few months of getting to know the people on the various teams we house I asked some of them "What one mistake did you make that I should be weary of?" I was expecting pearls of developer wisdom. More than one said not taking advantage of the RRSP matching earlier.

I follow the MotleyFool's podcasts and on more than a number of them they have cited numbers on the staggering number of people who don't max out their 401k match.


One guy went to close a deal with a Mercedes dealership. He went to have them sign papers. He came back with a Mercedes SL550(insanely expensive sports car). After everyone congratulated him on the new car...

I always find it hilarious when people congratulate someone on a massive purchase. "Congratulations on sinking a shitload of money into a depreciating asset, probably financed!" "Great job sacrificing your family's financial security for a toy to boost your ego!" "Hey, your credit wasn't abysmal, congratulations!!"

Now if someone graduates college, climbs Mount Everest, or some other feat worthy of congratulation that's another story. Pat on the back, buddy.

The sad part is that I know that if I had posted pictures of me buying a house I would have gotten way more likes than me posting pictures on top of Everest. I think people like applauding commercial "achievements" over real actual ones.

That said, I know that when I FIRE, if I chose to post it publicly I'll probably get an insane amount of likes (and possibly an equal amount of hates).

Honest question: you think so? I've fantasized about a particular number and if I reach it I've determined that the only one I'd tell is my sister or charities. I'd worry about "rubbing it in" or upsetting our human brothers and sisters who have different priorities or who through misfortune had no opportunity to do likewise. I digress. Keen financial stewardship is seen as a defect in modern society (ex. serial entrepreneurs, seed/angel investors, stock investors, and unicorn entrepreneurs are all vilified) imho but you think you'd get likes instead of being reported for offensive material?
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: MgoSam on August 10, 2016, 10:27:55 AM


One guy went to close a deal with a Mercedes dealership. He went to have them sign papers. He came back with a Mercedes SL550(insanely expensive sports car). After everyone congratulated him on the new car...

I always find it hilarious when people congratulate someone on a massive purchase. "Congratulations on sinking a shitload of money into a depreciating asset, probably financed!" "Great job sacrificing your family's financial security for a toy to boost your ego!" "Hey, your credit wasn't abysmal, congratulations!!"

Now if someone graduates college, climbs Mount Everest, or some other feat worthy of congratulation that's another story. Pat on the back, buddy.

The sad part is that I know that if I had posted pictures of me buying a house I would have gotten way more likes than me posting pictures on top of Everest. I think people like applauding commercial "achievements" over real actual ones.

That said, I know that when I FIRE, if I chose to post it publicly I'll probably get an insane amount of likes (and possibly an equal amount of hates).

Honest question: you think so? I've fantasized about a particular number and if I reach it I've determined that the only one I'd tell is my sister or charities. I'd worry about "rubbing it in" or upsetting our human brothers and sisters who have different priorities or who through misfortune had no opportunity to do likewise. I digress. Keen financial stewardship is seen as a defect in modern society (ex. serial entrepreneurs, seed/angel investors, stock investors, and unicorn entrepreneurs are all vilified) imho but you think you'd get likes instead of being reported for offensive material?

I think I would get both. If I were to publicly share it in social media I would list it as a slam on people that have other priorities, but I know that I would get a ton of likes from people. I also know that I will get slammed by other people, some of whom are complainypants. They'll say things like, "Must be nice to make ___ (amount is probably far less than what I earn)," or "Must be nice to not have children," or other things, so in other words I fear that people will take my success as a form of criticism.

Either way I don't really care, I didn't tell FB that I bought a house, I just told family and friends. The same will likely happen when I FIRE. My immediate FIRE plans are to move to South America to study Spanish, I might post something about that. Even if I don't, I'll likely post pictures of Peru or Equator and I'm guessing that someone will ask me how I'm able to do this, and I'll tell them that I'm FIREd.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Cpa Cat on August 10, 2016, 10:34:02 AM
I always find it hilarious when people congratulate someone on a massive purchase. "Congratulations on sinking a shitload of money into a depreciating asset, probably financed!" "Great job sacrificing your family's financial security for a toy to boost your ego!" "Hey, your credit wasn't abysmal, congratulations!!"

