Author Topic: Who is worse with money  (Read 6446 times)

chris009

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Who is worse with money
« on: December 15, 2012, 01:34:51 PM »
I have two friends in particular that have certain habits with their money that absolutely annoy me. Both are completely different. This might come off as a rant, in a way, but I'm curious to see who you may think is the worst of the two.

Friend #1

He's a single guy and makes around $55k/year, roughly. He's the type of person that spends all his pay check before the next one comes. He often has to put things on his line of credit to just get by until that next check comes. He has a very expensive phone plan (Well over $100/mth, just for him). He also bought a truck off a friend (overpaid for it) and the truck is riddled with problems. And he simply can't afford to get it fixed, so it's been sitting for the last 6 months. And it wouldn't surprise me if he's still paying full insurance on it.

He's not overly shy about sharing his finances. From what I can tell he has $20,000 line of credit, maxed out. And at least one credit maxed out. He may have more. Probably sticking him $30k-$35k in debt.

He's also a horrible procrastinator. Here are the big money ones that he has procrastinated on. He's in the trades and he has the experience to get his journeyman. He just has to go to school and take some courses. This would bump up his income by at least $10/hr. He hasn't got into school yet. He always waits too long and can't sign up for that semester. And I don't think he's even approached his employer about paying for this schooling because a lot of companies will pay for it.

Another big thing he does is call in sick a lot. At least once a week, sometimes twice. I don't know how he keeps his job, but he calls in sick a lot. And really this just boils down to him staying up so late that he can't get up in the morning.

There's probably a lot more that could be said, but he's literally the stereotype of someone bad with money.

Friend #2

My second friend is someone that I never really put into the category of bad with money. It changed recently as I'll describe below. There were obviously signs, but I just thought that he wasn't making the best choice, but being at least responsible with the choice made anyway.

After getting out of school he travelled to the other side of the country with his girlfriend (they were only together for a few weeks at this time). He ended up getting a job at about $50k/year. I think about 4-6 months later his girlfriend finally secured employment at around $45k-$50k. After renting for sometime (8-12months) they decided they were going to buy a house. I don't want to pass judgement on being unmarried and buying a house. I'm of the view that buying a house is a much bigger commitment than getting married.

What they did is tried to get the biggest mortgage the bank would give them? My friend did some refereeing on the side for money (which he didn't do anymore), but even used this as part of his income just to get a bigger mortgage. They saved up the bare minimum down payment (5%). In Canada we have the first time home buyers plan, where you can pull money out of your retirement accounts (up to $25k per person) for buying a home. They didn't have $25k each in their RRSP, but whatever they had they pulled out all of it. Instead of using it as a down payment, they used it to fill the house with furniture.

Shortly after they purchased a Toyota Highlander Hybrid. It was used (20,000km on it), but I believe they paid almost the retail price of a new one. I believe it is a 2009.

Anyway, a few years go by. They are making more now. Their combined income should be around $160k. This year they got married. The wedding cost $30,000 on their line of credit. Plus whatever their honeymoon was, which was several locations across the United States. In the same year, they travelled to the Dominican Republic as well as a trip to Europe (Spain and Italy). Also they had at least one trip across the country to see family and another one to Vegas.

The latest which happened, which finally made me think about it more, is the purchase of a new vehicle. I'm not sure what happened, but my friend said that he drove over a curb and there was something wrong with the vehicle. He took it into the Toyota dealership and they quoted him $2600 to fix it. Obviously having no money, he ran this cost through his insurance. He made no reference to what is going to happen to his insurance premiums because I doubt an insurance company is just going to eat that cost because he did something stupid.

Anyway, while he had the vehicle in at Toyota a salesman started talking to him. And literally at this point he had this buying a new vehicle in his head. He made some lame excuses like he bought the vehicle with 20,000km and now it has 120,000km and that's too many km. That's less than 100,000 miles. A few days later he literally texted me and said "the highlander is running gay, I'm going to get a new Lexus". The base model of the vehicle he is getting is around $60,000 with taxes. I think the most annoying part about seeing him do this is that he's convinced he has got a great deal and awesome trade in value. Even though the trade in value is hidden in the price. And I'm sure the cost of insuring that vehicle will be a lot more.

Their lifestyle tends to be a bit more expensive. They like going out to the bars and drinking. At least where I live, you can't go out for a night at the bar and spend anything less than $100. They also eat out a lot. My friend usually brings breakfast to work from Tim Horton's and goes out for lunch as well. They also both have new iphones each, massive 3d television, expensive cable, internet, netflix, tablets, laptops. My friend plays hockey and golfs in the summer. Very expensive lifestyle.

