Post # 1
I don’t understand it! We have quite a few friends who just entered the professional world in the past year. None of them seem to be thinking of saving money yet but two of them just keep going further into debt. They have good paying jobs for a fresh college grad ($65k/yr) so I understand splurging a little but I don’t understand their purchases.
One had $30k of student debt. Okay, fair enough, I have student loans as well (as do most people my age that I know). He had a decent car that got him to and from work and did not have a ton of mileage. Dropped that car and purchased a $35k car (took out a loan for almost all of it).
Another friend who makes the same amount has less than $5 in his account right before his pay check (absolutely no savings). He also has almost $30k in student loans and also just purchased a $30k car (with a loan). He told us his goal is to pay his $5k in credit card debt and then purchase a new motorcycle (with a loan).
I just don’t understand. I know I shouldn’t be judging people and they’re actually helping the economy but seriously… where did this mind set come from? I don’t understand taking out loans unless you absolutely need to. We plan on taking one out for a house. That’s it. DH just keeps saying it’s the “American Mindset” and everyone “needs to keep up with the Jones” (or however that goes) but before last year I thought this was just on TV shows. Now I’m realizing that tons of our friends ARE these people!
Now, I understand that not everyone is as lucky as we are financially but these friends that I have definitely ARE financially well off in terms of their salary. I’m not trying to judge, I’m trying to understand and I hope I don’t get flamed for this. Is it like this in other countries? Is this really the majority of Americans? I would rather spend wisely now and retire early. Not to say that we don’t ocassionally splurge or treat ourselves but we don’t go into debt doing so. I’ve also never understood the mentality of needing to have the best of everything.
Post # 3
“I know I shouldn’t be judging people and they’re actually helping the economy but seriously” … “I understand that not everyone is as lucky as we are financially” … “I’m not trying to judge, I’m trying to understand and I hope I don’t get flamed for this.”
– For “not trying to judge” and “knowiing that [you] shouldn’t be judging people” it seems to be all that you’re doing. I’m not sure what observations you’re trying to make, but can’t go along with anyone who for any reason adopts a holier than thou attitude, everyone’s circumstances are different and no matter how well we know our friends we are alway observers on the outside looking in, never privy to the exact details.
Post # 4
@MrsBeck: I don’t understand what business it is of yours if your “friends” take out loans or live pay check to pay check? If they were asking to borrow money from you, I could understand your concern however they aren’t so I don’t see the issue.
Post # 5
@renwoman: I’m curious if this happens in other countries as well. It seems as though people say that this is the American mind set so I’m curious if it truly is only happening in America or if it happens in other countries as well. I admitted to judging them and also acknowledged that I shouldn’t be doing it. I’m not adopting a “holier than thou” attitude and I’m sorry it came off that way. I’m trying to understand why people do it. Do they not learn about saving? Is it truly just a mind set where they want the “coolest” or “best” of everything.
Post # 6
@dannielle89: I’m not saying it’s my business. I’m asking others if this is the norm.
ETA: I don’t understand why you put “friends” in quotations.
Post # 7
@MrsBeck: It’s hard to reasonably spend when you get your first “real world” income!
My DH bought a PS3, and Xbox360, and a large flatscreen TV on the same day six months after starting his first “real” post-college job! (Back in ’07, long before me!)
Post # 8
@MrsBeck: I have a friend who is like this. His thoughts are that he can always make more money but he can’t make more time. So he’ll buy whatever he wants now and pay for it later. As a result, he has tons of student debt, car dept, and CC debt. It drives me nuts.
More often than not, I try not to judge people and their spending habits. Mostly because I have no idea of their financial position. But if you’re telling me all the details of your finances and your poor spending habits you better believe I’m judging you. And that’s only because that sort of fiscal irresponsibility can affect me in the long run.
I don’t think your first friend has necessarily done anything wrong. Student debt is considered good debt and not something I think you have to put all your extra money torwards or go without to pay it down. As long as you are making the minimum payments, that’s good enough. And if your friend wanted a new car and can afford the payments, I don’t see why he shouldn’t get it. Maybe he got some super awesome deal he couldn’t pass up?
