I don't know where my money goes

[LivingAlmostLarge]

I cannot tell you how many friends have said that to me lately. I never respond. But right now we're in the midst of the house hunt and three friends have said that to me. Two of them ask how do you save money for a down payment? All three have said they don't carry credit card debt and use only a debit card or cash. But none are saving for retirement or a house DP. Now I know two of them are making very good money and all three make 6 figures.

But I don't get where their money goes? I know what one of them makes she told me what her husband makes. But she has no idea where the money goes. They live paycheck to paycheck and her husband yells at her and says we can't spend until the next paycheck! Then they can spend and they do. She said it's getting stressful.

Trust me I haven't said anything. But I've sat there and wondered what the hell are these people spending money on? They don't drive super fancy or new cars. They have slightly more expensive rentals. Only one couple have expensive cars, two boats, vacations, private school, etc. I know where their money goes. But the other two? I don't get it.

Do you ever wonder where people who say that and aren't flashy with money their money goes? Have you ever pointed out where it goes? I can't see them spending a ton so I couldn't point it out if i wanted to. No new car, no expensive rent, don't seem to eat out. Where does it go?

[97guns]

its the same story with 95% of the people i know, money every month goes to credit card bills, they NEED credit to merely survive. these people live in a world of hurt and they only see roses

[DaveInPgh]

Chances are it is never one area where they are failing, but a combination of multiple bad habits.

One area that I think most fail at is grocery shopping. Filling your shopping cart with non sale items really adds up fast. I see people throw things in the cart without any thought of the price.

[Joan.of.the.Arch]

I think electronics can take up a lot of apaycheck. The devices themselves and then connections, cool aps, games, ebooks, etc. That includes televisions and viewing packages. Clothes and personal care can run a up a lot if people let it. $100 haircuts and $300 coloring per month? $200 sunglasses, $600 prescription lenses? Even food can run into a huge chunk per month. Some may be paying as they go now, but also paying for past purchases, too. Like, car financing re-rolled into the next car, credit cards run up years ago, or student loans taken out for more than was necessary 15 years ago. Alcohol? That too could be costly if you let it. Recreational drugs? A fine shoe collection? Indulging in tons of children's toys, lots of after-school and weekend kids' activities? Sports that require an expensive kitting-out for the whole family and all year round? Lots of well-paid baby sitting? Two people eating out at decent restaurants every day? Who knows!

I guess there are a zillion ways to spend the whole paycheck and not have much to show for it.

[Singuy]

Oh yeah I have two pharmacists who one is in his late 40s, and one is in his 60s. I looked up their houses, all under 250k...the 60yo bought his house when it was only 120k. They don't drive fancy cars and I know the 60yo mooch free meals all the time. He also worked 2 jobs a good portion of his life..

He, in his 60s, can't even retire after a pretty major car accident ...while the one in his late 40s puts 0 into retirement because "I have no money"....so I'm wondering what is going on as well for some of these people.

[DaveInPgh]

Oh yeah I have two pharmacists who one is in his late 40s, and one is in his 60s. I looked up their houses, all under 250k...the 60yo bought his house when it was only 120k. They don't drive fancy cars and I know the 60yo mooch free meals all the time. He also worked 2 jobs a good portion of his life..

He, in his 60s, can't even retire after a pretty major car accident ...while the one in his late 40s puts 0 into retirement because "I have no money"....so I'm wondering what is going on as well for some of these people.

It isn't the recreational drugs that Joan mentioned. They are getting those for free

[Fishindude77]

I think electronics can take up a lot of a paycheck. The devices themselves and then connections, cool aps, games, ebooks, etc. That includes televisions and viewing packages.

This is a huge expense that didn't even exist when I first started working for a living.

Cable or satellite TV - Never had it, used an antenna for free.
Internet connection - Never had it, wasn't available.
Cell phone - Never had one, we shared a single land line.
Computer - Didn't have one at home.

Many families spend the equivalent of a house payment on this stuff each month, and truth is, you could live without all of it.

[DaveInPgh]

I think electronics can take up a lot of a paycheck. The devices themselves and then connections, cool aps, games, ebooks, etc. That includes televisions and viewing packages.

This is a huge expense that didn't even exist when I first started working for a living.

