1. Don't buy your friends cars
So I was a teller line manager in college. One day this 19-year-old kid comes in with a check for like $350K. I start to chat him up to make sure he wasn't getting scammed or something.
Turns out his dad had died and this was the life insurance check he got.
I say, "well it's terrible that your dad died but at least he thought ahead to take care of you. Let me set you up with one of our advisers and if you play your cards right you'll be retired comfortably by 40."
Nope, he says "I'm buying all my friends cars." And he did. The worst part is he was buying OK used cars. He came in every couple days for 3 months to get a couple cashiers checks for like $6,500 to buy each of his friends several cars.
By the end of the 3 months the money was gone.
That was about 15 years ago so taking compound interest into account he'd have about $1.5 million at this point.
2. Owing more than the value of your house
My ex-father-in-law was incredibly bad with money. He would constantly buy and trade in NEW cars, over and over again. I'm talking $60,000 cars too. New trucks, Jeep's, a Corvette, everything. In a year he'd easily go through 4 new cars at minimum.
But oh wait, it gets better! He took an early withdrawal out of his 401(k), paying penalties and all, to buy a Corvette WHILE THEY OFFERED 0% FINANCING!
On top of that, I found out he was taking multiple home equity loans out. He bought his house in 2003 for $80,000 and NOW owes $165K.
All of this while constantly spouting "if you work hard, you can have these things too."
3. $1,000 on Nerf guns
I dropped $1,000 on Nerf guns and accessories, thinking my friends would want to run a tournament style thing in the back yard.
Turns out my wife and I were the only people out of everyone we knew who would want to do something like that.
We were 20-years-old at the time. We ended up giving most away to relatives with kids or used them as gifts.
4. Squandered windfalls
My mom got a decent inheritance from my grandma passing, but instead of paying off her house (on which she's almost been foreclosed), or fixing her car (which is now gone because the head gasket blew), she decided to put in a deck, redo her kitchen, and buy some weird cabin out in the middle of nowhere.
Which aren't necessarily terrible ideas, but why she didn't choose to service her insane debts before making upgrades doesn't make any sense to me.
5. Reinvesting...in the lottery
I worked at a convenience store as a teenager. We had a few regulars that drank coffee and played dominoes. One guy, Earl, was pretty down on his luck. He had been laid off just a few years shy of retirement and was fixing lawnmowers to earn a living.
Earl used to buy a few scratch-off tickets here and there but since he got laid off it was like one a day. He liked the big $5 ones. One day he comes in, buys his coffee and a scratcher, and wins $250. He is completely convinced his luck has changed so he "reinvests" the $250 in more scratchers. He won $10, which he used to buy two more tickets, both of which were losers.
That $250 could have gone pretty far towards paying bills, buying groceries.
6. Fad diets and chiropractors
My ex-wife was complaining when we were married that I should be paying all of the bills since she couldn't afford to chip in at all. Eventually, I sat her down and went through her personal accounts to see how, exactly, she was barely scraping by making $50,000 while I was paying the mortgage, utilities, and grocery bill.
The only thing she should have been paying was her car payment. She should have been flush. Nope. She was broke and had to use her credit cards most of the month.
I found out she was spending nearly $1,000 per month at her chiropractor. Multiple weekly visits, she got a massage there as well. She also visited their in-house "nutritionist" who was charging her a few hundred bucks a month to give her some weird diet that included things like "After dinner, you can have four grapes."
She also had a trainer at the most expensive gym in town and refused to switch to Planet Fitness because hers had a pool she never used.
She was also hitting Starbucks multiple times a day, eating lunch out every day and buying clothes whether she needed them or not.
7. Used retirement funds to buy a horse
My sister worked at a local bank from the late 70s to about the mid 80s. She early on became one of their main computer people. I am currently an IT professional but I remember her explaining to me the difference between software and hardware.
So one day she finds out that there was a large chunk of money in her retirement fund from the bank. Like $30,000 or something. She is maybe 29 or 30 at the time.
For whatever reason she decides to quit her job and cash out the money, at whatever penalty she had to pay, and buy a bunch of crap including a horse.
She lived in a subdivision so had to board the horse. Got a job slinging cocktails at a local bar.
8. Timeshare vacations
My wife's daughter and husband were unable to support themselves without help and moved in with us.
Later on I heard they were considering a "timeshare vacation." Basically their plan was to use this thing and take many luxurious vacations. Setting aside the fact that the monthly payment alone was irresponsible for someone who already had failed to support his family, it's a TIMESHARE.
Anyway, they found out the fine print required that they travel to another state to do a three week course, which cost money, to "teach them" how to use the timeshare.