----

When it comes to who I think is worse with money, I really think it is friend #2. Even though he has a lot more money to turn around the problem with, friend #1 has really sunk as low as he can go. He can't get any more credit to go further in debt. Friend #2 on the other hand can easily get high balance credit cards and could very easily extend his line of credit. Neither of them have any cash savings. Friend #2 does have RRSP matching at work and takes advantage of that.

What do you think? I apologize for the long post. And it is a bit of a rant in way. Maybe there's a little jealousy in a way.
« Last Edit: December 15, 2012, 01:41:32 PM by chris009 »

marty998

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Re: Who is worse with money
« Reply #1 on: December 15, 2012, 03:14:18 PM »
Sounds like there is a little jealousy - the "if I had a $160k a year salary I'd do things better" attitude. Well what are you going to do to get that salary if you want it?

(Most) people have the freedom to live their lives how they choose. There isn't a right or wrong, but I reckon there is a limit to the care factor you should have analysing your friends financial circumstances. Live your life how you want. You will have all the time in the world once you reach FI. They will still be paying for their choices working when they're 65. At some point everyone realises consequences of their actions.


sheepstache

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Re: Who is worse with money
« Reply #2 on: December 15, 2012, 03:34:24 PM »
Sometimes when I hear about people being bad with money in these types of ways I realize my money management strategy takes very little willpower or energy for me.  "Handling" money the way either of these two do would exhaust me.

You might want to figure into your judgment the fact that friend #1 has much less of a safety net, so his ignoring that should net him some points in the bad-with-money olympics.

chris009

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Re: Who is worse with money
« Reply #3 on: December 15, 2012, 05:33:13 PM »
Quote
Sounds like there is a little jealousy - the "if I had a $160k a year salary I'd do things better" attitude. Well what are you going to do to get that salary if you want it?

(Most) people have the freedom to live their lives how they choose. There isn't a right or wrong, but I reckon there is a limit to the care factor you should have analysing your friends financial circumstances. Live your life how you want. You will have all the time in the world once you reach FI. They will still be paying for their choices working when they're 65. At some point everyone realises consequences of their actions.
I suppose there is some envy. It's not that I'm prying into his life or anything. He's always sharing it with me and I just get the impression that he's almost trying to show-off. I don't mind analysing things. It gives perspective. If I'm not challenging my own assumptions about the way I work my finances than my assumptions aren't worth very much. But I realize that I maybe in a marathon with my finances, but I'm definitely not competing against anyone else.

Quote
Sometimes when I hear about people being bad with money in these types of ways I realize my money management strategy takes very little willpower or energy for me.  "Handling" money the way either of these two do would exhaust me.

You might want to figure into your judgment the fact that friend #1 has much less of a safety net, so his ignoring that should net him some points in the bad-with-money olympics.
Yeah. I definitely wouldn't want to be in either of their positions. With friend #1, all he really needs is a year, or a year in a half clean up his mess. That's why I don't usually look at him as the one worse off. He may not have that safety net, but he can remedy everything in short order.
« Last Edit: December 15, 2012, 05:35:41 PM by chris009 »

keith

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Re: Who is worse with money
« Reply #4 on: December 15, 2012, 06:43:31 PM »
A few days later he literally texted me and said "the highlander is running gay, I'm going to get a new Lexus".

*facepalm*

projekt

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Re: Who is worse with money
« Reply #5 on: December 16, 2012, 01:35:56 PM »
Friend #1 sounds kind of depressed. Absenteeism, lackluster concern about money and bettering oneself...

marty998

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Re: Who is worse with money
« Reply #6 on: December 16, 2012, 08:22:22 PM »
Quote
Sounds like there is a little jealousy - the "if I had a $160k a year salary I'd do things better" attitude. Well what are you going to do to get that salary if you want it?

(Most) people have the freedom to live their lives how they choose. There isn't a right or wrong, but I reckon there is a limit to the care factor you should have analysing your friends financial circumstances. Live your life how you want. You will have all the time in the world once you reach FI. They will still be paying for their choices working when they're 65. At some point everyone realises consequences of their actions.
I suppose there is some envy. It's not that I'm prying into his life or anything. He's always sharing it with me and I just get the impression that he's almost trying to show-off. I don't mind analysing things. It gives perspective. If I'm not challenging my own assumptions about the way I work my finances than my assumptions aren't worth very much. But I realize that I maybe in a marathon with my finances, but I'm definitely not competing against anyone else.


Fair enough, I look for "what not to do" but I find it difficult to compare because everyone values things differently. Your friend might think a Lexus is the best buy in the world. To him he's right, to us...well you know, try not to laugh to much.


eyePod

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Re: Who is worse with money
« Reply #7 on: December 17, 2012, 08:56:09 AM »
out of your control.