I bought a new car the other day - and this kept happening to me. Ten different people congratulated me, asked me what kind it was, what year it was, etc. Someone even asked when I was going to put pictures on Facebook. It was like I had a baby.

"Congratulations... It's a Buick!!"
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: joleran on August 10, 2016, 01:14:09 PM
This is my ex.  He is a CPA and Sr Manager of Finance and he can't figure out how to keep his own accounts in the black.  What I've learned over the years is that his mentality has been that he viewed personal accounts as business accounts, credit card debt was "accruals" and "debt leveraging", new electronic toys were "investments"/"fixed assets" and so on.

If only his credit cards only charged corp bond rates and he used them to buy things to make more money...
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: TheGrimSqueaker on August 10, 2016, 01:39:41 PM
I always find it hilarious when people congratulate someone on a massive purchase. "Congratulations on sinking a shitload of money into a depreciating asset, probably financed!" "Great job sacrificing your family's financial security for a toy to boost your ego!" "Hey, your credit wasn't abysmal, congratulations!!"

I bought a new car the other day - and this kept happening to me. Ten different people congratulated me, asked me what kind it was, what year it was, etc. Someone even asked when I was going to put pictures on Facebook. It was like I had a baby.

"Congratulations... It's a Buick!!"

I can just imagine what's next... brand reveal parties set up like the fashionable "gender reveal" gift grabs parties for parents who are expecting? You slice into a cupcake, and wow: it's got an Audi symbol baked into it somehow.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: chesebert on August 10, 2016, 02:15:17 PM
Do upper middle class people really buy 100k+ plus cars on credit? I see a bunch of SL550, M6 and their equivalents where I live and I have always wondered. 

I am also curious the percentage of McLarens, Ferarris, Aston Martins that are purchased on credit.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Dancing Fool on August 10, 2016, 02:24:23 PM


Now, can we switch to my complaints about lawyers?

YES. Every conversation with a lawyer is the most expensive "maybe" my company has ever paid for.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: chesebert on August 10, 2016, 02:55:31 PM


Now, can we switch to my complaints about lawyers?

YES. Every conversation with a lawyer is the most expensive "maybe" my company has ever paid for.
Your company needs to ask the right question. "Do you think we can win the case/get the deal signed before shit hits the fan" is not a valid question.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Chris22 on August 10, 2016, 05:28:51 PM
Do upper middle class people really buy 100k+ plus cars on credit? I see a bunch of SL550, M6 and their equivalents where I live and I have always wondered. 

I am also curious the percentage of McLarens, Ferarris, Aston Martins that are purchased on credit.

Lots of what I've seen is that half are leased and half are paid cash, and only a small amount are financed to purchase. 
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Taran Wanderer on August 10, 2016, 06:38:59 PM
I always find it hilarious when people congratulate someone on a massive purchase. "Congratulations on sinking a shitload of money into a depreciating asset, probably financed!" "Great job sacrificing your family's financial security for a toy to boost your ego!" "Hey, your credit wasn't abysmal, congratulations!!"

I bought a new car the other day - and this kept happening to me. Ten different people congratulated me, asked me what kind it was, what year it was, etc. Someone even asked when I was going to put pictures on Facebook. It was like I had a baby.

"Congratulations... It's a Buick!!"

I can just imagine what's next... brand reveal parties set up like the fashionable "gender reveal" gift grabs parties for parents who are expecting? You slice into a cupcake, and wow: it's got an Audi symbol baked into it somehow.

I got a new (to me) car recently. My old one was getting up in miles and its list of quirks had grown so large I couldn't take it anymore. I could have held on a little longer, but I can across the perfect replacement - same model, same color, 7 years younger, and 90% fewer miles. Even though it is 8 years old, people assume it is brand new because it looks like it is. They are really taken aback when I tell them it is used and old.  I can't tell if they think it's cool or if I'm crazy. I might prefer the latter.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Making Cookies on August 11, 2016, 07:27:41 AM
Eight years ain't nothin'!

