I had a boss who had over $60,000 of credit card and other consumer debt. He never could understand why he could not dig himself out of the hole that he had created. It only took a month of working for him to understand where most of his problems came from. His personal finance focus was mixed up or inverted in a way. My boss would agonize and sweat the small purchases while totally blowing all his money on poorly planned, researched, and impatient large purchases. He would hem and haw about saving a few dollars here and there on small purchases like going out to eat at a restaurant, but he would decide at the last minute to fly across the country to see his family while he was on temporary duty (TDY).
Don’t get me wrong, small needless purchases will quickly add up to large sums of money if you are not careful, but you have to be able to see the forest AND the trees. It’s a balancing act, but you have to get the large purchases like home mortgages, car loans, etc. right if you want to have any chance of having a healthy personal finance picture.
Here are just a few examples of the mistakes my boss made in order to get $60,000 in debt:
- Poorly choosing the neighborhood to buy a house in
- Sending his children to private elementary school
- Leasing a car