Do you need a PF timeout?

Remember when you were really young and your parents use to beat you mercilessly put you in timeout when you got in trouble. For example, I remember saying ‘piss’ in front of Mom Ninja for the first time. She was not pleased with my potty mouth so she did what most mothers do. She threw me down the stairsjust kidding… She made me wash my mouth out with soap. But, instead of the normal squirt of liquid soap on the tongue, she took it one step further. She took a bar of soap, made me put it in my mouth, and bite down on it for a good five minutes while I was in “time out”. She was ruthless. You’re lucky mom I didn’t call child protective services on you for a clear violation of my constitutional right to free speech 🙂

Just like I got sent to timeout for bad language, I think people should be given timeouts if they violate some of the fundamental financial principles. Just imagine, Joe purchases a television from Best Buy and finances it at 15% interest. Enter Personal Finance police. It’s time for them to smack Joe around a little bit and put him in financial timeout. In said timeout Joe would be required to reflect on his poor decision to finance a TV in hopes that he does not make a similar mistake.

Okay, maybe PF police wouldn’t really work out. I guess we all have the God-given right to make stupid financial decisions. Instead of threaten you with a timeout, how ’bout I just walk through some of the more important financial NO NOs?

No No #1:

Don’t borrow money at an unreasonably high interest rate. Let’s face it, sometimes you might have to borrow money (to buy a house or take out a student loan), but that doesn’t mean you need to go charge everything on your credit card, take out payday loans, and take out a second mortgage. High interest debt is going to absolutely destroy your wealth building potential. Unless it is an absolute emergency, put the credit card down (if you aren’t paying it off in full that is).

No No #2:

Never, ever, ever lose track of your money. Have you ever had a $100 in your wallet and a week later notice you spent it all, but have no clue what you bought? It’s really important, and extremely beneficial, to track your spending habits. There is plenty of free budgeting software that will make this super easy for you. All you have to do is sync up the software with your bank accounts, keep any receipts from cash purchases, and the software does the rest. Want to know how much you spend dining out each month? Boom. The software lays it out nicely for you. I bought Quicken a few years ago and it has totally helped me gain some insight in to my spending patterns.

No No #3:

Don’t get scammed. You know the old adage: If it’s too good to be true, it probably is. There are plenty of people, and companies, willing to take your money from you. Enemy of Debt posted a few weeks back about a Craigslist scam he almost fell victim to. Need another example? You know that catchy tune; “F-R-E-E that spells free, credit report dot com bab-y”. It’s a catchy tune, but nothing about freecreditreport.com is free. If you want a legitimately free copy of your credit report go to annualcreditreport.com (government sponsored). There is a wealth of information out there to help you determine what the best credit report monitoring service for you would be. Don’t get SCAMMED by some dude with a guitar and a catchy jingle.

No No #4:

Do not, I repeat DO NOT, forget that your money is suppose to be spent. It’s not uncommon for me to become so obsessed with saving my money I forget I’m allowed to enjoy it. There is nothing wrong with a little non-budgeted spending every now and again. Sometimes it feels good to cut loose and splurge 🙂 Don’t be the awkward cat lady that has $10,000,000 in the bank, but refuses to go out to dinner with her family because it’s a waste of money. Live a little.

There’s probably a dozen more financial NO NOs that should have made the list, but I’m too lazy to write them all out. So, I’m gonna ask that you faithful readers help a Ninja out and throw down some more NO NOs in the comment section below. Maybe buying a new car is a no-no? Spending more than 50% of income on housing? Borrowing money from friends? Let me hear what you got!

25 thoughts on “Do you need a PF timeout?

  1. Thanks for the link love dude! Writing that scam article was fun but it was even more fun playing with the losers mind that thought he was going to scam me out of $1700. LOL

    Your entire list is great, but I think the one that serious savers see to forget is number 4. Being a tight wad is not what money was intended for. Like Dave Ramsey said, money is called currency for a reason, because it's active, and it should never be hoarded. We should let it pass freely through our hands, having tracked it of course, for things like saving, giving, and definitely a little fun from time to time. I couldn't imagine going my whole life saving saving saving without having a little fun with it along the way. I think I'd rather just be poor. LOL

  2. Nice list Punch. I forget to spend money too, but then again spending is what put me on that Dunce stool to begin with. It's amazing how much I look like the picture above.

