Excusing bad behavior

October 4, 2010 · 35 comments

One of my favorite things about personal finance is hearing all the crazy excuses people use to justify bad decision making. For example my friend pulled the, “My transmission just went out so I HAD to buy a brand new car” Since when did a little car work, justify the need for a new car loan? Maybe it’s a sense of entitlement, or perhaps a lack of responsibility? Maybe I’m crazy, but I think it’s time we slap our peers back to reality and remind them that financing a boob job (wonder how many pervs are gonna click that link) is a terrible idea. Here are some of the most common “crappy excuses” I’ve come across…

Car:

The only thing stupider than financing a new car, when your old one is broke, is financing a new car when there is nothing wrong with your old one. Seriously people, cars are not like shoes. They do not need to match your outfit. I know at least three people who sold there, perfectly fine, cars for some type of hybrid or ‘fuel efficient’ car. Ummm, really? You are going to sell your $8,000 Toyota Camry that gets 25mpg, and go finance a $30,000 Prius that gets 47mpg? Did you know, that prius will only save you about $600 a year in gas? Which means it would take more than 20 years to actually save money. Fuel efficiency is NOT a valid excuse for financial stupidity. (I’m not talking about people who can afford Hyrbids, so all you hyrbid owners can stop foaming at the mouth.)

Tax Deductions:

Similar to the hybrid model above, I can’t believe how many people used the $8,000 tax credit as their excuse for buying a home. Since when did getting $8,000 from the government, warrant spending $300,000 of your own? Seems a bit crazy to me. Again, if you were already looking to buy a home and had adequate liquidity, then you made a smart move by taking advantage of the low market and the tax credit. Something tells me, however, a bunch of people went and bought homes they couldn’t afford, just because they felt like they were suppose to. Do you know anyone that took advantage of this credit or any other credit, that should not have?

Sales:

This is probably the excuse that makes me want to punch a baby the most frustrated. You know exactly what I’m talking about, and sadly, some of you are probably guilty of it. I’m talking about the woman, who after complaining about how broke she is, goes and buys a pair of boots from Nordstrom because they were on sale. Or the unemployed dude who puts rims on his car because he got four rims for the price of three. You know the guy. He loves to say “I saved $300 buying these rims”  when the truth is he SPENT $900 to get them. There is nothing wrong with looking for a good deal, but there is absolutely something wrong with buying crap you don’t need just because “It’s on sale!”

Man oh man, the list goes on and on and on. I can think of at least three more categories I could rant about (balance transfers, student loans, unemployment) but for the sake of not offending everyone, I’ll bite my tongue and call it a day. I’m sure many of you come across excuse makers every day. Care to share any of the ridiculous things these people come up with?

{ 34 comments }

1 RN in IL

I have family who believes that because they are shopping at discount stores (for stuff they don’t need) that they are “saving”. Buying stuff you don’t need is still $$$ you don’t need to spend. Also, this same family likes to buy stuff I don’t need as gifts. I am an adult who will take care of my own needs. Please make donations to a charity of your choice.

2 Joey

I agree with your assessment of purchase motivations. Most of them are ridiculous. Recently I watched a couple of seasons of Top Gear on Netflix and now I have “car fever.” There’s nothing wrong with my current car. In fact, I just had quite a bit of work done to it and it’s running good as new. I’m just going to wait it out and I hope the “fever” goes away soon (although looking at new cars is fun).

What’s you beef with balance transfers though? I know there is a transfer fee, but it’s pretty easy to find out how much interest you’ll be paying and see if the transfer is worth the cost of the fee. For example, I had a credit card I knew I wouldn’t be able to pay off for at least a year, so I surfed the balance to another card with 0% interest for 12 months and paid the fee which was much cheaper than the interest I would have paid had I left the balance where it was at.

3 PunchDebt

It’s not so much the balance transfer that bothers me as much as it is people rack up a ton of Credit card debt, and then decide to transfer to a 0% card. Maybe they pay the debt off in those 12 months or maybe they don’t. But the next year the same thing happens again and it’s a never ending cycle. The balance transfer doesn’t combat their poor spending habits, it’s just a crappy way to avoid a serious problem. In your case, it sounds like you got your ish together and are working on improving your situation, though so my beef doesn’t apply to you :)

4 Chubby Bunny

I would say this philosophy also applies to people who, in an attempt to get out of the bad debt cycle, will take on a consolidation loan and then choose not to close all those credit cards. Then they get excited about all this open they credit they suddenly have, and proceed to rack up the cards AGAIN.

5 eemusings

Transmissions are expensive. That’s the reason we ditched our first car and bought another. It wasn’t new, though.

6 Melissa

if you’re going to spend more money fixing the car than the car itself is worth, i think it’s a good bet buying a new (used) car… right?

7 PunchDebt

Yeah a “new USED” car is the key. My friend, however, bought a new NEW car.

8 Small Town Runner

But Ninja! Haven’t you heard the commercials? “The more you spend the more you save!”

9 PunchDebt

Bwahahaha! Yes I’ve heard those commercials. Followed by the “Taco Bell is good for you” news reports I’ve read. It’s all a bunch of bullsh….

