The Worst Money Stories I've Heard

About 15 years ago or so my wife and I became financial "coaches" for a church-based organization designed to help people having financial trouble. Through the year's we've probably helped a couple hundred people/couples manage their finances -- mostly simple stuff like setting up a budget and working to pay off (usually high) debt (mostly credit card debt.)

Over those years we've seen and heard some pretty strange stuff (as you might imagine.) I thought I'd share a few of the more unusual stories that have stuck in my mind. Here goes:

• As we were digging through one couple's finances with them, we kept finding new purchases they had made and owed money on and yet had neglected to put into their budget (this happens a lot -- we usually have to ask "is this everything" several times in a meeting.) After putting the pieces together, we found out that this couple had $50k in credit card debt, had another $50k or so debt in a business gone bad, and that the husband had lost his job a month earlier. "Oh, and after I lost my job I bought a new boat," the husband told us. "You WHAT????????????" was the only response we could eek out to the "I bought a boat" cherry on top of the mountain of bad financial moves.
• After we had discussed the difference between needs (I have to have it to survive -- food, clothing, shelter), wants ("I'd really like a new TV"), and desires ("I'd like a new 52 inch state-of-the art LED TV with 500 cable channels and the ability to beam down graphic images from NASA") with one couple, we then spent 15 minutes trying to convince the wife that her weekly $50 pedicure was NOT a need (and showing her how much it was costing them.) Mind you she had no medical reason for this -- but she insisted that she had to have a pedicure every week at the cost of $50 a pop. Ok with us, but it was a $2,600 annual cost that wasn't really a "need" in any way we could see it.
• I got a call one day from a guy I'd never heard from before. He wanted me to meet him at the courthouse in a couple hours and speak during his bankruptcy hearing. I had no idea what he wanted me to say, but I declined as you can imagine. I did offer to meet with him later in the week to work out a budget and get his finances back on track. He declined, as you can imagine.
• One guy came to us making $130,000 a year, but he was spending even more -- much more actually -- than what most people would consider to be a very high income. When we suggested that maybe his four high-end cars (BMWs and Mercedes) -- all leased for each member of the family (him, his wife, and two kids) -- were killing him, he blew us off. Nope, he had to have those and we needed to cut elsewhere. Ok, how about the expensive vacations he was taking each year. Nope, couldn't cut those either. How about the over-the-top clothing spending the whole family enjoyed? Nope, couldn't cut there either. In the end, he wasn't willing to cut any spending but wanted to balance his budget. We left the meeting two hours later -- us frustrated that he couldn't do simple math (spending more than he earned) and him frustrated that we couldn't solve his problems quickly, simply, and with no changed spending habits on his part.

I tell you these stories not only for your amusement, but to also let you know that I've "seen it all" (or at least a very large part of "all".) Many of my thoughts/comment/posts on this site are a reflection of what I've seen in people's finances over a long period of time. And believe me, what I've seen is usually pretty scary!

Comments

[Kyle]

It never ceases to amaze me how some people just don't get it. I have seen a lot of craziness in my days as a collector for a mortgage company. My favorite was the guy who had a Mercedes that cost him more per month than his house (they were mobile homes) but took the bus to work everyday because he didn't want to put miles on his car. So he was paying for a car, and bus fare, but not his house. I hope it was a roomy Mercedes cause he may be living in it now.

[Eugene Krabs]

Thank you for the Monday morning amusement.

[SmartSecurityPeople.com]

In a past life, I used to be a banker and I regularly provided loans for our customers. I remember one day going through an application of a husband and wife duo and based upon income I thought the loan was a slam dunk approval. They made a little over six figures annually (with which you could live like a king in our community)but as I was going through the credit report, I found that they had over $85,000 in revolving credit card debt. On top of that they had a huge mortgage payment, 2 nice sized lease payments, and various other loan debt. When all was said and done, their debt-to-income ratio mandated a denial on their loan request. Now here is the kicker... They wanted the loan for $52,000 to purchase his and hers Harley Davidson motorcycles... Talk about needs vs. wants.

FMF- Thank you for your service in trying to help educate the masses.. one post at a time..

[Four Pillars]

I'm not sure I would have lasted 2 hours with the multiple cars idiot.

At the end of the day you can give advice/light the way/lead a horse to water etc but at some point they have to help themselves.