    My mom always told me to quit play with my money 🙂

  3. Another rule: NEVER, NEVER, NEVER, pass on free money. Anyone who is not contributing up to the match in their company's retirment account is crazy! In what other circumstance would anyone deny free money?!!!!

  4. "Maybe buying a new car is a no-no?"

    Not in my opinion (especially since I just did, but I buy and hold cars for 10 years on average). I know about the depreciation thing, but if you're planning to hold it for 8-10 years, so what? A new car gives you a warranty and peace of mind that it hasn't been abused by the previous owner, giving you free rein to abuse it yourself.

    Another NO NO from me: Do not believe everything you read/hear/see from pop financial gurus. The Suze Ormans and Dave Ramseys of this world have some good points to make but they also offer a lot of questionable advice as if it were gospel truth. Needless to say, they scorn any opposing viewpoints as being beneath contempt; otherwise they couldn't hold on to their self-appointed status as financial know-it-alls. Keep reading and learning so you can learn to evaluate the pop gurus and take the good while leaving the bad.

    • Totally agree. I love buying a new car and holding on to it for 10+ years. Sometimes that resale value can be a surprise.

      Also agree with the financial advice stuff. I love it when financial advisers tell me that I will get a 8 to 12 percent rate of return on the stock market or mutual fund. Too bad they don't guarantee that in writing.

      • I've not heard any financial "guru" guarantee that kind of return. I have heard them say that they are possible though, and they are.

        I do not know too many people that keep a car for 10 years. Most people get sick of them after 5 or less, but even so, it's still a questionable purchase being as though you can buy a one to two year old car, that IS in great shape and still drive it for 8-9 more years, assuming you keep it for 10 years that is.

        I see what you both are saying, but I think the 10 year argument is just something that people use to convince themselves they made a great purchase when really they just wasted money. I would rather buy a car after the value has already taken the biggest loss, but I do admit that there are way too many people out there that don't know enough about buying used cars to wait for the "right" one. Te other thing that comes into play is patience. Most people want it and want it now.

        • I am nearly 62, and I have just bought my 5th car. I would have kept the 2000 Camry 2-3 years longer if I could, but it got rear-ended this past January by an unlicensed driver who didn't think it was necessary to slow down and move right while I was signaling a left turn into my development that I had made without incident for almost 20 years. I needed a car quickly and I did not have the luxury of time to research used cars, had I planned to go that direction. As it was, I got a $4800 settlement check from Geico on a car that had cost $21,000 ten years earlier, and the purchase price on my comparable new year, adjusted for inflation, was less than the amount I paid in 2000.

  5. OH MY LITTLE DEBT NINJA, you did threaten to call protective services and I went and got the phone for you, then you just sat with your Irish spring in your mouth hating me….who knew it would be an example for PF lovers later in life. This just proves everything is a learning opportunity!!

  6. Actually, we are in a PF time out right now. We made a, shall I say, poor financial decision last year and our (beloved Alaska Air) credit cards were cancelled last month.
    PF timeout served and lesson learned.
    Trina

  7. I woudn't dream of doing most of these, but I have a long list:

    a) Financing an Engagement Ring
    b) Financing a wedding or other large party
    c) Financing a vacation
    d) Financing cosmetic home improvement projects
    e) Financing cosmetic surgery
    f) Renting storage units to house your extra stuff. (Get rid of the extra stuff!)
    g) Buying a house that has more bathrooms than people living in it. (In general being house poor is nuts)
    h) Buying a vacation home (The math never works for me: mortgage+taxes+hassle-rental income is still usually alot of money out of pocket that you can be spending going to all kinds of awesome & exotic destinations.)

    • The storage unit commercials are interesting – they begin by saying you own too much stuff, and you think – YES, buy less! But then the solution is spending money on a rental miles away instead of selling crap!

  8. I did #1 a few years ago and have been in a 'time out' from racking up any additional CC debt for the past 3 years. My last 2 remaining balance are thisclose to being paid off…

  9. buying stuff you dont need with a credit card ESPECIALLY when you still owe money on that card for other stuff you bought and didnt need!

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