What terrible financial decisions have you witnessed your family, friends, or coworkers make?

[dclpluto]

Most of the people I know don’t put a lot into their 401k. Big big mistake

 

[dreamer17555]

Honestly I don't get this thread. Most of us do not have 100% complete pictures of others finances and sharing what we perceive from the outside as "mistakes" leaves a bit of a sour taste in my mouth. If this question was asked on a different forum they could easily answer how so and so spends so much money at Disney.

I have enough of my own financial mistakes. I don't need to share what faults others might have.

 

[ronandannette]

The biggest mistake I have seen? Lend money to family members. And, of course, it never gets paid back.

I just would never lend a dime. Can't pay your mortgage? Rent a room. Can't make your car payment? Drive a junker. Can't pay your basic bills? Get another job. Get three jobs. Eat rice and beans. Ditch your iphone and get a track phone. I'm not giving you money. Family or not.

My one co-worker just lent $5k to his son and daughter-in-law. They were behind on "a lot of stuff". Oh. They also just got back from Las Vegas. He was so mad they took a trip when they owe him money. This is how family fights occur.

I totally agree, but with a slightly different slant. Give, not loan, whatever you are willing to part with, or decline outright but the idea of a "loan" to family is almost always the road to heartache.

 

[RamblingMad]

Most of the people I know don’t put a lot into their 401k. Big big mistake

The more you make the more sense it makes to add to it. I can defer enough income to drop a bracket. But if you’re stretched income wise, I can see people only putting in enough to get the match.

 

[DLgal]

The more you make the more sense it makes to add to it. I can defer enough income to drop a bracket. But if you’re stretched income wise, I can see people only putting in enough to get the match.

The problem with 401k contrbutions is that while you get the tax benefit now, you might need it more later. We will likely be in a higher tax bracket later on in life than we are now. So, for us, 401k isn't the best investment option. Roth is better for us now, as we have an artifically low income (since a full third of our income is tax free allowances) so we can still make Roth contributions. We do have a 401k type plan that we contribute to, but we only put 7% of our income into that every month. The rest goes into the Roths.

 

[design_mom]

I have a couple of family members who are always trying to come up with a good "side hustle" and are convinced that it's going to be the gateway to wealth. The problem is that they spend a bunch of money to get themselves set up (the "starter kit" for the latest MLM company, the inventory and equipment for their new crafting business, etc -- and they "invest" in the best of everything.)

Then the venture turns out to be more work/less enjoyable/less profitable than they thought, so they abandon that idea and move on to the next thing. They sell off the stuff they accrued for the failed plan, but at a major loss. Then start buying stuff for the next idea.

Spend money, lose money, Spend money, lose money. Their money-making plans create expenses instead of profits. They don't see the cycle though.

 

[china mom]

The problem with 401k contrbutions is that while you get the tax benefit now, you might need it more later. We will likely be in a higher tax bracket later on in life than we are now. So, for us, 401k isn't the best investment option. Roth is better for us now, as we have an artifically low income (since a full third of our income is tax free allowances) so we can still make Roth contributions. We do have a 401k type plan that we contribute to, but we only put 7% of our income into that every month. The rest goes into the Roths.

That's what happened to me and DH. When we retire again, we will still be in a much higher tax bracket than we were when we first invested in our 401 and 457 so we really lost out on that tax situation.

 

[DLgal]

That's what happened to me and DH. When we retire again, we will still be in a much higher tax bracket than we were when we first invested in our 401 and 457 so we really lost out on that tax situation.

It's a trap a lot of people fall into.

 

[china mom]

When DH and his ex split up, the housing market had taken a big dive. The realtor told them that they would have to take $10K to the table to unload the house. So, she stayed in the house and DH paid $900/mo toward their mortgage.

Then I came into the picture and a few years in, I pointed out to him that he had paid $900 x 12 months x 4 years .....$43,000 just so they wouldn't lose $10K. We had her sign a quit claim deed to us and we took $6K to the table and dumped the house.

Yep, that one was hard to watch.

 

[kdonnel]

I really can't fathom seeking the professional opinion of a contractor only to ignore it entirely.

People don't ask for advice to hear they are wrong, they ask to get confirmation they are right!

 

[RamblingMad]

The problem with 401k contrbutions is that while you get the tax benefit now, you might need it more later. We will likely be in a higher tax bracket later on in life than we are now. So, for us, 401k isn't the best investment option. Roth is better for us now, as we have an artifically low income (since a full third of our income is tax free allowances) so we can still make Roth contributions. We do have a 401k type plan that we contribute to, but we only put 7% of our income into that every month. The rest goes into the Roths.

