The value of LBYM

[Souschef]

I know I have posted this before, but it bears repeating. There are going to be people who are a train wreck because of poor financial decisions.
My cousin blew through a $1M inheritance and is in deep yogurt now. I do rot rejoice at her plight, nor do I feel pity for her.

 

[iloveyoga]

Loosing my job shortly after buying my first house was an eye opener. Taught me to not buy too much house.

I remember many years ago the realtor and lender showing us how much how we could afford and it was way too much!! I did not understand all the pieces at the time, but I knew how much we could spend each month. We bought a house for about half of what they suggested.

 

[joeea]

Does the term Schadentreude mean anything to you ?

I'm guessing you meant to write Schadenfreude.
And I'm sad that you would find pleasure in their misfortune.

 

[joeea]

From the viewpoint of the employee they were being asked to take a 6% pay cut. The concept of delayed gratification was so incomprehensible it completely masked the value of added compensation.

Delayed gratification is a powerful concept that is rejected by many.

- We all know people who treat their tax refunds as found money rather than money to be saved.
- We all know people who decide to start their social security benefits the day it becomes available at 62.
- We all know people who buy far more house than they need.
- We all know people who expand their lifestyle each and every raise

Etc, etc.

Should we ridicule such people? Or feel bad for them?

 

[EarlyBirdly]

The real problem is that these type of people are allowed to breed indiscriminately.

 

[joeea]

The real problem is that these people are allowed to breed indiscriminately.

Ugh.

Ar you suggesting new laws requiring a financial knowledge test before being allowed to procreate? Or forced sterilization?

 

[Amethyst]

Oh dear; you make it sound like they aren't really people. One of them could have saved your life in the ER for all you know.

I prefer to blame an education system that doesn't teach life skills, but that is just me.

The real problem is that these people are allowed to breed indiscriminately.

 

[EarlyBirdly]

Delayed gratification is a powerful concept that is rejected by many.

- We all know people who treat their tax refunds as found money rather than money to be saved.
- We all know people who decide to start their social security benefits the day it becomes available at 62.
- We all know people who buy far more house than they need.
- We all know people who expand their lifestyle each and every raise?

S.S. timing is not always a black and white decision with no shades of gray. The other three certainly are...

 

[EarlyBirdly]

Ugh.

Ar you suggesting new laws requiring a financial knowledge test before being allowed to procreate? Or forced sterilization?

No. Just an applied knowledge test as determined by individual financial review.

Administered by stern looking Men. In Military attire. Wearing Really Big Hats.

Like the Russians...

 

[aja8888]

I prefer to blame an education system that doesn't teach life skills, but that is just me.

Isn't that what your parents are supposed to do (at least from their perspective)?

 

[joeea]

S.S. timing is not always a black and white decision with no shades of gray. The other three certainly are...

Everyone who is motivated can squint really hard to see gray.

 

[EarlyBirdly]

Oh dear; you make it sound like they aren't really people. One of them could have saved your life in the ER for all you know.

I prefer to blame an education system that doesn't teach life skills, but that is just me.

I generally use gross exaggeration and dark humor to drive home a point, which is generally misinterpreted.

And, I totally agree that education is important however, as expressed anecdotally here many times, people still insist on doing dumb things like not taking the company match (free money) by participating in their 401k.

And, I actually know well compensated medical professionals who have gone bankrupt for no good reason. They ARE good people and have been friends of mine for decades.

And, I know that one should not begin sentences with "and", but I do it anyway because ...Well, because I am a Renegade. That and 9 cups of coffee riles me up pretty good.

 

[finnski1]

We were offered 0% financing two years ago by Subaru, which was really surprising because it's such a popular brand! When I think of 0% financing and cash back, I think of brands that get their market share based on loyalty or low price. We actually had the cash saved up anyway, and I was thinking about CD rates and such when I realized that that amount was just about what we had left on our mortgage! So out of our former monthly mortgage payment, about 1/3 of that goes towards the car loan, 1/3 towards saving to replace the older car, and the rest...well, it was a little breathing room in our budget, but now it is going towards stable fees!

We just bought a new outback 2 day ago. They still have 0% financing for three years but it was in lieu of a $1500 rebate.
Regardless it has become very tough for us to part with accumulated savings but the existing outback was 14 years old and though that's not necessarily a problem, it needed $1800 in repairs (catalytic converters) to pass inspection.


I couldn't justify spending the $1800 on a car that was only worth at best $12-1500 and could easily have other issues immediately following that fix. We decided to buy a new Outback. They are discounting these heavily right now even though they are very popular here in NH. I think this has a lot to do with the fact that a new redesigned Outback is due out in a few months.


Also the car we bought has fantastic safety features over our old one.
Hopefully will have this one for 14 years as well.

 

[Amethyst]

"Your parents didn't teach you enough about handling money, and the school system certainly can't be expected to, so...your vasectomy is scheduled for Monday at 11 a.m.!" Lol

Isn't that what your parents are supposed to do (at least from their perspective)?

 

[Moemg]

I'm guessing you meant to write Schadenfreude.
And I'm sad that you would find pleasure in their misfortune.

I find no pleasure in anyone's misfortune but a lot of people do .I'm sorry you misunderstood my post .I should not have posted that . I discovered LBYM's at 30 after becoming a single Mom so I made a lot of mistakes before then so I can see how a young couple could screw up .

