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The Power Purchase
My wife and I are friends with another family that is (in my opinion) on the verge of losing their home to foreclosure. They have never told us this directly but we know their income and we know their mortgage bill. The numbers simply don't add up and we feel they are now using credit cards to keep the mortgage paid.

What makes this situation worse is that this couple insists on acting as if nothing's wrong. They fly to exotic locations for vacation, they buy the fanciest washer and dryer on the market, drive a BMW, and several times each month, they blow money entertaining neighbors and co-workers. It's almost painful to watch.

These crazy purchases all deal with pride. This couple is so concerned with their persona and community clout that they are literally putting their future and the futures of their kids in jeopardy. To this day, they don't maintain a functional budget. I just don't get it.

I agree with your inevitable thoughts; this is an extreme case of irresponsible spending. However, I'd challenge you to consider your reasoning behind every purchase that you make over $50. At $50, you can catch a lot of mistakes. That's when a pair of jeans is no longer just a pair of jeans, it's a designer pair of jeans. $50 is when you're paying for the name on the shoes, not the shoes. If you need motivation to do this, create a goal or a savings account that you can send that $50 to. You may not get the jeans but you're $50 closer to being able to pay cash for that vacation, college tuition, etc.

Procrastination
I want to be loud and clear here. If you are 20 years old today, you WILL wake up tomorrow and be 35. My father used to always tell me this and I'd scoff in the same way you just did. But - I kid you not, time is a crazy thing. Yesterday I was drinking with my friends 6 days a week, today I have a daughter that just started kindergarten and a 2-year old son that loves Brian Urlacher (as well he should).

If there is one thing you get out of this article it's this: Whatever you are saving, it's not enough. I am not going to go into a huge diatribe here. If you work at a company with a 401k, contribute as much as you can. As a rule, you should at least be contributing up to the amount that the company matches. However, add more and contribute more if you can.

If you are a freelancer or work somewhere with no 401k, setup an automatic withdrawal that goes into a savings account not attached to your checking account. If your income level allows for it, put some cash into a Roth IRA, etc.

The key is to start NOW. If you make a million later in life or inherit a truckload of cash, do what you want, but don't skip savings today in anticipation of that! That's a nice segue to...

Assumptions
I hate to say this but you are the only person watching out for you. Whether you are relying on an inheritance from Daddy or banking on your $1,300 Social Security check, you are simply a fool to assume that it's headed your way.

In line with everything that I've mentioned thus far, you have to plan your finances in a way that will all but guarantee your needs are met. If you do get a windfall or if Social Security exists in five years, you need to treat that as a bonus. You can NOT rely on anything that you don't personally control.

Misguided Matrimony
I would wither up and die if I didn't have my wife's constant support so thankfully, I don't have this particular issue to contend with. However, getting married for the wrong reasons can and will cost you dearly. In the past I've thoroughly explained some points to consider before getting married and to this day, I stand behind them 100%.

Divorces are messy; my parents are divorced. The process can become an emotional and financial roller coaster that seemingly begins and ends with the rider's car flying off the rail. The key is that you never know it's coming.

Treat your relationship with unprecedented respect. Consideration, compromise, trust, etc. You get the point - don't get married on a whim.

Letting Schools Teach your Kids about Finance
Um, Houston, we have a problem; my kid is 16 and has no idea how to handle money.

Listen, our schools have major issues and we all know it. One of these huge problems is that there is absolutely zero education on personal finance. If Mommy didn't open a savings account for you when you were 6, you'd have nothing and you may have never even been in a bank.

Knowing this, parents, aunts, uncles, and anyone that cares, needs to teach kids about money. I am not talking about 'saving is good', I am talking about some good knowledge of how credit works, what debt is, how debt hurts you, what investments are, etc. If YOU don't teach your kids these basic principles, you are severely handicapping them.

Do more than give your kid an allowance for mowing the lawn; teach them how to turn that $10 into $12. Not doing so may put you in a never ending spiral of bailing them out of credit card debt.

As I mentioned, there are loads of 'gurus' out there and there are thousands of tips. However, at some point it becomes paralysis by analysis so you do nothing. When it comes to money, have a handful of guiding principles and live by them. Doing so thoroughly will help with the micro issues like impulse purchasing, etc.

Interesting. After reading this, I guess I raised most of my kids right. They seem ro be saving for retirement [and at least one of them is getting close to that magic retirement age -- now, THAT feels wierd!] and they had responsibility for small purchases/decisions when they were young so they learned about consequences before it mattered so much.
Good article.

Maybe i should have started a new message for this but i wanted to get this on here today because it is possibly a financial mistake we made yesterday but can still get out of this week.
Ok here goes and i really need replies from anyone that has to say something about it. It is called Long Term Care Insurance.We had a meeting last night with our financial advisor and we applied for it.My o/h will retire, at age 62 in Feb. Now we are not so sure we did the right thing to do. We know everyone has their own reasons for having or not getting LTCI. It will cost us $400.00 a month.That is a lot of money but then again it is pocket change for what it would cost if Gene or myself would need to be in a nursing home. Since none of us knows what the future will bring this is a great thing to have. But then again we figured up what it will cost us for 5yrs.,paying $400.00 a month. OMG now we are thinking should we keep this or not.I want to hear from all who wants to reply and your thoughts on this subject.Thanks.crissy

I think you could just put that in a savings account and forget the ins co. I think they are rip offs.
just my own personal feelings....

I also think twice about subscribing to magazines, and I only take them for one year, never renew them. My sis sends me one every yr for xmas and I never get it read. I need to tell her to not renew it any more...I have a yrs worth I've not even looked at!!! I only have one coming to me now and it is about to run out, and I will not renew it. I will just read all of the ones I havn't gotten around to yet!
I cut off HBO a long time ago...they just show the same things over and over...

Crissy, I don't know enough about long term care insurance to have an intelligent opinion on it.

I did want to weigh in on the $50 mistake idea, though. I've always been more cautious about the $50 mistakes and probably made less of them. However, it's the smaller ones that add up and will eat your lunch if you don't watch them....like the magazine subscriptions, etc.

I do have two magazine subscriptions right now, and I read both of those. I'd let them lapse and missed them, so they are treats that I enjoy. There's a basket at my library where you can drop off magazines and anyone can take them, so I take mine there when I'm done.

You've got me thinking, though, about what other small things are under the radar.

Chrissy, a financial analyst would determine if you have enough assets to self insure and if not - then recommend the insurance.

A care home will cost ar least $3000 a month and they estimate that people live 2 - 2 1/2 years in a care home. - so you will have to save $100,000 for each one of your care. You may have a home or assets that exceed that amount that you could sell if you need it. Then, I'd say - forget the insurance.

If your family members enjoy longevity - you may need your assets before your own care. Then, I would say continue it. You can PM me if you have more questions.