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View Full Version : Great Read - You Can Learn a Lot From a Rich Girl


|Zach|
11-07-2006, 01:01 AM
http://www.violentacres.com/archives/30/you-can-learn-a-lot-from-a-rich-girl

Driving home from the bar one evening, my friend Marilyn confided in me that she was afraid. In six months, she would be graduating from grad school and her parents were going to cut her off financially for the first time in 26 years. Marilyn works twice a week (8 hours total) waiting tables to pay for pot and shoes, but everything else from her rent to her groceries has been paid for by her parents. Marilyn, at 26, doesnít know how to balance a checkbook and has no idea what a gallon of milk costs. On top of that, she managed to secretly charge up some credit cards to the tune of $12,000 and that debt alone was overwhelming her. She couldnít imagine what it would be like when she had to pay all of her own bills, plus the credit card debt. She ****ed up big time and rather than admit that to her parents (who amassed their wealth through careful, responsible investments) she was desperately confiding in her older friend hoping for a magic solution to her problems.

I suppose she came to me because Iíve been there. If any of you consider me obnoxious and self important now, you should have known me when I was in high school. At that time, I hadnít ever had to struggle for anything in my life. Everything from material things to academic achievements were mine without the slightest bit of work or effort on my part. So when I sat in my high school physics class and the theories being taught did not instantly become clear to me, I turned up my little nose, crossed my arms, and refused to learn the material at all because it was obviously beneath me. Physics was beneath me. This was my response to a challenge that required more than a few seconds to accomplish.

This was also my mentality when I began college. Unlike Marilyn, my parents cut me off financially the day I graduated high school, but that didnít matter because I was able to maintain my style of living through credit cards. I applied for 11 of them and used them to purchase things like lattes, kegs of beer, and plastic Jerry Garcia bear beads to decorate my apartment. I thought credit cards were free money and in six months, I had maxed out every one. I would have gotten more, too, if my credit at that point wasnít in the shitter. But it didnít matter because I really had everything I needed at that point.

It was justÖ.the billsÖ..eleven of them on top of all of my regular bills. I was having a hard time keeping track of them. Iíd lose them, forget about them, and then Iíd come home at night and find out that my electricity was turned off. Again. But instead of sitting down and working out my financial situation, I deemed all the credit card bills too hard and inconvenient to manage, so I decided to quit paying them. In true spoiled brat fashion, I refused to so much as open the bills for a solid four months.

You all know what comes next, donít you? Oh yes, the phone calls. Vicious phone calls from angry creditors at all hours of the night who refused to be ignored. I had never connected a human face to my debt, so I was stunned when this happened. And when I opened one of my bills for the first time and saw that the balance had almost doubled? Well, you could have bowled me over with a feather.

So I sat down with all of my bills and a calculator and struggled to figure out the damage. I didnít understand simple concepts like interest, over-limit fees, late fees, or annual membership fees, so it took me a while. The end result was that if I put forth every spare cent of my spending money towards paying this debt, I would be free of it in 24 years. The rarified microbiologist is in a bit of consumer debt right now and he describes it as one of the most soul crushing feelings in the world. Sitting there with my bills and the knowledge that I had sold a quarter of my life into slavery for some plastic beads, I couldnít think of a more apt way to describe it.

In the end, I went to some pretty extreme measures and paid off my debt in 3 months. I cut up all my credit cards and foolishly thought it would improve my credit situation. Little did I know that paying the bill doesnít turn a bad debt good again. The only thing that would fix my credit was for me to learn to establish new credit responsibly. It took me over four years to quit making rookie mistakes. To date, it was the most difficult thing I have ever forced myself to accomplish.

Marilyn is not quite like me. She has a lot of pride, but not enough to force herself out of her comfort zone. Knowing this, I advised her, ďBetter to ask your parents for help now when itís only $12,000 and not really a big deal than to have to ask them for help later when itís gotten completely out of control.Ē

If this was just a cautionary tale for young rich snobs, then I wouldnít bother telling it. The problem is that the middle class are making these same credit mistakes without the safety net of wealthy parents to fall back on. We are sending our children out into the world without any idea of how to manage credit, balance a checkbook, or devise and follow a feasible budget. We are doing this not out of maliciousness or desire to see the future fail, but because we donít know how to accomplish those things. Because of this, we are cheating ourselves and our children out of retirement.

