mild rant in here about finances

[vmax]

Why do some people seem to always be broke?
I have a BIL and SIL, nice people but they are ALWAYS BROKE!

They always live hand to mouth. They both work, decent jobs with benefits, long term good employees
They don't get fired and they both have had the same jobs for years.

I just can't figure out how the hell they stay broke, they don't do drugs or drink and don't appear to live beyond their means. They have an adult son who they have bailed out of debt on and off and keep treating him like a baby and that has to be part of it. They never have any money saved for emergencies and every time they need to take a trip to visit their elderly parents, they end up buying used tires to make the trip and have to charge their gas on credit cards. We end up sending them money to come home on even though they genuinely don't like taking it, we just send it anyway so they can make the trip.

I sat down and did the math with their income and expenses and I just don't see where their money goes.

 

[Dawico]

Some people are just like that. I know many of them. Heck, I am one from time to time when work is slow. I don't make a habit of it though.

 

[vmax]

Some people are just like that. I know many of them. Heck, I am one from time to time when work is slow. I don't make a habit of it though.

I'd be willing to bet that you have some money in savings and an emergency fund.

these people make about 75K a year and live in an area where the cost of living is pretty low.

 

[Davetex]

I have in-laws just like that. One thing I've noticed is they go through vehicles constantly. I've been driving for 40 years and I'm on my 4th vehicle, and it's pretty new. Should last a long time.

 

[Mreed911]

I sat down and did the math with their income and expenses and I just don't see where their money goes.

They probably don't, either. Do they have a budget?

How much is their debt service each month? What are they making payments on that they should own, instead?

 

[Code3GT]

Send them Dave Ramsey's book. I never knew financial freedom until I started living on a budget and not buying stupid shit on credit. My truck is an 06 and has almost 200k on it. I'd love to be in a new vehicle but it runs fine and the key is contentment. Until they're content with what they have/make, they'll always be broke.

 

[SIG_Fiend]

Nowadays, there is a ridiculous number of ways a person can nickel and dime themselves into bankruptcy or living paycheck to paycheck even while making a good income. I know, because I've done it myself and learned some hard lessons. Eat out frequently, get a few recurring monthly charges going, splurge on some purchases here and there each month. Very quickly, $10, $20, $100 snowballs, and before you realize it, 75-90%+ of your paycheck is used just simply paying bills. I also see a lot of people that get a bit ridiculous in some of their purchases too. I mean, it's not my place to say, and everyone is welcome to do what makes them happy, but getting a new $30-60k+ car every 2-3 years, on a sub $100k income is excessive. One of the things that really helped me was thinking about purchases and investments in terms of percentage of my income. For example, how could I justify spending $50k on a new(er), nice sports car....if I'm only making $50-70k/yr? Effectively making a purchase that is 100% of annual income. That just doesn't make sense, especially at that level of income, when your monthly car payment is about the same cost as a mortgage payment.

 

[Younggun]

I've added up what I spend on soft drinks in a week, it adds up quick. Especially when I add in my 2 slices of morning pizza.

Monthly bills, I hate them and avoid if at all possible. Reason for no cable or internet at the house and pre pay phones. I've been in a bind before and being able to simply not use a service anymore was much easier than trying to continue making the monthly bill.

 

[ROGER4314]

I took a 60% pay cut when I retired. The Scottish blood flowing in my veins took control, and worked out a budget that covered everything just fine. The Scottish people are feisty and tight fisted with money. Some call us "frugal", others call us "cheap." Still, when my budget says that I'm out of money, I QUIT SPENDING! It's a damned shame the fools in Washington, DC can't try that!

The OP is right, though. I tried to teach budgeting to others and they just don't "get it."

Flash

 

[baboon]

I've been called a cheap bastard by people who are in debt & earn more then myself. I've been able to pay cash for my last 2 vehicles, pay off my house 16 years early, hunt Africa 3 time & buy some decent guns. Only once have I not paid off a credit card bill @ the end on the billing cycle. That was just before Clinton took office & I bought $5K in ammo.

One guy I've known 30+ years. He's a straight up drunkard. Generally buys 2 Miller Light tall boys @ a time from the Stop & Rob. I broke down how much he's blown on beer per year & he did not believe it. Divorce & child support didn't help him either. Had to have a Corvette @ one time.

Another buddy of mine was so broke when he died his sister told me he had no toilet paper in the house & nothing in the fridge but doggie bags that were rotten. Kitchen table was stacked up with bills. He had to have a boat. Blew up the motor in his Toyota pulling it & had to buy something bigger while being upside down on the Toyota. Bought cigarettes, cokes & $5.00 worth of gas everyday after work on a credit card. Only made the minimum payment every month.

More recently a buddy of mine who has made 3 times what I earn for the last 20 years got a divorce over money. He said in just the last 5 years his wife had pissed away $300K.

I think it has a lot to do with how you were raised. I thought my dad was cheap as a kid because I had to work to earn my own money for the toys I wanted. Seen plenty of kids parents just buy them what they wanted.

I have always cut my own grass. Bought hair clipper & buzzed my own head. I look @ the food I eat as going to be shit tomorrow so I keep the grocery bill low. I also don't have a problem dropping $350.00 on dinner for our anniversary.

