How **NOT** to FIRE

[The Cosmic Avenger]

This couple is pretty much the opposite of financially independent, living way above their means, and will probably never be able to retire until they collect SS (and even then, probably won't be able to survive on it): https://www.wealthsimple.com/en-us/magazine/money-diary-couple-debt-us

It was hard being sympathetic, but I practically yelled at my monitor when I got to this part:

Kate: Like, when my son went to prom, we didn’t rent a tux because we didn’t have the cash, but we bought a suit because we have a Nordstrom card.

 

[aja8888]

This couple is pretty much the opposite of financially independent, living way above their means, and will probably never be able to retire until they collect SS (and even then, probably won't be able to survive on it): https://www.wealthsimple.com/en-us/magazine/money-diary-couple-debt-us

It was hard being sympathetic, but I practically yelled at my monitor when I got to this part:

In the 1980's, a few of my neighbors in Southern California were living like this.

 

[MarieIG]

Well, I was sympathetic but:

a) Get a handle on the debt;

b) Sell the house, move into a residence with a lower monthly overhead, and decent public schools;

c) Stop the expensive eating out;

d) One car and public transportation;

e) Wifey - look for a higher paying job (or government job that offers loan forgiveness after a number of years) and put increase into paying off student debt;

f) Figure out plan for student loan debt ASAP;

g) Look for a non-profit debt consolidation service with good ratings/ reviews;

h) Be upfront with the kids, they don't need every detail, but Mom and Dad have some loans that have to be addressed, so we are going to have to budget carefully for a few years.

 

[USGrant1962]

The numbers don't really add up, they are glossing over a LOT of spending in that article. They are grossing ~$180K. A $360K house, $405/mo car payment (say $800 for two cars), and $15K for private school are quite reasonable at that income level.

 

[daylatedollarshort]

The numbers don't really add up, they are glossing over a LOT of spending in that article. They are grossing ~$180K. A $360K house, $405/mo car payment (say $800 for two cars), and $15K for private school are quite reasonable at that income level.

I agree. Without a complete list of expenses to review, the article doesn't make any sense to me. A $360K house, they aren't paying down the student loans, driving a Corolla, where is the income going?

 

[The Cosmic Avenger]

I agree. Without a complete list of expenses to review, the article doesn't make any sense to me. A $360K house, they aren't paying down the student loans, driving a Corolla, where is the income going?

From the sound of it, they don't know, that's the problem. They BOUGHT A SUIT for their son for prom because they didn't have the cash to rent a tux? They don't want to think about it, IMO.

 

[aja8888]

The numbers don't really add up, they are glossing over a LOT of spending in that article. They are grossing ~$180K. A $360K house, $405/mo car payment (say $800 for two cars), and $15K for private school are quite reasonable at that income level.

We don't have any of those types pf expenses and I can tell you that $70K annually is disappearing from around here.

 

[Milton]

It was hard being sympathetic

I find it impossible to sympathize. This is not a couple who did their best and were sideswiped by some contingency out of their control (job loss, medical crisis, etc.). Rather, they candidly acknowledge that they have deliberately made, and indeed continue to make, choices harmful to their financial wellbeing:

• incurring a huge debt for law school (with little or no intention of actually using that degree)
• making no effort to pay off student loans
• conceiving three children, and sending all three to private school
• accumulating pets (two rescue dogs)
• buying a large house that "we probably couldn't afford", even though "our first (smaller) house was perfectly fine"
• spending "insane amounts" on high-priced groceries
• negotiating a 50% discount on their credit card debt, paying it off using money begged from their aging parents, and then running CC right back up within a few years

I also don't feel sorry for "Tom" being forced to drive a 2012 Toyota Corolla (our car is a 2006 Corolla).

 

[audreyh1]

This couple is pretty much the opposite of financially independent, living way above their means, and will probably never be able to retire until they collect SS (and even then, probably won't be able to survive on it): https://www.wealthsimple.com/en-us/magazine/money-diary-couple-debt-us

It was hard being sympathetic, but I practically yelled at my monitor when I got to this part:

So you can’t rent a tux using a credit card? Please!

Maybe they planned to return the tux.

