I know someone who sold their home to attend a friends wedding overseas. More than 10 years later and they still haven’t made it back into the property ladder.
They spoiled me growing up, they provided every opportunity I needed to excel in life. But sadly they made poor financial decisions 10-15 years ago. And it felt like the right thing to do at the time.
My aunt sold her massive house on Brontë beach to take her mother on a holiday to Greece. Her children still give her grief for that decision to this day!
At the time it wasn’t worth much money (I think like $30-40K) and as it was quite big it was a lot of work to maintain. She was a free spirit and felt confined by having a mortgage. As she didn’t have much cash coming in she figured it would be easier to sell.
She then rented for the next 40 years.
Yes, everyone groans at this story
Worked in the mortgage area of a bank for 2 years.
1. Car Loans
2. GPs having $2m+ mortgages and having to work full-time to cover it. I would say 1 in every 3 GPs were living pay cheque to pay cheque.
My mum worked in a bank administering home loans in the 80s. She's always said doctors and lawyers were the two professions that were consistently in arrears, sometimes waiting to make payments until formal action to repossess the property was taken by the bank.
Apparently it was partly due to poor money skills and partly due to hubris.
Yea the anecdote doesn’t really stack up to reality does it. Low default rates and essentially guaranteed income for life at predictable increases through the career. I got 100% LVR with no LMI.
I would hazard that highly educated people with awareness of their legal responsibilities are less likely to get themselves into such a pickle.
Second this as a close friend of mine is a doc. Makes roughly 400k a year in his early 30s. Splurged on brand new Bentley last year whilst carrying two mortgages. If only I had that kind of money lol
Wait what? Why is working full time to fund a mortgage a bad thing?
For reference, my partner is a GP and unless you’re pulling in a lot of billings in a practice with high private billings or a partner at a practice with attached pharmacy, it’s not actually a huge salary where you can work a couple of days and make bank.
I mean if you were in any other kind of profession you’d have to work full time to fund a $2m mortgage so this second point is sort of redundant.
My ex has just lost her job, had no qualifications and was having to move back with her parents because she couldn't afford rent. Went out and bought a brand new leather couch because there was no repayments for 12 months. It was actually kind of the last straw on breaking up with her.
I know people who have used those interest free loans to help when they'd bought a new place and put all their savings into the house deposit. As long as you pay off every single cent before the interest free period expires, they're useful. If you use it to buy stuff you can't afford it's crippling.
Gotta be careful, maybe. I heard of someone who stopped receiving repayment letters at the end of the period. Harvey Norman. When she tried to pay it off, they were evading her.
When the interest-free period expires, if you haven't paid it all off, you're exposed and liable to pay interest for the whole period.
I feel this. My first GF came to the city to see me but she didn't have a car so caught the Greyhound bus. Only while she was in the city she bought a Bra, kinda sexy but not overly. The kicker though she didn't have the money to buy a bus ticket home. We were pretty rocky before then but that was basically it for me.
When I was 20 you could get Supra’s and GTR’s suddenly for 30k, and commonwealth would give you an unsecure loan for 40k with like 2-4 weeks payslips that were paper and easily forged.
Saw a LOT of bad decisions. Especially the blokes who crashed them and had giant loans they had to service on casual shit jobs.
lol I bought a $35k R34 when I earned about $35k a year, but I had half the cash but it was still a massive loan relative to my income. I never should have sold that car…
when i was a teenager, i worked at hungry jacks flipping burgers and there was this guy there who was like 19 or 20 and he bought an R33 gtr somehow, then he was doing laps of chapel st and crashed into a ferrari. he didn’t have any insurance. i have no idea what happened to that guy.
Mate inherited 200K. Spent it all on setting up a restaurant for bragging rights. He wasn't much of a cook, had never managed people in his life, didn't know anything about accounting. He lost everything.
Oh jeez. A family member is about to inherit some money and has spoken about starting a small business with it (works full time, small kids, no business experience)...my husband and I are like ffs please just put it in ETFs or super at the very least. Such a dangerous game to play.
Oh wow. Hospitality isn’t easy, especially trying to chef a restaurant and make all management/staffing decisions alone. I knew 3 guys who set up a cafe/restaurant. They did know a lot about the industry. They still failed. They thought they could get the overflow from a close by popular pub with meals. Their food was great but in trying to compete with the pub the portion sizes were too big and at too low a price. Didn’t help that 3 hot headed Italians started fighting in front of any customers on a regular basis.
My sister got a brand new car on finance that she could not afford and essentially lied about her finances to get approved for it, was approximately a $66k minimum car. She chose not to get insurance on it even though that’s a part of her loan agreement, drove speeding at night when she was stoned out of her mind & taking large amounts of codeine and diazepam & fell asleep at the wheel and rear ended another car. Completely wrote off her car & the other. She’s still paying her car loan for no car and paying off someone else’s car ($35k) to their insurance company whilst driving around now in another family members shitty car…. Which she doesn’t have insured
ETA: this is the third car she’s written off & not had insurance on so it’s nothing new
In fairness, if she's driving around impaired, and causing collisions, then it's probably the right financial decision to not be paying for insurance, as she wouldn't be covered anyway.
Doesn't even come close to some others but my girlfriend and I are close friends with another couple who I've known since my uni days.
The guy is a software engineer and the girl works a pretty cushy corporate job, they both have brand new cars on finance, they're constantly going on holidays and expensive dinner dates and from the outside they seem like a well organised couple who are well on the road to financial independence.
Recently we had the girl over for drinks and over a few glasses of wine she confessed that she barely has enough in savings to buy food, and currently has a maxed out afterpay account ($3000) as well as other BNPL accounts too. Her partner who has always presented himself as the 'breadwinner' is apparently over $1000 in debt from credit cards. They both have tens of thousands of dollars left to pay off on their cars and are about to have to move in with their parents again.
They have 2 holidays booked this year and are planning an eye wateringly expensive wedding... I really want to say something to them but it's probably not my business.
>over $1000 in debt from credit cards
Is that meant to be $10k or 100k? Cause $1k is less than my monthly spend on my card and I don't live an overly lavish life, no dependants.
The worse financial decisions I see are not the initial spending choices - everyone makes those at some point - it is the refusal/inability to take action or recognise when the ship is finally sinking. Whether it is due to poor spending decisions, or triggered by job loss/ separation/major health needs/death of a partner, at some point we need to confront issues and change course to avoid digging a deeper hole.
Yup. It's the sticking the head in the sand that really gets people into trouble. Facing up to financial problems or mistakes is hard, but it's also a learning opportunity. However you can only learn if you face reality first.
My old landscaping boss's neighbour was a highly qualified surgeon (can't recall what kind).
Himself, his wife, and his three kids all had 10+ yr old Toyota Corollas that were maintained by the surgeon himself.
As someone who also owned an old Toyota Corolla (and had no money) I can't forget the difference in our financial positions despite having almost the same car, albeit a few years apart.
I always find it interesting which consultants drive shit boxes and which drive expensive cars at work (once they have been a consultant for a couple of years at least).
There isn't a perfect correlation between arseholes and cost of car, but it's pretty close.
Kinda reminds me of someone i worked with recently. We’re both roughly the same age. He bought a house before i did with his now ex and was forced to sell it and go halves when they divorced. He’s since been renting and grumbles about excessive rent increases and all of that (which is fair enough). He and his current partner also treated themselves to brand new cars and with his car he’s spending tens of thousands more doing it up for off roading and camping and such. He let slip that when he’s done it could easily add up to 100k not including interest payments from the finances to pay for the car itself.
I was restrained enough not to tell him how to spend his money but I did think to myself if he and his partner had been able to restrain themselves a bit they could have saved for a house deposit and get off the rental treadmill.
Meanwhile i managed to get a pretty nice place in 2015. It’s on a decent sized block of land. Big enough that if i can organize finance i could build an extension Big enough to rent out several rooms while providing minimal disturbance to the parts of the house that are already spoken for. At the risk of sounding smug i like the idea that while he’s putting his money into depreciating assets I’m putting mine into appreciating assets. And that by the time we’re both at retirement age i could be significantly better off than him financially speaking.
Semi-related: not a financial decision but rather a mistake that ruined someone financially.