These plans really help out high income investors that can’t invest in Roth IRAs. I’m now deferring enough to move from a 32% bracket to a 24% bracket. And I will most likely withdraw at a 12% bracket. It makes sense. If you don’t see the benefit, then a Roth makes sense and only add to capture the match. Taxable also makes sense to if you plan to retire early.

 

[DLgal]

These plans really help out high income investors that can’t invest in Roth IRAs. I’m now deferring enough to move from a 32% bracket to a 24% bracket. And I will most likely withdraw at a 12% bracket. It makes sense. If you don’t see the benefit, then a Roth makes sense and only add to capture the match. Taxable also makes sense to if you plan to retire early.

We don't even get a match, so that's not even part of the calculation. It's a military TSP and the Marine Corps doesn't match on people who have the old 20yr retirement pension plan.

 

[dez1978]

2) About 20 years ago a co-worker opened a coffee shop with his wife. This was before Starbucks was in the area. They butted heads with the building department over things they didn't want to do, permits etc, so their opening costs were way over budget. They were determined to pay a living wage, offer health insurance, vacation and sick time to employees. They did a brisk business, but they couldn't cover their fixed costs because customers wouldn't pay the prices he would have needed to charge to cover costs.

Lol, I think this may be one time we actually agree on something! This is an issue for lots of small businesses and franchised places. Being able to give all of your employees those things is something I think most small business owners wish they could do, but can't afford. And I think a lot of new business owners waaay underestimate the true costs of opening a business then try to cut costs, like permits or think they can slide something past the inspectors then end up spending more than they would have to do it right to begin with.

The biggest mistake Ive seen is getting sucked into those title/payday loan places that you can never pay off at 200% interest.

 

[Colleen27]

People don't ask for advice to hear they are wrong, they ask to get confirmation they are right!

I've been really proud of DS in his house hunting. He's asked both his dads (DH & my ex) to be part of the process, since DH is a now-former residential contractor and ex has done foundation repair and basement waterproofing for decades, and he's actually listening to their advice rather than falling in love with a house and going full-speed ahead. Maybe he learned from his uncle's mistakes!

 

[disykat]

Again, a bad financial decision for her perhaps but ethically, a very decent thing to do.

I disagree. I agree she had good intentions, but I don't think screwing herself over is "ethical."

 

[nicolita3]

I disagree. I agree she had good intentions, but I don't think screwing herself over is "ethical."

Yeah when her ex husband died none of his "kids" stepped up to pay for his cremation. His kids were all in their 30s. She felt bad and paid for it out of pocket. So she was out a lot of money. I think she should have paid the expenses that were brought on by him and then given them whatever was left over. It's sad cause now she has cancer and no one is stepping up in her family to help and she has to continue working while in treatment.

 

[b2k1121]

Honestly I don't get this thread. Most of us do not have 100% complete pictures of others finances and sharing what we perceive from the outside as "mistakes" leaves a bit of a sour taste in my mouth. If this question was asked on a different forum they could easily answer how so and so spends so much money at Disney.

I have enough of my own financial mistakes. I don't need to share what faults others might have.

Exactly, most people don't share info on their finances with others, even in their own family. So most of this is probably guessing and a chance to feel smarter than others that you perceive to be making poor financial decisions.

 

[disykat]

Yeah when her ex husband died none of his "kids" stepped up to pay for his cremation. His kids were all in their 30s. She felt bad and paid for it out of pocket. So she was out a lot of money. I think she should have paid the expenses that were brought on by him and then given them whatever was left over. It's sad cause now she has cancer and no one is stepping up in her family to help and she has to continue working while in treatment.

I couldn't "like" your post without feeling like I was liking how they are treating her. Paying for the expenses and giving them what is left would have been absolutely the fair/ethical/right thing to do. So sad that she tried to do what was right and is paying the price.

 

[disykat]

Exactly, most people don't share info on their finances with others, even in their own family. So most of this is probably guessing and a chance to feel smarter than others that you perceive to be making poor financial decisions.

I don't really see anything wrong with that. We're on a forum where we like to brag about our vacations and any number of other things that we don't always get to talk about much in real life for fear of offending people. Here, we get to give our opinions about what we think is best. We do a lot of judging on almost any topic! IMO there is nothing wrong with talking about finances and how you think your way is best on an anonymous forum. It's the perfect place to do it.

 

[ronandannette]

I disagree. I agree she had good intentions, but I don't think screwing herself over is "ethical."

Start a hypothetical "My Ex-Step Mother Stole My Inheritance" thread and let's see what the wisdom of the crowd says. IRL though, what does your friend say about her own situation? Is she mad at herself for her decisions?
ETA: I just realized you weren't the PP who brought this example into the thread.