You can't avoid hearing about them these days--people making stupid financial choices. I heard a while back from a woman with huge debts wanting arguments for convincing her husband to cash in his retirement savings so she could buy yet more consumer crap. Some of these people are stupid--or at least ignorant about financial matters. But I think many of these cases are something else. Some of these people are not stupid. They are, rather, hopeless.
After all, hope for a better future is the driving force behind most good financial decisions. Saving and investing are always forward-looking actions. Even something as simple as buying the large box of laundry detergent when the unit cost is less only helps you in the future, when you don't have to go to the store and buy yet another box of the stuff.
Wise Bread is full of articles on how to make the better choices: Choices about debt, choices about spending, choices about earning, choices about investing.
It's easy to look at people who, in the face of all the good information nevertheless make stupid choices--and figure that they must be stupid people.
But making smart decisions about the future only makes sense if you have one.
Now, there will be people out there who figure that it doesn't matter--that stupid is as stupid does and don't see why should we care why others make stupid decisions. I see at least two reasons why we should care.
First, you need to understand the difference if you want to help. No amount of education or good advice will help someone who's hopeless. What the hopeless person needs is to see a clear path to a better future.
Second, though, it's worth understanding the difference between stupidity and hopelessness simply as a matter of seeing the world as it really is; of knowing what's true.
There are plenty of people out there who can't even imagine a life where their finances aren't out of control. It's easy to sneer at people who make obviously self-destructive financial choices, but I think it's wrong-headed. What they need is not scorn, nor advice, nor even a handout. What they need is hope. I wish I knew how to give it to them.
Hope is indeed in short supply these days. Poor financial decisions are often (IMO) a form of self medication. Spending feels good temporarily. You know the term - retail therapy.
Your article is well done - and gets to the heart of a very troublesome matter.
Kudos.
Some people just don't know when the party is over . . .
Others don't care . . .
And still others make changes in the short run, just waiting to return to their bad habits . . .
You can lead the horse to water, but you can't make him drink.
There are clearly a lot of different ways to be stupid.
I've never really thought about whether there are a lot of ways to be hopeless, or if being hopeless is really just one big thing.
Very interesting article. And I agree with Kelly. Just want to point, though, that when feeling hopeless and overwhelmed to the point of making stupid decisions, it may be time for a checkup to see if there is a medical problem--e.g., depression, thyroid or some other underlying cause. Sometimes the right medication and/or exercise can help a lot.
Yes, depression is certainly a cause of hopeless feelings.
I've seen, though, people who aren't depressed--people who aren't even hopeless in general, just hopeless about their finances--make really awful decisions. If you have so much debt that you'll never be able to pay it off, and so little cash that you can't even hire a lawyer to declare bankruptcy, why not spend whatever you luck into on shoes or toys or beer? What difference could it possibly make?
Someone with hope for the future might well be able to see a path out--spend the money on a suit of interview clothes or at least groceries. But that requires feeling, at some basic level, that there is a way out.
The point makes sense. It saddens me, but it makes sense. Some people can't see past tomorrow no less worry about making a budget or set a long term goal. How can you offer someone hope? I think hope is the worse thing you could lose. You can lose freedom, and hope can pull you through, but if you lose hope, what else do you have?? I'm pretty sure Victor Frankl mentions this in his book. hmm. thought provoking.
-Nate
I think it's pretty easy to lose hope when the US government is spending every dime of whatever we produce plus whatever our kids and grandkids produce. The entire culture has to change.
Yes, MANS SEARCH FOR MEANING. Good reminder Nate.
many reasons for hopelessness but sometimes there's nothing we can do about or for others. they have to do it themselves.
The woman you wrote about: what did she believe that her purchase of more stuff would gain her (aside from more stuff)? What could be more important to her right now than funding her future? It could be any number of things, some of them horrible to endure, some not so much. If you disagree with her prospective course of action, that's one thing. Characterizing her actions, or anyone else's, as hopeless does her a disservice. She's probably HOPING for something different than you are.
I've always believed that hope is grounded in 1) having acceptable and possible options and 2) having the will to act on one or more of those options to create change. The former you can get externally; the latter you can't.
I once read a statistic that a large percentage of the American population truly believes they will win the lottery or otherwise hit it big one of these days. I think some people who do not plan or spend with the long term in mind are living their "temporary life," which won't matter once everything changes when they hit it big. This American quirk has also been used to explain why Americans don't seem to mind tax breaks for the rich -- many of us believe that we will be among them one day.
What if the urge for material consumption isn't about the lack of hope or evidence of stupidity?