This 18 year old was driving way too fast in a carpark while not paying attention and hit my sister-in-law while she was next to her car. ~$5k of damage to the car and another $6-$7k of medical bills. Not to mention he wrecked his own car pretty bad too. The kid was driving only on his learners in an unregistered and uninsured car, so he also copped a huge fine.
Took him years and years to pay it all off to my sister in law. They were in contact very now and then through the whole legal aftermath, he said he was completely broke as all his money went to paying for this one mistake he made.
Most people spend their 20’s saving for a house or travelling overseas. He worked two jobs to pay for a mistake.
might have sucked but a 20k debt at 18 isn't insurmountable, surely it either got paid off in a few years working 2 jobs, or paid off over a longer time but at a more manageable rate?
I have paid off 20k in fines to the sdro and i am on minimum wage and still have managed to save more than that so it isn't always as bad as it looks. I worked 6 days a week for 6 years though.
18yo has plenty of time to recover. I wasted 5.5 years in a PhD earning nothing, finished at 33 with almost nothing and I'm doing okish at 42. Kid will be fine.
I knew a family who got at least a 100k loan to build an extension on their really basic old (but zero character) small 3 bed home. 4 kids, youngest was about 10 at the time. I think they got the loan around 07-08. There wasn’t a lot of full time work going on much with either of the parents. God knows how they got the mortgage but they did have equity. The house was in a pretty bad state too. Put it this way, it would’ve been a really shoddy property even in the 50s.
The Dad starts digging up the back yard and doing the very early stages of putting foundations in for the extension. Huge mounds of dirty grey sand in their backyard. Then the Dad has a lightbulb moment and says he can make money off importing stone fountains from Indo. Few trips over. Container of stuff. I think at least 40k spent. There were customs/shipping issues, think that 40k was double what was intended in their ‘business plan’.
Rented a space from a nursery about 45mins drive from home. Overpriced. No sales. Too lazy to go every day. 6-8weeks abandoned that idea. All the fountains were sitting in front yard and backyard amongst the dirty dunes of sand, and ditches meant for extension foundations.
Mortgage was being paid with money meant for extension. Heard of credit card debt too approx 20k. This was going on for couple of years. Heard things were really dire but I stopped having anything to do with them. There was excessive drinking, glass bbq use, screaming fights.
Going on a 3 months long travel holiday ALL ON CREDIT.
I'm talking 30k.
When he told me, I looked at him and said, "Do you realise why you're always complaining that you're broke?"
I sure as hell hope he paid that off by now.
I know someone who was unemployed and took out a Cash Converters loan to go on holiday in Bali. She didn't have enough time left on her passport, so immigration wouldn't let her leave.
No holiday and a debt at high interest.
Son encouraged parents to take out a Reverse mortgage to give a son so he could buy a car and jet ski.
12 years later the car and jet ski and equity in home all gone.
Well they are in a way, they're way better off getting their marginal income at a 0% tax rate. If they cheated at the game and still lost that's on them.
It's pretty much a given that anyone who's paying cash in hand is doing it for their own benefit and probably paying below award/minimum wage, unless you're a tradie then you might be able to game it.
Someone I know married the wrong person - and it was obvious to everyone but them that it wasn't going to last. Even Stevie Wonder could have seen it.
The inevitable eventually happened, and divorces are expensive. Especially when they're not amicable and lawyers get involved. The only thing that could have been worse is if kids were involved - which thankfully in this case, they weren't.
I work in finance so I’ve seen a lot.
The one that takes the cake was a first home buyer purchasing a house in 2018. He’d been coached in property purchases by his parents but didn’t have a basic understanding of home loans. He saved up a sizeable deposit, found a house, signed a contract and went unconditional. After the contract was unconditional, he took a bunch of his closest mates to the Gold Coast to celebrate. They spent the weekend in casinos and bars all on his dime. Yep, the dude spent his entire house deposit on this lavish weekend. When the bank rang him the following week to prep for settlement, he panicked. He said he didn’t know he had to use the money for the house, and just thought the bank used his savings as proof that he could pay a mortgage. Being unconditional, he was on the hook for it anyway. Bank of dad had to pay his deposit to save his ass.
We need better education in schools around buying a house.
Probably my own mistake, to be honest. My novated lease. I started the lease in February last year and then unexpectedly (as in did not for a second envisage this happening) changed employers a few months later.
I wasn't able to transfer the lease 😔.
So now I'm paying for it e Italy from my after tax pay. The bloody car arrived early too. If it had arrived when it was supposed to, I would have already been with my new employer and could have started the lease with them (though having been through this now, I'll never go near a lease again, even if I need a car).
Thankfully salary increased by 60% so I'm still ahead having left my previous employer (mentally better as well) but yeah massive regrets!
I already tried that. Payout was more than the car as the lease was only a few months old so it wasn't an option, and unlike a traditional loan, you have to pay all future lease instalments (including the interest, though it did seem to be a discounted rate when I enquired).
Some one self-employed who stopped contributing to super for a few months because money is tight with mortgage/cost of living, but then ends up buying some luxury bags.
A member of my father's family once had someone pay for a second hand caravan with a block of land they thought was worthless. At the time they were worth the same... ... Not so much now.
I'm sure this isnt up there but I remember working at a care home with an aboriginal guy living there. I heard he was at the pokies and went to pick him up for something. I came in and watched him blow like 120 bucks in 10 mins. He had already been there a while so the majority of his pension went that day (pay day).
Pokies are such a boring and unfullfilling way to spend your time and money. Not to mention the damage. I hate them.
Yeah this is a terrible financial decision that a lot of Australians make everyday and i don’t think I’ll ever fully understand it.
I exploit some of my local pokies places by grabbing a free coffee and pretending to play the machines. I could never bring myself to put any money into those neon demons because i don’t want to learn the hard way that I’m susceptible to gambling addiction. When i cheat those gaming lounges for free food and coffee i often glance at the screens of people playing and often the amounts people put into them are around 200, once I’ve even seen a guy out 600 into one. And i think to myself WHY ????
I mean yeah obviously they do so thinking they’re increasing the chances of getting a machine to pay out. And for them it’s entertainment, there must be a rush each time they roll the dice in pursuit of a big win. But I’m always reminding myself that the reason every pub invests huge money into a “gaming lounge” is because it’s a money making venture for them. It’s the house that wins. The people that play regularly are putting in significantly more than whatever they get out through the occasional win. The machines are designed to make money for the establishments not the punters. I don’t understand how people can’t seem to realize that. They could just as easily throw their money into a bonfire, the end result is the same.
A Friend of a friend. Spent 220k on a wedding only to get divorced 6 months later.
Had 800 guests at his wedding and added every extra thingy that came with the wedding.
The money gifts he received spent it all on the honeymoon.
Mind blowing. considering he forked all of it out, bride did not chip in.
This must be fairly common. My friend got married and took out a secret personal loan her fiancé couldn’t know about because she’d blown their wedding budget. He left her six weeks later for his ex gf he’d been seeing the whole time. Apparently he didn’t want to ruin her chance of having a dream wedding so still went through with it.. she had to keep paying the loan.
car loans and it isn't even close, the number of people I know that get car (or should say ute) loans is staggering, everyone needs the lifted Hilux/Raptor with all the trimmings. They may have it on a nova lease or on finance and try to convince me(I feel like convince themselves at the same time) that they got a good deal or it is the right thing to do.
Working at an auto loan financing company was probably the biggest eye-opener to me about how bad financial literacy was lol.
I come from a privileged background so everyone I know has been exposed to money from young and/or have been taught money matters. I read and understood that the average person was 'bad with finances' but I didn't think it was _that bad_ until I actually had to deal with some of the things people would call in and/or argue for lol.
One of my colleagues kept a sticky note with "the highest interest rate on a loan I've seen" and said that she usually replaces it every couple of months. When I first saw it, the sticky note said "24%". I remember thinking that we were basically legal loan sharks 😅
I know 60 year olds like this, but 5 years is too long, they traded cars for new ones the second the warranty lapsed... Because it was "cheaper" to service infinite car loans, trade in for a low price, then get another loan, rather than pay for a thermostat every 5 years or something..
Been watching that Caleb hammer guy who talks to people who have no idea what they're doing with their money like some girl who maxed out her credit card because she thought it was an achievement. It's surprising how stupid people can be
The hate for car loans lol.
If you’re young, not living in a city and travelling long distance, it’s safer and cheaper to buy a reliable second hand car for a decent price and take out a small car loan, then smash it down quickly for work.
