During the depths of the financial crisis, one of the proposals I sent to the Obama administration was to institute spending curbs based on high school or college grade point averages. It didn’t matter whether you went to Community College or UC Berkeley since everybody’s circumstances are different. What matters is how well you did in school to justify want based spending as opposed to need based spending.
For example, if you were a D+ student (sub 2.0 GPA out of 4.0) you are only allowed to buy generic clothing and ride public transportation to work for the rest of your life. No car or lollipops for you. If you were a B student, then suddenly that new $20,000 Honda Civic is available to you after the dealer scans your ID to check the government GPA database. If you are an A student, then you are free to buy whatever you want because logic dictates that if you are smart enough to study hard in school then you are smart enough to practice good financial habits.
I was shocked Obama never acknowledged my letter because my proposal would only help the government expand their authority (think PRISM) over the people of this great nation. We voted for Big Government and I wanted to support the cause as much as possible as I figured out a way to go John Galt. Although Washington DC stayed silent, fellow patriotic Americans voiced their opinions in the comments section of the post, Tax Rates Based On Work Ethic Shall Fix The World. It’s all about creating incentives.
Just imagine a world where everything is rational. Imagine everybody reading their mortgage contracts before signing so that they are aware of their financial obligations instead of blaming others when they can’t pay. Imagine if everybody adopted the attitude of not deserving something until worked for? Now imagine a country where everybody is middle class and pitches in to support our country. There would be no socioeconomic warfare, just equality. We can always dream right?
DO WHAT YOU WANT WITH YOUR FINANCES, JUST DON’T HURT OTHERS
Losing over $300,000 in wealth directly as a result of my actions is depressing when I start to think about all the things I could buy or experience. In order to get back to even, I taped up all my bad trades and wanton purchases on my wall to prevent me from making more unwise purchases.
I don’t think I bought a single material item over $200 during the 2008-2009 financial crisis. Instead, I poured my heart out into writing articles on this site. Each letter typed made me feel a little bit better. Every story I heard about a reader going through a similar situation made me want to write more. Distracting my mind from financial loss in this online world numbed the pain.
When we felt solid signs of recovery in 2010 I finally opened up the wallet and bought some tailored clothes while I was overseas on business. It felt strange to finally spend money on a want again.
The thing that made me feel slightly better about my lost wealth was the fact that I didn’t hurt anybody in the process. Buying an overpriced car enriched the saleswoman and the dealership. Buying stock at too high a price meant someone else got to sell at a higher price. At least I didn’t get my friends and family into my disaster stock. Buying a vacation property meant the sellers got to avoid another 15% decline. The only person I really hurt was myself.
If I decided to default on my mortgage, I would be hurting the neighboring property owners. If I racked up huge credit card debt, the credit card company would probably charge higher interest rates overall to cover their rising non performing loans. Ever wonder why the best credit card rates are still around 10%? This is where huge government oversight comes in to try and regulate the heck out of the finance industry so that innocent people don’t suffer. Borrowing rates and spending abilities based on work ethic and grades doesn’t seem like a bad idea now does it?
SHOULD WE SPEND MONEY WHILE WE ARE STILL IN CONSUMER DEBT?
Although I never got into consumer debt, I liken my wealth destruction similar to getting into $300,000+ in consumer debt. The only way to get yourself out of a hole is to first stop digging and then call in AirWolf with a drop down ladder.
I felt an enormous amount of guilt purchasing anything after my poor investments, so I didn’t for two years. I kept on telling myself, “How could I deserve these new pair of shoes or this vacation when I was so stupid with my finances?” My net worth tracker was flashing red warning signs and I just could spend.
There are some who think with an entirely opposite mindset. Taking on debt is a great way to live beyond your means. If you are able to live like a billionaire on borrowed money and then die a peaceful death at 89, how sweet would that be? Meanwhile, getting out of debt also feels wonderful because it is a great sense of accomplishment. We don’t criticize a fella for getting into $100,000 of credit card debt while only earning a $60,000 salary. We praise him for eventually becoming debt free! All those folks who spent within their means in the first place are irrelevant.
The personal finance community has opened me up to a world of folks who lived beyond their means and are writing about their debt elimination journeys. I honestly had no idea so many people suffered from debt problems until I started this site. If I ran out of allowance or side job money when I was in school, I couldn’t spend a thing. I didn’t have a credit card in college either. By the time I got my first job waking up at 5am every morning to go to work, I was determined to save all I could so I didn’t have to work forever!
Maybe it is a good idea if the Government implanted a chip in everyone who has more than $5,000 in revolving consumer debt. Every week the chip would release an anti-dopamine drug to make the consumer so depressed they won’t spend any money. Given the indebted want to feel happy again, they’ll be so motivated to paying off their debt to get their chips out! Brilliant I say!
COMING AROUND TO LIVING IT UP
Getting into consumer debt is fun. If it wasn’t fun, then people wouldn’t do it. I discovered the secret to spending more money than normal on vacation is by linking funny money stock market gains to your vacation budget. It was a breakthrough moment in eradicating my frugal ways during the summer of 2013. It was exhilarating to spend close to $10,000 on experiences. I’m thinking this is the same type of exhilaration people experience who spend money they don’t have. It’s like getting something for free, but not really.
I don’t think people who are up to their eyeballs in credit card debt should feel ashamed. Spending lots of money is like an addictive drug that’s hard to kick. Some people are just more susceptible to addiction than others. The court system shows sympathy for drug addicts all the time (think Lindsay Lohan) by sending them to rehab over and over again instead of jail. We should show the same understanding for those who can’t control their spending habits.
Who is the government to say what we can and can’t do? Everybody hits a certain limit where they feel so bad about their spending that they eventually stop and go in reverse. Alternatively, the credit card just cuts them off. I say have fun while you still can. We have healthy bailout systems in the form of government assistance, parents, and wealthy spouses. S/he who dies with the most loses.
Wealth Building Recommendations
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Updated for 2018 and beyond.