I recently got back from a sightseeing trip around the San Francisco Bay Area.
Of course, one of the most popular attractions in San Francisco is the beautiful Golden Gate Bridge. It’s absolutely breathtaking to behold in all its majesty.
Ironically, the gorgeous span is also an extremely popular suicide location; more than 1300 people have jumped off the Golden Gate Bridge since it was completed in 1937.
And while most people would never consider committing harakiri by any means, there are more than a few folks who unwittingly choose to commit financial suicide every day.
How so? Well, here are seven of the most popular methods:
1. Having children too early. There is nothing more destructive to one’s financial future than bringing children into the world without having an established and stable means to support them. Raising children requires a tremendous investment of not only money, but time as well. Unfortunately, when those resources are in short supply, it becomes extremely difficult to start a business, or gain the necessary experience, on-the-job training and/or education required for the type of career advancement opportunities that lead to significantly increased earning power.
2. Abusing credit cards. There are thousands upon thousands of careless people who have been driven to financial ruin after burying themselves under a colossal mountain of debt via credit card abuse. In most cases, it’s because they lacked the financial acumen and discipline to understand that credit cards are a double-edged sword that must be treated with respect and used responsibly.
3. Maintaining financial dependency on others. We are constantly being admonished by officials to avoid feeding bears, squirrels and other wildlife in order to prevent them from eventually becoming dependent on handouts. For the exact same reason I’m absolutely convinced that, the longer we stay dependent on government assistance or friends and family for financial support, it becomes tougher for us humans to achieve financial independence.
4. Failing to accurately track income and expenses. Trying to get a handle on your personal finances without knowing how much money you are earning and where it is all going is tantamount to trying to drive while blindfolded. People who fail to take the time to analyze their finances typically end up crashing and burning because they lack a means of ensuring they get the most from their income. As a result, they end up succumbing to a severe case of lifestyle inflation.
5. Setting down roots in the wrong location. Whether you realize it or not, one of the most deceptively critical financial decisions you’ll ever make is where to live. True, sometimes we have little choice in the matter. However, it’s important to keep in mind that choosing to live in a high cost-of-living locale without the income to support such a lifestyle makes it extremely difficult to not only make ends meet, but also accumulate wealth over the long haul.
6. Failing to establish a plan for the future. The young always seem to have more time than money, which is why financially important things like putting aside money for short- and longer-term emergencies — or feathering a retirement nest egg — are often never even considered until people approach their golden years. Of course, by then, it’s usually much too late. The old bromide really is true: Failing to plan is the same thing as planning to fail.
7. Marrying the wrong person. Choosing whom to marry is another epic decision with major implications. Remember: Marriage is a financial contract. As such, it’s always a financially dangerous proposition — there are countless responsible people who ended up bankrupt due to the antics of a financially undisciplined spouse to prove it. As for those who eventually recognize their matrimonial mistake after saying “I do,” they still end up paying dearly. The average cost of a divorce is approximately $20,000, which just goes to show that the only people who prosper from a divorce are usually the lawyers.
Photo Credit: The Honeybee
Savvy Scot says
I totally agree with your point on having kids too early, but have to disagree on the marriage point. In my case (and a lot of others I know) getting married helps to save money and start building a future. Less money is wasted on nightclubs and taking girls out to impress! Combined finances also give a great foundation to save as DINKYs
Len Penzo says
I see your point regarding marriage. However, all bets are off for those who end up marrying financially irresponsible mates.
On a side note: did you really just admit that, now that you’re married, you no longer need to spoil your wife like you did when she was your girlfriend? 😉
My best friend’s wife married a financially irresponsible person. My other friends and I try to get him on track, but he tends to flaunt his poor money skills at least as much as he learns from the advice.
I agree completely on not having kids too early. My husband and I are committed to not have kids until we are both where we want to be in our careers.
I do not want to resent my kids in the future and blame them for not achieving my career potential.
In my experience it isn’t the age at which one marries; it is choosing a financially responsible spouse that counts.
Len Penzo says
Absolutely, Jenna. I need to better clarify my point … By marrying too early, I was trying (unsuccessfully) to infer “before one gets to know their partner.” Even older people are at risk of marrying someone before they truly get to really know their attitudes about money. Although I do think younger people are more susceptible to this.
When I get a moment, I am going to fix the paragraph.
I have one. Not having health insurance. One trip to the hospital can wipe a person out financially. My husbands emergency appendectomy was $35,000. Didn’t anticipate that one. We were fortunate enough to have health insurance so it didn’t make as big of a dent in our finances.
