“Oh, she’s just had a run of bad luck. That’s why she’s having financial troubles,” I recently heard someone say about someone I know very well.
I kept my mouth shut, but it made me realize there really isn’t such a thing as bad luck, at least not when it comes to repeat-behavior and financial habits. Instead, it’s an excuse for not taking control of the financial situation and making some much needed changes.
Without delving into all the gory, gossipy details which could turn into a novel-like post that I’d title “Trust Fund Baby Ends Up in the Poor House” (probably a very likely story), I’ll summarize and let you be the judge:
Exhibit A:
Living off a trust-fund and the residual income of others, said person (we’ll call her Sarah) decides to rent out a $4,700 a month apartment near the beach, a $2,200 apartment for her files, and three storage facilities for all of her inherited items. One-year later, she reorganizes and gets rid of the one-bedroom apartment and narrows down her belonging to two storage facilities to save some money.
Her credit card debt has increased to $180,000. She decides that once her remaining parent dies, she’ll take the inheritance money and pay off the credit card bills.
She inherits the money shortly thereafter, and decides to pay off almost all of her credit card debt still owing $90,000. The remaining inheritance, which wasn’t as much as she had expected because she was dipping into it to pay her bills, continues to pay for her lifestyle.
Sarah has made few changes in her everyday purchases such as foregoing purchasing gold-flaked oil and reducing eating out.
Bad luck, or bad choices?
Exhibit B:
Sarah hires a financial consultant to help her figure out how to get out of credit card debt, reduce her monthly bills, and live off her remaining income. The financial consultant gives her a very precise plan – get rid of all excess employees, pay off all of the credit card debt, and reduce living expenses.
Sarah decides to take the remaining life insurance money that she received and pay off some of her credit card debt getting it down to under $20,000, keep her employees for the time being, and just not eat out as much.
Bad luck, or bad choices?
Exhibit C:
Realizing she is coming up short every month, the credit card bills increase to almost $80,000. She is in a panic. She’s let go of most of her employees, only calling on them when they are really needed. She also decides to ask for a lump sum payout from the residual income she receives from a family business that her ancestors built up. She’s hoping against hope that this plan pans out because she feels she has no other options.
She feels cheated and wronged: her trust fund was much less than what she had expected, she stopped paying on a million-dollar life insurance policy for a late ex-husband because a financial planner had told her she couldn’t afford it (then the ex-husband died and she felt cheated out of a million dollars), her sister sued her for writing her out of the parents’ will, her bookkeeper told her that if she paid off her credit cards, she’d have enough money to live off of but she was wrong.
Bad luck, or bad choices?
This is an extreme case of one person – a person who never had to take control of their finances and finds it easier to blame everyone and everything instead of owning up to her own mistakes.
Financial decisions all boil down to personal responsibility. No one can go around saying, “It’s not my fault. So and so messed me up!” If you don’t know how to balance a ledger, learn! If you don’t have enough money each month for expenses, it’s time to sit down and start cutting out things that actually make a difference – it’s painful, but sometimes it must be done.
Though my life and circumstances are night and day compared to Sarah’s, I’ve learned a lot from her mistakes. The most important thing I’ve learned: Take initiative, be in control of your finances, and don’t blame anyone else for the poor choices you’ve made!
Do you know someone who justifies their financial behavior with “luck”?
9 Comments
Wow! Great post. I had the “honor” of being a financial advisor to some of these people. If they didn’t have so much “bad luck” things would have been better…sure.
Sarah doesn’t sound so much like she has “a plan” as she thinks she has a buffet of choices. Sadly, her modifications to well-organized plans have cost her tons of money. She should feel cheated….she cheated herself out of a ton of money!
@Average Joe – That’s a great phrase “buffet of choices” that describes her thinking. And you are so right, she’s cheated herself out of money she could have invested!
Yeah, I agree. Bad luck ain’t any more real than good luck. It’s all just there, it’s all just life. Good stuff happens, bad stuff happens, so do the best you can to prepare for it and make good choices so that when the good/bad stuff happens, you’re as ready as you can be. THere’s no such thing as bad luck! (or good!) GREAT post!
@TB – You could almost replace “luck” with the word “choice” and it would be a more realistic view of events that shape peoples’ lives.
It is sad that people fall into this much money and squander it. If she wants to return to her prior lifestyle she will have to do what her parents did and earn it.
@Lance – Unfortunately, she’s past the traditional “retirement” age and hasn’t worked in 30+ years. I don’t see her getting a job anytime soon – Sadly I’m not even sure what she’s qualified to do.
First of all…..I can’t imagine that much money PERIOD! LOL
However, I see bad choices….but maybe I am seeing the high dollar amounts, which is making me think bad choices.
I have lived below the poverty line….way below, all of my adult life until the last couple of years after I got married.
Now, we do get the bills paid on the money that comes in, but there are not too many extras. We are considered middle class here in Kansas at an income of $50,000 a year.
“Luck is when preparation meets opportunity.” ~ Seneca.
To a very large extent, we make our luck. Even things like unexpected, life altering events can be prepared for with various types of insurance.
I’m with you, blaming “bad luck” is an excuse. It’s been my experience that such people often experience chronic “bad luck” simply because they never plan for anything.
@Joe Morgan – Exactly. People who don’t plan for anything often blame “bad luck” on all their woes. It’s not a good strategy for life.