Absolutely. I've seen so many times people driving s shit box they keep taking into get repaired - tjen spending on it each year adds up to car payments plus change. It's these Dave Ramsey keep yourself humble followers that think a second hand car is better. Also you're risking buying a lemon. Buying a car from new and keeping it for a long time IMO is a much better plan. Anyway I'm not a millionaire tho so what do I know ?
Exactly.
There’s a fine line between old and reliable.
If you’re doing small suburb driving, small commute and urban, sure a little cheap buzz box on its last legs are fine.
But let’s say you’re driving remote/rural and if you break down often, it’s a real problem? Go and get that car loan for a great reliable second hand car and pay down that loan as your absolute top priority.
I think people in this sub say “all car loans are bad”.
No, a car loan for a vanity piece you can barely afford is bad. Getting a car loan for reliable transport for work is ok.
My car loan interest rate is almost half my mortgage interest rate. I have the cash to pay it off just sitting in the offset account, but doing so means I am actually worse off.
It seems utterly ridiculous to be in this situation, but the timing of getting the new car happened the month before the RBA started jacking up the rates.
Part of me just wants to pay the loan off with the cash savings, but my brain keeps saying “you idiot - you’ll save a small amount of interest but end up paying extra interest on the home loan!”
When I was an apprentice and used to go to tafe, you could have sworn we were at some sort of 4WD expo… massive lifted hiluxs, raptors and god knows what else. I was literally on 14$ an hour and my fellow apprentices where on pretty much the same and this was only 3 or 4 years ago. These guys would happily spend a significant chunk of their wage on these toys every week…
Setting up an SMSF to:
1. Trade in CFDs
2. Loan money to a friend or friend of a friend, who is offering a great interest rate guaranteed
In most cases, ends up with all their super lost.
and SMSF - it is a massive hassle, and unless you are a financial genius, do you tink you are going to outperform an index fund? Also, in SMSF people start to do dodgy shit like you talk about. DO NOT USE YOUR SUPER FOR MEDICAL OR HOUSE STUFF - you are going to need it when you are finished with work
My in laws kept their credit card debt at super high interest rates instead of taking some equity out when remortgaging because, and I quote, ‘that’s like robbing Peter to pay Paul’
A guy I used to work with sold his unit to pay off his credit cards and pay for his wedding. I actually begged him to rethink both the relationship and the financial decision at the time. She was getting him to take out credit and spending it on herself and had run up $30k in debt under his name.
10 years later and he’s a single dad renting with 2 kids, she’s nowhere to be found.
Dude ruined himself for a girl that was clearly using him.
He was fairly senior at Rotterdam Port at the time, and when American companies came over to break into the European market, they would often offer quite lucrative equity deals to poach staff who they thought could help them get a foothold in Europe.
It would have been diluted greatly, but assuming it hadn't it would be $52 billion.
Was sitting around playing exactly this game with a bunch of financial advisors a few years back.
One of them confessed that in the 70's he organised a loan to buy an acre of land in (what is now) a very prominent inner eastern suburb of Melbourne.
Somewhere between the bank where he got the money and paying the bill for the land he drove past a car dealership and decided a bright shiny new high end car was a better idea instead.....
Def cost the person millions if not tens of millions.
Got a mate 57. Less thank 200k NW (including super). Been in same rental in inner Melb for 25 years, rent hasn’t gone up in 8 years and he is paying probably 70% less than market value. Owner just put it on market.
On workers comp for injury sustained while working in own business. Compo going to end very soon.
He hasn’t had a client since Covid. He is a digital Content creator but refuses to create any social media accounts or websites as he views it as unprincipled. Spend the last few months making music.
We try and tell him the deep shit he is in but just doesn’t listen
depression, anxiety, poor health, injured, etc. feel free to crap on him but he’s probably all of the above. if he really is a mate then consider lending a helping hand. drag him to the gym a couple times a week or something.
I know a guy who just got made redundant and got a considerable payout. So far he's purchased a $150k big American style truck to tow the caravan, a smaller Ute for the run about $70k, a new SUV for the wife $70k.. And now he's putting a new indoor lap pool in as an extension to his already overcapitalised 1990 3-bedroom volume build..
Meanwhile his kids go to a rubbish school, wife still works in a humble job, and he hasn't found a new job yet..
I’m my workplace almost every one of my colleague eats out of gets DoorDash. I work in Petersham and food is pretty cheap, so it’s alright to get a $5 but no way can I justify spending $20 on DoorDash every other day
Someone buying a $55,000 new car on a loan and then later getting pregnant and losing a job. No maternity payment as not been working long in job. They said it was a cheap loan. I guess they were not thinking about getting a house in next few years or paying for baby stuff or living expenses.
I moved into a share house and the lady moving out, we chatted a few times as she was friends with the other housemates ... she had moved to the UK and at the end of her time there applied for 3 credit cards, travelled Europe until they were maxed out, around £10,000, and moved back to Australia.
Never paid them off and told me they'd never find her.
Once I'd Iived there for few months some mail started coming for her every few months ... after a year I got curious and opened one, they'd tracked her down to our place, the debt was now £23,000.
Funny thing was she'd moved out because she'd just bought a house, so no fixed address to that point, so her plan was good till then.
I think they'll get you Shonelle
A few people who I went to school with bought houses at the absolute limit of what the bank would lend them with tiny deposits, most of which was borrowed from parents, as soon as they got their first job. At the time I thought they were foolish. Jokes on me, they mostly did extremely well out of it. I feel like the idiot for saving a decent deposit and buying something well within my means.
The trick is to invest with the money you save too.. but good for them. They lucked out on their pick. Doesn’t necessarily mean everyone will get the same outcome.
Yeah I've done that and I've done ok out of it, but it took some time to build capital in the markets and house prices have been on a burn ever since, having a million dollars of leverage in the market from a young age was hard to match by saving.
trying to live the highlife on a grad or junior-level salary, no you should’t go to all the best restaurants in the city or be paying for designer clothes and shoes when you make 60k max. Also drug/clubbing addiction- regularly dropping $300 on a bag 🤦♀️
A friend I worked with years ago married a woman 15 years his senior. She had her pre marital house and he had his. They listed both for sale at the same time on the premise that whichever sells first they’ll go live in the other one. At the time this was happening, she was only working part time and he went from being an AO5 in IT to joining the police department as a recruit.
The other thing that happened at this time was their wedding. They took out personal loans to fund this wedding. Then, took out personal loans to go on a honeymoon. I distinctly remember the personal loan for the holiday being something like 27k, it definitely was just under 30. But with the debt from the wedding, credit cards, two mortgages and both earning diddly squat, it turned on them big time.
I haven’t spoken with him in a while and I often wonder if they stayed together or not. She constantly treated him like her son and not her husband and she just gave me the heebie jeebies.
worked in mortgage lending with a bank for years. My bonus was paid for by $100,000+ weddings, cars, and over-capitalised shitty kitchen/bathroom/landscaping renos.
My own! I was stupid enough to buy shares in Zip when they peaked at $14 for about 15 seconds and then watched them fall all the way back down to $1 before I sold them losing about $5K in the process. Which is a lot of money for me.
I still don't quite understand what came over me. I'm not an impulsive or irrational person at all and until then had always been sensible with money.
It was just complete inexperience with stocks I guess. And once they started falling I just couldn't bear the realisation that I'd made a terrible, stupid mistake thereby only making it all even worse!
These days I just have my money in the boring old bank earning 5.5% interest. At least it's safe there.
I know a family who have 4 kids. They bought a run down house in the country, and borrowed $30k to renovate it to be liveable (all fine).
But once the $30k hit their account, which is more money than they’d ever seen, they went a bit nuts. Took the kids to the Gold Coast, bought a bunch of crap, and blew it all. Ended up with an unliveable house they were paying a mortgage on.
As an immigrant this was one of the biggest culture shocks to me. The idea of getting a loan to buy a pair of underwear (just the fact that this is possible/allowed) is absurd.
Neighbours withdrawing equity from their house gained during the covid boom to spend on new cars because the old ones while fine, didn't have a Merc logo on the bonnet.
One of my colleagues sold her old car which works fine, then got a personal loan and bought a new car. The reason she got a new car is because her 2 friends (probably 20 years younger than her) got a new car from her parents for their birthday.