[Funny about Money]

LOL! You just haven't met my daughter-in-sin yet. These stories seem almost sane in comparison with hers... The kids were just repossessed by Child Protective Services, thanks to her financial troubles and the ongoing fight with the equally moronic ex. When asked what she would do if and when she wins her lawsuit against her former landlord (which could be lucrative, assuming she can get anything out of a guy who just declared bankruptcy), she said she would use it to hire a lawyer to sue her ex some more.

[Crystal]

I too have a little personal experience with "special" people that want to get out of debt without cutting back on any spending at all...sadly it's usually friends or aquaintances and they get frustrated with me after I point out the flaw in that thought process. Oh well, they asked. :-)

Thanks for the little laugh this icky Monday morning.

[D]

@SmartSecurtyPeople.com

Please explain the "In a past life" sentence... highly intrigued.

[Apex]

FMF,

I have seen this pattern many times with myslef and with others I know who have tried to help people.

You have personally helped enough people that your stats would be interesting.

I would be very curious if you could please try to estimate how all the people you have tried to help fall into the following 3 categories:

CLUELESS - % that basically were looking for some kind of magic but couldn't seem to let go any spending or anything but minor spending having basically letting them run right towards the same cliff they were previously headed for.

SKIN OF TEETH - % that sort of got it and were willing to make some changes and help to stop the bleeding so to speak and get them on a balanced budget but probably didn't quite buy in enough to get them on the road to financial security and debt paydown, just stop them from going over the cliff.

EPIPHANY - % that really got it, cut back spending in an effort to both balance their budget and free up extra cash to pay down debt, eventually get out of debt and then go on to start saving and building for retirement.

And do you have any ideas what percent of those not in the CLUELESS category stuck with it say 5 years later?

Thanks.

[BillV]

Does anyone else wonder, as I do on occasion, if these folks are the "norm" and that regular readers of this post are the "abnorm"? I'm sort of joking here, but I do wonder sometimes.

[KateMTP]

Wow. I thought I was bad about budgeting but these stories make me realize I am much more financially savvy than some others out there. I have made some hard decisions in the last couple of years to save money and pay off debt. Two years later, I am in a much better place and excited about my financial future. Of course, I don't leave 4 high-end vehicles either...

[Kate]

The last story (the $130,000 income story) really burns me up. How can anyone who is that stupid get a job that provides that sort of income? It's cases like that make me want to raise my hand and say, "I can do a better job with your income, so I'll take it, please!"

Sorry, that's not very charitable of me, but honestly.

[Crystal]

@BillV
I'm almost positive that the readers of this blog are the "abnorm". If everyone were like the people who usually post on this blog, there would be almost no credit card debt and everyone would choose to live in a home they could afford.

That's why I love reading everyone's "abnormal" answers here...it's like a breath of fresh air!

[MC]

Diabetics can often get health insurance to cover regular pedicures--since if they don't take super good care of their feet they often have to be amputated.

But the guy with the high salary wasting it on BMWs? LOL! Sounds like my ex.

[Crystal]

Shouldn't diabetics take care of their own feet? I mean, isn't it healthier to take care of your own things at home since there would be less exposure to germs?

I'd undertand the need for foot baths and maybe to pay for someone to do that if you can't reach or move much due to age or sickness, but it seems a waste of health insurance to cover normal pedicures...

[Beastlike]

This is insane. I guess it comparable to my 50 yr old family member who has stage 3 cancer, yet continues to smoke a pack a day. Absolutely Clueless!

[MC]

You can give all areas of your own feet a close and meticulous inspection for abrasions, cuts, bruises, pressure sores etc? Because I'm thin, agile, and athletic and I'd have a hard time doing this.

Many diabetics are not in as good shape as me and are considerably older. And a visit to a nail salon is much cheaper than a visit to a podiatrist. I don't begrudge them their foot care.

[Old Limey]

