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 (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.
- FTW is 26 years old.
- She works in a dead-end job at a local takeaway store.
- She lives at home with my wife’s mother, and this must be her third time moving back home.
- She has a very unhealthy lifestyle (poor diet, low/no exercise).
- 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.
- Completed high school but has no other formal qualifications or skills and no desire to obtain any either.
- 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…
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!