A 20 year old car is OLD. ;)
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Simpli-Fi on August 11, 2016, 01:46:35 PM
Hell, I have two cars over 40 years old, but on the other hand I have another I paid over $8k for, buy new clothes...when I need clothes, eat lunch with coworkers, have two houses over 1000sqft...guess I'm a financial disaster
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Trudie on August 12, 2016, 11:43:41 AM
Not everyone with nice things is a walking financial disaster ready to implode.

(https://media.giphy.com/media/ceeN6U57leAhi/giphy.gif)

Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

Ummmm... I occasionally buy new clothes, paid more than $8K cash for my car, own two of them, and want to work until I'm 51.  Yet, I'm 80% of the way to FIRE and would hardly consider myself a "financial disaster."  Different strokes.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Taran Wanderer on August 12, 2016, 02:33:19 PM
My score:

1) FAIL - eat lunch with coworkers and order drinks on top of that
2) FAIL - drive a car that they paid more than $8,000 for
3) FAIL - buy new clothes
4) FAIL - have engagement rings/wedding bands that costs more than $300
5) FAIL - had a wedding that was at a venue
5) FAIL - have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) PASS - (intend to FIRE at 45 to 50) want to work until they are over 50
7) FAIL - (three cars, actually) have two cars (see #2)
8) FAIL - (all 3 of them) have their kids in preschool

It's an interesting set of criteria, but fairly narrow. If I had wanted to FIRE at <40 or ERE at <30ish, I could see using these criteria, but to simply FIRE in my forties?  Not necessary if you have a decent income. Whether to earn more or spend less is a big factor in financial management in general.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: JetBlast on August 12, 2016, 05:13:57 PM
Not everyone with nice things is a walking financial disaster ready to implode.

(https://media.giphy.com/media/ceeN6U57leAhi/giphy.gif)

Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

1) Pass (?) - Drinking ( I assume you meant alcohol) during lunch is highly discouraged at my job. Do often have lunch or dinner with coworkers at restaurants, so sort of fail.
2) Fail. Bought it new, but plan to keep for a decade or more.
3) Fail, though most new clothes are bought 50% off. Wife works part-time retail gig. Do have some things from secondhand stores.
4) Fail. $300? Even with another zero on the end we'd still fail. Man, we suck at money.
5) Fail, unless there's an odd expansionary zone for moderate COL areas.
6) Probably Fail. I like my job. If I can scale back a little then I'll likely keep going after 50. Still many years down the road.
7) Pass. Woohoo! Found one!
8) Pass, but no kids so that's not really applicable.

I guess we're mostly a financial disaster. I never would have guessed by our net worth.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: chesebert on August 12, 2016, 05:44:01 PM
Not everyone with nice things is a walking financial disaster ready to implode.

(https://media.giphy.com/media/ceeN6U57leAhi/giphy.gif)

Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

1) Pass (?) - Drinking ( I assume you meant alcohol) during lunch is highly discouraged at my job. Do often have lunch or dinner with coworkers at restaurants, so sort of fail.
2) Fail. Bought it new, but plan to keep for a decade or more.
3) Fail, though most new clothes are bought 50% off. Wife works part-time retail gig. Do have some things from secondhand stores.
4) Fail. $300? Even with another zero on the end we'd still fail. Man, we suck at money.
5) Fail, unless there's an odd expansionary zone for moderate COL areas.
6) Probably Fail. I like my job. If I can scale back a little then I'll likely keep going after 50. Still many years down the road.
7) Pass. Woohoo! Found one!
8) Pass, but no kids so that's not really applicable.

I guess we're mostly a financial disaster. I never would have guessed by our net worth.

1) Pass, bring lunch to work.
2) Pass, don't own a car.
3) Fail
4) Fail, commodity inflation.
5) Fail
6) Fail, does HCOL mean HongKong or UES?
7) Pass
8) Pass, 0 car
9) Pass, employer paid so doesn't count.