 

[CardsFan]

The numbers don't really add up, they are glossing over a LOT of spending in that article. They are grossing ~$180K. A $360K house, $405/mo car payment (say $800 for two cars), and $15K for private school are quite reasonable at that income level.

I agree, there seems to be lot missing. The expenses you cite are not out of line for that income. So just where is the money going?

 

[Sunset]

Sounds to me like these folks believe they found out a way to free-load though life:
Rack up the CC and then only have to pay off 1/2 of it. Do it again is their unspoken plan.
Declare bankrupty to wipe out debts, that seems to be the way the Wife is thinking.
They don't pay their student loans because, they are planning/hoping all will be in forgiven by gov't.
Borrow (gift) of money from parents.

These are the type of folks who will demand us "lucky" "rich" savers pay for their retirement..

 

[aja8888]

I agree, there seems to be lot missing. The expenses you cite are not out of line for that income. So just where is the money going?

Other bills, taxes, insurance, gasoline, utilities, etc.

 

[Milton]

Such 'money diaries' are pretty funny, though I suspect that the anonymous subjects are largely if not entirely fictionalized for dramatic impact. That might explain why the numbers don't seem to fully add up.

By way of contrast, here is a 'good' example of how to FIRE.

 

[Dtail]

Hey we used to spend quite a bit of our income, but still always saved and never went into debt besides a mortgage.
They made their bed......

 

[Major Tom]

They are as bad as each other, and this is part of the problem - they are enabling each other's behavior. The worst part of their whole tale, IMO, was taking money from their parents to pay off part of the debt, then running the debt up again.

They're aware of what they're doing, and yet they do it anyway. Completely bonkers. Why are we even talking about this?

Such 'money diaries' are pretty funny, though I suspect that the anonymous subjects are largely if not entirely fictionalized for dramatic impact. That might explain why the numbers don't seem to fully add up.

Yes, very possible, especially if you look at the products the site that the article appears on is selling. Perhaps our strings are being pulled on purpose!

 

[Milton]

They're aware of what they're doing, and yet they do it anyway. Completely bonkers.

^^^This^^^

Why are we even talking about this?

Because schadenfreude is fun!

 

[Major Tom]

^^^This^^^

Because schadenfreude is fun!

Heh! I know enough people in my real life who couldn't handle money well if their lives depended on it, without reading about these (fictionalized or otherwise) goobers!

 

[The Cosmic Avenger]

They are as bad as each other, and this is part of the problem - they are enabling each other's behavior. The worst part of their whole tale, IMO, was taking money from their parents to pay off part of the debt, then running the debt up again.

They're aware of what they're doing, and yet they do it anyway. Completely bonkers. Why are we even talking about this?

Because while most of us are very good at LBYM, we occasionally get new members who are asking how to get started, and some even feel like this couple....although probably not nearly as bad, since people who even think about retiring are taking the first step before planning, and the couple in the article seem congenitally incapable of planning!

tl;dr version: a cautionary example for our noobs.

 

[Milton]

Heh! I know enough people in my real life who couldn't handle money well if their lives depended on it, without reading about these (fictionalized or otherwise) goobers!

Sure; but when you actually know someone who is struggling, even though due to their own self-destructive behaviour, it's not very nice to enjoy their misery. Whereas with anonymous / fictionalized accounts, we are free to enjoy schadenfreude without guilt.

 

[Major Tom]

Good points and well taken, Cosmic and Milton.

 

[Katsmeow]

I can understand this couple. DH and I were this couple...but on steroids. We made more money than this couple actually. On the other hand, at one time, our credit card debt was more than twice theirs.

I wouldn't say I am sympathetic to them. I wasn't sympathetic to myself. I knew a lot of it was our bad choices. But, I can understand it. Yes, we lived above our means. And, we had great means (over $300k a year income toward the end). We did have 3 kids and our kids had a lot things that needed a lot of expense. One child had weekly therapy for years. Another child was in a very expensive therapeutic school and then private school for years (unusually, I was delighted when he got to college because our annual tuition costs went down). Some of these needs resulted in some ancillary costs that were very expensive but I could never square the circle to find a way out. Child related costs for these non-typical things were about $80k a year for about 6 years. This was over and above the "normal" child related costs.

