Choosing to be broke

Last night I spent some time with some friends and it made my little ninja heart sad. Only one of them knows that I love finances, and none of them knew I have a financial blog. There was one continuing theme that seemed to reoccur throughout the night. These people are stressed.

A little background on these peeps, one has a steady job as a teacher, one was recently laid off but found another job, but took a pay cut, and the other is in a masters program. They are all roommates and they all live well outside of their means. These were some of the conversations that occurred during dinner last night.

The Teacher. The majority of my conversations with her focused on a used car she was looking to purchase. She currently owns a 2006 Honda (which she bought new) and after three years of driving it, she believes it is time for an upgrade. She has her eyes set on a $25K used 2007 hybrid. She also mentioned to me that she has credit card debt, a small school loan, and $900+/month rent. She’s a teacher, so I know she is not bringing home big money. She really has no need for the upgraded car, aside from the fact that she “wants” it. This girl is financially strained and tomorrow, that strain is only going to intensify when she comes home in her new ride.

The Recently Laid Off. I did not have direct conversations with her about her financial situation, but overheard comments she made like “I have no money.” After she was laid off, finances obviously became a little tight for her. She was fortunate enough to find another job quick, although she mentioned it does pay less. After taking the pay cut she knew money was going to be tight so what did she do to improve her financial situation? Well, she went and bought a new car. A brand spankin’ new Honda. Her justification: “My car payment and insurance stayed the same, but now I get better gas mileage.”  I wish I could have slapped her and said that is a short term solution to a much bigger problem. The only reason she has equal car payments…she extended her loan out for six years. She is so desperate to try and make extra money, she almost got suckered in to a craigslist scam. Fortunately I hopped on the computer, after hearing about her “exciting opportunity”, and was able to prove to her that it in fact was a sham. I’ve always wondered what kind of people fall for the craigslist scams. The answer…broke people. To cap the night off. She told me about how she sent in some gold to Gold Exchange and received a check for $33. I chuckled in my head and wished she would have read yesterday’s post.

The Student. Now I don’t know to much about the student aside from a few comments about how rent ($900+/month) was really stretching her financially and that she was strapped for cash. Unfortunately, I was unable to learn more about her situation. The reason, she left to go shopping at Nordstrom. Ummm, excuse me, but if you’re broke should you really be going to Nordstrom right now?

Spending the evening with these girls was a frustrating reminder that sometimes people choose to be broke. They live like rockstars, but don’t have the income to back it up. The two with jobs make enough money that they could easily live a comfortable life, but they chose to be financially strained, stressed, and stupid by doing things like spending every dollar they make. It’s craziness, but a great reminder that living within your means, improves your overall quality of life. Life is good, because I have chosen to make it that way.

13 thoughts on “Choosing to be broke

  1. I'd like to say these people you had dinner with were the minority, but sadly they are the majority. I would find it hard to be good mates with anyone like this. How ridiculous to even consider purchasing another car after owning a new vehicle for only 3 years!!

    Having more (or at least some) financial training in high school might go some of the ways to fixing this problem. But it's really up to the individual to realize that we can't all live like rockstars.

    I was going to say I hope these girls don't come across your blog, but from the sounds of it I think it's pretty safe to assume they're not part of your subscriber base.

  2. I think that what you're also seeing is people who haven't hit the bottom yet. You're still young, so I'll assume that your friends are still young. I was making the same financially stupid decisions then that they were (well, I never paid that much in rent). I'm guessing that it will take most of them at least another year or two of making bad decisions before they realize that something will have to change.

    Since they're your friends, I would say give them time, casually mention in conversation some good financial decisions you've made. But don't badger them about their own. There was nothing that I hated more than the one friend of mine who was always criticizing me for how I spent my money. I just made excuses for why he was able to do the things that he was and I couldn't and in the end resented him.

  3. This reminds me of a few friends of mine with the same bad money habits and issues.
    In general, I find that the mindset of these friends are to live it up and splurge now while they're still young (they're 24-26).
    I'm all for living it up but some of these friends go out and party 7 days a week, buying bottles at the club then slap it on a credit card. They have newer cars with rims and take regular vacations all while paying nearly $1,000 in rent…sad thing is I probably make as much if not more than them and I can't realistically afford those things even if I had the same extreme mentality of theirs.

  4. Great post DN. I can totally relate to this – I have many friends like this. Well said.

  5. Sounds like they all have entitlement syndrome.

    Things are stressful, so I deserve this drink/car/shopping.

    They're also thinking in the short term. It's easy enough to wrack up CC debt now, but the crappy part is paying it off over the years.

    The girl buying a hybrid is another great example of thinking in the short term. Toyotas are dependable cars…there's no reason why she couldn't get 200,000+ miles out of it.

  6. Great post and I have to agree that this mindset is the majority in our nation.

    Some people (my inlaws) never get out of this mindset. They are pushing 50, still have kids living at home, and make a point to be oblivious to their bank account and credit card statements. They leave some of their bills lying around at times and its embarrassing when I happen to see them, with past due on them. And they continue to go out to eat multiple times a week, at somewhat pricey places not to mention their other constant splurges. Their power/water has been shut off in the past for "forgetting" to pay the bills. When will they hit rock bottom? 😉

  7. Great post! I have similar friends, and we are around the same age so I'm sure so are these people you were hanging out with. Time to change my ways now so I don't sound like the dumb one always complaining about money but rockin' all new designer stuff!

  8. I don't know how people can live like that. I drive an old clunker Ford Tempo my friend is letting me borrow that she originally purchased for $600. It doesn't have working A/C (we live in the desert), the back windows don't roll down, only one of the front automatic windows works using the controls (the driver's window has to be pulled up and down). However, it starts every time, gets okay mileage, and gets me where I want to go.

    My roommate (who has a lot of cc debt and would be up shit creek without a paddle if she lost her job) rode with me a couple of weeks ago and told me she felt sorry for me because I had to drive such a crappy car. I wanted to tell her I was able to save up to quit the crappy job we both had (she still has it and complains about) and find something better because I drove this crappy car. I didn't say anything for the sake of household harmony, but I sure was baffled that anyone would feel sorry for me.

  9. Oh the wonderful world of consumerville!

    I'm a closet consumer. Act like I hold to the budget, but find spending on shorts or buy a higher priced grocery item(s). Okay, but its not as bad as buying a new car. I already made that mistake – $3500 under @ 15.9%.

  10. This reminds me of a recent conversation I had with a coworker. She is about to go on her 4th vacation this year, someone else said she must make too much money. She said, no, I pay for vacations with my credit card. Seriously.

  11. Painful to watch. But I remember when it was me doing all of the same stupid things just about two years ago. I don't know if you can help them though. I think most people have to hit a wall before they really understand what they are doing wrong and how it is possible to change.

  12. Good post and I love your observations and conclusions… I bet at the end of the long night of stressing over finances and plans to buy new cars the principals each pulled out plastic to cover the cost of the evening out.

    Funny and sad I suppose.

    Thanks for sharing!
    Dave

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