It’s not really your money if you’re in debt

Here at Grumpy Rumblings, we’re all about enjoying life’s little luxuries… *if* you can afford them.  You won’t hear us castigating you for buying a nice car or fancy cheeses or lattes or traveling or whatever it is that makes you happy.  If you have the money, spend it on whatever (legal) thing you want to spend it on.  It’s not a race to financial independence unless you want it to be (and some of us prefer working to taking cold showers).  He who dies with the largest asset portfolio isn’t the winner.

However, we get irritated when folks with high debt loads make the same argument, especially when that debt is of the high-interest unsecured kind.  Not only are you shooting yourself in the foot someday living near the edge, but you’re also living it up today at the expense of other folks if that house of cards comes crashing down.  One day you may get hit with a negative shock.  You could lose your job or hit your credit limit or get hit with a big medical bill or any number of things that many of us self-insure for with cash in the bank.  And at that point, someone will have to bail you out.  It might be family or it might be bankruptcy or you may get suckers on the internet to help shoulder your burden.  It may even be the government paying for your problems in old age or nonprofits taking care of you.

Those folks say they’re entitled to their high debt loads.  They fund more lavish lifestyles than we have on their smaller incomes.  Travel, fancy handbags, daily meals out, nice cars, a house with no money down… why should they have to pay off their unsecured debt before living life?  They say it’s their money, they should be able to do what they want with it.

Except it isn’t their money.  It’s their money plus the expected value that they’re going to screw up and someone else is going to have to take care of their mess.  And the probability of that happening is pretty high, much higher than folks who are responsible with their money.

And those responsible folks are the ones who end up footing the bill, whether because they’re family or just society as a whole.  And that’s irritating.

Now, we wouldn’t trade with these entitled folks.  We *like* having real actual money of our own more than we like the consumer goods or additional travel or whatever it is we could be funding instead of saving or keeping our credit lines open.  But it is still obnoxious.  (And why is it that almost every person I know IRL like this votes Republican and hates folks on Welfare?  The only difference is access to credit!)

Student debt isn’t as bad because it’s virtually impossible to discharge in bankruptcy, but it can still keep folks from retirement saving, which eventually comes back to bite society through old-age Medicaid costs if nothing else (2/3 of Medicaid is long-term care).  Housing debt is secured which means the bank at least gets a house in return for the debt.  But we still cringe when people put 0% down on top of all their other debts.

Anyhow, I guess the point of this post is, stop bragging about your expensive purchases until you’ve taken care of yourself first.  We don’t want to hear about it.  It’s not your money that you’re spending until you’re out of debt.  Stop talking about spending other folk’s money.  Even better, stop spending other folks’ money… but that is probably too much to ask.  ETA:  Stopping complaining about your debt would also help, especially if you’re always attributing that debt to the universe being against you.

What do you all think?  Should people be entitled to lavish spending so long as they can make the minimum payments on their credit lines?  At what point are you allowed to live a lavish lifestyle?  What’s your limit for what you would do to get out of high interest unsecured debt?

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37 Responses to “It’s not really your money if you’re in debt”

  1. feMOMhist Says:

    OK honestly I found myself wondering *how* some people i know, who are profs at sciDAD’s school, so salary levels are public, afforded what they had/did. I’ve realized 1. inheritance, 2. well off generous parents 3. law suit settlements explain a WHOLE lot. Made me feel a lot better, which is kind of ridiculous, but there you go. I”m happy to have alive relatives and not to have suffered whatever gets you a large legal settlement! My parents worked their asses off for their money and I tell them to spend it all on themselves first. They are generous enough as it is!

    • nicoleandmaggie Says:

      Yeah, #2 won’t take money from her mom. My mom raised me, she needs to keep her money for herself!

      • feMOMhist Says:

        exactly! I say spend every damn cent on yourselves and leave the rest to the kids for college. My parents gave us everything while we were growing up. Now they take trips all the times and I say GOOD FOR THEM! My parents are also waspy enough stress self sufficiency so much that I see taking money from them as wrong. I recognize this as cultural and I’m not judging others. It’s just our dynamic

      • nicoleandmaggie Says:

        I had words with my sister about not letting my mom treat her all the time several years back when my sister first started making a lot of money. I did let my dad donate a lot of money to my son’s school, but I can’t imagine taking his money for my own purposes, even if he says he doesn’t know how to spend. Give it to people who actually need it, if you’re not going to buy that house in the Central Valley that you keep talking about.