Your other friend is a bit annoying because he has CC debt and no savings. Ok, you buy a pricey car because you need one anyway and you can comfortably afford the payments, but you should make sure you have a healthy savings before spending money on a motorcycle.
Also, don’t most people take out a loan for a new car? Or is your qualm more about how much the car was – thinking they should have gotten cheaper cars until teh student debt was paid off?
Post # 10
I would say this is really common for a lot of people.
Personally, I do not plan on getting another car until mine dies. If and when that happens, I will be buying a used car, that I’ll most likely being taking a loan out for because I don’t know that I’ll have $10k laying around that I’m not planning on using for a house or something. I have $75k in student loans and make a decent salary. I have also, however, never defaulted on a car or loan payment, missed rent, etc. I know my monthly limits, how much I should be saving each month, etc.
It’s about knowing your limits and working with your budget. For all you know, they could be doing just that. You just don’t know the intimate details.
Post # 11
@BrandNewBride: DH wanted to buy soooo many things once he got his bonus. Unfortunately for him we had to spend his bonus on a bed and a washer and dryer. I think that might be what is happening with our friends though. It did feel great to have an actual pay check once I had a “real” job!
@RunsWithBears: I guess I’m just a bit annoyed because they ALWAYS talk about money. They are constantly asking us why we don’t both buy new cars and why we don’t buy this or do that and basically just spend all of our money. So since they are putting their financials out in front of us I do know everything about their cash flow. I mean I know it shouldn’t drive me nuts or annoy me but it’s just so difficult because it seems so irrational!
I suppose I should try to see the best in both like you pointed out. Maybe the first one did get a good deal. I know next to nothing about cars so I really have no idea if he got a good price. The second one though is just annoying. He mooches off of us when we all go out and is constantly talking about how he has no money to do anything fun.
I’m not really sure why I brought up the cars. I guess most people do take out loans for that. It just annoys me when they complain about not having money. In the back of my mind I’m always asking myself why they didn’t purchase cheaper cars or keep their other cars for a bit.
Post # 13
@MrsBeck: Yeah, I can see how that’s annoying when they talk about it all the time or when they complain about not having money, but choose to buy an exensive car. That kind of talk annoys me too. Fiscal irresponsibility and entitlement drives me insane because it does have an overall affect on the economy and our society. It wouldn’t be a big deal if it only affected the person in question, but it doesn’t.
Post # 14
@MrsBeck: Have never been to Japan, but I believe most businesses there don’t accept credit cards. I recall watching a TV episode a couple years ago on some travel channel where they showed that even the Gucci store will only accept cash…
Seems like they are loathe to carrying debt (hey, me too!). Wondering if this is still true over there.
Post # 15
I can’t understand why anyone would get a loan on a car/motorbike – you are literally throwing money down the drain. A car loses 20% of it’s value the minute you drive it off the block! Why would you want to pay interest on an asset that loses it’s value as years go by?
I have friends in similar situations – they want to buy a house, but they can’t save their deposit. They’ve decided that getting the deposit together is ‘unattainable’ so they spend all their spare cash on dinners, presents, toys, and holidays. I am certain they will get to 30 and start complaining that they are still living with their parents. They also spend a lot of time telling me that I should be going on more holidays because you’re only young once. My parents are in their 50s and have done Europe twice and America/Hawaii twice in the last 10 years – Europe and Hawaii are not going anywhere!
It wears on my patience. If they had saved all the money from their numerous o/s trips, they’d have double a deposit by now.
Post # 16
Happens here in Australia too.
We choose to live very frugally despite making a good income, and all we owe in the world is under $70,000- and that is for a house and two cars (all other debt is paid). We repay our homeloan weekly and triple the minimum amount of repayment.
For me, that is infinitely more satisfying than living with debt stress. Others are more comfortable with debt and that is ok. I just feel that you never know in life what will happen (ie redundancy, death of a spouse, serious illness) and would prefer to know we can live comfortably even in the worst scenario.