I'm feeling like I've made EVERY stupid financial mistake there is

iVillage Member
Registered: 07-24-2001
I'm feeling like I've made EVERY stupid financial mistake there is
18
Fri, 01-13-2012 - 4:32pm

OmG . . .

I joined this board some months back and at the time thought "boy I really need to make some tweaks to my life/lifestyle given my particular circumstances and the current economy". Since then I've been trying to educate myself on everything financially related . . . and it's been a tough learning curve.

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Avatar for mahopac
iVillage Member
Registered: 07-24-1997

Well, without turning this thread into a discussion of "What is the point of education," I agree that if schools are going to teach technology and other "life" skills, as opposed to pure education, they should also teach basic financial skills.

iVillage Member
Registered: 05-08-2006
I don't want to downplay the value of education or good advice, but I think their is a high amount of exploitation going on in the financial world. Telling people that it a good idea to use your house like a checkbook to take vacations and buy things benefits no one the person lending the money. Creating a culture where 'having' is more important than 'being able to afford' benefits the credit card companies and the stores and manufacturers, not the consumer. I remember being offered a mortgage with a variable rate but a guaranteed monthly payment - any shortfall would be added to the mortgage amount. I knew that to do that was dangerous, but I had the discipline and knowledge to take the low rate but make the highest payment. That bank was paying a very high interest rate and charging a low mortgage rate. I knew it was too good to be true, and it was. They are out of business now. I was smart enough to only have the FDIC limit on deposit, so I didn't lose money. But many people were exploited by their deals. Payday loans are exploitive - going after the most vulnerable and putting them into unmanageable situations. I don't know if you can teach Caution or suspicion or common sense. We all know that 'if it sounds too good to be true, t probably is' but then we see others we respect doing similar things and we get swept away. I have a whole life insurance policy. It has delivered exactly what it said it would. I paid some premiums and eventually, the premiums paid the rest. It might have been better to buy term insurance, and if I needed a significant amount of insurance now, I would buy that. But I would make sure I understood the reputation of the company and the agent and the cost ratio of the policy. I think everyone should have renters insurance if they rent and homeowners if they don't. The deductible should never be more than what you have in your emergency fund, but the higher you can manage, the better. Little nuisance claims cost insurance companies a lot to settle in paperwork and manpower, so they make it worthwhile to not file them. My parents didn't have a lot, but they worked hard and were relatively smart about the basics. We always had bank accounts, and half of any money we got for birthdays or earned growing up had to go in the bank. My mother used the envelope system 50 years ago. We had eggs for supper every Thursday night. They had no idea about investing and there are places when we could have made smarter decisions but I knew how to balance a checkbook at 12. Everything I know about smart shopping and couponing I learned from my mother. SJ
Avatar for poorboy2011
iVillage Member
Registered: 10-02-2011
happysj56 wrote:
Payday loans are exploitive - going after the most vulnerable and putting them into unmanageable situations. I don't know if you can teach Caution or suspicion or common sense.

iVillage Member
Registered: 08-24-2007
I have mixed feelings about the education being the solution to money problems. While I've gained a lot from the knowledge I've acquired over the last few years, the truth is that the real reason I've been able to tackle my debt and make such headway with my finances is that my income increased by a couple of hundred dollars per month. That little edge got me going.

In high school, I took a course called "single living" (with dreams of being Mary Tyler Moore) and we were taught budgeting, stocks, etc. It actually didn't help me 3 years later when I was pregnant and the finances were being controlled by someone who is so astonishingly bad with money, he continue to amaze me to this day. It didn't help that after I gave birth, we were living on his minimum wage and it was simply not enough money for two people with a baby.

If you are really poor, you're biggest problem is not that you make bad choices or aren't educated in finance, you're biggest hurdle is that you don't have money.

We all make financial mistakes (all of us) or the odd bad decision. The differerence is that when you have very little money, a bad decision can become epic and have take on major proportions in your life. Things that don't need to be considered by people who have money can become insurmountable for someone who is poor. Yes, middle class people's parents have heart attacks, but they don't have to worry about how to afford to travel back and forth to the hospital to see them. It's the enormous and never-ending complications attendant on everything one tries to do without money that grinds people down.

I agree with PB2011 who said that factual knowleddge is not enough because someones we make mistakes even with full knowledge of the consequences. The truth is, everyone is human, everyone needs to indulge sometimes. The difference is whether you are financially comfortable enough to absorb the mistakes.

I've been thinking a lot about this because, thanks to my new "car budget" , my finances are so tight I realize that if I actually rely on this new budget, I won't be able to absorb mistakes. I'm not sure I can live that way again. Lots to think about.

Kate


empty purse

iVillage Member
Registered: 07-24-2001

Poorboy,

That is a very good point that I wasn't considering.

For me personally, it's always been a matter of education and setting priorities.

But there certainly can be more to the whole story.

iVillage Member
Registered: 11-14-2008

Kate, I agree with you that education alone would not solve this problem. What I wish for is for people to have the option to follow the eduction or not.

And it wouldn't be mistakes your budget had to indulge, it would be your decisions to absorb like eating out or traveling. You just have to decide what is more important. I think....if you had a car, all of it would fall into place and you wouldn't need to eat out as much, you would be less stressed and might even be able to swing a 2nd job 2 nights a week

Avatar for poorboy2011
iVillage Member
Registered: 10-02-2011
small_change wrote:
We all make financial mistakes (all of us) or the odd bad decision. The differerence is that when you have very little money, a bad decision can become epic and have take on major proportions in your life. Things that don't need to be considered by people who have money can become insurmountable for someone who is poor. Yes, middle class people's parents have heart attacks, but they don't have to worry about how to afford to travel back and forth to the hospital to see them. It's the enormous and never-ending complications attendant on everything one tries to do without money that grinds people down.

I get this. I didn't have the exact same experience, but I did have to weigh the copay + taxi fare (more than the copay) to figure out whether I could afford to see the doctor. Better medical care, unavailable in the small town I live in, was generally out of the question because it entailed substantial travel. It's hard to make a good decision under such circumstances, because you can afford to make only mediocre or bad decisions.

When there is little money, there is no margin for error. Everything has to be planned out carefully. When your plan fails, sometimes for no fault of your own, you can be penalized heavily. You also pay a price in your social relationships, because most people (at least in my world) don't understand not having money.

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
small_change wrote:

If you are really poor, you're biggest problem is not that you make bad choices or aren't educated in finance, you're biggest hurdle is that you don't have money.

We all make financial mistakes (all of us) or the odd bad decision. The differerence is that when you have very little money, a bad decision can become epic and have take on major proportions in your life. Things that don't need to be considered by people who have money can become insurmountable for someone who is poor. Yes, middle class people's parents have heart attacks, but they don't have to worry about how to afford to travel back and forth to the hospital to see them. It's the enormous and never-ending complications attendant on everything one tries to do without money that grinds people down.



Well said, Kate.

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