3 Cautionary Tales, The Sad Money Stories

These are all real. The names have not been changed to protect the not so financially savvy. We all know someone who is in this situation, maybe in it ourselves. Quite easy to fall into the trap.  Not so easy to get out.

Carlos and the Mini Mansion

About 15 years ago my friend Carlos received a promotion  and a very nice raise came along with it, so he bought a bigger house. He did what many of us do: run to the bank with the pay stub and ask "how much can I get?"  He bought as much house as the bank said he could! A beautiful four bedroom, three bathroom house with a huge backyard. He lives in a gated complex within a larger gated community where he pays two separate maintenance/security fees.

His only son is away at college and will soon get married. Carlos and his wife are now empty nesters and have no wish or opportunity to have more children.  They have that huge house all to themselves.

The complex has tennis courts, a large swimming pool and many other amenities that exclusive gated communities offer. Never used them in all the years they have lived there, even though that was one of the reasons they were attracted to the complex in the first place.

He lives less than 6 miles from work, but he must leave before six. He does not start work until eight, but with that rush-hour traffic if he were to leave at 6:15 he would not get to work on time. He hits the traffic jam as soon as he drives out of his complex. So he arrives more than an hour before he starts and buys breakfast every morning!

Now they would love to sell and buy a smaller house with a shorter commute to his job. Something that is more suited to their needs. Problem is he can't, the housing market is so depressed that the house has lost about 40% of its original value and they can't afford that big a loss.

My Neighbor’s New Car

My neighbor just bought a brand spanking new car, the car of his dreams.  How long did he dream of it? Not too long, the thing just came out. He will probably trade it in within three years for his next "dream" ride.  He says he deserves it, he works had for his money.

The real story behind this purchase and the  many others before it is quite different from what we may think; not needs or even wants. He is in perpetual competition with someone.  Never happy with simply keeping up; he has to do one better than those of us around.

The neighbor up the block just bought a new car, his old one was done  and actually died on him. Within a month he had a new car too. He tried to explain that it had  something to with gas prices. I did the math for him. He is not talking to me at the moment; says I called him stupid.

This competition with everyone over everything has gone on for years. Never gets to go anywhere on vacation; he can't afford to.

I have tried to make him realize; he needs to quit with the competition.  The keeping up with the Joneses is slowly killing him and he doesn't even realize it.  Nobody else pays his mortgage, car note or any other bill for that matter. So he should not care what they may think and focus on what makes him happy.  Really happy! Hopefully one day soon he will learn.

Where Did My $20 Go

                               

I too was once a moron with my money; with the financial IQ of a bagel.  Sure I have always contributed to my 401K but only enough to get the company match.  One day a friend showed me the math and why I should max out my contribution. I did a lot of stupid things before I realized they were stupid. Many years had gone by before I realized my mistake.

One night, sadly, not too long ago I arrived home from work and emptied out my pockets. Keys, wallet, two bucks and change and some lint were all I found.  I left with $20 that morning and got home with nothing to show for it. This is what a typical workday was like.

I decided to take inventory next work day.  This is what I found:

Coffee when I arrived

Lunch

Coffee in the afternoon     

Snacks somewhere along the way

That was it, poof my money was gone.  I realized that I was wasting a lot of money here. I got to thinking that I should be saving some money instead.

What is the point of narrating these three sad tales of financial stupidity?  More are created every day. I realized we are all guilty to some extent. I see it all the time, and if we want more out of life we need to make changes.   

Living paycheck to paycheck or waiting for your pension or social security deposit to arrive so that you can buy some groceries does not lead to a fulfilling, happy life.

My fix was fairly easy, for others it may not be so easy. I started by getting three things: an envelope, a travel mug and a food container.

Took a twenty to work every day, but I also took my morning coffee with me and lunch on alternating days; just last night's leftovers. Whatever cash was in my pocket went into the envelope.   After week one I had $51. The envelope was the easiest way to keep count of what I was spending. Don't believe small savings add up to big money over time?  This may change your thinking.

We cannot turn back time.  Starting today is better than next week or next month and infinitely better than never starting at all..  Life is much better when you tell your money what to do, not the other way around. Before you go out and spend your hard-earned money, keep in mind these cautionary tales.

The views here expressed are all my own and are not legal, professional or financial advice. You should consult a professional before investing. Referral links may be found throughout, I only recommend products I believe in.  This site also presents links to other sites but is not responsible for their content or privacy practices.