We have friends who bought brand new jeeps (each of them) and are now buying a house.  Both make 40-50k a year, are getting married together next year, and live at home with no rent or anything for the past 4 years while working.  All I can do is worry about them once they're out on their own. I don't think they understand the amount of extra expenses that comes up when you're buying everything and Mommy and Daddy aren't.

plantingourpennies

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Re: Who is worse with money
« Reply #8 on: December 18, 2012, 09:54:54 AM »
Its an interesting question. I think sometimes an out-sized income can really allow a family to get in WAY over their head in a way that a smaller income can't.

In other words, a smaller income, because it provides (theoretically!) a cap on available credit, and prevents the person from hurting themselves too badly.

Best,
Mr. Pop

Gundy

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Re: Who is worse with money
« Reply #9 on: December 20, 2012, 05:35:33 PM »
Sounds like there is a little jealousy - the "if I had a $160k a year salary I'd do things better" attitude. Well what are you going to do to get that salary if you want it?


I don't necessarily think that analyzing a friend's finances is a form of jealousy. There was a time in my life when I equated possessions with happiness, and I was jealous of those that could afford a nice car or furniture or whatever. But as I began to understand that possessions are only a symbol of the choices that we make with money I became more at peace with myself. Now when I see a person of modest income pull into work with a brand new car I don't rush to congratulate him like everyone else does. I feel sorry for him that he is trapped in a world where he still thinks that buying things will bring him long term satisfaction.

I would say that as my desire to be FI has increased along with my awareness of finances my curiosity about other people's finances has increased as well. It's like a train wreck, you just can't look away because you don't know how they live like that.


lizzigee

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Re: Who is worse with money
« Reply #10 on: January 10, 2013, 03:00:48 PM »
I'm only new on here but I guess my take on it is - does it really matter who's worst? 

I think the best thing to do would be to look at the mistakes they each individually have made and make sure we use the knowledge gained to prevent ourselves from making the same mistakes.  Annoying though their actions may be, unless they ask for advice, it's really not something we should bother ourselves about, everyone needs to make their own path. Focus on doing the best you can do for yourself!

Phoebe

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Re: Who is worse with money
« Reply #11 on: January 10, 2013, 04:18:53 PM »
+1 Mr. Pop

marty998

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Re: Who is worse with money
« Reply #12 on: January 10, 2013, 06:49:08 PM »
I'm only new on here but I guess my take on it is - does it really matter who's worst? 

I think the best thing to do would be to look at the mistakes they each individually have made and make sure we use the knowledge gained to prevent ourselves from making the same mistakes.  Annoying though their actions may be, unless they ask for advice, it's really not something we should bother ourselves about, everyone needs to make their own path. Focus on doing the best you can do for yourself!

That's a great post.

Skyn_Flynt

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Re: Who is worse with money
« Reply #13 on: January 10, 2013, 06:54:09 PM »
Sounds to me like #1 would borrow just as much as #2 if he had access to that much credit.

AlexK

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Re: Who is worse with money
« Reply #14 on: January 10, 2013, 11:50:32 PM »
I work with a guy who is just like #1 but maybe a bit worse. He is always worrying about when a check is going to hit his bank account and complaining about being broke. When he ever does get money it is immediately wasted on BS he doesn't need. That lifestyle would stress me out!

totoro

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Re: Who is worse with money
« Reply #15 on: January 11, 2013, 04:37:50 AM »
I don't know if it is a good use of time to decide who is "worse".   A better question might be whether they might be interested in changing anything and, if so, if there is a tactful way you can provide information that would help.

I have friends and family who are not very good with money.  Unless I can help, which normally I can in small ways like recommending a book or site, but I  can't in big ways like changing habits, I try to steer clear of the topic.   

I don't want to analyze their situations to try to determine who is worse or what mistakes they have made because it makes no positive difference to me or them and I think they could do the same about me and some of my life choices. 

StarswirlTheMustached

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Re: Who is worse with money
« Reply #16 on: January 11, 2013, 09:21:18 AM »
Friend #1 sounds kind of depressed. Absenteeism, lackluster concern about money and bettering oneself...

Agreed. Why is he staying up late every night? That could be a symptom, too.
Out partying, or just dicking around on reddit? When I was worse in my depression, it was always the latter-- and I knew I was tired, knew I had to go to bed, but couldn't actually work up the motivation to shut down the computer and go to sleep. I'd just click on some other bullshit thing that brought me no joy, and hated myself for it.

Friend 2 sucks with money, but friend 1 may have mental health issues he needs help working through. Or maybe he just sucks with money and projeckt and I are projecting (or maybe I'm doubly projecting, projecting my projecting on projeckt.)