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10 Ways To Spend Money That Prove You’re Obviously Insane

by Shawanda Greene

A roll of dollar bills on toilet paper holderAristotle once said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

Yeah? Well, so is insanity.

Many people believe their disastrously low bank balance is caused by outside forces – bad luck, if you will. Mostly, being broke is a result of habitual actions.

Albert Einstein defined insanity as “doing the same thing over and over and expecting different results.”

To understand why you don’t have any money, simply marry the wisdom of Aristotle and Einstein. It’s because you repeatedly manage your money like a crazy person.

Here are the top 10 ways insanity manifests itself in your spending habits.

1. Playing the lottery

Your chances of winning are as good as everybody else’s. They’re not going to win and you’re not either.

2. Borrowing on credit cards when you’re already deeply in debt

Instead of taking the sensible approach to getting out of debt – instead of exercising financial restraint, you ferociously dig yourself into a deeper mess. Neither gov’ment nor pixies nor rainbow colored unicorns pay off debt. You’ve gotta get this done. Your first step: stop borrowing money.

3. Being overly optimistic about future  pay increases

Positive thinking and willful delusion are not the same. During the recent run up in home prices, it was amazing how many people believed their monthly after-tax income would grow by 30% in time to cover the increase in a 1-year adjustable rate mortgage. Come on, people.

4. Overdrawing your bank account, paying creditors late, exceeding your credit limit

Hoping and wishing aren’t effective money management strategies. If you’re constantly smacked with no value added fees, then you’re either insane, clueless or plain ol’ dumb. There’s no way anyone with finite income and adult obligations would continually pay these. There’s just no way.

5. Getting speeding  and parking tickets

Resist the urge to break the law. Ultimately, it’s gonna cost you – once when you pay the fine, and for moving violations, twice when your car insurance premiums go up.

6. Loaning dead beats money

Here’s something I’ve never been able to understand. How can one person have multiple bad debts with another person? Did the lender not learn anything from the first, second, and third time he loaned the borrower money?

7. Not paying your taxes consistently and on time

Penalties and interest for paying late, filing late, not filing and not paying are steeeep.

If you’re engaged in an internal battle over whether you should pay the unfair taxes levied upon you by the U.S. government, then here’s a tip that might set you free.

The trick is to stop thinking of it as “your” money. ~ IRS Auditor

There, I fixed ya.

8. Incurring hefty medical bills for preventable diseases and conditions

Let’s be honest. We know what causes obesity, Type II diabetes, heart disease, stroke, etc. You must take conscious and deliberate actions to ensure you’re physically healthy.

Even with “good” health insurance, you never know when your claim will be denied. Besides, being healthy will help you get more enjoyment out of life, and you’ll spend less money in an effort to make yourself feel better.

9. Expecting material things to bring happiness

Boy, it sure feels good to buy stuff. Especially stuff that’s shiny and colorful and new. Unfortunately, the novelty of new stuff wears off almost as soon as we buy it.

If you’re home when reading this, quickly scan the room you’re in. Compare the stuff you constantly use with the stuff you’ve used a time or two with the stuff that’s still in boxes. You don’t have to tell me what the ratios are, I already know.

10. Haphazardly going back to school anytime you can’t find a job

Why is the popular solution to paying off student loan debt going back to school and incurring more student loan debt? How does that make sense?!

I don’t dispute a good, formal education can boost your lifetime earning potential. However, a college degree is not a magic pill that automatically leads to more money. If you insist on going to (or going back to) college, carefully evaluate where your skills AND interests lie, THEN determine whether a relevant degree will generate a worthy return on your investment.

What other insanity indicators have you either practiced or witnessed?

This article was featured in the Carnival of Financial Planning – Edition #196 at Darwin’s Money.

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{ 15 comments… read them below or add one }

Ban Clothing July 28, 2011 at 3:21 PM

I think your last point about going back to school when the first degree isn't even paid for is a valid point. People constantly do this and it's never a good financial decision. People can justify it by thinking they will be able to make more money when they get out. If you can't get a job with your anthropology degree you still won't be able to get one with your masters.

