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.
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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.