I hate these kinds of stories.
I’m talking about the ones where people blow all their hard-earned money either through a scam, recklessness, or just plain bad luck. And, sadly, it happens all the time.
AskReddit users talked about the worst financial decisions they’ve ever seen.
1. Ouch!
“A private company announced a special dividend to all shareholders as of date of record one-month in the future. $1.30/share dividend.
There was an option holder with 300,000 options at a $0.10 strike price.
He did not exercise them. Had he exercised his options for $30,000, he would have been paid $390,000 the following month.”
2. Some people…
“I used to work for a company with an actuarial Department. There was a lovely young woman working in the call center with a masters degree in data science.
She was constantly talking about how frustrated she was with making $16/hour in a call center when she had a masters degree in data science, yet no matter how many times I told her to apply to the actuarial team she wouldn’t do so. The actuarial team was HUGE about promoting within.
I saw many people who wanted to learn more about what they do who had no experience whatsoever get excepted into the team because they wanted to learn. This girl was a shoo-in. And yet she never even tried despite the fact that there were always openings.
She also shared with me that she was $180k in debt for that master’s degree. Last time I checked in with her she had left the job completely and is now in school for art. (Insert facepalm emoji here.)
But my favorite was before I was even an accountant. I worked for a small CPA firm as a receptionist during tax time. I saw a full-grown woman sit down on the floor and start crying because she owed $900 in taxes that year when she had made about $150k that year.
I rolled my eyes so hard that I hurt myself. Later that day I had a guy who owed $750k to the IRS and said “woohoo! That’s way less than last year!””
3. Sad stories.
“The client who joined an MLM and racked up half a million dollars worth of losses before finally listening to us and quitting.
The client who spent $40k on Farmville over 3 months.
The clients who give their adult children allowances that exceed my salary, fancy cars, and houses without expecting them to ever hold down a job themselves.”
4. Bad idea, sir.
“Watched a client walk out of my office after I explained the risk in liquidating his 401K to start his own business.
He started it with no management experience or business model, real “fly by the seat of his pants” kinda guy. Wanted to start a career flipping houses in a college town, turn them into upscale rentals.
Did it in a bad neighborhood and lost EVERYTHING.”
5. Oops!
“My brother had a long standing client of around 10 years get married after only knowing a woman for 12 months. He was almost 55, she was in her early 30s.
55 y.o. man wanted to add her as a signatory on his retirement account. Basically giving her 100% power over the account. A quick soft credit check showed she was not good with money.
My brother offered up many different options as to how to give her access to the money but with limitations. He even straight up refused to do it, saying that he needed to think about it for a few days.
The guy came back in the next morning saying he would file a complaint against him if he didn’t set it up. My brother said that he would need to get the documents notarized, and sign a waiver that this is against the institutions advice.
The guy comes back in later that day and finalizes the deal.
You can guess what happened within about 6 months.
The account had around 600k in it to begin with, and she had managed to run off with about 65k before the account was frozen by my brother for review of withdrawls.
The man was f*ckin p*ssed and tried to lawyer up twice. Neither time did it even go to court.
His advice is that if you are married and have investment accounts, just keep them separate unless you REALLY have a reason to give them access.
You can totally notify the agency about your marriage, and sometimes in certain situations the spouse can get limited info confirmed for medical bills and such.”
6. Terrible decisions.
“Making over $250k (sometimes WELL over), no withholding, not paying estimated taxes throughout the year, can’t afford the tax bill with the return EVERY YEAR, then b*tching because they can’t afford the installment payments on the taxes they owe from two years ago.
Sell your gaudy McMansion, take your teenage daughter’s credit card away, let your drunk driving son stay in jail and get a public defender, and tell your b*tch wife to stop spending all day at the tennis courts sipping mimosas.
Get your sh*t together and pay taxes throughout the year like the rest of us. You aren’t being persecuted by the IRS, you’re just an idiot.”