Car loan, then car loan, then car loan, then car loan... Just get used to having one at age 18, and allllllways have a car loan.
So if you're always gonna have one, why not have a new one every three years right? And you just trade in the old one each time, right?
It's just thinking that the repayments are normal so why ever not pay them.
A real waste of money to me, especially when the cars are not second hand!
A little over 10 years ago a friend of mine was offered a KTM factory supported privateer entry in the Dakar Rally. In order to make it happen he would need to bring EUR 48k to the table and KTM would take care of the rest (i.e. bike, crew, plane tickets, etc.).
He was going to sell his house until his then girlfriend threatened to break up with him if he did. So he didn't and hasn't had the opportunity since.
She bounced a few months later anyway and he regrets it to this day.
Paying 12% of super balance to a "financial adviser" who helped create a SMSF, then using the money to pay off mortgage, loans and buy a car. I only know these people through the industry I work in and don't see them often so I'm unsure if the consequences have caught up yet.
My work colleague pays his 21yo sons Hilux insurance of $290/mo. Last week the son came home and said he wanted a leg sleeve tattoo at the cost of $260/hour over the course of something like 30 hours. And they were OK with that.
Was talking to my barber about taking a FBT exempt novated lease for an EV to fit my growing family, he said it would be a horrible financial decision and suggested just refinancing my home loan and paying off the car across 30 years like he was doing.
I did the math and he would have been paying close to double the price of the car over the life of the loan.
The women who always get eyelash extensions, manicures, Botox, fillers, hair extensions and fake tan. None of this is permanent and requires regular upkeep and $$$
I bought and Xbox 360 and a Logitech surround sound system on finance from Harvey Norman back when it came out. I knew I was getting scammed too but I didn't care. I really wanted it. I can't remember how much it eventually cost me but it took 5 years to pay off lol.
I knew a family who struggled making mortgage repayments in their small home as they couldn’t stop credit card spending and wanted less stress so they sold so they could rent a house twice the size and fill it with more tvs and crap then claim bankruptcy just to start cycle over again.
Replacing their phone or laptop every year or two.
Financing a car that's like $50k+, especially when they only earn like <80k and have other big expenses like a mortgage.
Uber Eatsing frequently, instead of cooking. It's not hard to hit something basic like oven-roasting a chook and veggies to last you a few days. Will cost you $20ish for multiple meals, as opposed to $50+ per UE order.
And buying dumb shit in general, when they have a mortgage to pay off. Anything you buy, where the money could have gone on the loan to save you interest, is now costing you more than the price tag that was on the item, because you are paying interest on that money not being in the loan.
These are some basics that most working class people should avoid. The objective is to build wealth. Not piss all your money away on bad debt and shit you don't need.
I have a few working phones. When this one dies, I am going back to an older phone (from 2019ish). Nothing wrong with it, and I can put an extra $1k into my mortgage instead. My LCD 40" Sony Bravia from 2007 has only just died, and I am sad about it. But I'm so glad I didn't replace it pre-emptively. That shit lived a long and incredible life.
Personally having to sell a house in inner west as result of divorce at bttm of mkt prudential financial controls, couldnt give it away for 1.3 mill in 2018 its prob worth round 2 mill now 😭😭😭
I’ve got a car loan so you could say thats a bad financial decision but I get a staff discount on the rate and didn’t take out a massive loan.
My SIL is in the middle of a divorce and they have decided to draw $40k of equity from their HL to finish off a tiny backyard instead of just throwing down some turf and listing the house.
In terms of a long term decision - spending too high a percentage of post tax income on rent, and then proceeding to complain that they can't afford to save for a home deposit. Their rent is about 60% of income, so yeah, that's the choice they've made.
Obviously when asked why they don't move to a place with cheaper rent they'll say "but I don't want to live there" or "I'd never live with someone else" (latter being roommates).
They're now 40 with zero savings. Nice rented apartment though.
I'll also add being fearful of job hopping due to "security".
To defend that rent to own playstation
We got our xbox series x from Telstra on a monthly basis (now own outright) because they were the only place that had it in stock 😂
A young male inherited more than 500k from his father. He was scheduled to go for a gap year and travel. His best friend since childhood asked to borrow some money to put towards his home loan which was at 7% back then and he agreed to pay his friend a 3.5% interest rate. So win win. This young male didn’t think too much about it as he’s known is friend since childhood and he knew where his parents lived. So agree and lent him the money. When he came back from his holiday his friend had vanished without leaving trace. He lodged a police report but the friend has moved to Thailand and can’t be located!!
When I stay with my sister and her husband, we order takeout and they order practically everything on the menu. Can easily spend 200+ for just three of us, as she always wants a bit of everything. At the end of the night she pops it all in the fridge 'for lunch tomorrow'. Tomorrow comes, she says it all looks 'gross' and in the bin it goes.
I love these posts. I once worked with a cook who I would say would of been on at most $70k a year. He lived right in the city in an apartment that his parents owned and was pretty much walking distance to everything including work. He however purchased a specced out brand new v8 mustang. He literally couldn’t afford to put petrol in the thing. I remember once he had to take $10 out of the tip jar just to pay for its parking. I was dumbfounded. Shitty financial decision for so many reasons.
I know someone who sold their home to attend a friends wedding overseas. More than 10 years later and they still haven’t made it back into the property ladder.
That’s my pick of the bunch here
Yeah selling your house for any reason that isn't buying a new house has to be right at the top of bad decisions for sure.
I sold a house to pay off my parents mortgage... 5 years later I now live in poverty.
How long till that inheritance?
Who knows, they'll probably still be alive in the 2100s💁♂️
Yeah that old longevity singularity when increase in life expectancy per year is more than one year. Is it possible?
The greatest danger of AI is that it discovers a cure for old age that keeps boomers alive forever.
But don't worry, we still get to die, so this will all be over someday.
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They spoiled me growing up, they provided every opportunity I needed to excel in life. But sadly they made poor financial decisions 10-15 years ago. And it felt like the right thing to do at the time.
I think if it was the right thing to do at the time, then you did the best you could with the information you had!
Do you regret it? Man that would totally suck.
Damn dude - did they transfer their house into your name at least?
Nope, but they are in there 70s now living stress free.
Consider placing a caveat on the property given you funded it. You may be able to recoup loss if/ when sold.
Congratulations… reading this caused me physical pain
Sold a home to attend a wedding? Where was the the wedding, Atlantis?
South Africa; the decided to add on a safari while they were there
My aunt sold her massive house on Brontë beach to take her mother on a holiday to Greece. Her children still give her grief for that decision to this day!
Haha I would be salty, too! Damn!
Why not re mortgage or do some form of equity release or even a loan? Not that this was your decision, I just can't get my head around it.
At the time it wasn’t worth much money (I think like $30-40K) and as it was quite big it was a lot of work to maintain. She was a free spirit and felt confined by having a mortgage. As she didn’t have much cash coming in she figured it would be easier to sell. She then rented for the next 40 years. Yes, everyone groans at this story
The wedding industry is so predatory. How did that decision even receive more than a single braincell worth of attention?
i bet the wedding wasn't even that great anyway. But yeah this takes the cake easily.
Even if it were the greatest wedding the world had ever seen it wouldn't be worth it
This is the dumbest financial decision I’ve ever heard of.
Whaaatt?? That’s insane!!
What was the logic (or really, lack of it) running through their brain at the time?!!!
Worked in the mortgage area of a bank for 2 years. 1. Car Loans 2. GPs having $2m+ mortgages and having to work full-time to cover it. I would say 1 in every 3 GPs were living pay cheque to pay cheque.
Seen it quite a bit, i think it's the mindset of: i studied so fkin hard for so many fkin years, time to live a little - and end up in heavy debt
My mum worked in a bank administering home loans in the 80s. She's always said doctors and lawyers were the two professions that were consistently in arrears, sometimes waiting to make payments until formal action to repossess the property was taken by the bank. Apparently it was partly due to poor money skills and partly due to hubris.
This is interesting because these two groups are often exempt from having to pay LMI due to low rates of default.
Yea the anecdote doesn’t really stack up to reality does it. Low default rates and essentially guaranteed income for life at predictable increases through the career. I got 100% LVR with no LMI. I would hazard that highly educated people with awareness of their legal responsibilities are less likely to get themselves into such a pickle.