Reply

Shawanda July 28, 2011 at 11:18 PM

Thanks for dropping by and commenting, no less!

I hear about people making the irresponsible decision to go back to school all the time. I wanna shake 'em, slap 'em, and ask 'em, "Are you crazy?!"

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debtfreeandbroke July 28, 2011 at 11:19 PM

I totally agree with #7 (I agree with all of them), but #7 is a big deal to me. If I didn't automaticly save away 25% of our income for taxes I'd have to find at least $8000 at the end of the year. It's a lot easier to save up that money thoughout the year and hope that I get to keep some at the end, than to spend the money througout the year and hope I can find enough to pay them at the end.

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Shawanda July 29, 2011 at 7:38 AM

I try to tell people. Uncle Sam is one creditor you don't want to mess with.

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kim July 29, 2011 at 12:41 AM

How about trading in a perfectly good car every two years and then rolling over what you owe! Or trading for the latest cell phone every time a new one comes along. Or having to have the latest styles in clothes. Good tried and true styles and classics will always be popular, having the latest makes you look like a fashion nightmare. If you have to have the latest color scheme, buy a scarf!

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Shawanda July 29, 2011 at 7:41 AM

These are good ones. If you're going to trade in a car every couple yeas, you might as well lease one. Although I wouldn't recommend that either.

I remember two of my friends' boyfriends buying $400 – 600 phones. What?! These men weren't making the kind of money to justify purchases like that.

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Crystal @ Travel Ins July 29, 2011 at 1:10 AM

Oops. I'm nuts, but I knew that. :-) I do use about $10 of my fun money every month on the lotto. I like having my daydreams, lol.

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Shawanda July 29, 2011 at 7:43 AM

In the interest of full disclosure, I'll buy a lottery ticket every few years or so. :) I figure one dollar won't totally destroy my financial plans.

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Loki_23 August 1, 2011 at 1:47 PM

I know a couple of folks who break all but 3 of these regularly. It amuses me to no end! They always seem to look about cluelessly as if to say, "I do not understand how/why my financial situation is so abysmal." Of the 3 they do not break, one they do not believe in (schooling); the other 2 seem to fall into 'following the law.' Yet these folks ridicule us for all we do. Our net worth is climbing. Theirs… well, need I say?

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Shawanda August 1, 2011 at 3:37 PM

One of my college friends would always complain about having bad luck. It's been 10 years and she's still singing that same tune. What happens to her has nothing to do with luck, chance or happenstance. She just makes bad decisions…constantly!

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Money Matters Guy August 3, 2011 at 2:08 PM

I never play the lottery, but i know people who spend a small fortune on lottery and scratch off tickets.

Also, #5 will waste money on other ways too such as poor gas mileage and more wear and tear on your car.

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Shawanda August 4, 2011 at 1:10 AM

Amazingly, the people I know who consistently purchase lottery tickets are the ones who can afford it least. A lot of people gamble under the guise of entertainment. There's nothing entertaining about losing money.

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Lorraine Martinez September 24, 2011 at 5:25 PM

Hey Hey Hey….I've won in the lottery 5 times, but I only play $1.00 per day. I do agree that their has to be limits. Mine is $1.00 because my budget allows for it.

As with school, my BS is paid off and I did go and sign up for a second degree but I refuse to register for classes unless I have the money for all the expenses for the semester. I do not want to incur any new debts until all the debts the family business has are paid off. School is not going any where and I rather concentrate on getting our finances in order. I know that getting another degree will set a great example for my girls, but being financially responsibility and teaching them the value of a dollar is more important to me right now in the economic times we live in. The business will be theirs in the future and I want to be able to leave them something free of debt and flourishing regardless of the economic state of the country.

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The Debt Princess March 7, 2012 at 2:25 PM

I am obviously insane. I did go back to school while I still owed on my first degree. I've talked about it on my blog. I don't recommend doing what I did but it was an out to a bad situation.

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Suzana Daniels January 16, 2013 at 7:29 AM

Hi,

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Hope you would give me an opportunity for the same and would also share your views on this.

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