Iíve spoken to a lot of college kids lately who regularly spend $200 for a pair of blue jeans. When I ask them how long it takes for them to earn that kind of cash, the answer usually falls in the realm of a week or so. At this point, I will stress that not even the very wealthy spend an entire weeks worth of salary on one article of clothing. College kids disagree because theyíve seen wealthy people wearing more expensive clothing than their jeans. So I explain that while they may wear more expensive clothing, that it doesnít constitute a week of their salary. Normally, they earn the price of expensive jeans in an hour, often less. On the off chance that the kid understands the picture that Iím trying to paint for him, he expresses shock that I would suggest he should never spend more than $8 (his hourly wage) on a single article of clothingÖ.or alternatively buy significantly less clothing. But most of the time, the idea that they might be living well above their means only confuses them and they just stare at me blankly.

My Mother in Law, who is respectably middle class, will die in debt and the worst part is she rarely buys anything for herself. Every Christmas we go over to her house bundled up in sweaters and jackets, swathed in a layer of blankets because she canít afford to turn the heat up. But everyone will be plowed with the presents that she couldnít control the impulse to buy. It pains me to see and I just want to say to her to please take back the bracelet and the sweater and the gift certificate and the 20 presents you bought the children that will most likely be donated to charity without them ever playing with them because they have so much already and please, turn your heat up. Seeing her live her adult life with some semblance of physical comfort is more valuable to me than any present she could give.

I guess what Iím trying to find out is why the **** are we doing this to ourselves?

Is anything that you own worth living paycheck to paycheck for? Is the extra square footage and the swimming pool and the new car worth it knowing that something as little as a traffic ticket can screw you up for the month? Is a playroom full of toys for the kids necessary when all youíre doing is teaching them that mindless consumer excess is not only normal, but the key to happiness?

You know what makes me happy? Not being a slave to the things I want to buy. But hey, thatís just me. I also plan to retire early and I feel that Iíll be pretty alone in that endeavor unless I can convince a few now to come with me later. There are legions of people who are going to come face to face with the hard, cold reality that their debt doomed them to a life of dependency on a job at Walmart passing out smiley face stickers and shopping carts. They will find out, too late, that the things that they had to own cheated them out of retirement.

I hope the plastic beads are worth it.

Rausch
11-07-2006, 01:10 AM
Save your time, watch fight club and sink a 12 pack...

chagrin
11-07-2006, 06:01 AM
This is just too long, I will read it later - can you bottom line it for me?

Simplex3
11-07-2006, 07:36 AM
This is just too long, I will read it later - can you bottom line it for me?
It's actually very well written, I'd spend the 3 minutes.

Rooster
11-07-2006, 07:58 AM
Great article. It is so true.

chagrin
11-07-2006, 08:02 AM
It's actually very well written, I'd spend the 3 minutes.

Fine :harumph:

chagrin
11-07-2006, 08:05 AM
okay, a decent article on debt.

Rain Man
11-07-2006, 08:12 AM
I like the sentiment, but it's not lost on me that the author figured out that she had 24 years of debt piled up and then "took some extreme measures" and paid it off in three months. Perhaps the simple answer to life's problems is to sell our Porsche Carreras.

jidar
11-07-2006, 08:22 AM
I like the sentiment, but it's not lost on me that the author figured out that she had 24 years of debt piled up and then "took some extreme measures" and paid it off in three months. Perhaps the simple answer to life's problems is to sell our Porsche Carreras.


Yeah I know. What the **** kind of extreme measures could clear up that kind of debt? Bankruptcy I suppose.