 

[ivinsfan]

"Your parents didn't teach you enough about handling money, and the school system certainly can't be expected to, so...your vasectomy is scheduled for Monday at 11 a.m.!" Lol

LOL, but on a serious note I've seen posters who grew up in a seriously dysfunctional financial family and said that's won't be me did a complete 180.. But from what I've seen in real life probably 90% plus grow up copying their parents money skills or lack of. Generally they probably model 90% of everything they saw at home.

 

[karen1972]

And, I totally agree that education is important however, as expressed anecdotally here many times, people still insist on doing dumb things like not taking the company match (free money) by participating in their 401k.

This comment just reminded me a friend recommended a group page which I figured out was a Dave Ramsey follower page and they were posting how you can't put ANY money in your 401k because you are only on baby step #2 and Saving for retirement is Baby step #4... ie you can't save any money in retirement until you are 100% debt free and a 6 month Emergency fund.

Needless to say I got kicked out of the group within an hour for posting advise that was contrary to Daves teachings. I don't listen to him, I didn't know what the baby steps were but I just couldn't believe anyone would be telling people to not save at least the company match to get out of debt that could take a decade and whos interest may or may not be high.. a decade of lost compounding interest and free money.. much less saving for a home which in many cases could be way more cost effective than renting, etc.

My point being is there are lots of financial advise out there and I personally don't agree with 99% of it so how can we expect anyone to make good choices where there is so much noise and bad advise out there. One size never fits every situation so the only way to get the best advise is for them to know your entire picture.. ie like places like here where people give their information and then lots of people still ask detailed questions to make sure nothing is missed or overlooked before advise is given.

 

[The Cosmic Avenger]

I'm guessing you meant to write Schadenfreude.
And I'm sad that you would find pleasure in their misfortune.

It's not a good habit to be in, but occasionally it is warranted. For example, our next door neighbor was dealing drugs, kept unsocialized dogs that escaped from their yard a few times, and had a drunken party for their mostly underage friends that devolved into a brawl and literal pissing contest at 2:30am on our quiet suburban street.



So when the bank foreclosed on their house, no one was in the least bit sad for them.

 

[Amethyst]

I used to, in my teens and 20s, but it never went over well so I pretty much quit. The temptation remains

I generally use gross exaggeration and dark humor to drive home a point, which is generally misinterpreted.

 

[Amethyst]

Oh, that sounds familiar from my days as a supervisor. Some people are so literal about taking instruction. They cannot envision adapting an authority figure's advice and instructions to the situation. Literal people need to be told exactly.what.to.do. or they become lost and resentful.

This comment just reminded me a friend recommended a group page which I figured out was a Dave Ramsey follower page and they were posting how you can't put ANY money in your 401k because you are only on baby step #2 and Saving for retirement is Baby step #4... ie you can't save any money in retirement until you are 100% debt free and a 6 month Emergency fund.

Needless to say I got kicked out of the group within an hour for posting advise that was contrary to Daves teachings. .

 

[Sunset]

Value of LBYM to me was during the housing crisis. I never once worried about losing my house or being underwater. There were times when DW and I were a bit envious of some of the houses we’d seen. Frankly, I’m sure we could have afforded them, but it would have been tighter and I now realize that the stress of ownership coupled with the likelihood that I would have had to work longer makes it all worth it that we stuck with our smaller, simpler house.

....

+1
When DW and I were buying a house, the bank offered to loan us $1M.

We refused and said if we couldn't find a house for $250K or less, we weren't buying.
That way, even if one of us lost a job, we could still carry the house, but that would not work with a $1M house.

 

[brucethebroker]

You're not the first person who has described this phenomenon, as have others on this thread, but it is really hard to wrap my head around that mindset.

Retirement savings not the only head scratcher...
Worked 2 years in the "home office" of a megacorp. in the early 80's. Many secretaries/receptionists hired right out of high school. They would sit around and complain about low pay scales. We (middle mgrs.) would suggest taking classes at local Jr. College (2 miles away), university (10 miles away-ANY business related courses) or certification classes (free in our building DURING work hours (paid time off). All were reimbursed by the company. All were "guaranteed" pay raises once certification/degree was accomplished.

Nope. Too much work. Yes, some did take the courses (15%, maybe?). But most of the youngsters did not. Guess you can't give away free degrees, either.

 

[DrRoy]

In 1993 we were told by my Megacorp that I was on 90 days notice to find another position or be terminated. We had long been LBYM and had money that we could have lived on for quite a while, but still at the expense of our RE. I was fortunate to find a position within the co. so as to retain my benefits and pay, but we had to move and I went to a shift work type of schedule. It was an extremely anxious experience, but 5 years later it led to another position that I than held for 20 more years with a lot of self management authority.

 

[WestUniversity]

Conspicuous consumption? It is really important to some people that others think they are doing well no matter what the real story is at home.

Sounds like it’s simply denial. The truth is perhaps too hard to handle right now...

 

[Amethyst]

When I was 31, I worked with a man 10 years older who was very jealous of younger people (especially women) who were getting promoted, while his career stagnated. Truthfully, he was mediocre and acted like he was 75, not 41. But he also refused to get a college degree, even though he'd been told it would make the difference for promotion, and even with employer sponsorship. He "felt it shouldn't be necessary." Nothing to be done about that attitude.

Many secretaries/receptionists hired right out of high school. They would sit around and complain about low pay scales. We (middle mgrs.) would suggest taking classes at local Jr. College (2 miles away), university (10 miles away-ANY business related courses) or certification classes (free in our building DURING work hours (paid time off). All were reimbursed by the company. All were "guaranteed" pay raises once certification/degree was accomplished.

Nope. Too much work. Yes, some did take the courses (15%, maybe?). But most of the youngsters did not. Guess you can't give away free degrees, either.