Later on, I referred them to a legal service that helps people escape these arrangements, and of course, just like when I warned them not to buy the timeshare, they "knew" my advice was horrible.
To date, five years later, they still have this timeshare and have not been able to use it once. But $400 a month goes to the people who sold it to them.
9. Having a baby, can't pay rent
Married couple I know have never held down jobs. The guy keeps getting fired and the girl keeps quitting because of various reasons. My mother-in-law felt bad for them and let them move into her basement for peanuts for rent.
Man lost his job again, woman got pregnant. Had the baby, quit to take care of it. My too kind mother-in-law gave them a couple months of no rent to get back on their feet.
When the guy got a job again he kept making excuses about rent. Trashed her house, never paid. She eventually evicted them for unpaid rent and damaging property.
They still went to Disneyland. They go every year they said.
My mother-in-law is taking them to court.
10. Massive TV, no electricity
Having Rent-a-Center come out with a giant TV and living room suite. Having Comcast come out the same day and turn on your cable.
But not paying your electric bill so three days later you're knocking on your neighbors doors asking for money to pay your electric bill because it's been turned off.
Then sneaking onto same neighbors porches at night and plugging extension cords into their porch outlets.
11. Not focusing on the mortgage
My parents were constantly on the verge of foreclosure and could barely pay the bills or put food on the table, but every Sunday they scraped together everything they could to give tithes at the megachurch we went to (they couldn't even scrape together lunch money for me).
We ended up homeless because they decided that wasting all of their money on private Christian school for my brother and me was more important than paying the mortgage.
They were so terrified by the thought of us being exposed to atheists that they ended up choosing homelessness instead. All the while my mom didn't work because that wasn't her "place" in the household. Bad decisions all around.
12. Blowing student assistance loans
From the U.K. One of my flatmates in university got the maximum maintenance loan and managed to blow his entire first installment on going to bars.
£100(~$130) into his overdraft, he took a girl out on a date to a fancy steakhouse and spent another £150 (~$200). All while being exploited by said girl. It was embarrassing to watch, especially after everybody around him was giving him monetary advice.
13. Picking the worst of two evils
Old roommate who was constantly late on rent came into some money after his grandfather passed. After taking care of his debts (smart) he had about $2,500 left and was planning on buying a used Mustang he saw in a grocery store parking lot (dumb).
Luckily everyone was able to convince him that'd be a dumb idea because it'd end up costing him so much money in gas and taxes. Phew. Crisis averted.
So he bought a 30-year-old scooter instead. In New England. In the winter.
I think it lasted about 6 months before it broke down. Still not sure why he didn't at least buy a brand new one, he had the money for it, but I gave up on trying to make sense of his financial decisions.
14. Mortgage fiascos
My aunt has declared bankruptcy twice in her life due to never having learnt her lesson. Recently her husband's mother died and willed them a fully paid for house.
So they do what any rational person would do and MORTGAGE THE HOUSE SO THEY CAN RENOVATE IT.
She just lost her job (again) and now they are in danger of losing the house. Brilliant.
15. Expensive weddings
I know a couple who spent $125K on their wedding.
Their marriage lasted less than four years. They ended up arguing over who had to pay which part of the debt ('I didn't want the flowers in the first place!') during their divorce settlement negotiations.
They were each still paying for the first wedding when they married their second spouses.
16. Business, no plan
I had a friend cash out all of his stocks and savings so he could spend $100k on his own online marketing business.
He had no prior experience and no clients lined up. He had about 4 clients over the course of 2 years, one of whom never paid him.
17. Filling a pool you can't afford
Definitely filling your giant swimming pool up then being unable to pay the water bill, resulting in your water being shut off for months, forcing you to use the pool water for your water needs.
As in flushing the toilet, cooking, drinking etc. Until the health department catches wind of it and has your kids taken. They will come take your kids in this state if your house is without water for a certain number of days because it's considered uninhabitable.
Then you go around the neighborhood knocking on doors asking your neighbors for money to pay your water bill so you can get your kids back.
18. Buying into contracts impulsively
A friend of mine who is very bad with money and his girlfriend bought some sort of water filtration system from a door to door salesman. He has to pay something like $300 per month for this filtration system.
He was all stoked because it came with a free set of pots and pans.
Fast forward a year and his girlfriend has broken up with him, moved out of the house, and he's had to sell his home because he can't afford to live there.
The water filtration system is now sitting in a storage unit where he still pays $300 per month for it because he's on contract for another 2 or 3 years.
We have great water quality in my area.
19. Bought a samurai sword
One of my friends got a loan for tuition in college. Paid for his classes and had about $300 left over.
So he goes to the mall and buys a samurai sword from one of those knife shops. Then he buys a box of Hugs, these little juices for kids that come in small barrel shaped plastic bottles.