Cable or satellite TV - Never had it, used an antenna for free.
Internet connection - Never had it, wasn't available.
Cell phone - Never had one, we shared a single land line.
Computer - Didn't have one at home.

Many families spend the equivalent of a house payment on this stuff each month, and truth is, you could live without all of it.

Add to the fact that many of the devices are purchased via credit card that doesn't get paid in full every month.

[DaveInPgh]

The household income of my best friend easily surpasses ours. And I am not even factoring in the off the books cash he makes working side jobs. I recall a couple years ago he was refinancing his mortgage and getting cash back in order to pay off $17k in credit card debt.

[rennigade]

Thats why its so important to track your expenses. If someone asks me where does all my money go...I can pull up quicken and show every expense for the month/year/years. Its very simple yet very few actually do it.

I dont know how anyone can think about every retiring if they dont know what their expenses are. How could you possibly know if you have enough money if you have no idea how much you spend?

[Jluke]

I dont know how anyone can think about every retiring if they dont know what their expenses are. How could you possibly know if you have enough money if you have no idea how much you spend?

I think people usually pay and ask a financial advisor if they can retire...

kind of like how people rely on the bank/mortgage lender to tell them how much house they can afford.

It takes effort and math skills to track your income, savings, and spending - some people just can't be bothered with that. "It's my money and I can spend it how I want to"

[disneysteve]

But I've sat there and wondered what the hell are these people spending money on?

I think electronics can take up a lot of apaycheck. The devices themselves and then connections, cool aps, games, ebooks, etc. That includes televisions and viewing packages. Clothes and personal care can run a up a lot if people let it. $100 haircuts and $300 coloring per month? $200 sunglasses, $600 prescription lenses? Even food can run into a huge chunk per month.

I think Joan nailed it. A lot of things people blow money on aren't really visible. A $15 haircut looks exactly like a $50 haircut. A $5 bottle of shampoo cleans your hair as well as a $25 bottle of salon shampoo. A $99 pair of glasses correct your vision as well as a $500 pair of designer frames. $5/pound organic veggies taste the same as $2/pound conventional veggies. Most people can't tell a $5 bottle of wine from a $50 bottle of wine.

It's very easy to overspend in almost every area without having anything at all to show for it.

[HundredK]

As a high-earning, recovering "I don't know where my money" goes type of person, I can say that you get in the habit of not realizing how much the stuff you buy costs. I think it's all the little things that add up that you spend more money on that you don't even give much thought to. Electronics, groceries, eating out (especially that in our case), travel, really all of it. Also, keep in mind that income taxes probably account for a higher percentage than a lower gross income would (they certainly do in my case). And of course payments on debt don't help. And you sort of just get in a groove, and life goes by, and you are perpetually in that situation.

It might sound crazy to people who are practiced at being budget-conscious, and I get that, but it's really easy to get in a situation where the dollars disappear without any real understanding of exactly where it has all gone.

I think when people are sick of their current situation, or I suppose have no other choice, they'll make the conscious decision to know where their money goes. Until then, I'm sure they're being honest and really don't have a clue where it all ends up.

[DaveInPgh]

I think Joan nailed it. A lot of things people blow money on aren't really visible. A $15 haircut looks exactly like a $50 haircut. A $5 bottle of shampoo cleans your hair as well as a $25 bottle of salon shampoo. A $99 pair of glasses correct your vision as well as a $500 pair of designer frames. $5/pound organic veggies taste the same as $2/pound conventional veggies. Most people can't tell a $5 bottle of wine from a $50 bottle of wine.

It's very easy to overspend in almost every area without having anything at all to show for it.

Am I the only one paying $1 for a bottle of shampoo?

[disneysteve]

Am I the only one paying $1 for a bottle of shampoo?

I'm sure you're not, especially around here. But that's exactly my point. I'm sure nobody looking at you can tell that you are using $1 shampoo while they're buying $25 shampoo from their fancy salon.

I cut my hair at home with a $25 clipper I bought years ago while other guys are going to a high profile place and spending that much each time they go. Can you tell the difference by looking at us? Of course not.

So when you look at someone and try to figure out where they are spending all of their money, a lot of it may be on invisible things. They don't have to be in fancy house driving a luxury car and wearing designer clothing.