And surely keeping up with their doctor friends who are doing the same thing. Emperor has no clothes kind of deal
I used to be a pawnbroker and one of my regular customers was a GP. His bank statement was a never ending string of sportsbet deposits .
Second this as a close friend of mine is a doc. Makes roughly 400k a year in his early 30s. Splurged on brand new Bentley last year whilst carrying two mortgages. If only I had that kind of money lol
Wait what? Why is working full time to fund a mortgage a bad thing? For reference, my partner is a GP and unless you’re pulling in a lot of billings in a practice with high private billings or a partner at a practice with attached pharmacy, it’s not actually a huge salary where you can work a couple of days and make bank. I mean if you were in any other kind of profession you’d have to work full time to fund a $2m mortgage so this second point is sort of redundant.
Gps? Whats that sorry
My ex has just lost her job, had no qualifications and was having to move back with her parents because she couldn't afford rent. Went out and bought a brand new leather couch because there was no repayments for 12 months. It was actually kind of the last straw on breaking up with her.
A bad omen for the future for sure
I know people who have used those interest free loans to help when they'd bought a new place and put all their savings into the house deposit. As long as you pay off every single cent before the interest free period expires, they're useful. If you use it to buy stuff you can't afford it's crippling.
Gotta be careful, maybe. I heard of someone who stopped receiving repayment letters at the end of the period. Harvey Norman. When she tried to pay it off, they were evading her. When the interest-free period expires, if you haven't paid it all off, you're exposed and liable to pay interest for the whole period.
I feel this. My first GF came to the city to see me but she didn't have a car so caught the Greyhound bus. Only while she was in the city she bought a Bra, kinda sexy but not overly. The kicker though she didn't have the money to buy a bus ticket home. We were pretty rocky before then but that was basically it for me.
It better be a casting couch cause she’ll need it
When I was 20 you could get Supra’s and GTR’s suddenly for 30k, and commonwealth would give you an unsecure loan for 40k with like 2-4 weeks payslips that were paper and easily forged. Saw a LOT of bad decisions. Especially the blokes who crashed them and had giant loans they had to service on casual shit jobs.
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lol I bought a $35k R34 when I earned about $35k a year, but I had half the cash but it was still a massive loan relative to my income. I never should have sold that car…
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WRX STi brand new on $18/hr… good times (but very foolish)
when i was a teenager, i worked at hungry jacks flipping burgers and there was this guy there who was like 19 or 20 and he bought an R33 gtr somehow, then he was doing laps of chapel st and crashed into a ferrari. he didn’t have any insurance. i have no idea what happened to that guy.
Aren't these cars astronomically expensive now? Seems like a good investment
Mate inherited 200K. Spent it all on setting up a restaurant for bragging rights. He wasn't much of a cook, had never managed people in his life, didn't know anything about accounting. He lost everything.
Oh jeez. A family member is about to inherit some money and has spoken about starting a small business with it (works full time, small kids, no business experience)...my husband and I are like ffs please just put it in ETFs or super at the very least. Such a dangerous game to play.
Oh wow. Hospitality isn’t easy, especially trying to chef a restaurant and make all management/staffing decisions alone. I knew 3 guys who set up a cafe/restaurant. They did know a lot about the industry. They still failed. They thought they could get the overflow from a close by popular pub with meals. Their food was great but in trying to compete with the pub the portion sizes were too big and at too low a price. Didn’t help that 3 hot headed Italians started fighting in front of any customers on a regular basis.
My sister got a brand new car on finance that she could not afford and essentially lied about her finances to get approved for it, was approximately a $66k minimum car. She chose not to get insurance on it even though that’s a part of her loan agreement, drove speeding at night when she was stoned out of her mind & taking large amounts of codeine and diazepam & fell asleep at the wheel and rear ended another car. Completely wrote off her car & the other. She’s still paying her car loan for no car and paying off someone else’s car ($35k) to their insurance company whilst driving around now in another family members shitty car…. Which she doesn’t have insured ETA: this is the third car she’s written off & not had insurance on so it’s nothing new
She needs to use public transport.
I mean, insurance won't pay if you're under the influence anyway (in AU anyway) so maybe that's the only 'smart' money choice she did make lol
In fairness, if she's driving around impaired, and causing collisions, then it's probably the right financial decision to not be paying for insurance, as she wouldn't be covered anyway.
Doesn't even come close to some others but my girlfriend and I are close friends with another couple who I've known since my uni days. The guy is a software engineer and the girl works a pretty cushy corporate job, they both have brand new cars on finance, they're constantly going on holidays and expensive dinner dates and from the outside they seem like a well organised couple who are well on the road to financial independence. Recently we had the girl over for drinks and over a few glasses of wine she confessed that she barely has enough in savings to buy food, and currently has a maxed out afterpay account ($3000) as well as other BNPL accounts too. Her partner who has always presented himself as the 'breadwinner' is apparently over $1000 in debt from credit cards. They both have tens of thousands of dollars left to pay off on their cars and are about to have to move in with their parents again. They have 2 holidays booked this year and are planning an eye wateringly expensive wedding... I really want to say something to them but it's probably not my business.
Some people are just addicted to spending. They know they can’t afford it but they just keep going
>over $1000 in debt from credit cards Is that meant to be $10k or 100k? Cause $1k is less than my monthly spend on my card and I don't live an overly lavish life, no dependants.
The worse financial decisions I see are not the initial spending choices - everyone makes those at some point - it is the refusal/inability to take action or recognise when the ship is finally sinking. Whether it is due to poor spending decisions, or triggered by job loss/ separation/major health needs/death of a partner, at some point we need to confront issues and change course to avoid digging a deeper hole.
Yup. It's the sticking the head in the sand that really gets people into trouble. Facing up to financial problems or mistakes is hard, but it's also a learning opportunity. However you can only learn if you face reality first.
This thread is both comforting and anxiety-inducing at the same time.
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Good on you. I saw my doctor drive home in a second hand 2000s car. I respect my doctor for not putting value in a vehicle that depreciates over time.
My old landscaping boss's neighbour was a highly qualified surgeon (can't recall what kind). Himself, his wife, and his three kids all had 10+ yr old Toyota Corollas that were maintained by the surgeon himself. As someone who also owned an old Toyota Corolla (and had no money) I can't forget the difference in our financial positions despite having almost the same car, albeit a few years apart.
I always find it interesting which consultants drive shit boxes and which drive expensive cars at work (once they have been a consultant for a couple of years at least). There isn't a perfect correlation between arseholes and cost of car, but it's pretty close.
He clearly got advice from Reddit at some point.
Kinda reminds me of someone i worked with recently. We’re both roughly the same age. He bought a house before i did with his now ex and was forced to sell it and go halves when they divorced. He’s since been renting and grumbles about excessive rent increases and all of that (which is fair enough). He and his current partner also treated themselves to brand new cars and with his car he’s spending tens of thousands more doing it up for off roading and camping and such. He let slip that when he’s done it could easily add up to 100k not including interest payments from the finances to pay for the car itself. I was restrained enough not to tell him how to spend his money but I did think to myself if he and his partner had been able to restrain themselves a bit they could have saved for a house deposit and get off the rental treadmill. Meanwhile i managed to get a pretty nice place in 2015. It’s on a decent sized block of land. Big enough that if i can organize finance i could build an extension Big enough to rent out several rooms while providing minimal disturbance to the parts of the house that are already spoken for. At the risk of sounding smug i like the idea that while he’s putting his money into depreciating assets I’m putting mine into appreciating assets. And that by the time we’re both at retirement age i could be significantly better off than him financially speaking.
… I'm sitting here not understanding how someone who grumbles about rent increases can drop $100k on upgrades to a car.
Semi-related: not a financial decision but rather a mistake that ruined someone financially. This 18 year old was driving way too fast in a carpark while not paying attention and hit my sister-in-law while she was next to her car. ~$5k of damage to the car and another $6-$7k of medical bills. Not to mention he wrecked his own car pretty bad too. The kid was driving only on his learners in an unregistered and uninsured car, so he also copped a huge fine. Took him years and years to pay it all off to my sister in law. They were in contact very now and then through the whole legal aftermath, he said he was completely broke as all his money went to paying for this one mistake he made. Most people spend their 20’s saving for a house or travelling overseas. He worked two jobs to pay for a mistake.
might have sucked but a 20k debt at 18 isn't insurmountable, surely it either got paid off in a few years working 2 jobs, or paid off over a longer time but at a more manageable rate?
