Why aren't people more financially responsible?

[iced]

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@Kree wrote:

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@iv

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My Dad died at the age of 45. I personally have a few habits that most would consider not "financially responsible", but whats the point of retiring at age 44, if your gonna be dead a year later. I think there is a fine balance between ensuring you don't work until you are dead, and ensuring that you don't regret your financial decisions if you find out you only have 2 weeks to live.

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This is indeed a delicate balancing act, perhaps one most people don't balance so well. Some days, I'm not even sure I'm balanced.

My own family tells me "You can't take it with you" just about every time money comes up, because I'm saving and saving and saving for that future day when I might actually retire. They try to reason with me that there's little point sitting on millions of dollars if I'm dead, or I die two weeks after retiring. Instead, they advocate I should live a little more now - buy that bigger home, that fancy sports car, and so on as if I'm entitled to be so selfish. They are right in that I can't take my money with me, but it'll be money after I'm gone, and it should go to help someone. If it doesn't, that's on me for choosing poorly who gets it in my will.

What I don't hear often is the other side of that argument, and the one I'm more attached to - nobody should ever become a burden on their family or society. This is the person who lives their life paycheck to paycheck, never saves enough money for the future, and dies broke. Their family (or the state) is left footing the bill for their care when they're too old to work. They're footing the bill for the funeral and for the debts left behind by such a person. Some in this bucket never got to a point where they could save enough, but many in this bucket also lived the YOLO mentality where a tax refund is blown on a new boat or TV and every little windfall here or there was quickly gone, lost on material pleasures of the here and now.

Personally, I think it's better to die never having had a chance to spend your money than to die and leave others an additional burden. My own family doesn't agree with me, and that underscores just how delicate of a balancing act this really is.

[TheVig]

It used be a balancing act for the DW and I. Then we discovered the word “NO”. It’s a word many are too weak to say or receive.

For us the word has been very liberating. The ones receiving it however have taken it worse than being called a subprime mother$*#*#$*#. Oh well.

We gladly offer to show a better way to financial freedom. So far no takers. Glad to show how we do it, but we will not be a participant in the stupidity. No different than somebody suffering from a drug or alcohol addiction. I’ll get you set up in the right direction, but you are not getting a drink or a hit on my dime.

[Anonymous]

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@sarge12 wrote:

I will fully explain this...it is due mainly to the difference in speed various parts of body develop.

1) Age 0-6....this is the preschool years...you are cute, and everyone just loves to see you. You are the hit at every gathering.

2) Age 6-17...the school years...your body grows fast, but unknown to you, your brain does not. It is somewhere in the latter stages of this age you become an absolute terror to the civilized world.

3) Age 18-25...You are now legally an adult, but you still do not have a fully developed brain. Amazingly, you think your parents and anyone their age are idiots. You don't need them anymore, you can get credit cards and alcohol. You want what you want when you want it, who cares if you can really afford it. Besides, if you don't get that video camera, how are you going to capture yourself doing the tide pod challenge for youtube.

4) Age 26-35.... Somewhere in these years you brain finally develops...Your body is still strong, which is good, because you are still trying to pay off all the stupid things you did when you were 18-25. You are likely also incuring added expenses raising a family. At some point in this time many give up on that and declare BK. You also at some time in these years realize your parents were geniuses.

5) Age 36-45....This is the age you finally get it all together...you are working hard, your mind is sharp, but your body is starting to deteriorate a little.

6) Age 45-55....Your mind is now very sharp...but your body is starting a rapid decline. Body parts hurt for no reason, and you wonder will you even make it to retirement.

7) Age 56-65....You are saving all you can to try and survive after you retire....if you live that long. Everything is hurting, all the time. You are losing hair, teeth, can't walk good anymore. The only thing that seems to work now well is that slow developing brain. Everything else is breaking down.

8) Age 65+....Retirement...Finally, you and your tired broke down body can rest, and that wore out body needs it too. It varies, but usually sometime after this, that slowly developed brain starts to break down too.

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Wow that is depressing.  Luckily even at 53 I don't have the body parts aching for no reason.  I think this is related to the topic though.  If you don't eat healthy and exercise you are going to age much more rapidly. It is like credit.  If all you are thinking about is in the moment you are not going to have any savings and have a lot of debt.  But like your health you can be thrown some unexpected things that can cause you debt.  You can lose your job, you can have unexpected medical bills.

[Anonymous]

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@Anonymous wrote:

I agree that marketing and advertising put a lot of pressure on people. Some can resist the temptation of buying something new and cool, some can't. The other problem is that people care too much about what others think of them. they buy new phones/cars/clothes to demonstrate how successful they are. Also, I guess spending money is an addiction in some way. You get used to that euphoric feeling of possessing something brand new and the happiness it brings you. 

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Yeah but the good feeling when you buy something is very short-lived.  

[Anonymous]

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@800who wrote:

I never knew it growing up because my parents were good at hiding it, but they weren't the most responsible financially. In high school I took a class about personal finance and it was very basic, but somehow it got me into being financially responsible and credit etc. Now credit is almost a hobby for me. I am 19 now with a top tier credit score and I got my first credit card a month after I turned 18 and I rememeber talking to my dad about it as I was coming up on my 18th birthday and he was almost angry/dissapointed when I mentioned that I wanted to get a credit card and I was confused, today I understand why because my parents had terrible financial habits and my siblings who are significantly older than me made bad financial decisions when they first turned 18 and my dad had to suffer through it and fix it. I knew personally that I was more than capable of having a credit card. I've been working at a credit union for about a year now, and it's so weird seeing all these people that just barely scraping by... which is more expected however, I see way too many people treat credit cards as "extra" money and the crazy high balances people have and then watching them make that minimum payment every month has me so confused. The highest credit card balance I've seen personally is like $45k with a 800 or so minimum payment and I guess what I'm getting at is why is this so common. Thoughts and opinions on this?