 

[vmax]

Nowadays, there is a ridiculous number of ways a person can nickel and dime themselves into bankruptcy or living paycheck to paycheck even while making a good income. I know, because I've done it myself and learned some hard lessons. Eat out frequently, get a few recurring monthly charges going, splurge on some purchases here and there each month. Very quickly, $10, $20, $100 snowballs, and before you realize it, 75-90%+ of your paycheck is used just simply paying bills. I also see a lot of people that get a bit ridiculous in some of their purchases too. I mean, it's not my place to say, and everyone is welcome to do what makes them happy, but getting a new $30-60k+ car every 2-3 years, on a sub $100k income is excessive. One of the things that really helped me was thinking about purchases and investments in terms of percentage of my income. For example, how could I justify spending $50k on a new(er), nice sports car....if I'm only making $50-70k/yr? Effectively making a purchase that is 100% of annual income. That just doesn't make sense, especially at that level of income, when your monthly car payment is about the same cost as a mortgage payment.

good advice in there.

 

[Texas42]

Most people are broke. Living paycheck to paycheck is noral.

Most people couldn't pay off a $5k emergency. They don't do a budget, and they don't know where their money goes. Being broke and in debt is normal. Normal sucks.

I'm a firm believer in Dave Ramsey's plan. I listen to his podcast most days.

 

[Savage805]

I've read that 60% of the country has less than $1000 in savings.

 

[Bozz10mm]

Smart phones, Ipads, cable TV, broadband internet, credit cards, and underemployed adult children, can take quite a chunk out of one's bank account.

In my early days, there where times the wife and I had to live on sandwiches and cereal until pay day. We couldn't save any money until I started a payroll deduction savings plan. Best thing I ever did. Well, one of the best things.

 

[Brains]

I've never listened to Ramsey, but I'm guessing his message is about as simple as it gets - don't spend what you don't have?

I was born somewhat wealthy, my folks died (separately) when I was a child, and I ended up on the street just before starting high school. I learned the hard way what broke really was, and made a little agreement with myself to never be broke again. From that second, I started putting money away, no matter where it came from. I didn't save only from my paycheck (@ $3.10/hr). I'm not one of those who believes every spare penny goes to savings, but I have a realistic idea of what I need to save and where to save it. Fast forward a decade or so, and my wife (g/f at the time) was a bit nervous back in '03, because the company I worked for closed the office I worked in. Laid everyone off. She's a hard working planner type as well, but wasn't working at the time either (her company also laid everyone off). I tried sharing the finance details with her, but suffice to say she wasn't feeling very comfortable with "zero" income coming in (I did do some freelance programming work, but not much). Long story short, it was a nice six month hiatus for us, because the money was already there.

It's important to think big picture about your money. Car dealers are predators who get you thinking about what you can afford per month. Don't. Think about what you're willing to pay, TOTAL. Including the interest. Negotiate on THAT amount, you can calculate it backwards to per month easily enough. With a home, your mortgage costs you an insane amount of money in interest, some of which you get back as a credit on your taxes, but that diminishes throughout the life of the loan. More expensive homes also mean more money in upkeep, property tax, insurance, etc. Is it worth it? Pay these types of loans off as aggressively as you can to minimize the money you're losing. The old wisdom about buying the biggest house you can afford in many cases is poor advice. Look at all those poor saps in California and elsewhere who got sucked under when property values tanked. If you plan to stay in the home a short period of time and the home is in a rapidly growing area, it can pay off, but not always. Do the research. Think 10, 20 years out and see if you feel the same way. Always get fixed rate loans (unless you really know why you'd want an ARM, you don't want an ARM).

Then think about what you want, vs. what you need. I have a perfectly solid 2007 SRT8 I drive back and forth to work. I'd love either a new Vette or a Cadillac CTS-V. Both are within my budget, but does it make sense when I literally only drive it the 20 miles or so per day? That SRT8 is paid for, has just under 62k on the clock, and is still kinda fun to drive. I'm keeping it.

 

[mitchntx]

don't spend what you don't have?

There you go again ... being all logical and stuff.
I didn't "see the light" till I was in my mid 30s. And man am I paying for it today.

I have done my best to coach and share with my kids the importance of saving NOW and saving OFTEN.

 

[peeps]

Similar to OP, I have a sister in law who is always broke too. Awesome person, but who knows what financial stuff she has going on. Just sort of annoying that we have to pay every time we all go to dinner, pay for fuel to drive out of town, etc..

We also have followed Ramsey's snowball debt reduction plan for about 3 years now. Went from ~$55k in consumer debt to $0 next month :-D I don't follow every detail with his stuff, but the snowball has been extremely effective, not only financially but psychologically.

 

[ZX9RCAM]

Similar to OP, I have a sister in law who is always broke too. Awesome person, but who knows what financial stuff she has going on. Just sort of annoying that we have to pay every time we all go to dinner, pay for fuel to drive out of town, etc..

We also have followed Ramsey's snowball debt reduction plan for about 3 years now. Went from ~$55k in consumer debt to $0 next month :-D I don't follow every detail with his stuff, but the snowball has been extremely effective, not only financially but psychologically.

Congrats!

 

[Nate C]

Proverbs 22:7

 

[Texasjack]

It's remarkably easy to get deep enough in debt that it takes decades to crawl out from under it. In my case, medical bills (and the loss of my wife's pay because she could no longer work) put me in a hole that took quite a while to dig out of.

A lot of kids today graduate from college with student loan debts bigger than my first house note. It's hard to get a start when you're already buried to begin with.