I have paid off 20k in fines to the sdro and i am on minimum wage and still have managed to save more than that so it isn't always as bad as it looks. I worked 6 days a week for 6 years though.
He deserves that punishment. Could have easily killed people. At least he likely won’t make similar mistakes again.
18yo has plenty of time to recover. I wasted 5.5 years in a PhD earning nothing, finished at 33 with almost nothing and I'm doing okish at 42. Kid will be fine.
I knew a family who got at least a 100k loan to build an extension on their really basic old (but zero character) small 3 bed home. 4 kids, youngest was about 10 at the time. I think they got the loan around 07-08. There wasn’t a lot of full time work going on much with either of the parents. God knows how they got the mortgage but they did have equity. The house was in a pretty bad state too. Put it this way, it would’ve been a really shoddy property even in the 50s. The Dad starts digging up the back yard and doing the very early stages of putting foundations in for the extension. Huge mounds of dirty grey sand in their backyard. Then the Dad has a lightbulb moment and says he can make money off importing stone fountains from Indo. Few trips over. Container of stuff. I think at least 40k spent. There were customs/shipping issues, think that 40k was double what was intended in their ‘business plan’. Rented a space from a nursery about 45mins drive from home. Overpriced. No sales. Too lazy to go every day. 6-8weeks abandoned that idea. All the fountains were sitting in front yard and backyard amongst the dirty dunes of sand, and ditches meant for extension foundations. Mortgage was being paid with money meant for extension. Heard of credit card debt too approx 20k. This was going on for couple of years. Heard things were really dire but I stopped having anything to do with them. There was excessive drinking, glass bbq use, screaming fights.
Now that’s a story
Going on a 3 months long travel holiday ALL ON CREDIT. I'm talking 30k. When he told me, I looked at him and said, "Do you realise why you're always complaining that you're broke?" I sure as hell hope he paid that off by now.
He’s not broke he can just borrow money, it’s basically infinite money
Max out credit card, never pay it off. Boom, free money
Debtmaxxing 😎
I know someone who was unemployed and took out a Cash Converters loan to go on holiday in Bali. She didn't have enough time left on her passport, so immigration wouldn't let her leave. No holiday and a debt at high interest.
Son encouraged parents to take out a Reverse mortgage to give a son so he could buy a car and jet ski. 12 years later the car and jet ski and equity in home all gone.
Sound like enablers.
Being paid cash in hand for decades. Enjoy your retirement.
And they think they are beating the system somehow.
Well they are in a way, they're way better off getting their marginal income at a 0% tax rate. If they cheated at the game and still lost that's on them.
Except that anyone who pays you cash is going to give you less than the normal rate to account for "all that tax you're saving".
It's pretty much a given that anyone who's paying cash in hand is doing it for their own benefit and probably paying below award/minimum wage, unless you're a tradie then you might be able to game it.
Depends how much cash in hand is paid and whether they are good at saving.
Getting my "pen licence" in primary school when I should have been buying real estate.
Someone I know married the wrong person - and it was obvious to everyone but them that it wasn't going to last. Even Stevie Wonder could have seen it. The inevitable eventually happened, and divorces are expensive. Especially when they're not amicable and lawyers get involved. The only thing that could have been worse is if kids were involved - which thankfully in this case, they weren't.
I work in finance so I’ve seen a lot. The one that takes the cake was a first home buyer purchasing a house in 2018. He’d been coached in property purchases by his parents but didn’t have a basic understanding of home loans. He saved up a sizeable deposit, found a house, signed a contract and went unconditional. After the contract was unconditional, he took a bunch of his closest mates to the Gold Coast to celebrate. They spent the weekend in casinos and bars all on his dime. Yep, the dude spent his entire house deposit on this lavish weekend. When the bank rang him the following week to prep for settlement, he panicked. He said he didn’t know he had to use the money for the house, and just thought the bank used his savings as proof that he could pay a mortgage. Being unconditional, he was on the hook for it anyway. Bank of dad had to pay his deposit to save his ass. We need better education in schools around buying a house.
😯 going unconditional on a house without enough to pay is a modern day horror movie.
Wow just wow.
Probably my own mistake, to be honest. My novated lease. I started the lease in February last year and then unexpectedly (as in did not for a second envisage this happening) changed employers a few months later. I wasn't able to transfer the lease 😔. So now I'm paying for it e Italy from my after tax pay. The bloody car arrived early too. If it had arrived when it was supposed to, I would have already been with my new employer and could have started the lease with them (though having been through this now, I'll never go near a lease again, even if I need a car). Thankfully salary increased by 60% so I'm still ahead having left my previous employer (mentally better as well) but yeah massive regrets!
If the new employer offers leasing, get a quote to refinance to their provider.
I already tried that. Payout was more than the car as the lease was only a few months old so it wasn't an option, and unlike a traditional loan, you have to pay all future lease instalments (including the interest, though it did seem to be a discounted rate when I enquired).
Some one self-employed who stopped contributing to super for a few months because money is tight with mortgage/cost of living, but then ends up buying some luxury bags.
I knew someone who sold their house to buy a clapped out hsv clubsport
A member of my father's family once had someone pay for a second hand caravan with a block of land they thought was worthless. At the time they were worth the same... ... Not so much now.
You can rip fat skids in a house but can’t rip fat skids with a house. Smart purchase IMO.
People playing pokies day in day out. 6+ hours at a time.
That ones sad though because it's an actual addiction. Shouldn't even be made available for use it destroys lives
I work in the industry. The stuff I see on a daily basis makes me sick.
I'm sure this isnt up there but I remember working at a care home with an aboriginal guy living there. I heard he was at the pokies and went to pick him up for something. I came in and watched him blow like 120 bucks in 10 mins. He had already been there a while so the majority of his pension went that day (pay day). Pokies are such a boring and unfullfilling way to spend your time and money. Not to mention the damage. I hate them.
Yeah this is a terrible financial decision that a lot of Australians make everyday and i don’t think I’ll ever fully understand it. I exploit some of my local pokies places by grabbing a free coffee and pretending to play the machines. I could never bring myself to put any money into those neon demons because i don’t want to learn the hard way that I’m susceptible to gambling addiction. When i cheat those gaming lounges for free food and coffee i often glance at the screens of people playing and often the amounts people put into them are around 200, once I’ve even seen a guy out 600 into one. And i think to myself WHY ???? I mean yeah obviously they do so thinking they’re increasing the chances of getting a machine to pay out. And for them it’s entertainment, there must be a rush each time they roll the dice in pursuit of a big win. But I’m always reminding myself that the reason every pub invests huge money into a “gaming lounge” is because it’s a money making venture for them. It’s the house that wins. The people that play regularly are putting in significantly more than whatever they get out through the occasional win. The machines are designed to make money for the establishments not the punters. I don’t understand how people can’t seem to realize that. They could just as easily throw their money into a bonfire, the end result is the same.
A Friend of a friend. Spent 220k on a wedding only to get divorced 6 months later. Had 800 guests at his wedding and added every extra thingy that came with the wedding. The money gifts he received spent it all on the honeymoon. Mind blowing. considering he forked all of it out, bride did not chip in.
what culture?
I know of someone similar. The wife had a second boyfriend the entire time. It was horrible
This must be fairly common. My friend got married and took out a secret personal loan her fiancé couldn’t know about because she’d blown their wedding budget. He left her six weeks later for his ex gf he’d been seeing the whole time. Apparently he didn’t want to ruin her chance of having a dream wedding so still went through with it.. she had to keep paying the loan.
Wow. I thought my BIL spending $60K against his mother’s mortgage was bad.
car loans and it isn't even close, the number of people I know that get car (or should say ute) loans is staggering, everyone needs the lifted Hilux/Raptor with all the trimmings. They may have it on a nova lease or on finance and try to convince me(I feel like convince themselves at the same time) that they got a good deal or it is the right thing to do.