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Think of investing and being in debt as short-term thinking vs long term thinking.  Why do people smoke?  They aren't thinking 30 years down the road.  Why do people charge stuff and pay interest?  Because they want it now not a year from now.  Big story in the news how this guy made many millions of dollars spent hunrdeds of thousands on clothes but it wasn't enough so he created off-shore accounts and cheated on his taxes and got fradualant loans.  

Similarly some people don't go to college. Think of college as investing in your future.  You could start working right when you are 18 and make a small amount of money or you could invest in your future by going to college for four years.  A lot of people choose not to college or not to go to trade school and learn something like being an Electrician or a Plumber.  They end up making a lot less money over their careers than by putting it off. 

[csl1]

Year after year, statistics show that most Americans are living paycheck to paycheck. This isn't the case because they're irresponsible; it's moreso because average incomes are not in line with the average cost of living in this country-- and the gap between the cost of living and the incomes earned in most households is only becoming greater as the years go on. It's also the case that most people don't have a rainy-day account, not because they're mismanaging their money, but because there isn't very much left over after the bills are paid and the groceries are bought.

Many people view credit as a way to supplement their income, not because they're irresponsible or greedy, but because they don't really have other options. It's sad, but that's the way it is. 

[Kree]

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@csl1 wrote:

Year after year, statistics show that most Americans are living paycheck to paycheck. This isn't the case because they're irresponsible; it's moreso because average incomes are not in line with the average cost of living in this country-- and the gap between the cost of living and the incomes earned in most households is only becoming greater as the years go on. It's also the case that most people don't have a rainy-day account, not because they're mismanaging their money, but because there isn't very much left over after the bills are paid and the groceries are bought.

Many people view credit as a way to supplement their income, not because they're irresponsible or greedy, but because they don't really have other options. It's sad, but that's the way it is. 

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I went into my masters program fully funded. Suddenly the fiancee got pregnant, then got fired (the day before her healthcare was supposed to start), then couldn't get a new job because pregnant health declines.

Wound up going into more debt to avoid being homeless. After the lease ended moved back in with parents while finishing program and stayed there for 4 months afterwards to pay down debt before moving on.  Took 4 months to get the post degree Job, so only had the part time work I had during my schooling which didn't allow me to pay down much debt.

The post degree job was a temp to hire that paid less than cost of living, but I had no place to stay and no other offers, so took it and more debt.  Contract ended, got extended, then finally 9 months after starting got the real job offer.  Made more money, but with all the new debt and minimums still end up negative every time a unexpected expense comes along.

If I get the promotion and bonus I expect in 4 months I'll finally be solvent and can actually start paying debts down, but every time a little emergency pops up I will have another month of no progress.  Atleast it is better than now where the emergency increases debt.

I think few people really contemplate how expensive it is to be poor.  Best example I've read uses kitchen electronics. A well off person notices their fridge having problems, they will wait for a sale and replace it.  400 dollars spent.

A impoverished person will wait until the fridge is dead, and buy a new one regardless of price.  500 dollars spent. Already 100 lost for being poor.

Because no emergency fund,  the fridge goes on a card and spend an extra 50-100 in interest paying it off. Now 150-200 behind the well off person.  If another emergency pops up, the payments are delayed and even more interest will be paid over time. If they are lucky they might have gotten a 0% introductory offer, or could BT for a minimal fee, and save on the interest, but even then the people that have the least money are still going to be paying the highest prices, unless they are proactive and buy the sale item before the fridge is truly dead. Then they get lectured about buying thing not "needed" and buying things on credit, even if it saves them hundreds in the long run.

[TheVig]

As far as wages not keeping up with cost of living. Part of the blame can be placed on the consumer. Voting for tax increases to fund social programs. Feeling you are entitled to a certain size home, in a certain neighborhood. And yes, just keeping up with the Jones etc.

Me and DW live in CLT. We've always had good incomes. How we've gotten and stayed ahead, was by living in the economically depressed parts of town..aka the hood. Well not the hood but close enough. Problem now, is others in society have caught on to our plan and following suit. It's gotten to the point that the multigenerational hood rats are getting literally priced out of town. Add in some developers with deep pockets. Come in wipe out entire city blocks and build new apartments and homes, etc.....now everybody feels the squeeze, not just the perpetually poor.

I learned a trade early on. Didn't go the traditional college route. With only a couple exceptions. I'm making way more than the college grads I know. Plus I dont have student loan debt. This epidemic issue with student loan debt, didn't happen on a mass scale until the govt decided to get into the student loan business.

Borrower is slave to the lender. Best way to enslave people and control them is to have a tight leash on their pocket books. Get society to have everything on a payment plan, and you control them.

[Glen_M]

You can just take finances out of the equation, and ask: "Why aren't people more responsible?"

Modern people are used to lots of safety nets and support from society at large, no matter how bad their decision making is, in all aspects of life, not just finances.  We have taken a natural tendency for altruism toward members of our tribe/clan and stretched and twisted that into saving all people from their own stupidity whenever we possibly can.

It used to make sense, because our own genetic traits were more likely to survive into later generations if we supported others who were probably related to us.  Whereas now, an individual doesn't perceive the need to exert much effort looking out for our their best interest becasue they illogiclaly expect complete strangers to do that for them.

[Anonymous]

Good point Glen. Just removed finances. Lol

People don’t even take care of their kids much less give a crap about a financial obligation.