Woohoo barely passed!
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: LeRainDrop on August 12, 2016, 06:25:13 PM
Here is the easiest way to spot financial disasters
They: don't know how to count from 1 to 9, so they count 5 twice.
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

Corrections shown above.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Crusader on August 16, 2016, 08:48:22 AM
I wonder two things:

1.  How many people on this forum think "not pursuing RE/MMM path" = "pending financial disaster". There are lots of people who can save 10-20% AND live a "flashy" life with a little leverage (car payment, maybe carry a small CC balance for a splurge occasionally) but who aren't $500 away from living in a van down by the river. I sometimes wonder if MMMers can tell the difference.

2.  How many people, here and IRL, take at face value statements said in jest. I say all the time things like "my wife took my daughter shopping this weekend; I never wanted to retire anyways" as a joke but it has zero actual bearing on my real financial situation. It's just empty talk. Or "got no money till Friday again!" But that really means "because I don't want to transfer any out of savings."  It really can't be that everyone you know is a walking financial disaster, I think people downplay stuff all the time, or they say they "can't imagine retiring" because they don't want to think about retirement not being a million dollar beach house, not because they'd be eating cat food in week two.

Great points. 

If I talked about some of the things I purchased, I think some people here would have a heart attack, haha.

I am kind of in the same boat, but with 50%-25% savings rate. I think this is the greatest post of how to look into the grey area of MMM and being a overspender.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Crusader on August 16, 2016, 08:55:29 AM
I find that many economists assume everyone tries to optimize economically. There is actually a lot more emotion and sentiment involved.  Thinking like an engineer isn't best for every situation, but engineers have to actually think and plan out how things will work. Motivational speeches, vision, and goals can be helpful with people, but they don't work on equipment and electronics. The fundamental laws of physics and chemistry apply. Engineers win by working through those details and making things happen. Meanwhile they are criticized for being too literal and detail oriented.

As a business person who supports engineers, I find too often engineers get caught down in the weeds on stuff that doesn't really matter, and on many occasions can fail to see the forest.  I also see engineers who ask very specific questions, get very specific answers to them, and fail to solve the problem because a broader question would have given them the answer they were looking for.  Many times I've written the email that said "you asked me for X, the answer is Y, but what I think you were after is Z and the answer to that is A, B, and C."

In a lot of things requiring deep thought of philosophy, finance, politics, and general discussion, I generally find myself having to discuss things is as many as four viewpoints. Kind of basically being devils advocate, but it also helps provoke thought in people I am discussing with and myself. Even if I do not agree with the conclusions of the viewpoints I at try to follow it by some logical consistency defining that viewpoint.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Simpli-Fi on August 17, 2016, 12:31:08 PM
I find that many economists assume everyone tries to optimize economically. There is actually a lot more emotion and sentiment involved.  Thinking like an engineer isn't best for every situation, but engineers have to actually think and plan out how things will work. Motivational speeches, vision, and goals can be helpful with people, but they don't work on equipment and electronics. The fundamental laws of physics and chemistry apply. Engineers win by working through those details and making things happen. Meanwhile they are criticized for being too literal and detail oriented.

As a business person who supports engineers, I find too often engineers get caught down in the weeds on stuff that doesn't really matter, and on many occasions can fail to see the forest.  I also see engineers who ask very specific questions, get very specific answers to them, and fail to solve the problem because a broader question would have given them the answer they were looking for.  Many times I've written the email that said "you asked me for X, the answer is Y, but what I think you were after is Z and the answer to that is A, B, and C."

In a lot of things requiring deep thought of philosophy, finance, politics, and general discussion, I generally find myself having to discuss things is as many as four viewpoints. Kind of basically being devils advocate, but it also helps provoke thought in people I am discussing with and myself. Even if I do not agree with the conclusions of the viewpoints I at try to follow it by some logical consistency defining that viewpoint.

Funny because I'm an engineer who is supported by business persons who think the details of having leaves on trees is irrelevant to the sustainability of the forest.  I love when I ask questions and these clever business minds respond with an answer to a question I didn't ask; really helps me do my job because I'm a moron fumbling around looking for the right question to ask.

