Clues that someone isn't financially savvy?

[jeffrey]

I was walking with a group of friends when a decked out Hummer drove by. One of the people in the group spoke up to say that he wished that he would one day be that wealthy. Without hesitation, I said that I doubted that the person driving that car was all that wealthy. He looked at me like I wa nuts -- it was an expensive car so obviously the person must have a lot of money.

Granted, I could have been wrong. The person may have been wealthy. My gut, however, told me that it was someone who wanted others to think he was wealthy rather than actually being wealthy just because of the way it was blinged out.

This got me thinking -- what are some of the things that clue you in that a person isn't all that financially savvy.

[disneysteve]

This got me thinking -- what are some of the things that clue you in that a person isn't all that financially savvy.

Leasing a car.

Carrying a balance on a credit card (other than exploiting 0% deals for those of us who are savvy).

Using payday lenders or check cashing places.

Buying lottery tickets as a regular habit (not the occasional dream purchase).

Going shopping because the store is having a big sale even though they freely admit they don't need anything.

[MonkeyMama]

Anyone who thinks that someone with a lot of expensive things actually has a lot of money, has a lot to learn! (Not that this means no one can have money and a Hummer. It's just usually the opposite - considering the past decade in particular).

The ones that bug me? Believing everything their lender and mortgage and stock broker tells them.

**You can never lose on real estate (so 100% leverage on a home/rental - now!)

**You can never lose in the stock market (so take a mortgage on your house and 100% leverage into stocks?)

**All the tax myths like you should borrow more for your house *just* for the tax write-off. I have had several stock brokers tell this to my tax clients (though maybe they aren't even getting any tax benefit?) Anyway, the truth is their broker wants them to buy lots of stock either on margin, or against their house. Bad!! A few were at least wise enough to ask their tax counsel to be sure, but very few bother asking us when they get that kind of advice.

**FICO myths. You could never possibly have a good FICO score without ever having a car payment. You have to carry loan balances (Credit card) to get a good FICO score. Stuff like that.

Most of the above can be summed up to consider the source of your information. Though the professionals spout this stuff so much, the masses of misinformed start to quote it as gospel.

[LMA]

This got me thinking -- what are some of the things that clue you in that a person isn't all that financially savvy.

A decked out Hummer...

Kidding aside, as you probably know there is a difference between rich and wealthy. There are those that want to look like they have money but they really don't, they just are able to make the payment.

Then there are those that make a lot of money and also spend it all. That's where you see the ones with the shiny cars, country club memberships and big houses.

Then there are truly wealthy people who are really financially independent. They may or may not have the toys that go along with lots of money. There is just something about the truly wealthy that they don't feel they have to prove to others they are wealthy.

Other than that when you see someone flaunting a lot of "status symbols" that might be a clue.

There is also the person that is constantly talking about all they bought and how much it cost...

[KTP]

Sometimes they are kind of both (flaunting and wealthy)

Trump is a great example. When they show an interior shot of his office or home, everything is gold and overly ornamental. He must think it looks rich, but I think it just looks gaudy.

[GREENBACK]

what are some of the things that clue you in that a person isn't all that financially savvy.

The "keep up with the Jones's" folks come to mind right away. I think we all know people who spend well beyond what they can really afford so they can look like they're rich. Hummers seem to be popular with this crowd.

[jteezie]

2 things in particular tip me off: talk about interest payments related to credit cards and the need to earn more money.

More subtle things, working a job they hate, cynicism about wealth and the wealth gap.

And a side note: MonkeyMama, I think it is possible to have a good FICO score without ever getting a car loan. I fall in this category (I think cars are a complete waste of money), but I suppose my student loans are a substitute for the traditional car loan installment type of credit.

[jpg7n16]

And a side note: MonkeyMama, I think it is possible to have a good FICO score without ever getting a car loan.

I believe MM's post says that if you say things like "you can't get a good credit score without a car payment" that you have no clue what you're talking about.

I don't believe MM was personally taking that stance.

-----------------------------------

I'll add: an over-emphasis on cashflow. "What's the payment?"; "Can you afford the payment?"; "It doesn't cost that much each month."

Things like that show that they are likely just focused on the short term consequences, and ignore the long-term consequences of their actions.

How many people got a car they couldn't afford because they could "afford" the payment?

[Bades]

When your friend tells you he carries a CC balance and is looking to get a $200 sound system for his car. Also his car is a piece of junk that probably needs some money thrown into it to keep it safe.

[photo]

I agree with you Steve on everything except this:

Going shopping because the store is having a big sale even though they freely admit they don't need anything.

I will often shop sales in anticipation of what I may need or even want. Too often, when we need something is when it's not on sale. Therefore, it's best to shop sales (doesn't mean you have to buy) so that when you need something, you'll not only have it, but the item was obtained at a discount.

I stock up on Costco sales items even if I don't need them at the moment. I have yet to ever pay full price for laundry detergent and other household items.

[kork13]

1) Payday (or the day after) is a big shopping day.
2) The phrase "I can have the money after I get paid this Friday."
-- Both of these scream "I live paycheck to paycheck."

3) The extent of their budgeting centers on planning (in October) how they'll be spending their tax return.
-- Tax returns are like an annual birthday present from Uncle Sam... right??

4) Holding the firm belief that everybody's got car loans and credit card debt, and to not have them is: a) weird; b) bad for your credit score; c) a sign you can't afford the "good things" in life.
-- No kidding... I've had this conversation with someone.

5) Going shopping "because I've got a coupon for 25% off!"
-- ::sigh::

...wow, this is fun. I'll have to keep thinking about these, I could just keep going and going and going... hehe

[photo]

Kidding aside, as you probably know there is a difference between rich and wealthy. There are those that want to look like they have money but they really don't, they just are able to make the payment.

The person who cleans my toilets each week drives a much newer car than I do and spends money on little things that I think are totally worthless. That's fine, because I'd rather drive the older car and not clean toilets for a living...

[disneysteve]

I agree with you Steve on everything except this:

I will often shop sales in anticipation of what I may need or even want.

I stock up on Costco sales items even if I don't need them at the moment. I have yet to ever pay full price for laundry detergent and other household items.

That's different. I'm not talking about stuff that you know you'll be needing, like laundry detergent. I was thinking more of people who go out and buy yet another pair of shoes when they already have a closet full because the store was having a big sale or sent them a "preferred customer" discount coupon, particularly when these people are already in debt and living paycheck to paycheck.

If you go take advantage of a sale as a strategic move to save yourself money down the line, that' just good planning not irresponsible spending.

[disneysteve]

1) Payday (or the day after) is a big shopping day.
2) The phrase "I can have the money after I get paid this Friday."
-- Both of these scream "I live paycheck to paycheck."

Just saying, "I'm going to cash my paycheck" tells me there is an issue. The women in my office run to the bank at lunchtime on payday to cash their checks. Me? I stick mine in my pocket and deposit it at the ATM whenever I get around to it. Today is Tuesday and I have not yet deposited Friday's check. My checking account earns no interest so it really doesn't matter when I put it in and going to the ATM is a pain so I wait until it is convenient for me.

At my wife's old job, her coworkers used to run out at lunch to cash their checks so that they could "afford" to eat lunch that day as by the time payday came around, they were out of money. Of course, it might have had something to do with the fact that they went out to eat every day while my wife sat in the break room with her brown bagged lunch and had direct deposit so she usually didn't even know it was payday until somebody said something.

[bjl584]

I used to work with a guy that would go to the boss on Wednesday of every week and ask for an advance on his paycheck. It was obvious that this guy was in some serious financial hardship.