  2. Alyssa Says:

    Yes! On the flip side – I hate when people assume we’re “spending outside our means” because of some of the luxuries we have. We pay outright for everything – from groceries and date nights to big ticket items like renovations, travel, electronics, etc., and if we can’t, then we don’t buy them. It bugs me that people assume that we are going into debt because they think that’s the only way it’s possible to be able to buy things like that.

    • nicoleandmaggie Says:

      Don’t worry, we won’t assume you’re in debt unless you tell us you are!

    • rented life Says:

      OH! I hate this too. Husband’s family has made all kinds of snide comments about our finances (including “it must be nice to be rich”)–when really I saved for those big things. Planning a trip? We save in advance. When we owned a home and redid the bathroom, I saved (and asked family to help with demo/putting in flooring so no hiring out) and we did it for less than $2k–outsiders didn’t think that was possible. We bought the car at a time when our jobs were more secure and I’ve never made a late payment on anything (and now we have reliable transportation.) Sorry for the rant.

  3. becca Says:

    I have student loan debt, but you know what really keeps me from saving for retirement? Going into biomedical research.
    You know what they say. “Don’t mock the grad students, they just made a terrible life choice”. I’m sure that goes double for postdocs.

    If I promise to spend at least some years working on diseases that keep people from enjoying healthy retirements that they saved so diligently for, can I enjoy my trip to New York to go to an autophagy conference?

    • nicoleandmaggie Says:

      Like we said, student loan debt isn’t dischargable in bankruptcy, so you’re stuck with it forever. The conference is probably a career investment and may end up getting you a better job and higher earnings in the future. Just don’t enjoy yourself too much, or if you do, don’t brag/complain to us.

  4. rented life Says:

    (And why is it that almost every person I know IRL like this votes Republican and hates folks on Welfare? The only difference is access to credit!)
    –yes!

    Can I ask a question? What does unsecure debt mean? (Sorry, I’m trying to learn the financial stuff but I don’t know the lingo!)

    I don’t mind if someone does what I do right now–I have credit card debt, but I won’t pinch every blasted penny to send to it (We have student loans too, but car and credit card are my first focus–paying the car will free up more money and can happen sooner). Anyway, I always pay on time, send the max amount that I can, often make multiple payments on the credit card–any extra “unplanned extra” that is, goes there–but I also don’t mind buying meat at the grocery store, getting my hair cut by a professional (I did it myself in grad school, my favorite stylist is worth the $35), or having an occasional dinner out. But even then, I set the money aside from our pay checks, I use coupons for our fav restaurant (they do a different deal every month), and I’ll make sacrafices in the grocery bill if we eat out to balance things out. But we’ve never added to our debt if things are tight and I have a solid plan for the getting out of the debt we have. We used to know a couple that always felt like they needed to keep up with another couple that was very well off. We are friends with the well off couple too, and I never feel like I’m lesser because we have a different SES. We have a great time with them, but the other couple felt like it was a competition, despite their debt, they kept buying the latest toys. We, on the other hand, moved to a different area to better afford housing. SIL lives similarly, but gets mad at us for the things we do/buy. Drives me nuts.

    • nicoleandmaggie Says:

      Unsecured means you didn’t put up any collateral. So A mortgage is secured debt, a car loan is secured debt, going to the pawn shop is secured debt. If you default, the lender gets whatever you put up in exchange. Credit card debt is not secured debt because if you default they don’t get anything of value.

      • rented life Says:

        Ah! Ok, thanks, that makes a lot of sense. This is my new goal: learning as much financial things as I can. While I know I’m doing better than my parents did (they’ve improved since), I also sense that I could be doing even more to have a solid future/meet our financial goals for retirement, travel, etc.

  5. chacha1 Says:

    I think it should be a damn sight harder to get credit than it is, and it’s harder right now than it was in 2008. It’s not nearly hard enough. I doubt we will ever go back to the days of neighborhood banks granting personal loans – that’s really the function that credit cards serve now – but I think we (as a society) could be doing a much better job of educating people as to the fact that credit cards ARE LOANS.

    And unsecured loans, at that (as you note). If they were secured, people would clean up their acts pretty fast. Hmmm, maybe that’s the answer … don’t permit a credit card issuer to allow a credit line over, say, $10000 – unless it is tied to the client’s house.