He proceeds to throw the Hugs into the air and cut them in half with the sword in a Kroger parking lot at 11 p.m.
Note, he was unemployed at the time and spent about $260 of the $300 on this parking lot slaughter fest.
20. Went to the wrong neighborhood
My cousin got a reasonably sized inheritance and used it to buy a house in a city where he doesn't live, where he didn't move to, and where he's been unable to find a tenant to rent it.
Four years, and the house is still vacant, losing value and giving him nothing back.
21. Everything. Everything he did
This guy I knew went from being on mom and dad's bill to his own because he messed up in school. So instead of getting a cheap apartment close to campus, he picks one of the most expensive apartments in town.
No utilities included, got the cable/internet add on, got the several hundred dollar parking pass, and continued to eat out and go out on a regular basis.
You will be as shocked as I was to learn that that didn't work out and he had to move back in with his parents.
22. Impulsively buying a car
After a divorce, this woman I know used the split equity from the sale of their former marital home to buy a Cadillac Escalade. Then ended up in government apartment complex, on benefits, and losing the SUV because she couldn't afford to insure or gas it.
Girl, you could've had $50K+ in the bank to survive until you got on your feet...you set yourself back five years and may never recover. Her husband is doing great though.
23. Skip the sofa!
I used to live with a bunch of friends. One of them had his girlfriend move in with us and they were both bad with money so they didn't have a cellphone due to overdue bills.
The first thing they did when they moved out was get a $2,500 sofa from a rent to own place.
They're doing much better now that they're older but back then most of their financial decisions were super shortsighted.
24. Rent-to-own? Not for video games
My roommate is renting a PS4 from a rent-to-own shop. He's paying $80 a month and he's had it for about half a year. He's put, loosely, about $450 into it.
Well he's selling some of his video games and was deciding whether to keep it or return it. I asked him how much is left to pay, to determine if it's worth keeping.
He still owes $450 on it. He still, after paying nearly $500 dollars for it owes MORE THAN A PLAYSTATION COSTS TO BUY IN THE FIRST PLACE.
A new PS4 is like, $300. And the one he's renting is used.
25. Where you come from matters, but not this much
My sister in law and her husband have three kids and make $1,500 a month(he’s the only one who works and she refuses to). They always complain about having no money and have GoFundMe pages up but she spends tons on learning about her ancestors.
She even hired a professinal genealogist at a whopping $50 an hour (she’s spent $1,500 so far in 6 months).
Meanwhile her kids need dental work, wear clothes with stains, and holes, and they live in a two bedroom shack in a bad neighborhood. Their car is 20-years-old, and hardly runs, but hey at least she knows she’s related to someone from Iceland 100 years ago...
26. Using plastic unwisely
Treating the limit on their credit card as money they have.
For example, they have a $5,000 limit on a new card and immediately think about what they could buy with $5,000.
And opening a new credit card when they run out of that $5,000. I used to be a cashier at a store which had a store credit card that can only be used at that store. Most of the credit applications I processed were either denied or given very low credit limits because those cards attract people with the worst financial decisions.
27. Eating out all the time
Eating out for lunch every single day and complaining about how poor/broke you are.
Obviously, Sandra, was that peanut and chicken kale salad with a side of pasta and extra bakery treat really worth it?
28. Quitting while ahead
An old friend of mine (we'll call him Friend A) was in a rough place.
He had a job but couldn't really afford to get out of the slump he was in (living paycheck to paycheck), so my other friend (Friend B) who owned a house offered to let him stay for free for a few months.
All Friend A had to do was pay the internet bill ($70 per month). Easy enough, right?
Well Friend A decided that since he no longer had expenses, he would just quit his job and play Friend B's Xbox all day long and join a band.
Lo and behold, Friend A ran out of money eventually. Now he owed Friend B the internet bill and simply couldn't pay it. Instead of getting a job, Friend A stole Friend B's Xbox and pawned it, then used the money to pay Friend B the internet bill.
We don't talk to Friend A anymore.
29. Questioning you on savings
When you let a friend know how much you have saved and they ask why you aren't spending more. BECUASE IF I SPENT IT I WOULDN'T HAVE ANY SAVED.
Recently got an argument with a friend about that.
They accidently saw my bank statement. My fault, I forgot to put it away before they came to my to my friend.
Since they discovered what I have in savings, they're always going back to it whenever I find something too expensive.
30. Not cooking at home
I work at the bank. Literally 95% of people's expenses comes from food & eating out.
Now that doesn't mean someone is necessarily financially illiterate. But by simply making their own food and getting a coffee machine, most people can save a large portion of their paychecks.
Also having a credit card that offers no rewards. There's so many with no annual fee.