10 Chubby Bunny

Taco Bell IS good for you! (if you own the franchise, that is….)

11 Sandy L

Here’s one
Buying new clothes when you get fat. I had an ex who refused to buy new pants, so he went on a diet until he fit into his clothes again. I went back to work with my pants too tight until I lost that last bit of baby weight. IT was a long 3 weeks, but it sure motivated me to hit the gym every day til it was gone. I wish I were that good now.

Now buying clothes when you lose weight..hell yeah, reward yourself mightily!

12 Elle

Wonderful points! You’ll probably be spending much more than $8,000 just with your property taxes over the life of the mortgage. You really have to run the numbers yourself when you are house hunting.

13 Kevin @ Thousandaire.com

I agree in theory, but I also think that if you are going to spend a few thousand dollars on fixing your old car then it’s time to evaluate if that money is better spent on a new one. If your old car is costing you a lot of money in repairs and is just old and junky, it might be time to put that $2-3k you would have spent on a transmission towards a used car.

14 PunchDebt

True, I’m talking a moderately used car in need of a new transmission compared to a new $20,000 financed car like my friend bought. If the transmission repair isn’t worth it, you can buy another USED car instead. That’s the point I was trying to make.

15 Red

So true on the house credit! Mr. Red and I had been married for about a month when my dad said, “You should be buying a house now! You can get that credit!” “But Dad, we don’t have money for a down payment…” “The banks will work with you on stuff like that!” Uh…. Lol! Now I’m able to laugh about it, but the night we had the argument I wanted to scream I was so frustrated. Advice like that is why so many people are in trouble right now!

One of my other pet peeves – and this is related more to the environment than personal finance but it also would save you money – is when people insist that it’s okay to use plastic like crazy “because I recycle.” Uh, no! Recycling costs money and resources too! It’s better to buy a water filter and a big water bottle (I recommend Camelbak) than spend all that money on bottled water and waste all that plastic! Come on now! ;)

16 Nicole

I have a friend who moved in with her boyfriend specifically because of the credit. Her father actually helped them pay their down payment, and their credit went straight to him. I’ve never really pried about how they were doing with their finances, but buying a house doesn’t just stop there, they are constantly doing projects around their house and spending more money.

I have to say I am guilty of overspending on clothes and shoes. I have been better lately with curbing these temptations, but sometimes a new pair of shoes just makes me feel happy :-) I know it’s not a good excuse, but I like to enjoy my money, and shopping is fun for me.

17 TwinsMama

I agree with you on most points. I bought a car (used and from my Mom) when my transmission died on my first car. The reason I did so was because I paid a whooping $700 for the car and the cost of a new transmission (on a car no longer being made) was aprox $1,500. No way in hay was I going to spend that on that car.

By buying my Mom’s older car I saved so much in repair costs and when that car finally died…yes I drove it into the ground. I felt it was finally my time to get a new one. I got a great deal through my credit union and my payments were pennies. However I bought well BELOW my means and always paid more so that I was never upside down!

I have to say the home buyer and car credits were what did it for me. People made lots of poor purchasing decisions just to “get in” on the credits. We are/were in the market to buy and could have purchased but I had a sneaking suspicion that rates and prices would drop even lower. Good thing we waited. Now we will save even more by having a lower rate and nice size house for a much more reasonable purchase price!

18 laura

Cash for Clunkers, anyone?

I have SO many friends who got suckered into that one – people who would’ve driven their own cars for at least a couple more years and then replaced them with affordable used cars, who now have massive car loans that they totally underestimated and never in a million years would’ve taken on if not for the program.

19 PunchDebt

Oh, cash for clunkers. What a joke.

20 james@creditcardresearcher.com.au

If the kids spend on a wrong thing you can understand but what is the adults in the family cannot stand the temptation to over spend on stuff which you don’t need.

21 Sandy X

Touché on the bit about “sales.” And shame on all of the companies that lie to folks and say “you’re saving money.” Uhh, no you’re not. If anything, you’re spending less. If your cash isn’t going into a savings account, piggy bank or some other equivalent, and – instead- is going into the hands of some person who is offering you a product or service, I hate to burst your bubble and advise that you, my dear, are in fact spending. FYI: Spending DOES NOT equal saving. And if you think so, you suck :)

22 Valerie

I am sorry, but I disagree with you on the car purchase bit. We had a VW Passat that was 10 years old, which we purchased new. Last winter the heat died on it. I took it in for an oil change and left with an estimated repair bill of $4K, and that would not guarantee that the heat would work either. They weren’t really sure what was wrong and said a $500 service *might* fix it. Living in Colorado with a toddler, we could not afford *might fix it*. I am sorry but you need heat in a car in the winter with a toddler in the back seat. It also needed tires, brakes, timing belt, and a few other things. We did not have $4K sitting around to put in to a 10yr old car. It made better sense for us to trade it in. We got $4K for it, and we rolled that into a 1 yr old crossover/SUV that fits our family better. That vehicle was $5K under blue book, add in the trade in amount…we did okay!

