4 ms·

Loan payments, most likely. Too much money in car loans, credit cards, and the like are traps that too many people fall into. I personally cannot fathom why a

by amalcon 17y ago

Loan payments, most likely. Too much money in car loans, credit cards, and the like are traps that too many people fall into. I personally cannot fathom why anyone would willingly take out a loan to buy a car that was not their first (used cars are not that expensive if you're willing to save for a few years), or why anyone would use a credit card without knowing they have the money to pay it immediately, but I do know that people do this. They also had two kids. Kids are expensive; they genuinely require new clothing every year, lots of doctor visits, etc. Of course, if you're not too proud for it, you can get a lot of this stuff from friends and family with older children, but it's still expensive.

Periodic 17y ago
He said what she refused to cut back on, food, clothes, kids. My reaction when I had some financial trouble recently was to quickly to cut back on food purchases and evaluate moving to a smaller house. However, fortunately I still have a positive cash flow. I was surprised when he mentioned paying over $100 for cable/internet with all these money problems. If it were me, that would be the first thing to go and I'd move back to $5/mo dial-up. Sounds to me like they were able to avoid any big costs (like house repairs), but their brains couldn't really understand the cost of recurring payments on so many small things.
- randallsquared 17y ago
  If you're in the hole a thousand a month anyway, what's another hundred more or less? It won't solve your actual problem to get rid of it (unless you can get rid of enough of them to actually solve the problem), but getting rid of it may well affect your life enough to depress you such that you find it that much more difficult to think of solutions, etc. I've been in that situation many times over the past twenty years (though never nearly to that degree!), and I don't regret spending $x when I was going to be short $(x*10) or more.
  - Chocobean 17y ago
    ... you have to think of the 10% cut as a 10% discount on your debt PLUS recurring interests. Heck even 1% matters when it comes to paying down mortgages and debt.
  - HSO 17y ago
    That's really fatal thinking. Actually, it's a well-documented psychological bias. To many people, a dollar earned != a dollar saved (or a dollar less in loss), although they are all conceptually the same.
    - nostrademons 17y ago
      A dollar earned is actually more like $0.60-0.70 saved after taxes.</pedantic> Anyway, I know a bunch of people that think the same way. I knew one girl who basically couldn't afford to eat - she'd go hungry for several days at the end of each pay period because there was no money to buy food. (Not too surprisingly, she ended up with an eating disorder.) But she had more "stuff" - big screen TV, DVD-player, IPod, home entertainment system - than I've ever had. Her logic was that a few hundred bucks might by food for a couple weeks, then she'd just be hungry again. Or it could buy a big-screen TV, and she'd be hungry longer, but at least she'd be entertained in the meantime. When she put it like that, it almost seemed rational. Being able to save and invest for the future is a luxury I have because I've never really had to want for the basic necessities.
      - kaens 17y ago
        I've never fully understood the way that some people go about entertaining themselves. I mean, I can't remember the last time I was bored. I'd almost go as far as to say that if you're ever bored, you're doing life wrong. I can analytically get my head around why people end up in a mental state where they think that buying a television for entertainment is a higher priority than buying food - it has a lot to do with (IMO) the way the brain develops, and how that relates to culture. In other words, pattern recognition in the mind doing what it does best, over the course of someone's entire life. The problem is that everything around you is fascinating. I guess it's not to most people, and I should just consider myself lucky that I never feel the need to buy a bunch of entertainment luxuries to keep myself entertained. When she put it like that, it almost seemed rational. Yeah, it does seem almost rational. Really, I guess it is rational, assuming one puts a really high value on being entertained constantly via external media. Ahh, people's mindsets get me in a bad mood sometimes.
lief79 17y ago
As for the car loan: low interest rate, upcoming wedding, upcoming house purchase. If the money isn't needed, we can always pay off the loan. More accurately, I wasn't going to argue with my fiancee over it, and she didn't want me to pay for it before we were married. She was worried about the reliability of her current car (I'd guess mostly needlessly), but since she is a social worker occasionally moving kids around and visiting rough areas, I don't blame her for that part. I paid cash for a 1 year old vehicle 6 years ago.

by amalcon 17y ago

Periodic 17y ago

He said what she refused to cut back on, food, clothes, kids. My reaction when I had some financial trouble recently was to quickly to cut back on food purchases and evaluate moving to a smaller house. However, fortunately I still have a positive cash flow. I was surprised when he mentioned paying over $100 for cable/internet with all these money problems. If it were me, that would be the first thing to go and I'd move back to $5/mo dial-up. Sounds to me like they were able to avoid any big costs (like house repairs), but their brains couldn't really understand the cost of recurring payments on so many small things.

randallsquared 17y ago
If you're in the hole a thousand a month anyway, what's another hundred more or less? It won't solve your actual problem to get rid of it (unless you can get rid of enough of them to actually solve the problem), but getting rid of it may well affect your life enough to depress you such that you find it that much more difficult to think of solutions, etc. I've been in that situation many times over the past twenty years (though never nearly to that degree!), and I don't regret spending $x when I was going to be short $(x*10) or more.
- Chocobean 17y ago
  ... you have to think of the 10% cut as a 10% discount on your debt PLUS recurring interests. Heck even 1% matters when it comes to paying down mortgages and debt.
- HSO 17y ago
  That's really fatal thinking. Actually, it's a well-documented psychological bias. To many people, a dollar earned != a dollar saved (or a dollar less in loss), although they are all conceptually the same.
  - nostrademons 17y ago
    A dollar earned is actually more like $0.60-0.70 saved after taxes.</pedantic> Anyway, I know a bunch of people that think the same way. I knew one girl who basically couldn't afford to eat - she'd go hungry for several days at the end of each pay period because there was no money to buy food. (Not too surprisingly, she ended up with an eating disorder.) But she had more "stuff" - big screen TV, DVD-player, IPod, home entertainment system - than I've ever had. Her logic was that a few hundred bucks might by food for a couple weeks, then she'd just be hungry again. Or it could buy a big-screen TV, and she'd be hungry longer, but at least she'd be entertained in the meantime. When she put it like that, it almost seemed rational. Being able to save and invest for the future is a luxury I have because I've never really had to want for the basic necessities.
    - kaens 17y ago
      I've never fully understood the way that some people go about entertaining themselves. I mean, I can't remember the last time I was bored. I'd almost go as far as to say that if you're ever bored, you're doing life wrong. I can analytically get my head around why people end up in a mental state where they think that buying a television for entertainment is a higher priority than buying food - it has a lot to do with (IMO) the way the brain develops, and how that relates to culture. In other words, pattern recognition in the mind doing what it does best, over the course of someone's entire life. The problem is that everything around you is fascinating. I guess it's not to most people, and I should just consider myself lucky that I never feel the need to buy a bunch of entertainment luxuries to keep myself entertained. When she put it like that, it almost seemed rational. Yeah, it does seem almost rational. Really, I guess it is rational, assuming one puts a really high value on being entertained constantly via external media. Ahh, people's mindsets get me in a bad mood sometimes.

lief79 17y ago

As for the car loan: low interest rate, upcoming wedding, upcoming house purchase. If the money isn't needed, we can always pay off the loan. More accurately, I wasn't going to argue with my fiancee over it, and she didn't want me to pay for it before we were married. She was worried about the reliability of her current car (I'd guess mostly needlessly), but since she is a social worker occasionally moving kids around and visiting rough areas, I don't blame her for that part. I paid cash for a 1 year old vehicle 6 years ago.