;-)
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: NESailor on August 17, 2016, 01:56:49 PM
CPA here.  Later bloomer as far as super mustachianism is concerned so targeting a FIRE age of around 41 - 42.  A lot of my colleagues and fellow CPAs are total spendypants but they're not really in disaster territory.  Sure, they may blow 90K on a very "normal" life but they still save tens of thousands/ year in their 401(k) and will most likely end up millionaires regardless.  Just at 65 instead of 45...but to each their own.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: ditheca on August 18, 2016, 11:02:40 AM

Here is the easiest way to spot financial disasters
They:
1) eat lunch with coworkers and order drinks on top of that
2) drive a car that they paid more than $8,000 for
3) buy new clothes
4) have engagement rings/wedding bands that costs more than $300
5) had a wedding that was at a venue
5) have a house larger than 1,000 sq ft in a LCOL area and 200 sq. ft in a HCOL area
6) want to work until they are over 50
7) have two cars (see #2)
8) have their kids in preschool

I've done 1, 2, 3, 4, 5, 5b, 7, and 8.  I'm obviously a financial disaster...  or maybe these are terrible criteria.  Or do I get a pass because I'll be retired long before 50?

It's easier to spot a mustachian:

1) No consumer debt
2) Live on half your income
3) Ride a bike
4) Life plan doesn't include needing to work forever

Not a perfect list though... We should be more inclusive!

1) No [new] consumer debt
2) Live on [reasonable fraction of] your income
3) Ride a bike [and/or drive an economical car]
4) Life plan doesn't include needing to work forever

Edit: Full disclosure: I'm a business major.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: trashmanz on June 12, 2017, 09:01:03 AM
Math is a science
People are emotional
Spending for some is closer to a science while spending for others is closer to emotional

That doesn't seem to jive with why most MMM folks are engineers and scientists.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: talltexan on June 12, 2017, 09:18:44 AM
I'm going to take a contrarian position: Business Majors have high earning power, meaning they focus on growing their income more than on making the kinds of lifestyle modifications that will help them save for retirement.

In addition, their earning power will make it harder for them to pull the plug eventually because continuing to work will make them so much money.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Laura33 on June 12, 2017, 12:40:26 PM
Yeah, I'm gonna go with selection bias.  If you're looking at dropping $100K or more for a top MBA program, you are likely doing it because you are interested in the high salaries that are dangled on the other side.  And for most people at 18 or 22 or 25, that is because of all of the cool shit that kind of salary can buy you.  Someone who is inherently frugal is more likely to figure the optimal ROI on the degree and conclude that something like engineering makes more sense, given the likelihood of said MBA hitting it big at a hedge fund or as CEO somewhere anyway.

And I, too, am apparently a total financial disaster, except for #1.  I'm even 51 and -- gasp! -- choose to continue working.  Oh, the horror.  Pretty please will you let me back in the club if I can prove that I am FI and save half my income from said unnecessary job? :-P
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Chris22 on June 12, 2017, 01:08:35 PM
Yeah, I'm gonna go with selection bias.  If you're looking at dropping $100K or more for a top MBA program, you are likely doing it because you are interested in the high salaries that are dangled on the other side.  And for most people at 18 or 22 or 25, that is because of all of the cool shit that kind of salary can buy you.  Someone who is inherently frugal is more likely to figure the optimal ROI on the degree and conclude that something like engineering makes more sense, given the likelihood of said MBA hitting it big at a hedge fund or as CEO somewhere anyway.

You don't have to "hit it big" to be successful as a business person.  With my accounting degree and my state-school part-time MBA, I've managed to get to a comfortable six-figure income about 10 years after entering the work force.  Probably pretty analogous to most engineers. 
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Laura33 on June 12, 2017, 01:34:13 PM
Yeah, I'm gonna go with selection bias.  If you're looking at dropping $100K or more for a top MBA program, you are likely doing it because you are interested in the high salaries that are dangled on the other side.  And for most people at 18 or 22 or 25, that is because of all of the cool shit that kind of salary can buy you.  Someone who is inherently frugal is more likely to figure the optimal ROI on the degree and conclude that something like engineering makes more sense, given the likelihood of said MBA hitting it big at a hedge fund or as CEO somewhere anyway.

