Earful of Money: Help for Astonishingly Bad Financial Decisions?
[Almost Debt Free is still on hiatus. In the meantime, I’m playing around with the idea of a new series called Earful of Money, in which we discuss solutions to money problems overheard or observed around us. Let us know what you think.]
Did you ever have lunch at a packed place, ride the train or wait in line just to get stuck next to loud talkers? Sometimes it’s hard to tune out what people are saying — especially if they’re talking about some wild stuff. It’s no wonder websites like Overheard in the Office and Overhead in New York are so popular. People say priceless things.
My friend B’s recent lunch experience was an extended episode of what you’d find on one of the Overheard websites. I couldn’t meet B for a lunch date, so she was stuck having lunch by herself. Two women were seated next to her, and they proceeded to have a boisterous conversation about money. Things took a dark turn, however, when one of the women candidly began lamenting her money woes to her friend.
B’s paraphrase of the conversation left me astonished. One of the women (let’s call her Janet) detailed bad decision after bad decision while her friend (we’ll call her Doris) sat in her chair speechless and awestruck. B could hardly control herself too. Context is everything, so there’s probably more to Janet’s situation that would make her seem less clueless, but I’ll leave that for you to decide. Let’s examine Janet’s story (assuming we know as much as Doris knows about Janet) and figure out some way to give polite, but helpful feedback to Janet.
Scary Point #1: Fails to See That Not Everyone Has the Same Expenses; ARM Mortgage Troubles Already
Janet: I just don’t understand why she gets to go to on all these exotic vacations, and gets to wear such nice clothes. I know how much money she makes, and it’s not much more than what I make. And I think I’m pretty good with how I manage money. I want to go on nice vacations too.
Doris: Well, you have a mortgage and she doesn’t.
Janet: That’s true. But I’m barely getting by with my mortgage payments. I just don’t know how I’m going to get by when my interest rate goes up in five years. I’m really worried about it. It’s just so not fair.
Scary Point #2: Carries Thousands of Dollars Because She Doesn’t Like Banks
Janet: I had all this money my roommate paid me for rent, so I took it Reno with Jim and won some money with it. Now I have all this money that I don’t know what do with; and I don’t want to put it in a bank because I hate banks. Now I’m carrying all this cash around.
Doris: [Tries to change subject.]
Janet: And you know what’s funny. I’ve been picking up all these tabs lately because I’m carrying around all this cash. Jim noticed too. We went out to dinner, and he said “Wow you’ve been good about picking up all the checks lately.” And I told him it’s because I never carry all this cash around, and so since I have all this cash, why not just use it.
Scary Point #3: “Why Don’t You Tell Me Where to Put My Money?”
Doris: [Uncomfortable. Looks at plate with eyes wide open. Has taken to fidgeting instead of eating.]
Janet: I’ve been thinking about investing, so I asked Terry where she puts her money. She was telling me Fidelity [pronounced it PHI-delity] is good because it’s pretty self-serve, so they won’t charge for commission like other places do because they tell you where to put your money. I don’t want to pay commission that’s for sure. But also, I don’t know where to put my money. I shouldn’t have to look that up. I asked Terry where she puts her money, and she said she couldn’t do that. Can you believe that? And I mean, why can’t I just go into Fidelity and say, “Why don’t you tell me where to put my money?” and not pay commission. Just tell me where to put my money!
Conclusion
Help her! This is like watching a person go overboard and not throwing a lifesaver. Either Janet is a rare breed, or chances are that we’re related to someone like this, or they’re connected to our social circle somehow. Do you know people like this?
If I were in Doris’ shoes, I’d be pretty uncomfortable too. To be honest, I’m not sure what I would say. Maybe suggest MyMoney.gov so that she could pick up some financial literacy? An intervention? Run from the table and never talk to her again?
Dear readers, how do you help someone who makes terribly bad financial decisions, and who also appears unwilling to learn how to make wiser decisions? Hopefully this snippet of Janet’s life does not represent her total outlook on finances. If it does, would you try to help her at all?
[If you have any money stories overheard or observed, feel free to drop them in the comment box and we’ll think of ways to approach the problem in the next Earful of Money.]
This is a great story. If I didn’t know better I’d say it would have to be made up… I like the earful idea. – Adam
As my friend B would attest, truth is stranger than fiction. The whole thing was just outrageous.
I used to sit next to a co worker who would own this topic.
She was so overextended on all her credit it was ridiculous- but everyday I would hear her arguing with creditors about how she needed to get cut a break. Sadly, this would only enable her to extend on the next card.