Len Penzo says
That’s a good one too, Aunt Jenny — although a lot of folks do get lucky and skate by in life without it when they are younger. I see that more as playing financial Russian Roulette. 🙂
That’s not to say I’m advocating people avoid health insurance. I think even young people should be carrying, at a minimum, a catastrophic health insurance policy.
It wasn’t until my In-laws died that my sister-in-law and her husband finally grew up and started taking care of themselves. They are still relying on public assistance, but one of them is working now. The pension and social security payments that were being shared with them were enough that they never cut the cord, but those funds died when the parents did.
I think it was so much worse than if they had been told “NO-stop asking for money-get a job” a long time ago.
Len Penzo says
I’m sorry to hear about your in-laws, Deb. Thanks for sharing your story.
David Brown says
I don’t understand suicide. There are too many things to do while you are alive. Wasting your life is stupid!
I see no rush to get married or have kids. I am glad I have waited for kids because I am getting a head start.
Len Penzo says
Smart man, Lance!
Settling down: gotta agree with that. If I knew how much more expensive it was to be a homeowner of an old house (even with a somewhat “fixed” house payment) vs. a renter, I would have stuck with being a renter longer.
I got married quite early and it has worked out as one of the best financial decisions of my life. Although I can appreciate that it can get get ugly and cause ruin for some people.
Hi! Came across your post on twitter.
Personally, I’d put credit cards at no. 1 above children. As a mortgage arranger in a previous job, being careless with credit cards just crushes so many people into huge debt.
I’d argue the toss over kids though, as you don’t always plan to have them, sometimes it just happens. In my case we were told we couldn’t have them, and then BLAM! All of a sudden my beautiful baby boy arrived. I’ve had to work my fingers to the bone to support him and Mum, but I don’t mind. And it’s much more fun than massive debt hanging over your head…
Len Penzo says
Welcome to my not-so-humble blog, Matt! I didn’t mean to imply these were ranked in any order. I guess I’ll clarify that too when I update the post!
For me, that’s a tough call between which one is more financially destructive. I think I would have to give the edge to “kids too soon” though simply because you can default on credit card debt and then begin to start over after several years. Not so with kids. But that’s just my two cents.
Len Penzo says
I think the occasional spousal argument comes with the territory too, Crystal. I know the Honeybee and I have had a couple of, let’s call them “passionate disagreements” over 16 years of marriage. lol
My parents have been happily married for almost 53 years now and I remember them having a few boisterous arguments when I was growing up.
Great post! I think that having kids at any age is a bad financial move but that’s just me
Len Penzo says
They are expensive, Vanessa — but worth every penny!
I have to agree with children being no.1-everyone I know who had kids too early is still at the same career-level they were when they started, or one person chose to stay at home and now they only have one slightly-bigger-than-when-they-started income. Great post! Glad to hear you enjoyed your vacation!
While I agree with you, the problem is the ‘people who don’t care’ just keep pumping out children and collecting government entitlements.
Meanwhile, the responsible, educated folks have fewer and fewer children.
This is an excellent post. No one really talks about true aspects of how people get themselves into debt in the first place. The most interesting part about this is that the people who commit one of these acts usually commit the majority of the others listed. For instance, someone who gets married too early ends up having a child too early, and they didn’t plan for the future and is now wondering why they are in debt or broke.
The point being if you are more personally responsible, it leads to financial responsibility.
We had our kids while we were in our early twenties. Though we lived like poor college students for quite a few years AFTER college, I’m not sad that we had our kids early. Admittedly, it wasn’t as much fun without extra money when we started out, but now that I’m pushing 40 I can’t imagine having kids any younger than my teenagers!I think finances shouldn’t be the only consideration for having kids. Just sayin’
I seem to have managed to avoid all these except the forth one. Failing to track accurately expenses and income, however, goes with selecting ‘money’ as one’s area of ignorance.
The only one I disagree with is number 4. I think failing to accurately track income and expenses is only tantamount to financial suicide if they are very close to each other. If you are an inherently frugal or financially conservative person, chances are you’re going to save half your income whether you track things or not. I’m certainly that way. I’ve never had a budget because I’ve never felt like I needed to account for every dollar.
Have to disagree with (1) and (7) – personally, from my Christian perspective (which may not reflect that of all Christians), there is never a “too early” to have children.
WRT marrying early, I also think it’s best to marry as young as possible precisely to avoid getting into bad “single life” habits that become harder and harder to break as you get older. 😀
Little Tex says
I disagree that marrying early is financial suicide. I am in my 20’s and realized that two financially responsible people running a household is much better than one when it comes to expenses and growing one’s wealth. The tough part is it is nearly impossible to not be blinded by feelings of affection to truly take notice of someone’s work ethic and spending habits. I think Len is right by saying really, you need to get to know your partner well regardless of how old you are before getting married.
