Clues that someone isn't financially savvy?

[thekid]

It boils down to a lack of personal responsibility.

Many things in life do.

Personal responsibility, personal discipline, natural ability level and not coming from too messed up an environment.

I don't know if there is anything else.

[kobe008]

I have a friend who was recently laid off from her job, wrongly of course . She couldnt wait to get her taxes done to get that big return, single mom so i'm sure she got most of what she paid in back. Soon as she got it bought several new household appliances then took a vacation out of town cause she 'had to get away'. Also since then has taken several more road trips out of town.

So I guess my answer to the OP is people who cannot wait for their tax return are not saavy.

[kv968]

to add to that:

Don't deprive yourself of a nice car. You only live once! You could easily afford the payment!

I don't know how many times I heard that one from co-workers when I was looking for a new car..."You work hard, you DESERVE it". My response was "I DESERVE a small or no car payment"

[thekid]

I don't know how many times I heard that one from co-workers when I was looking for a new car..."You work hard, you DESERVE it". My response was "I DESERVE a small or no car payment"

To be fair, it's all a question of balancing future needs/wants (mostly retirement) and present needs/wants.

We do only live once and there is little sense in pilling all into the retirement basket, gotta even out the fun a little.

There is nothing actually wrong with buying a new (even expensive new) car, as long as you're balanced with your long term goals. Wife and I just bought $70k of cars last year (her 30k and mine 40k) (we're in Canada where car prices are significantly higher than the US though). We have no debt (incl. mortgage), have maxed out retirement savings (we have defined benefit plans that eat up most of the space), a good chunk in savings and are in our early/mid 30s. We could have bought two used civics. Nothing wrong with that. We didn't, bought new and a little nicer. We do keep cars fairly long (7-8 years) and paid one cash (year end model and got a sweet rebate) and financed the other as we took advantage of 0.25% financing -could have paid cash but it made no sense at that rate. I estimate average yearly depreciation costs for the two vehicles to be about 6.5k (about 550$ a month for the two cars, or 275$ a month per car). Could we have halved that cost and invested the 3 grand a year, sure. Over the course of our working lives, this extra 3 grand a year would probably permit us to retire half a year sooner or whatever. I personally prefer the cars to the half a year or so.

You need to have your goals laid out explicitely and ensure your actions are coherent with them. Know what something costs you and decide whether it's worth it with regards to the overall picture. For me and I would guess most, balance between now and then is where life is happiest. I think there is a danger (with admittely a small portion of the population) of over focussing on long term goals to the detriment of short term ones. Gotta spread it in a manner that makes sense. You do only live once.

Not that I want to single out your post, it just made me think of this. I don't actually think it applies to your post. I'm just rambling, trying to justify my car purchases.

[disneysteve]

Don't deprive yourself of a nice car. You only live once! You could easily afford the payment!

Actually, that applies to things besides cars. Over on the Disney board, there are frequently threads from people taking Disney vacations that they clearly can't afford because "you only live once" or "the kids will only be young for so long" or some other inane excuse. I'm a huge Disney fan and the first time I went I was 13 and loved every second of it. Disney World didn't exist until I was 7 so the people going into debt to take their 4 or 5 year old because they have to go while the kid "still believes in the magic" is completely ridiculous.

[thekid]

I think "only live once" should be a call to live in a structured manner that ensures (as much as possible) that you maximize your life's potential (usually, neither extreme is good).

It's not a justification to spend without regard. That only makes sense if "you only live once and the world will end tomorrow".

[thekid]

We do keep cars fairly long (7-8 years) and paid one cash (year end model and got a sweet rebate) and financed the other as we took advantage of 0.25% financing -could have paid cash but it made no sense at that rate. I estimate average yearly depreciation costs for the two vehicles to be about 6.5k (about 550$ a month for the two cars, or 275$ a month per car).

Thinking this over, it really shows how little sense (folly really) leasing new cars for 3/4 years makes. You're just paying the high depreciation years in an endless loop. Financing costs aside (ie. if you can pay cash or finance at very low rates), you can get a much nicer car -if you keep it longer- for the price of leasing and re-leasing something like a civic. (or, looked at from the other way, somebody leasing a civic is paying per year roughly what somebody with an entry level luxury vehicle is paying per year if the latter keeps his car twice as long as the term of the lease). I find that astonishing.

[disneysteve]

That only makes sense if "you only live once and the world will end tomorrow".

That's just how some people think, though. They see no point in preparing for the future because they don't think they'll be around. I have a patient who is only in his late 60s who is struggling financially who recently told me that he never expected to live this long. This is common among folks who abuse their bodies - smoke, drink, do drugs, etc. It is also common among those who lost their parents and other relatives at a young age. If your dad died at 50 and your grandfather died at 52 and your uncles were all gone by the time they reached 55, your mindset becomes that you aren't likely to see 60 yourself so why bother saving for a retirement that won't ever come.

[thekid]

That's just how some people think, though. They see no point in preparing for the future because they don't think they'll be around. I have a patient who is only in his late 60s who is struggling financially who recently told me that he never expected to live this long. This is common among folks who abuse their bodies - smoke, drink, do drugs, etc. It is also common among those who lost their parents and other relatives at a young age. If your dad died at 50 and your grandfather died at 52 and your uncles were all gone by the time they reached 55, your mindset becomes that you aren't likely to see 60 yourself so why bother saving for a retirement that won't ever come.

I think that's mostly rationalizations to cover up what's at the root is lack of discipline. I know you are a physician and would be interested to know what you think. I think alot of it is ability to delay gratification, a late developping frontal lobe centered ability to overide other instincts. I'd think some people have more or less natural ability for it, environment also plays a big role as to how much you develop it. Some people are better at sports, others at planning and acting according to plan.

[maat55]

People who rarely fill up their gas tanks.

[Bades]

People who rarely fill up their gas tanks.

or put in $5 at a time, only to have to fill up days later lol

[disneysteve]

People who rarely fill up their gas tanks.

This partly depends on what gas prices are doing. When prices are falling, I'll refrain from filling up because I know the price will be lower tomorrow than today and lower the next day and the next day. When prices are rising, I'll keep it filled because I know if I don't, it'll just cost me more the next time.

I also don't fill up when I'm paying with a gift card, which I do regularly through a fund raising program at our synagogue. I buy a $100 card every few weeks. I'll just put in $25 each time which makes it easy to keep track of the balance. That won't fill the tank but I don't mind going a bit more often since the benefit is that I'm helping raise money for the temple.

[PMMM]

This was a complaint from a co-worker, "owing $295,000 dollars on a house I paid $264,000 8 years ago with the current value of the house at $256,000." I paraphrased.

That is a bad, bad combination.