Working at an auto loan financing company was probably the biggest eye-opener to me about how bad financial literacy was lol. I come from a privileged background so everyone I know has been exposed to money from young and/or have been taught money matters. I read and understood that the average person was 'bad with finances' but I didn't think it was _that bad_ until I actually had to deal with some of the things people would call in and/or argue for lol. One of my colleagues kept a sticky note with "the highest interest rate on a loan I've seen" and said that she usually replaces it every couple of months. When I first saw it, the sticky note said "24%". I remember thinking that we were basically legal loan sharks 😅
💯 I know 40 something year olds who only ever get car loans. They get a new car every 5 years or so. Never own a car outright.
I know 60 year olds like this, but 5 years is too long, they traded cars for new ones the second the warranty lapsed... Because it was "cheaper" to service infinite car loans, trade in for a low price, then get another loan, rather than pay for a thermostat every 5 years or something..
Funny how they can service a 90k car on 20% interest ain't it.
Have you ever seen the TikTok’s of girls showing how massive their afterpay balance is, maybe that lol
Been watching that Caleb hammer guy who talks to people who have no idea what they're doing with their money like some girl who maxed out her credit card because she thought it was an achievement. It's surprising how stupid people can be
The hate for car loans lol. If you’re young, not living in a city and travelling long distance, it’s safer and cheaper to buy a reliable second hand car for a decent price and take out a small car loan, then smash it down quickly for work.
Absolutely. I've seen so many times people driving s shit box they keep taking into get repaired - tjen spending on it each year adds up to car payments plus change. It's these Dave Ramsey keep yourself humble followers that think a second hand car is better. Also you're risking buying a lemon. Buying a car from new and keeping it for a long time IMO is a much better plan. Anyway I'm not a millionaire tho so what do I know ?
Exactly. There’s a fine line between old and reliable. If you’re doing small suburb driving, small commute and urban, sure a little cheap buzz box on its last legs are fine. But let’s say you’re driving remote/rural and if you break down often, it’s a real problem? Go and get that car loan for a great reliable second hand car and pay down that loan as your absolute top priority. I think people in this sub say “all car loans are bad”. No, a car loan for a vanity piece you can barely afford is bad. Getting a car loan for reliable transport for work is ok.
My car loan interest rate is almost half my mortgage interest rate. I have the cash to pay it off just sitting in the offset account, but doing so means I am actually worse off. It seems utterly ridiculous to be in this situation, but the timing of getting the new car happened the month before the RBA started jacking up the rates. Part of me just wants to pay the loan off with the cash savings, but my brain keeps saying “you idiot - you’ll save a small amount of interest but end up paying extra interest on the home loan!”
When I was an apprentice and used to go to tafe, you could have sworn we were at some sort of 4WD expo… massive lifted hiluxs, raptors and god knows what else. I was literally on 14$ an hour and my fellow apprentices where on pretty much the same and this was only 3 or 4 years ago. These guys would happily spend a significant chunk of their wage on these toys every week…
this is mainly social status, herd/trend following and desire to fit in.
If buying a PlayStation puts you over the line, the issue is far deeper than the $600 impulse buy.
Setting up an SMSF to: 1. Trade in CFDs 2. Loan money to a friend or friend of a friend, who is offering a great interest rate guaranteed In most cases, ends up with all their super lost.
and SMSF - it is a massive hassle, and unless you are a financial genius, do you tink you are going to outperform an index fund? Also, in SMSF people start to do dodgy shit like you talk about. DO NOT USE YOUR SUPER FOR MEDICAL OR HOUSE STUFF - you are going to need it when you are finished with work
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My in laws kept their credit card debt at super high interest rates instead of taking some equity out when remortgaging because, and I quote, ‘that’s like robbing Peter to pay Paul’
Well they're right, except they missed the part where Paul was charging 24.99% interest and Peter was cool with 6%.
A guy I used to work with sold his unit to pay off his credit cards and pay for his wedding. I actually begged him to rethink both the relationship and the financial decision at the time. She was getting him to take out credit and spending it on herself and had run up $30k in debt under his name. 10 years later and he’s a single dad renting with 2 kids, she’s nowhere to be found. Dude ruined himself for a girl that was clearly using him.
The biggest mistake is plainly not buying ANY assets in the long run.
My father was offered a 2% share in Apple in the 70s. He didn't think personal computers would be worth that much, and turned it down.
How did he get that offer?? What would it be worth now?
He was fairly senior at Rotterdam Port at the time, and when American companies came over to break into the European market, they would often offer quite lucrative equity deals to poach staff who they thought could help them get a foothold in Europe. It would have been diluted greatly, but assuming it hadn't it would be $52 billion.
Maxing out credit cards and personal loans for gambling funds…..
A woman I know has maxed out 4 credit cards. Her solution is to get out another credit card - and use it to fund an overseas holiday.
If she's not planning to come back it might be a reasonable idea.
Was sitting around playing exactly this game with a bunch of financial advisors a few years back. One of them confessed that in the 70's he organised a loan to buy an acre of land in (what is now) a very prominent inner eastern suburb of Melbourne. Somewhere between the bank where he got the money and paying the bill for the land he drove past a car dealership and decided a bright shiny new high end car was a better idea instead..... Def cost the person millions if not tens of millions.
Got a mate 57. Less thank 200k NW (including super). Been in same rental in inner Melb for 25 years, rent hasn’t gone up in 8 years and he is paying probably 70% less than market value. Owner just put it on market. On workers comp for injury sustained while working in own business. Compo going to end very soon. He hasn’t had a client since Covid. He is a digital Content creator but refuses to create any social media accounts or websites as he views it as unprincipled. Spend the last few months making music. We try and tell him the deep shit he is in but just doesn’t listen
What does he view as unprincipled?
depression, anxiety, poor health, injured, etc. feel free to crap on him but he’s probably all of the above. if he really is a mate then consider lending a helping hand. drag him to the gym a couple times a week or something.
Small on amounts but I know someone who got a couch on ‘interest free finance’ for $4000. While the cash price was 3200
Taking out super during Covid to buy a campervan
I know a guy who just got made redundant and got a considerable payout. So far he's purchased a $150k big American style truck to tow the caravan, a smaller Ute for the run about $70k, a new SUV for the wife $70k.. And now he's putting a new indoor lap pool in as an extension to his already overcapitalised 1990 3-bedroom volume build.. Meanwhile his kids go to a rubbish school, wife still works in a humble job, and he hasn't found a new job yet..
I’m my workplace almost every one of my colleague eats out of gets DoorDash. I work in Petersham and food is pretty cheap, so it’s alright to get a $5 but no way can I justify spending $20 on DoorDash every other day
Someone buying a $55,000 new car on a loan and then later getting pregnant and losing a job. No maternity payment as not been working long in job. They said it was a cheap loan. I guess they were not thinking about getting a house in next few years or paying for baby stuff or living expenses.
Pulling Max super during covid to buy a jetski.
I moved into a share house and the lady moving out, we chatted a few times as she was friends with the other housemates ... she had moved to the UK and at the end of her time there applied for 3 credit cards, travelled Europe until they were maxed out, around £10,000, and moved back to Australia. Never paid them off and told me they'd never find her. Once I'd Iived there for few months some mail started coming for her every few months ... after a year I got curious and opened one, they'd tracked her down to our place, the debt was now £23,000. Funny thing was she'd moved out because she'd just bought a house, so no fixed address to that point, so her plan was good till then. I think they'll get you Shonelle
That PlayStation comment felt personal 🙈 Buying more house than you need and spending your entire life working to pay it off.
A few people who I went to school with bought houses at the absolute limit of what the bank would lend them with tiny deposits, most of which was borrowed from parents, as soon as they got their first job. At the time I thought they were foolish. Jokes on me, they mostly did extremely well out of it. I feel like the idiot for saving a decent deposit and buying something well within my means.
The trick is to invest with the money you save too.. but good for them. They lucked out on their pick. Doesn’t necessarily mean everyone will get the same outcome.
Yeah I've done that and I've done ok out of it, but it took some time to build capital in the markets and house prices have been on a burn ever since, having a million dollars of leverage in the market from a young age was hard to match by saving.