She had all the latest shoes and fashions- to the point where she would have a new outfit almost everyday. She moved to another department and we still have two huge boxes of her shoes in our coat closet- for when she’d change up from boots in the winter.
Her daughter *had* to go to private school because of behaviour concerns regarding the kid’s friends at the public school. The daughter *had* to belong to cheerleading (unaffiliated with the school) as an afterschool activity- to the tune of hundreds of dollars for cheer training, trips, outfits, etc.
Its crazy how mixed up “others” priorities can be- but then I realize I am those peoples “other.” They see me as a miserly freak, barely eking out an existance for my family of 6 on one income.
Whatever.
I would avoid any further conversations – sometimes people are idiots and there is nothing you can do about it. The best strategy is probably to model appropriate behaviour and hope that they ‘get it’ before the sky falls on their head.
Interesting….I’ve overheard similar conversations myself.
And it gets better…I got bored after 4 months of “Retirement” so went back to work driving a bus for (insert name of Major Theme Park in Orlando) that transports their College Program Students around.
It’s great to talk to the kids but some of the overheard conversations….especially the Cell Phone ones can be truly unbelievable.
But about Janet….She is going to be in a lot of trouble sooner or later…probably sooner.
She needs to convert the ARM to a Fixed as soon as possilbe before the Credit Crunch makes it impossible and she becomes one of the Foreclosed who needs an Apartment…and with the vast numbers of them going to be needed and the short supply Apartment rents are going to go UP UP UP in the next 2 years..
For investing she needs to do something simple like an Index Fund with Vanguard or Fidelity and have an automatic depostit from her Paycheck…Yes thats possible I have it done from mine to a Vanguard Fund….Very simple to set up and better than an automatic from the Checking Account…the Money never gets to the Checking and so she won’t forget about an Automatic Withdrawal coming up and spend the Money and incur the Outrageous Bank Charges.
As for the bit about carrying around a lot of cash and spending it…she doesn’t have the discipline to carry it so it needs to be in the Bank.
Personally I tend to carry around a lot…usually $3000 or so but I also trained myself to think through any purchase…no matter how small…before actually through with it.
The advantage of my carrying so much is that I can usually get a Great Deal when I want to buy something….its amazing the discounts one can get when one is standing there fanning oneself with a stack of Hundreds….The KNOW you are serious and have the Money to purchase and I’ve often had salespeople drop other customers to come wait on me.
Besides…its comical to watch them Drool…}:~D
~ Roland
Jesus.
“Janet” obviously cannot be reasoned with and while appearing to ask for advice will actively refuse to consider any that involve, you know, changing anything. I know lots of Janets who pull the same damned act all the time; they like to bitch and moan and play poor duped victim when 95% of their woes were brought on by their own bad decisions, but when offered a way out it’s always “oh I can’t do that… can’t cut back, can’t save, can’t can’t can’t” which always means “I won’t.” Well then stop wasting everyone else’s time and go run out back and shoot yourself and do the species a favor.
Pet peeves; I got a whole litter of em.
I don’t know. I think she might take advice that is very easy to take.
She sounds clueless, but part of the problem might be that she hasn’t found anyone to talk to about these issues–they are uncomfortable to them or they are just as clueless themselves. (The exception being her real estate lender, who gave her plenty of advice which she never should have taken.)
I’d recommend the Vanguard total market fund.
I’d ask why she doesn’t like banks and ask her how those problems compare to the problem of carrying around the cash. Easy advice: put it in a drawer; do not take it out unless there is an emergency.
I’ve met plenty of people who ask for advice and can’t take it–those people just have to hit rock bottom I guess.
What’s scary is I’ve seen this banking issue come up on several occasions lately. I was talking to my friend M. the other day and he told me that his roommate D. always paid his share of the rent in cash because he didn’t have a checking account (because he also didn’t believe in banks). It blew my mind – D. is 25 and college educated. How on earth does this sort of thing happen?
Another friend told me that she works with a local non-profit that works with minorities to try to encourage them to open bank accounts and teaches them how to balance checkbooks, etc. The problem they face is that the community cashes all of their checks at the local liquor store or check cashing store because they don’t believe in banking for some reason.
Basic financial education should really be a mandatory course in school. I was lucky enough to have such a program, but then we have that sort of stuff in the Midwest.
Sounds to me like Janet is a professional victim. Quick run!!!!!
Part of the Carnival of Money Stories – Show and Tell Edition:
http://www.askmrcreditcard.com/creditcardblog/carnival-of-money-stories-show-and-tell-edition/