I am not sorry about spending that money. That said -- we didn't adjust our other spending to better allow for it. We made enough money that we could have handled this much better had we adjusted all of our other spending. But, we didn't. We went on expensive vacations. We ate out a lot. We went shopping every weekend. We didn't really spend a lot of money for what I would consider ostentatious stuff. We spend way less for a house than our income would have qualified us for. We had nice cars but not insanely high priced and always kept them for a long time. It was more the little things that added up. We could have handled them fine if we didn't have those extra child related expenses. But we did have them and we didn't adjust everything else to compensate.


Could we have managed without getting into debt at all? I am not sure. There were a couple of years that due to child related stuff were really high in cost and earlier on (before our income was that high) maybe we would have gone in debt even without the discretionary spending. But, we certainly could have minimized the debt to a lot less than it was.

That was a long time ago now. We eventually got out of debt. We never missed a payment and had great credit. This was a time when it was easy to get 0% credit card interest by doing a no fee balance transfer. So I just switched the debt around a lot. I rationalized we would have the debt now but would be able to pay it back later.

But -- it got more difficult. Credit card companies started getting rid of the no fee 0% deals. We were starting to have to pay interest. The minimum payments were eating us alive. We had to put new spending on a credit card because our income was going to making minimum payments. At the time we had a house that had a fair amount of equity in it. I proposed to DH that we sell it and use some of the equity to pay off a good part of the debt. We did that, paying off about half the credit cards as I recall.

We lived in a rental for about 6 months then bought another house. With our monthly debt much smaller it was easier to pay off the debt. My rule was that any credit card usage in a month had to be paid off that month. By then our income was at the higher end so that helped a lot. We cut out a lot of the frivolous spending. We did continue with what we felt was the necessary child related spending. It took 2 or 3 years but we paid off all the debt.

Oh -- on the retirement front -- I wasn't too worried about that. DH had always contributed to his 401k for many years. Also he worked for a megacorp where he could either take a pension or lump sum. I hadn't had a 401k for a lot of my career but in recent years had had one so I also had retirement funds. All of that money was going to be available. Basically we did have savings, just all pre-tax.

It has been over 10 years since we paid off the debt. We have never had problems with credit cards since then. We pay them off monthly. One thing about the debt pay down though was that we got used to living on a lot less than the income we had then.

 

[Yarnstormer]

They need to address their impulse control which I bet impacts other areas of their life as well.

 

[MarieIG]

I find it impossible to sympathize. This is not a couple who did their best and were sideswiped by some contingency out of their control (job loss, medical crisis, etc.). Rather, they candidly acknowledge that they have deliberately made, and indeed continue to make, choices harmful to their financial wellbeing:

• incurring a huge debt for law school (with little or no intention of actually using that degree)
• making no effort to pay off student loans
• conceiving three children, and sending all three to private school
• accumulating pets (two rescue dogs)
• buying a large house that "we probably couldn't afford", even though "our first (smaller) house was perfectly fine"
• spending "insane amounts" on high-priced groceries
• negotiating a 50% discount on their credit card debt, paying it off using money begged from their aging parents, and then running CC right back up within a few years

I also don't feel sorry for "Tom" being forced to drive a 2012 Toyota Corolla (our car is a 2006 Corolla).

I'm a softie, but that doesn't mean I think they should continue on their current path.

P.S. I drive a 2006 Honda.

 

[clifp]

I couldn't even make through the entire article. A 160K puts them in the top 10-15% of household income in this country.

The good news, is I just spent several days staying with my friends, who I've always had issues with their spending. It wouldn't be so bad if he didn't always complain about how much debt they are in, always ask my advice on where to invest his money, and then always ignores it. Anyway, I feel much better about my friends having read 1/2 this article!

 

[Milton]

I'm a softie, but that doesn't mean I think they should continue on their current path.

I don't think so either; but there is nothing in the transcript that suggests that they will change. It's not like they are ignorant (and so capable of modifying their behaviour, following a little education); rather, they are apparently quite aware of what they are doing.

Good for you re your Honda. Modern foreign cars are well made and last a long time: neither "Tom" nor anyone else should consider themselves frugal on the basis that their car is (only) six years or seven old.