    I ran myself into a good bit of financial trouble years ago, not through high livin’ but through a really bad choice of relationship, and bad handling of same. … When I needed to get my debt under control, it took eighteen months of basically spending nothing beyond living expenses, and putting ALL of the extra income against the debt. Eighteen months is not that long, really. It was not a very fun year and a half, but seeing the balances go down was very rewarding.

    Now I use my credit cards as a “float.” No more carrying balances. Speaking as an urban professional, it’s amazing how much extra cash you can accumulate when you commit to living a cash lifestyle (and by that I mean, spending only what’s in the bank checking account).

  6. NoTrustFund Says:

    It has been a bit of an evolution for me to accept that if we are saving and don’t have unsecured debt I don’t need to feel guilty about spending money. I am getting much better but I do think that if you are being financially responsible you should be able to enjoy your money.

    With respect to debt and complaining, this is a tough one as most of the people I hang out with don’t talk about money much, especially debt. I’ll hear complaints about ‘we don’t have any money’ (especially other parents at our daycare- no surprise there given the cost of child care where we live!) but never about cc debt and rarely about student loans. Obviously people have it but it’s not polite to talk about it.

  7. oilandgarlic Says:

    What I noticed is that my republican relatives tend to do hand-outs to family, and thinks that’s ok, without considering that some people don’t have family to fall back on. Either way, I’m pretty much with you regarding hand-outs. I have gotten help at various times in my life from family and government, but overall, I’m pretty sure I’ve put a lot into the system with taxes, steady employement and responsible saving habits.

  8. J Liedl Says:

    We still don’t have as much in general savings as I’d like, but between saving for kids’ education (starts next fall!) and paying down the mortgage, we’ve not had a lot of money leftover for more than the emergency fund maintenance. On the other hand, no expensive vacations (our only vacations are in sync with my conferences or visits to family), no fancy kitchen reno (not even a plain kitchen reno), dinner out maybe once a month, fast food every other week.

    We use my credit card a LOT since it has a very good rewards program but I haven’t carried a monthly balance in quite a long time. I’m trying to teach my girls not to make the mistakes I did as a struggling grad student and newly-employed person who had only basic financial literacy.

    It’s funny though, that perception is everything. When she was in grade school, Eldest was approached by a classmate who remarked with envy that we must be rich because we bought her new books “all the time”. Eldest boogled and commented that her classmate went to Europe every year as well as on other fabulous vacations and owned a home in a very prestigious part of town. That seemed more like ‘rich’ to her!

  9. Comradde PhysioProffe Says:

    You’re complaining that most people are greedy delusional idiots with zero ability or inclination to assess the relative risks and benefits of their behavor and to make use of such assessments to plan for the future? This is like complaining about rain or traffic.

  10. Club Thrifty (@ClubThrifty) Says:

    Umm…I just want to say “yes”. Yes to this whole article. In fact, if you are in debt, not only is your money not yours. Neither is most of the stuff you “own.”

  11. Consuelo Says:

    Wow–I SO agree with this post! Personally, I think it ought to be nearly impossible for those who are still in school to get credit cards–my oldest is in grad school and the next two are in college. Our deal is Mom and Dad provide significant help (they work full time in the summers) but they cannot get a credit card until they have a full time job after graduation. We have four more kids following behind and, so far, this approach has worked well for us. We have no debt whatsoever and I’m hoping all of our kids will save first and spend later…In my experience attitudes about debt are cultural…one has to work to consciously raise kids who take a dim view of debt.

    • chacha1 Says:

      Definitely! It’s like anything else, a set of parents can SAY whatever they think their kids should learn … but the kids are actually going to learn what they SEE. And in many cases, speaking strictly of finances, that’s overconsumption. I can’t begin to count the number of co-workers I’ve had over the years who said they “couldn’t afford” this or that educational enhancement for their kids, but were driving leased luxury cars.

  12. Leigh Says:

    So many people judge me for having bought a new car. It drives me nuts! So what if I spent $21k on a car? I’ll keep it for a while, it’s fuel efficient, and I saved up and paid for it in cash. I understand depreciation math, but I’d far rather know the car works fine and at this point, when it’s almost two years old, the decision to buy it is in the past, so why do people still feel the need to chastise me for it? Ugh.

    I definitely need to get better at dealing with people offering unwanted advice.

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  16. Mike Desmarais Says:

    The problem with “I can make the payments” is that works as long as it works, and when it doesn’t it goes horrible. Like you said what if you lose your job. How much of the housing crisis was from people that could “pay the payments,” and then lost their job. How much more are we paying for things because of people that file bankruptcy?

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