Let me introduce you to the Financial Train Wreck

While you can learn a lot from the PF blogs that are out there (I certainly have), I think you can also learn a lot from observing what not to do and making sure that you avoid these mistakes. People may not realise it but often they are their own worst enemies when it comes to finances, and sometimes if they just did nothing aside from go to work and live a straightforward life their early retirement would be almost guaranteed.

And as well as learning what not do to from some others, it can also be quite amusing to hear and share their ridiculous mistakes! And this brings me to the person I know as… The Financial Train Wreck.




Meet the Financial Train Wreck

The Financial Train Wreck: The picture of a child's wooden train is quite appropriate I think, since my wife's little sister has a child-like understanding of money (and plenty of other things in life too).

The Financial Train Wreck: The picture of a child’s wooden train is quite appropriate I think, since my wife’s little sister has a child-like understanding of money (and plenty of other things in life too).

The Financial Train Wreck (or “FTW” for short) is the pseudonym I am assigning to my wife’s little sister, and it is quite appropriate given her financial decisions made so far and her current financial position.

While she is actually quite a good person and we love her dearly, she is just an endless supply of examples of what not do to, both in finances and in other areas.

Clearly I can’t go over everything about FTW in just one post, but as an introduction I might be able to tell you a bit about her to set the scene.

  1. FTW is 26 years old.
  2. She works in a dead-end job at a local takeaway store.
  3. She lives at home with my wife’s mother, and this must be her third time moving back home.
  4. She has a very unhealthy lifestyle (poor diet, low/no exercise).
  5. I believe that she is incredibly lazy, staying up late, getting up late, and achieving nothing in life despite having a job that isn’t demanding (she completely leaves her job worries at the door when she clocks off) and no dependants.
  6. Completed high school but has no other formal qualifications or skills and no desire to obtain any either.
  7. Her net worth is approximately minus $50k.

So that was a brief overview of FTW, and I will tell you more about her in future posts, but let me start by outlining a basic mistake that she made early on that she will be paying for long into the future.

Credit card limits

FTW got a credit card early on, and when she applied she was automatically approved for a $2,000 limit. Now given her non-existent financial track record, even a relatively low limit like $2,000 was probably too much for her, but when they sent the paperwork out for the card they made a mistake. You see, while the approved limit was $2,000 when she applied, the bank screwed up the application and accidentally added an extra zero. So the limit was $20,000 instead of $2,000.

As FTW is almost a bit child-like with finances, she told her mother, who said that she should immediately call the bank and get the limit reduced. FTW said that she would do it, but funnily enough she never got around to it, and about six months later the card was maxed out to the full $20,000. No one knew that her debt was anywhere near that high until it was too late – the damage was already done.

Seriously though, WTF was she thinking?! That you don’t have to pay credit cards back? It was after all her first credit card, so maybe she didn’t know that the bank doesn’t magically give people $20,000 sums with no strings attached?!

Or was she like the stupid people that get a huge sum deposited to their account by mistake so they withdraw it and leave the country, thinking there won’t be any consequences?

Sadly this example is like many of the other mistakes that FTW has made where she has just put her head in the sand…

Image source: huffingtonpost.ca

Image source: huffingtonpost.ca

So do you have a FTW in your family or circle of friends? If so, let us know some of the mistakes that they have made so that readers can learn from (and/or laugh about) them!

IA.

8 thoughts on “Let me introduce you to the Financial Train Wreck

  1. Working for a non-profit financial counseling agency, we hear a lot of similar stories (I like the term FTW, may I use it?) All to many of the stories involve maxed out credit cards. I am surprised by the number of cards that on person or one couple can have and the massive mountains of high interest debt they have on them. More often than not, the person makes plenty of money and has always been able to make the minimum payments.

    Unfortunately, life always happens and because of job loss, unexpected medical bills, etc. they can no longer pay the minimum on their debts. To make matters worse, they typically don’t have any form of real savings either.

    Simply put, don’t use your credit cards to support a lifestyle that you can’t afford. If you can’t pay cash for something, don’t put it on a credit card unless it’s a true emergency and you have no other choice. Then kick yourself and ask why you don’t have an emergency savings account.

    If you do use your credit card, pay it off every month if at all possible. Why throw money away on interest?

    • Yes, feel free to use FTW – I think it has quite a nice ring to it but I need to be careful who I am using it around!

      I agree entirely with you on credit cards and can’t see any reason why (especially young) people can’t just use debit cards instead. They are just playing with fire if they don’t understand their money in the first place!

      Financial counselling actually sounds quite interesting, although I’m sure you come across some desperate people that have almost no way out which would be quite depressing to deal with. It seems as if society needs more people like you!

  2. My 26 y/o sister in law may be the German version of FTW, except a lot less extreme. A big difference here is that credit is not that easy to come by. My SIL also doesn’t plan for the future, and spends everything she has on… stuff. She currently spends most of her money on her car, which is a brand new VW beetle that she uses to drive to work. The thing is, her work is literally a 15 min walk from her home (plus we GAVE HER a nice bike!). While she’s hardly a train wreck, I do worry for her since I know she has the potential to be financially successful but feel that she whittles it away. It’s sad because I know she will regret it later on.

    • Yeah, it’s quite hard to see loved ones making these mistakes, especially when you know that you can help them. Unfortunately they usually can’t see how far behind they are until they can’t pay the bills.

      My wife and others have tried countless times to help FTW without success – she will improve for a short time but returns to burying her head in the sand again before too long! I think she sees the cure as worse than the disease!

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