You don't have to "hit it big" to be successful as a business person.  With my accounting degree and my state-school part-time MBA, I've managed to get to a comfortable six-figure income about 10 years after entering the work force.  Probably pretty analogous to most engineers.

Oh, ITA.  But you are also not the poster child for the question -- in fact, you are the "business" analogue of my example (comparing the ROI and figuring out that accounting undergrad + part-time MBA = excellent low-risk path to more-than-sufficient income).

IOW, it's not that following the business/finance track necessarily means you're big-hat-no-cattle.  It's just that if you are naturally drawn to the gigantic Stetsons, a fancy MBA followed by a hedge fund job looks like a pretty good way to get there -- people who are interested in money tend to follow it.  So I wouldn't be surprised if the finance world had a higher population of those types than some other areas.

I'd say the same about my profession, btw -- yes, there are people like me who did it pragmatically (scholarship undergrad + state school JD, loans paid off in under 2 years, six figures in @5-6), but there are a lot more who are just chasing the money so they can live it up.  Of course, these are also the ones who tend to burn out and so who, ironically, need MMM the most.  :-)
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: A Definite Beta Guy on June 12, 2017, 03:14:23 PM
My business friends are not financial wrecks compared to my other friends. They are just more spendy-pants than the typical mustachian.

I probably should throw myself in there as well.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Tyson on June 12, 2017, 04:16:07 PM
In some defense of the spendipants (of which I used to be a member), if it's drilled into that you'll never retire till 65 no matter what, then what the hell, why NOT spend a bit and enjoy some nicer things now? 

Of course, once I realized that the initial premise was wrong, and you could retire much faster, well then all the "treats" and "rewards" for working hard or whatever, simply lost their appeal.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: SeaEhm on June 15, 2017, 08:27:55 PM
Comments and advice like the person pursuing business should be an engineer is probably why so many people want to leave their jobs so badly, haha.

Let the ducks swim and the gazelles frolic. 

Maybe society needs to spend more time on finding what makes meaning in their life and how to balance it with everything thrown at them. 

Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: RetiredAt63 on June 18, 2017, 05:42:23 PM

Maybe society needs to spend more time on finding what makes meaning in their life and how to balance it with everything thrown at them.

Sue Finley is still working at 80, and when I look at her job history I understand exactly why.  I would be too if I were her.

http://www.latimes.com/business/la-fi-himi-finley-20170605-htmlstory.html (http://www.latimes.com/business/la-fi-himi-finley-20170605-htmlstory.html)
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: clarkfan1979 on June 24, 2017, 10:31:51 AM
A general BA in Business is not a very rigorous degree. More specialized business degrees like Marketing or Finance are going to be more rigorous with higher paying jobs when done.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: Acastus on June 24, 2017, 12:10:22 PM
An MBA teaches you how to manipulate people and how money sloshes around a company and the economy. There are very few technical skills required to get the degree. Some schools force you, or give you the option, to also learn some accounting, operations, logistics, or statistics.
Title: Re: Why are business majors likely to be financial trainwrecks?
Post by: eddie on July 02, 2017, 08:37:24 AM
My university made all the business majors take a class called Personal Financial Management.  It was an awesome class, the professor wanted to make it a mandatory class for the entire university, but had only succeeded in making it mandatory for business majors.  He created the curriculum and it included everything from balancing a checkbook, to insurance, investments, retirement accounts, time value of $.  Towards the end of the semester we had to write a paper on what we planned to do after college.  It had to include a detailed budget with housing costs, insurance quotes, line items for all the typical monthly expenses, expected salary after graduation, expected salary growth.  We also had to describe the qualities we were looking for in a potential spouse, how many kids we planned to have and when.  I still have the paper around somewhere, 15 years later.