Paula @ Afford Anything says
I’m glad you included “settling down roots in the wrong location” on your list.
I would LOVE to live in Manhattan, but at my income level, I don’t think that would be a wise move. At the same time, I have friends who live in Manhattan who always complain that they’re broke or tell me that I’m “lucky” to have enough money to invest.
(For the record, I should add that these friends moved there of their own volition, purely for the fun of it — there was no job or family that prompted the move).
Carlos Sera says
@Little Tex, it’s not marrying too early, it’s having kids too early. Admittedly, I’m guilty of having kids too early.
This is the kind of basic, straightforward, but critical advice that too many young people never get. AND OMG. I wish they would seriously listen to #7. I work with many 20 something year olds and I can’t tell you how many times I have said and then watched them totally learn the hard way!
You’ve made a great point, abusing credit cards can have a long lasting affect on someone’s credit.The debt that many people accumulate through the careless use of credit can remain on their credit report for up to 7 years! This can be avoided by simply keeping a close watch on your finances, like you mentioned. One way that people can closely monitor there finances is through Quizzle.com which gives clients a free credit report and score every six months.
Len Penzo says
For what it’s worth, folks are entitled by law to one free credit report per year from each of the three major credit reporting agencies (Equifax, TransUnion, Experian). That means they can get a free credit report every FOUR months by simply spacing out their requests to those agencies! For example: Request a free report from Equifax in April, another free report from TransUnion in August, and another from Experian in December, then repeat the same process the following year.
Good informative article! I agree that keeping a close look at your financials can save you from financial suicide.
David Moore says
The fastest road to poverty is having children before being financially secure- not rich, but able to comfortably afford housing, a reliable vehicle, child care, food, and the bottom line basics of living.
I married young and didn’t know my husband was a spendthrift until several months later since he wanted to handle our finances. Both the 16 year marriage and the divorce were quite expensive.
Thanks for the article..!! Tracking your finances is a good way to know your expenses and understand how much you have actually saved. It can also help modify your spending habits so that you adjust your expenses according to the budget. Also examine the non-essential things that you are spending money on. Looking at credit card and bank statements can help manage your expenses.
I strongly agree on your articles. I have been suffering financial distress because of lack of financial management. Sometimes I use my credit card as an alternative when I want to shop or eat in a fine dining restaurant. Then when the date of payment arrives, all my salaries will only go their. I have no idea why I cannot control my expenses. It breaks my heart.
Those are like an outline of everything we never did. And we’ve been very successful. I think a compatible married couple with kids have a superpower of sorts. A resilience and sense of purpose that can generate wealth, at least that’s what happened to us. I had a reason to be successful and to become a leader because it mattered to me that my kids and my wife see I was productive and admired by others because of my character and integrity. I think I held myself to a higher standard than I would have otherwise because it mattered to me that they were proud of me.
Kim-Pacific Northwest says
I would say we thought we had avoided all 7 but not so…. the area we have lived our entire lives is now way too expensive for us to continue to live here. The cost of living far out weighs our income but it is difficult to leave and in our case I refuse to leave my elderly parents. It may be a huge financial mistake but morally I will not leave my parents to fend for themselves. They are in their late 80’s now and need to be checked on daily. Luckily they can afford to live in this area so it is just us that have to be really, really careful. I thought our retirement would be frugal but this is going way beyond frugal to keep up with the cost of living in this area of the Pacific Northwest. It is a sad reality.
RD Blakeslee says
Mistake: “Setting down roots in the wrong location.” – Len
But get it right and its possible to set yourself up for a happy rest of your life:
Roger in Jax says
Good post and some good comments as well!
I have found that some people cannot handle credit cards. It makes it too easy to rely on them to solve problems quickly without taking the time to really examine something and whether it is worth the cost or not. This also includes impulse purchases for enjoyment as well. Reading a credit card statement and seeing how much money was given up in interest can really be an eye opener.
Also: Buying a house while carrying debt. Owning a home costs more money than is normally assumed. Having a credit card bill, a car note, and home costs can really be stressful. I strongly suggest getting all other debts paid off before buying a home.
This is not being judgmental of others, I learned these lessons the hard way, and I am working to teach my children to avoid some of the same mistakes.
The Millennial Money Woman says
I could not agree more with you on all – especially number 7. Too many people that I know don’t necessarily realize that marrying someone could have (or could not have) adverse financial impacts on their lives – and I already know a few millennials that had to shell out a few $10,000s for going through a divorce and essentially started from scratch, in their early 30’s.
These are the lessons that I wish were taught in school from an earlier age. Thanks for enlightening us, as always, Len!
Len Penzo says
Thank you, Fiona!
My mother said a woman can throw more money out the back door than a man can bring in the front door.