I do have a bit too much debt though. Difference being if I really really wanted to I could pay it all off in months, not years. Hrm.. I ought to do it.

boogblaster
11-07-2006, 08:22 AM
Road of hard-love has to happen someday..suck it up, look forward, forget about how it was, make a plan and stick to it, even if it means no designer shoes, that shit is just material anyway............

Rain Man
11-07-2006, 08:37 AM
Yeah I know. What the **** kind of extreme measures could clear up that kind of debt? Bankruptcy I suppose.


Ah. Yeah, you may be right with the bankruptcy. I assumed that "clearing it up" meant paying it, but perhaps the person just declared bankruptcy so she could keep the stuff. It seems like a no-lose strategy.

DaFace
11-07-2006, 08:38 AM
I like the sentiment, but it's not lost on me that the author figured out that she had 24 years of debt piled up and then "took some extreme measures" and paid it off in three months. Perhaps the simple answer to life's problems is to sell our Porsche Carreras.

I was wondering that as well. I figure she had to either 1) sell off a ton of her stuff, 2) beg for money from her family, or 3) go to work in somewhere in the sex industry. I can't come up with any other way she would have been able to do something like that so quickly.

DaFace
11-07-2006, 08:39 AM
Yeah I know. What the **** kind of extreme measures could clear up that kind of debt? Bankruptcy I suppose.

That's not near as fun as the sex industry. :p

Fat Elvis
11-07-2006, 08:55 AM
I can really relate to that article. I paid off my student loan a couple of days ago, and I should be out of debt in 8 days; that is when we close on our home. I really like the home we have now, but it is too big for our needs. Having a smaller home (with the smaller utility bills, smaller insurance and smaller taxes) with no mortgage is just a huge relief for me. I hope to teach my daughters that bigger isn't necessarily better and that more doesn't always mean abundance. There is more to life than "things," and I certainly don't want to be a slave to plastic crap. I really thank God that I have the opportunity to get out of debt.

ck_IN
11-07-2006, 09:20 AM
Very good article. It should be a must read for every teenager/college student.

I was raised by a grandmother who grew up during the Great Depression. An abhorance of debt was burned into me at an early age. I've had one credit card my entire life. I never carry a balance. I paid my mortgage off by devoting every third paycheck to paying principal. I lived at home while going to college so no loans were needed. I've never had a personal loan in my life. I've never owned a car I couldn't pay cash for. Then again I don't drive Jags, Escalades, etc.

I just can't contemplate how people can live in constant debt. My grandma didn't die rich but she never owed a penny to anyone.

Rain Man
11-07-2006, 09:22 AM
I can really relate to that article. I paid off my student loan a couple of days ago, and I should be out of debt in 8 days; that is when we close on our home. I really like the home we have now, but it is too big for our needs. Having a smaller home (with the smaller utility bills, smaller insurance and smaller taxes) with no mortgage is just a huge relief for me. I hope to teach my daughters that bigger isn't necessarily better and that more doesn't always mean abundance. There is more to life than "things," and I certainly don't want to be a slave to plastic crap. I really thank God that I have the opportunity to get out of debt.

We're almost completely unpacked from the big remodel now (pictures to follow as soon as four final things get finished), and I find myself thinking, "Do I really need this much space?" It's kind of silly. I dearly love my house and it's a perfect home in a perfect location, but I can possibly see us downsizing at some point just to clear some debt off the books.

However, I'm a little torn on it with a house. If I can make the payments, it's not like I'm wasting money (other than bigger utility bills). It's just being stored in real estate instead of a bank account, which increases my quality of life. Therefore, it's not so much debt as it is leverage. However, it's still a big freaking check that has to be written every month.

I think my philosophy is going to be to stay in the house as long as I can make the payment comfortably, but if it ever becomes painful, then I'll downsize.

Iowanian
11-07-2006, 09:31 AM
I had a roomate after college, who had maxed out some CCs and spent his way out of college, trying to keep up with all of the other 90210 wannabe Delta Chi...

I guess its easier to be finanically thrifty when you start out without alot, and see your parents good example.