7. Wow.
“I work for a bank. One of our branches had a customer who was basically homeless. Then, he wins the lottery!
Over the next few months, the staff watched him come in to withdraw thousands of dollars every day to spend on extravagances. Everyone tried to convince him to sit with a financial advisor to help him make the most of his money.
Less than a year later, he’s in slightly better shape than when he started; he’s at least able to live in the car he bought.”
8. Come on!
“I’ve had a client where I noticed this guy’s credit debt always remained hovering $13k to $15k… I asked him why he only makes minimum payments on his credit card instead of paying it off, because I see he has roughly $11k sitting in a bank account.
Interest per month on that credit card bill is roughly $250, and according to his repayment patterns it will take him roughly 19 years to pay it all off.
His answer to me is the bank charges him $7.99 per month for his bank account if his balance dips below $10k… So to save the $7.99 per month this guy is paying $250 in interest on his credit card.”
9. Gotta do your research.
“What I’ve seen, countless times, is someone who started a business with ZERO research, no understanding of what running a business involves. (Here’s a hint: practically every business involves paperwork and deadlines.).
The business models come in waves… for a while it was Barbecue shacks, then it was cupcakes, then house flippers, then food trucks. I think they see it being done on TV shows that make it look fun. It isn’t fun when they come to me with debt, tax levies and lawsuits. IRS and state labor department and health department on their backs, and suppliers taking them to court for unpaid bills.
Some of them cashed out their retirement account to buy a business; others put their house up as collateral for an SBA loan. it’s a nightmare. If they had come to an accountant first, we might be able to help them (or even better, dissuade then).
I usually see them after 18-24 months of screwups and by then it’s usually too late to rescue them.”
10. Those fees add up.
“I’m a banker. Banks charge fees for using other bank’s ATMs.
I had a customer that would check his balance and then do withdrawals daily at a foreign ATM. Guy did not have a lot of money to begin with and because he did this, would overdraw his account and get slapped with an overdraft fee which put him in the hole further.
We ended up taking away his ability to overdraw his account. Dude was p*ssed but it helped right the ship a little.”
11. All gone.
“Bank advisor here, a customer got an inheritance, about 200.000€, and just spent in like 2 years, not investing it or putting into a savings account.
Didn’t even buy something big like a car our part of a house, just spent too much every month for two years and it was gone”
12. The car game.
“Claims Adjuster here, and I see it happen all too often – trading in vehicles with negative equity.
Why? Why can’t you be financially responsible and pay off your vehicle instead of rolling the leftover loan onto that new shiny machine you just can’t resist, and rinse/repeat a couple of years later. Your loan is just getting bigger and bigger.
I had one client (recent, otherwise I had more than that) – who totaled his vehicle. He blew past a stop sign and collided with another vehicle. Guess what friend, out of that $70,000 you still owe to the bank because you’ve traded in 4,5 vehicles over the years – we are only covering you for what your current vehicle is worth today, around $25,000 or whatever it was .
Depreciation applies unless you have the proper endorsement in place. That means you will be paying the bank for the leftover loans of some vehicles, none of which you own.
Own one vehicle, one loan – if you ever totaled your vehicle, insurance will provide you enough to cover the loan. If it doesn’t quite cover it because of high interest, it sure as hell isn’t a $45k loan left.”
13. Listen to your accountant.
“Best friend is a CPA, and when he had his own practice, he had some pretty big-name clients (Senators, musicians, pro athletes, etc.).
One of the biggest mistakes people made were thinking they were smarter than an accountant. His biggest challenge were the people who heard about the “sovereign citizen” nonsense. To no one’s surprise, a random guy on YouTube doesn’t know more than an actual CPA with 40+ years experience.
At least a few of these new-found “sovereign citizens” ended up doing time for tax evasion.”
Have you ever seen someone make a really terrible financial decision?
If so, please tell us about it in the comments.
We’d love to hear from you!
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