23 Larry

I think what you’re saying is perfectly reasonable. At 10 years a car has probably lived most of its useful life, and if you’re looking at such an expensive repair bill, it does not pay to fix it especially if the repair is not guaranteed.

24 PunchDebt

Agreed. There is a difference between a reasonable purchase, and an excessive one. In the car example stated above the purchase of a $20,000 vehicle (all financed) was excessive when she could have bought a $5,000 used car.

25 Stephanie

We bought my husband a new (well to him) car last year when we found out his car was going to need some really pricey engine work (head gasket had gone blahblahblah I zoned out after I heard the price). We did a quick-fix sealant thingy while we searched. It needed a bunch of other work too and was likely not to pass it’s next inspection anyway, so we opted for a pre-owned. It was just the best option for us (of course, if I ever find the person who hit the car last month and caused $3500 worth of damage **phew for insurance**…well that’s another story entirely).

My car? I will drive my Corolla until the engine runs away and the seat falls through the floor. Love it.

26 Chubby Bunny

Can I share a success story with all of you? (Its a bit reminiscient of the car tales above).

I recently bought a house, which happened to have a hot tub in the yard (YAY!). Said hot tub was found to be leaking about 10 litres of water a day. I had it my head that this must be WAY too big a leak to fix, and set about buying a new hot tub. Found one at Costco that was (only) going to cost me $7000 delivered and installed. Ouch, but at least I had the cash to pay for it outright.

One day, I’m walking the dog, and see that one of the neighbours has a SPAMAN truck sitting outside his home, getting his own hottub fixed….I think “Well, it couldn’t hurt to ask…” Anyways, this guy comes over, changes a jet and a hose to the tune of $200….and it’s fixed. I am ashamed to admit that I almost lost $6800 because I was either too lazy to call a repair guy or because I assumed that because the tub was too old to fix (12 years+).

Crazy, no?

27 Allison

Similar to Chubby Bunny — Splurged and bought a nice big 42′ TV when it was on sale… but didn’t splurge enough for a real quality tv so it died… at 13 months. The warranty ended at 12. Did what any irrational person would do and ran out an bought a new TV (I can’t LIVE without a TV you know lol) that was even bigger and more expensive than the last one and got some surround sound to go with it.

Fast forward over a year and I am moving to my new house with a remodeled basement in need of a tv. Called a TV repair man to come take a look at the TV and $150 later the TV is fixed!! I could have done it in the first place but it worked out ok because now we have two working tv’s and are so happy we called!

28 Emma

One of my co-workers is buying a brand new car so he can have lower car payments. He really cannot grasp the fact that he is so upside down on the car he owns that it will not matter if his car payments are lower, he’ll be about 100 by the time he pays it off.

29 Nicole

Wait… your shoes have to match your outfit? Crap.

30 mary m

A new car is only new the 1st time you drive it. After that, you are driving around an old car that has depreciated 20+% literally overnight.

31 Squirrelers

I recall a guy I knew some years ago driving an extra 2 hours round trip to save $20 on a small appliance purchase.

So, on the surface, it seems like his time would be worth $10 per hour, right?

Well, when you add in the cost of gas – let’s say $5, plus the wear and tear on the car, he really didn’t save anything for his efforts. He, on the other hand, thought it was great. Otherwise smart guy, too.

It’s very interesting to me how logic can go out the window in cases like this. Opportunity cost is not a universally shared concept!

32 Jsn

Guilty as charged. My wife and I bought a condo ($275,000) in March. We also put about 10,000 into the paint, flooring and a few pieces of needed furniture.
Problems:
1) We had to borrow from my parents to put 10% down (PMI sucks)
2) Prices/interest dropped a little after the credit expired
On the other hand, since the seller was motivated we got 8,000 in seller concessions + the 8,000 credit. This enabled us to pay back most of the parental loan. We are at 5.25% on the mortgage because of our good credit (.25% extra since it’s a condo), so we couldn’t have done much better…

**HOWEVER, we were looking into nice apartments in our area and they were coming in at about 2K+ a month with utilities. We had a great deal on our old apartment (1400 ALL inclusive), but it was small and we had been there for 3 years. Our total monthly for the new place is 2300 (PITI+HOA) and ~250 (utilities +cable/phone/internet). So we pay out approx 2500 a month, but we are currently paying down 300 of principle and we save a bit on taxes over the year (100ish a month if my math is good). Right now we are coming out behind, but when the PMI drops and we are paying down 5-6-7 hundred in principle, it will be a different story. One more thing that affected our decision- we have secure jobs and I will be getting a promotion in the near future so our income will increase. I also keep careful track of our income, budgeting and cash flow (partly started on my own, and partly cause I copied Ninja- thanks!). Otherwise, I might agree with everyone that we are crazy debtors.

33 Khaleef @ KNS Financial

I’m glad you mentioned the tax deductions! I HATE how people justify buying (really begging a bank for $300,000) a house because you can deduct the interest! That is such a stupid justification and if that’s the real reason, then I feel sorry for a bank who would lend to someone who thinks like that!

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