It always amazes me to see young people coming out of school or newly weds who EXPECT to live at the same level thier parents do, after years of wealth accumulation. Pssssst....you can't start out in a $250,000 house, fill it with $50k in furniture, drive new shiny cars....when you're making $35k

HS and colleges would serve us all well to work harder towards educating students on financial responsibility and budget.

Rain Man
11-07-2006, 09:41 AM
It always amazes me to see young people coming out of school or newly weds who EXPECT to live at the same level thier parents do, after years of wealth accumulation. Pssssst....you can't start out in a $250,000 house, fill it with $50k in furniture, drive new shiny cars....when you're making $35k


This drives me nuts. I had a couple of young employees in the past who went out and bought quarter-million dollar homes as their first house, and new, expensive vehicles, and then they came crying to me about not making enough money. Ever hear of a starter home? Ever hear of a used car?

DaFace
11-07-2006, 09:44 AM
This drives me nuts. I had a couple of young employees in the past who went out and bought quarter-million dollar homes as their first house, and new, expensive vehicles, and then they came crying to me about not making enough money. Ever hear of a starter home? Ever hear of a used car?

Boy, sounds like you could use someone who's financially responsible enough not to come crying to you about money... :hmmm:

Cochise
11-07-2006, 09:46 AM
I went down that road too with credit card debt from college. It was only a couple of grand, but man did it seriously piss me off to have to pay it.

And half the total debt was just interest paid to the credit card company. I didn't even get to spend it on booze or whatever. It was just profit built into the equation by MBNA or whoever it was. Luckily I had the means to not have my retirement ruined or anything, but friggin' credit is the debbil.

Rain Man
11-07-2006, 09:49 AM
Boy, sounds like you could use someone who's financially responsible enough not to come crying to you about money... :hmmm:

Yeah, but where can I find such a person? Where can I find such a person?

DaFace
11-07-2006, 09:51 AM
Yeah, but where can I find such a person? Where can I find such a person?

I'll let you know if I think of anyone.

Iowanian
11-07-2006, 09:55 AM
I had to do the student Loan thing for college...I started out in junk cars and worked my way up....I've never owned a new one, have a buddy get me lower mile vehicles via auctions at cut rates.

I've had a 3 house plan from the beginning. My first home was a detroyed rental ghetto.....I spent a couple of years living in rubble as I rebuilt it from the ground to the roof....I sold it for a net gain of the original purchase price....I sunk the equity into our 2nd home(married in middle of process) and some in an investment....This home is much nicer, but has room for improvement....alot of character that just needs a little here and there....some windows updated, kitchen work....stuff like that. My plan is to use the accumulated equity in the 2 homes to make a big dent in building, or purchasing a home I hope to be in for a long time. I started out in old furnature similar to college, and have worked my way up a piece or two at a time, as we could afford it without hurting the bottom line.

As I paid off 1 loan, I put that money into the next and so on.....I'm not wealthy, but in 15 years have clawed myself from broke and in debt(good debt, not CCs and shoes) and owe only on my home.

I'm no financial genius, but its not rocket science. I don't buy things I can't afford, I accept that my 6 year old truck with 90k on it still runs fine and is paid for.

I'll never understand renting while having the giant TV and the $5000 Home theater...with a job at the mall.

ct
11-07-2006, 09:55 AM
Good read, and painfully true. Thanks (Zach).

Iowanian
11-07-2006, 10:04 AM
In short...I think the title is flawed.

The Children of Sugar Daddy, could learn alot from poor kids.

Bob Dole
11-07-2006, 10:18 AM
This drives me nuts. I had a couple of young employees in the past who went out and bought quarter-million dollar homes as their first house, and new, expensive vehicles, and then they came crying to me about not making enough money. Ever hear of a starter home? Ever hear of a used car?


Sounds like the union grocery store checkout clerks that went on strike in KC back in the late 1980's.

They'd interview them on the nightly news as they stood on the front porch of their $250k house with 2 new cars in the driveway, a pregnant wife and 3 rugrats running around.

YOU RUN BAR CODES ACROSS A LASER, DIPSHIT!