Perhaps material consumption is a deeper biological urge...in the face of impending scarcity (psychological or real) perhaps someone is merely expressing the biological urge to hoard, to acquire now - because in the future, that option might not be there. It is forward looking not in a financial sense but in a more deeply instinctive manner.
After the past 6-months, it is no longer completely rational to think that money in the bank (or 401K) is a tangible asset that will be there for the future.
Hmmm. Perhaps it is biological on some level. I would lean more toward overspending being a social construct. I have read some very interesting studies that make a strong case for the effects of mass marketing on societies.
In more primitive cultures (or even less industrialized cultures)- cultures lacking in media & marketing - people do not have the desire to accumulate to the extent that we do. It is actually quite fascinating.
I mean really - do we 'need' so much stuff - or do we believe the lie that having so much stuff makes us happier, sexier, more powerful, etc.? I vote the latter.
This observation is right on the money. I can attest to that from personal experience. I raised two children as a single mother and was determined that they would have a good quality of life, which frequently meant pulling out the credit card and charging school clothes, shoes and so forth. I was so poor and struggling all the time, but determined that they would be set up to succeed in life and not be imbued with the same poverty messages I had gotten as a kid.
Then when it came time for college, I didn't have any savings to help send them to school, so I borrowed and they borrowed. And I went back to school myself, on -- you guessed it -- loans. I still am a renter and never got in the housing market because I couldn't afford a down payment.
However, this story has a more upbeat ending (or middle, actually, since I'm still in process) than you might imagine. Once the kids were out of school, they both got great jobs and began paying back their loans. I got a succession of better and better jobs and finally am making close to real money. And I've been paying off my bills steadily, a bit each month, to the point that I can now see out of the big hole I dug for myself. I have accepted my enormous school loan as something that will probably be a part of my life for years to come, but am not overwhelmed by it any more. It is what it is and I just keep making payments and trying to look forward.
However, there were so many days when it seemed as though nothing I could ever do would be enough, that my debts and my financial situation were fixed and hopeless, so what did it matter if I charged, say, dinner at a really nice restaurant for all three of us? Or take a cash advance from one credit card to pay the bill on the other one? Yep, been there, done that.
It's taken everything I have to change my internal conversation about money from one of hopelessness to one of responsibility, and to believe in a future for myself that doesn't involve debt. It's worth doing, but it really takes something. Part of that something is believing that you actually have a future and there actually is a path out. That sense is in very short supply these days, particularly as the financial news gets worse and it appears our "leaders" have their eye on just about everyone else but the citizens and consumers who pay their salaries.
I appreciate your compassion. I saw your idea firsthand years ago when I volunteered at a local juvenile authority. Many of the girls I worked with had no idea what a future that excluded drug addiction, alcoholism, abuse, neglect and early pregnancy could even look like. With such a bleak worldview, why change?
I'm all too familiar with the fact that some people don't feel alive if they aren't living constantly in survival mode. It's learned behavior and it's hard to undo. I say pick up Johnny Upinya's new book "Buy this Book and make me Riyatttchh" and it'll straighten you out.
Jabulani Leffall
Monetary Gadfly, Common Currency
00000 Broke Blvd. Kitchenette #68 & 1/2
Lowcash, CA 90000-0000
For older folks, we have an elevated expectation of hope, because we saw our parents experience the rise of the middle class, when increasing numbers of people saw not only their incomes increase, and job security increase, but also saw the market transform by producing more affordable housing, condominiums, and better credit to buy cars and durable goods.
Younger folks, however, are experiencing the opposite -- the shrinking of the middle class, and the increase in high wage and low wage jobs. Likewise, the consumer choices for housing are changing -- mcmansions or apartments.
Yes, people who see no hope make short term pleasure choices instead of long-term pleasure choices. But if you think about it, it makes sense. If you thought the world was going to end tomorrow, would you put your paycheck in the bank or spend it on a nice meal with your family? The problem is, we often make bad decisions.
Example: My 401K will be gone in 25 years when I plan to retire (actually, chances are it won't) so I will take out money, pay a penalty and tax, and buy a shiny new car instead.
But it's more complicated than that. The human brain has many personalities within it--all competing for their set of desires. Did you ever have a conversation with yourself that sounded like it was two people? Night guy wants to go to bed but morning guy tells him to set up the coffee pot so coffee is brewing when he gets up. Night guy says, "What did morning guy ever do for me?" In some people, morning guy wins and the coffee is made. In others, night guy wins and the coffee pot is empty. It is usually a pattern that lasts a lifetime.
This is the best case you can make for why we need government with a certain amount of "nanny" in it...because we need the coffee and some people will never set up the pot.
