The Justifiables


July 4, 2006   •   Fact checked by Dumb Little Man

This weekend I ran into a lot of people and was involved in a ton of conversations. I decided to put some of the nonsense into a post because it never ceases to amaze me that people complain about being ‘short on money’ but continue to justify goofy spending.

In the same weekend, the people that said these things also complained about a lack of money:

Quote: “I love my weekends because I have nothing to do”. I even have a service that cuts the grass for $30/week.”
Note: So you are basically telling me that you cannot spend two hours on a Saturday to cut your grass. Guess what, there are 5 months during ‘cutting season’ and there are 4 weeks in a month. Your laziness is costing you $600 per year.
Loss: If you just as lazily deposited that money into a 1.5% savings account, for 30 years you would have $22,714.86. If you were to skip the savings account and invest in something that averaged an 8% return, you would have $74,517.97. Enough said, cut your own grass.

Quote (from the same guy): “Cleaning doesn’t get to me. I have a maid service that comes in each week.”
Note: Ok, you are paying $75 bi-weekly. That’s $150/month and it’s not seasonal so you are out $1,800/year.
Loss: Using the same specs as mentioned in the Grass service loss, a conservative savings account would have equaled $68,144.58 and the higher yield investment of 8% annually would equal a whopping $223,553.91. I can clean a toilet for a quarter-mil, how about you?

Quote (from my wife’s sister): “I wouldn’t be caught dead using coupons, it’s embarrassing.”
Note: If you let other people dictate what you do with your money you are an, um, idiot. I personally save $25/month using coupons that I collect from the Sunday paper (which is the only paper I get, simply for the coupons)
Loss: Not as bad as the others, but its still $300/year. In most cases, that’s a car payment. Invest it somewhere at 8% and over 30 years, it’s $37,258.98. If you have credit card debt, throw it there.

Quote (wife’s friend): “We just bought a barzebo, you have to come see it.”
Note: What the *&^% is a barzebo? I had never heard of this but apparently it’s a bar with a roof that you can put on your deck or patio.
Loss: The loss is not the issue here. These particular people are absolutely underwater with their finances. I will say it again, don’t buy garbage you don’t need unless you really have a ton of extra cash. As it stands, these people using Home Equity money for this dumb thing just because they want to impress the neighbors.

Quote: (my brother) “We are going to sell our house and move back to Chicago (from another state). We should be able to make $20K on it if we don’t use a real estate agent.”
Note: Are you kidding me? IF? What IF you do have to sell your $320K house by using an agent? Guess what, your $20K nest egg becomes $5K.
Loss: How about everything? If you have this kind of mentality AND you fail to plan for major situations, you are in some big trouble. Moving to another state costs money, furnishing a house costs money. Don’t ever try something like this with only $5k.

Quote (another friend): “I reduced my 401k contribution because we couldn’t make ends meet.”
Note: You better know that this is a HUGE warning sign. Are you going to reduce it to nothing simply so you can spend more? What happens then, hit the credit cards, the kids ‘college funds? Cut spending way before you touch your 401k. If you are cut to the bone, then make an adjustment to your 401k however you never want to really go lower than the % your employer matches (or you are passing up free money)
Loss: A lot. Put together a budget and make sure you follow it. You are going down the wrong path.

The point of this is not to make fun of people but rather to draw attention to the decisions you make. When you spend money “for convenience” as is the case with lawn cutting and house cleaning, you are really making a negative impact on your financial future. The lesson is to think things through and understand ALL of the ramifications.

PS – If you are doing all of these things, you will be tossing out over $300K in retirement money assuming you received 8% annual returns. Makes you think, huh?



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