Budgeting, Debt, Personal Finance

We Create Many of Our Own Financial Problems

A coworker came to me moaning about her debt level the other day. Her New Year’s resolution is to get out of debt and she wanted to know where to start. I asked her what kind of debt she had. Car loans? Student loans? Credit cards? Almost all of the debt she had was from simple overspending on stuff she couldn’t afford. Expensive cars, trips, meals out, clothes, and electronics made up most of the credit card debt. She said, “I don’t know how we got into this mess. We don’t do anything that out of the ordinary. Everyone has this stuff.”

Now, I don’t know exactly what she and her husband make, but knowing their occupations I’m betting it’s not much above $70K combined. That’s a good income, but not high enough to afford four trips to deluxe resorts every year, a new Coach purse every two months, a new Jaguar, and three new TV’s in a year. (Those are the highlights of the debt load.) When I gently tried to tell her that she had caused this problem, she got offended. I told her that finance is pretty simple. What comes in needs to be more than what goes out and, in her case, she could totally control that. She was spending way more than was coming in and, to get out of debt, that would have to stop. It would be wise to look at at debt repayment calculator and see where things stood. She has enough income to live well on in this area, just not extravagantly.

“But I can’t vacation without staying a deluxe resort,” she said. “I’m not comfortable in a Hampton Inn or whatever.”

“Then you don’t vacation,” I told her. “Or certainly not as often. You can’t afford it,” I said.

“And the electronics. I have to have the latest cell phone for work.”

“Really?” I asked. “Does your current phone make calls? Can you check email as you need to?”


“Then your current phone is fine. Anything else is just a prettier package.”

“But the car. I need to impress clients,” she said.

“A Jaguar is certainly impressive. But other cars are just as nice as long as they are clean and well maintained. Or you could have bought a used Jag.”

We went on like this for a while with her offering up “reasons” why she had to spend all of that money. What it all boiled down to is that she preferred and wanted certain things, not that she needed them. She had created her own financial mess through her choices.

People make their own financial problems in different ways. People choose to smoke or overeat and cause their own health problems and the resulting expenses. People insist on having an enormous house or expensive car and then scream foul when the resulting payments drag them under. Even seemingly small decisions like eating out every day or buying new clothes every week can eventually add up to big financial problems. In the end, no one forced you to do any of this. You did it to yourself, just like my coworker created her own problems.

Certainly some financial problems are unavoidable. However, the vast majority of our financial “problems” stem directly from our poor decisions. This isn’t a fun way to look at it. After all, who wants to admit that they’ve messed up or caused their own hardships. It’s far easier to find someone else to blame. But when you get right down to it, no one forced you to vacation in deluxe resorts or buy all that junk you couldn’t afford. No one forced you to eat out every day or smoke and ruin your health. When it comes to fixing your finances, often the first thing you have to is look the mirror and ask yourself how you caused the problem. Once you know that, you can begin to correct the problems.

6 thoughts on “We Create Many of Our Own Financial Problems

  1. I can sympathise with both sides of this conversation I know what it is like to have friends that have the latest car, a nice big house and regular holidays and I would like those things also but it gets to a point when you realise you can’t go on spending, we learnt this lesson early on and although it was a hard lesson we got there.

  2. I also want to get out of debt but the difference with me is I know it’s my fault. At the time, I justified my overspending with things like “I deserve it” or “But I can afford” knowing that I’m not entitled to getting into debt and I certainly couldn’t afford it. It’s just something you have to get used to and adjust.

  3. I could not agree more. I have a coworker who laments her finances and complains that she is unable to retire due to finances. She has worked at the company for over 35 years…a person can retire at 30 years. However she spends, spends, spends…cruises, vacations abroad, clothes, cars, lives in an expensive house with land. She also is having her wages garnished due to back taxes.

  4. Unfortunately many of these people who want more than they can afford end up in government where they continue their profligate behaviour.

    Instant gratification and status lifestyles now seems to be an endemic problem but unfortunately there is always a price to be paid.

    Many of these people will have to work their whole lives and when they can’t work any more they will expect the state (using our money) to look after them!!

  5. Oops! Did the coworker deal with the problems? Trouble is, in this much debt you have to not just live within your means but live below that to free up the money to pay the debt.

    So, a double whammy! She goes from a ‘high on the hog’ lifestyle to a life of frugality. Selling some of the stuff and completely reassessing her life.

    Or, did she go to someone else with her dilemma, they may just have the magic wand to wave to make everything all right! Pity you left yours at home.

  6. How could someone NOT be comfortable in a Hampton Inn? I got to stay at one once courtesy of work and it was lovely. As too cell phones, since when does a compnay require cell phones that are the latest thing unless they buy them for the employee? Yes she is full of excuses. I’ve worked with people like that who could never figure out how I survived on what I was making because she couldn’t on the same salary plus child support. Well I wasn’t buying new clothes constantly or gambling every weekend at Niagara Falls or taking my young child to Red Lobster to eat since he didn’t like McDonald’s and of course she needed to get her car detailed at $50 a pop. Well she went bankrupt but didn’t learn her lesson. She just used the bankruptcy to start all over again racking up bills on her sister’s credit card!

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