The story of the guy with the $130,000 income reminds me of an ex son-in-law I once had. I stress the word "Ex", thank goodness.
This guy was a classic example of the "Small Man Syndrome". He used money to compensate for his many physical inadequacies and it certainly worked for him. He only ever bought Mercedes and they were always convertibles with the biggest engines available, and of course, personalized license plates. His next acquisition was a Trophy wife, then a huge, rare, and very handsome dog that attracted attention everywhere they went with it. Next step to prove his manhood was producing a child which he proudly carried around the dining room in very expensive restaurants and hotels to prove his manhood to other customers that weren't the slightest bit interested. Of course, he was also a fabulous tipper so that whenever he drove up to the best hotel in town the doorman was right there to park his "rocketship" in front of the entrance and pick up a nice gratuity. The same thing happened in restaurants with the maitre d' and the waiters who fell all over him knowing they would receive exorbitant tips. The ostentatious home, of course, had a huge pool and tennis court to entertain all of the many hangers on that liked receiving all the freebies. He also became a groupie of a very well known group of entertainers, and of course, used his money again to obtain back stage privileges etc. as well as singing at his wedding - whenever the group flew in for a concert there was a Mercedes waiting for each of them for use while they were in town.
Fortunately this guy made lots of money and even though he was, and still is, a big spender he is in no danger of running out, especially since his wealthy parents are very close to checking out and leaving him a huge inheritance.

[Apex]

@BillV

I don't wonder about that at all. I am fully convinved it's a fact. This blog represents the 2%. 98% make different choices.

When I refinanced my home a few years back my mortgage broker told me that he doesn't do any mortgages for people like me. And my situation was something like this: mid 30s, No debt (other than mortgage) 100K in savings, 100K in stocks, 50% home equity, and a well funded 401k.

He does dozens and dozens of mortgages every year for years. And he tells me that no one, nada, zip zero, zilch, of his clients are even remotely close to my financial situation (which isn't anywhere near lavish wealth). He told me that every single one of his clients when he looks at their finances is 90 days from bankruptcy. Basically if they lose their source of income they are bankrupt in 90 days because they have no savings and the bills they have coming will swamp them in 90 days.

Thats what the 98% looks like.

[Crystal]

I totally believe Apex's mortgage broker. Most people spend too much and don't save enough...that is just the way it is...

[Crystal]

@MC
I'm 30 pounds overweight and haven't been "athletic" for at least 3 years, but I can bring my foot 8 inches from my face and look at it on all sides (my coworkers just laughed at me while I was measuring...).

If I couldn't, I still wouldn't think that a germy pedicurist would be the best place for open-sored feet. I'm not trying to "begrudge" them anything...do you have any idea how germy most manicurists and pedicurists locations are?! If you have a solid immune system, you should be fine. But I wouldn't want my grandma getting her abrasions or sores checked on there...

PS Yes, my grandmother does have diabetic sores. No, she doesn't get pedicures...she would be grossed out too! My mother, the biologist, would cringe at the thought...

[John Doe]

Wait a minute...if 98% of the people out there "don't get it", who's picking up the slack? All that money has to go somewhere, right? Right???

[Meg]

What Crystal said about the pedicures. I always, always do my own, and I can now do a professional job of it without the "ick" factor and at a much lower cost.

[Scott A]

Excellent reading. I am a loan officer for a local bank and I, like the person who issued the third post, underwrite peoples' finances on a daily basis. Most people, I'm glad to report, have their finances together, but of course I have plenty of stories of people like these people who this post is based on.

Any one of us can come up with multiple reasons why people spend more than they make, but I firmly believe that one of the major ones is an overactive sense of entitlement, i.e., I deserve the three Mercedes, the house I can't afford, and the high end wardrobe while I can't afford to save a penny for my future and my family's future. Hmmm. It seems to be a conspicuous problem with a lot of Americans. Where is this sense of entitlement coming from? The media? Keeping up with the Joneses? A deep rooted unhappiness that they believe will be satiated by spending on themselves?

[Neal A. Deutsch, CFP]

As a Certified Financial Planner(tm) for over 25 years, I have heard and seen my share of the improbable and impossible. Oftentimes needs are very confused with wants, and the "gimme-getme-buyme" syndrome is far more pervasive than gold ole "lets sanely balance the budget." The fodder for many of my blogs on our blogsite stem from client experiences, where sanity gives way to impulse and realistic ways turn into fantasy. My favorite expression to clients, when feeling compelled to help their children is this: "the four hardest words to tell your children? WE- CAN'T - AFFORD - IT." Try it sometime...

[RF]

@BillV

Your right! The people that read financial blogs are 1% of the population. Morons who can't handle their finances don't read about smart money practices. Unfortunately, morons now make up the majority of our population.

Our country was made great by three qualities in its citizens: A work Ethic, a sense of thrift and good character. Those qualities have been replaced by greed, corruption and a sense of entititlement. We are a nation in decline.