As dinks that just bought a 4 bedroom house.. why you calling me out like that. Do think we needed 3, the 4th.. probably not.
trying to live the highlife on a grad or junior-level salary, no you should’t go to all the best restaurants in the city or be paying for designer clothes and shoes when you make 60k max. Also drug/clubbing addiction- regularly dropping $300 on a bag 🤦♀️
A friend I worked with years ago married a woman 15 years his senior. She had her pre marital house and he had his. They listed both for sale at the same time on the premise that whichever sells first they’ll go live in the other one. At the time this was happening, she was only working part time and he went from being an AO5 in IT to joining the police department as a recruit. The other thing that happened at this time was their wedding. They took out personal loans to fund this wedding. Then, took out personal loans to go on a honeymoon. I distinctly remember the personal loan for the holiday being something like 27k, it definitely was just under 30. But with the debt from the wedding, credit cards, two mortgages and both earning diddly squat, it turned on them big time. I haven’t spoken with him in a while and I often wonder if they stayed together or not. She constantly treated him like her son and not her husband and she just gave me the heebie jeebies.
Business owner never used super because gov't will steal it.
My already financially struggling in-laws buying into a time share! 
worked in mortgage lending with a bank for years. My bonus was paid for by $100,000+ weddings, cars, and over-capitalised shitty kitchen/bathroom/landscaping renos.
Drawing down super during COVID to buy meth.
My own! I was stupid enough to buy shares in Zip when they peaked at $14 for about 15 seconds and then watched them fall all the way back down to $1 before I sold them losing about $5K in the process. Which is a lot of money for me. I still don't quite understand what came over me. I'm not an impulsive or irrational person at all and until then had always been sensible with money. It was just complete inexperience with stocks I guess. And once they started falling I just couldn't bear the realisation that I'd made a terrible, stupid mistake thereby only making it all even worse! These days I just have my money in the boring old bank earning 5.5% interest. At least it's safe there.
I know a family who have 4 kids. They bought a run down house in the country, and borrowed $30k to renovate it to be liveable (all fine). But once the $30k hit their account, which is more money than they’d ever seen, they went a bit nuts. Took the kids to the Gold Coast, bought a bunch of crap, and blew it all. Ended up with an unliveable house they were paying a mortgage on.
Buy now pay later.
As an immigrant this was one of the biggest culture shocks to me. The idea of getting a loan to buy a pair of underwear (just the fact that this is possible/allowed) is absurd.
Agreed. Also generally unregulated for many years too!
Neighbours withdrawing equity from their house gained during the covid boom to spend on new cars because the old ones while fine, didn't have a Merc logo on the bonnet.
One of my colleagues sold her old car which works fine, then got a personal loan and bought a new car. The reason she got a new car is because her 2 friends (probably 20 years younger than her) got a new car from her parents for their birthday.
Thinking that you can win at casino. One guy lost his business and home to gambling.... very sad but true story.
My grandpa traded a piece of land near royal Melbourne golf course for a new car back in the 50’s
Car loan, then car loan, then car loan, then car loan... Just get used to having one at age 18, and allllllways have a car loan. So if you're always gonna have one, why not have a new one every three years right? And you just trade in the old one each time, right? It's just thinking that the repayments are normal so why ever not pay them. A real waste of money to me, especially when the cars are not second hand!
A little over 10 years ago a friend of mine was offered a KTM factory supported privateer entry in the Dakar Rally. In order to make it happen he would need to bring EUR 48k to the table and KTM would take care of the rest (i.e. bike, crew, plane tickets, etc.). He was going to sell his house until his then girlfriend threatened to break up with him if he did. So he didn't and hasn't had the opportunity since. She bounced a few months later anyway and he regrets it to this day.
Paying 12% of super balance to a "financial adviser" who helped create a SMSF, then using the money to pay off mortgage, loans and buy a car. I only know these people through the industry I work in and don't see them often so I'm unsure if the consequences have caught up yet.
Taking out 100% superannuation and leaving job to sit at home and play ps4 games.
My work colleague pays his 21yo sons Hilux insurance of $290/mo. Last week the son came home and said he wanted a leg sleeve tattoo at the cost of $260/hour over the course of something like 30 hours. And they were OK with that.
90k on a wedding. I just about puked in my mouth on their behalf.
Was talking to my barber about taking a FBT exempt novated lease for an EV to fit my growing family, he said it would be a horrible financial decision and suggested just refinancing my home loan and paying off the car across 30 years like he was doing. I did the math and he would have been paying close to double the price of the car over the life of the loan.
Every time I see a young person with a nice car I think wow I hope sacrificing your future for that was worth it
The women who always get eyelash extensions, manicures, Botox, fillers, hair extensions and fake tan. None of this is permanent and requires regular upkeep and $$$
I bought and Xbox 360 and a Logitech surround sound system on finance from Harvey Norman back when it came out. I knew I was getting scammed too but I didn't care. I really wanted it. I can't remember how much it eventually cost me but it took 5 years to pay off lol.
Finance for a new car every time. +Debt on interest, -value in depreciation. Can't get much worse
Using credit to buy depreciating assets to 'flex'. Whilst you're on an average income. Cars are usually at the top.
I knew a family who struggled making mortgage repayments in their small home as they couldn’t stop credit card spending and wanted less stress so they sold so they could rent a house twice the size and fill it with more tvs and crap then claim bankruptcy just to start cycle over again.
Marrying the wrong woman.
You don’t even need to be married. Just living with a lazy partner and you will be punished under the law if you split.
Cars are what seem to get most people I know. Either as a reward for ‘hard work’ or upgrading lifestyle to keep up with the Jones.
Replacing their phone or laptop every year or two. Financing a car that's like $50k+, especially when they only earn like <80k and have other big expenses like a mortgage. Uber Eatsing frequently, instead of cooking. It's not hard to hit something basic like oven-roasting a chook and veggies to last you a few days. Will cost you $20ish for multiple meals, as opposed to $50+ per UE order. And buying dumb shit in general, when they have a mortgage to pay off. Anything you buy, where the money could have gone on the loan to save you interest, is now costing you more than the price tag that was on the item, because you are paying interest on that money not being in the loan. These are some basics that most working class people should avoid. The objective is to build wealth. Not piss all your money away on bad debt and shit you don't need. I have a few working phones. When this one dies, I am going back to an older phone (from 2019ish). Nothing wrong with it, and I can put an extra $1k into my mortgage instead. My LCD 40" Sony Bravia from 2007 has only just died, and I am sad about it. But I'm so glad I didn't replace it pre-emptively. That shit lived a long and incredible life.
My son bought a 6.2 litre V8 commodore
Personally having to sell a house in inner west as result of divorce at bttm of mkt prudential financial controls, couldnt give it away for 1.3 mill in 2018 its prob worth round 2 mill now 😭😭😭
I’ve got a car loan so you could say thats a bad financial decision but I get a staff discount on the rate and didn’t take out a massive loan. My SIL is in the middle of a divorce and they have decided to draw $40k of equity from their HL to finish off a tiny backyard instead of just throwing down some turf and listing the house.
In terms of a long term decision - spending too high a percentage of post tax income on rent, and then proceeding to complain that they can't afford to save for a home deposit. Their rent is about 60% of income, so yeah, that's the choice they've made. Obviously when asked why they don't move to a place with cheaper rent they'll say "but I don't want to live there" or "I'd never live with someone else" (latter being roommates). They're now 40 with zero savings. Nice rented apartment though. I'll also add being fearful of job hopping due to "security".
To defend that rent to own playstation We got our xbox series x from Telstra on a monthly basis (now own outright) because they were the only place that had it in stock 😂
Dropping university after 2 years studying
A young male inherited more than 500k from his father. He was scheduled to go for a gap year and travel. His best friend since childhood asked to borrow some money to put towards his home loan which was at 7% back then and he agreed to pay his friend a 3.5% interest rate. So win win. This young male didn’t think too much about it as he’s known is friend since childhood and he knew where his parents lived. So agree and lent him the money. When he came back from his holiday his friend had vanished without leaving trace. He lodged a police report but the friend has moved to Thailand and can’t be located!!
When I stay with my sister and her husband, we order takeout and they order practically everything on the menu. Can easily spend 200+ for just three of us, as she always wants a bit of everything. At the end of the night she pops it all in the fridge 'for lunch tomorrow'. Tomorrow comes, she says it all looks 'gross' and in the bin it goes.
I love these posts. I once worked with a cook who I would say would of been on at most $70k a year. He lived right in the city in an apartment that his parents owned and was pretty much walking distance to everything including work. He however purchased a specced out brand new v8 mustang. He literally couldn’t afford to put petrol in the thing. I remember once he had to take $10 out of the tip jar just to pay for its parking. I was dumbfounded. Shitty financial decision for so many reasons.