[Apex]

@John Doe,

What do you mean who is picking up the slack? The 98% are. They keep spending everything they have plus more on credit cards and previously home equity withdrawal etc. They are driving the go-go economy with their excessive spending. And then when it reaches a boiling point and the financial system removes some of their easy access excessive credit and they have to quit spending, home prices plunge and the whole financial system falls apart and the government comes in to also "pick up the slack" and bail the banks out for lending money to people who can't pay it back.

The economy would be much healthier if people didn't spend excessively and then we would not be as subject to these wild swings. It might mean slower long term growth but not that much and it would certainly be a painful transition from where we are now to everyone living on 85% of their income instead of 105%, but it could be done.

So what slack exactly are you talking about that needs to be picked up? The 98% spending wildly causes a complete lack of slack. We could use a little slack.

[GT]

This topic and stories reminded me about a job I had in college:

One of the jobs while I was in college was working for a franchised sandwich shop. The owner had won a big settlement from his previous employer, and immediately bought within the year: a new hummer, new mustang, new boat, a new house on a lake, paid for an expensive wedding and honeymoon, and the franchise(his reasoning was: because he liked the sandwiches).

He partied extravagantly all the time, and would bring new 'friends' in from the bar and clubs in after 2am and would treat them to free sandwiches all night. In the end, he blew his entire settlement, lost one car, the boat, and his house.

He also did not take good care of the sandwich shop, and let standards drop to a bad level. Thankfully, the shop is currently closed until he meets health and safety standards again.

[BillV]

A little off topic here:
Could one person enlighten me about the post that start ?
Thanks

[FMF]

Apex --

The vast majority were either what you classify as SKIN OF TEETH or what I'd call HELP ME TO BALANCE MY BUDGET WITHOUT IMPACTING MY LIFESTYLE (they understood the math and knew in their minds why the needed to change, but they still wanted to spend and have all their "stuff".)

We never knew what became of any of them since it was extraordinary to get them to attend two or three meetings. To stick with us for five years was unheard of.

[BillV]

well I can't explain the above; was referring to posts that start 'shift 2'the online 'at sign" (it didn't make it in the abovepost) @ is what I mean.

[George@MoneyLounge.net]

The '@' sign means the message is directed towards whoever they mention there.

[BillV]

Thanks George,
Seems needless to me, but what do I know.

;-)

[Apex]

FMF's confirmation of the generally difficult task of helping people see the light has is further confirmation of my own experience and those I know of who have done the same.

It has generally soured me to some extent on trying to help people out of their own self induced problems.

I think the phrase "end of your rope" is very accurate for most of these people. Unless they are desparate with no way out, they are willing to keep climbing into the whole as long as there is more rope available to let them keep going down. Even though they know it's a bad idea, it's just too painful to start climbing back up or even to just tie a knot and try to hold your ground.

[Mike Hunt]

My ex-boss somewhat fits into this spending type.

Since 2003 he has been pulling in between $350K - $600K gross per year- this is living in Malaysia where the maximum income tax rate is 23%, he is from Europe so doesn't have to file in his home country unlike US citizens... The ex boss is 50 years old, divorced but his family still lives in Malaysia and he rents a house plus pays for a maid, gardener and cook for them - not ususual in Malaysia. He also has a few cars and a girlfriend where he is paying for a rental in a condo for her friends and cousin plus just bought her a new car.

He was interested in buying the assets to a company and told me that if successful could be a millionaire in a few years. I looked at him and said- 'Wait a minute, you must surely be a millionaire now.' He said he wasn't anywhere near that, not even a quarter of that. I find it strange since I worked for him from 2003 - 2006 making $150k per year before taking some other higher paying jobs and have now saved north of $1.5 million. I told him it wouldn't be hard to save a million (with his salary) so he can have money for a rainy day- currently he is quite afraid of losing his job or taking another job because the risk of losing income which would then put him out of business.

He said if he had a million dollars he would buy a ferrari (which runs around $800 - 900k in Malaysia with all the high import taxes). I thought he was nuts. I told him the advantage of having that much cash on hand is that it takes the stress away from losing your job and gives you freedom to tell your employer to shove it when you've had enough.... he agreed with that but I don't see him changing his ways anytime soon.

I thought the frugal types are maybe 30% of the population, it would seem the number is lower than that...

-Mike

[Concojones]

FMF,

Now this is what I call 'giving' (helping someone get on top of their finances). Of course, they need to be committed and I'd want to check up with them after some time (an initial session or two may not suffice).

[Alex]

Every time I loose my Job I always go out and buy a new boat to make myself feel better. Doesn't everyone do that? ;)