Although I am a self-declared personal finance expert here on Tawcan.com, I tend to avoid talking about personal finance unless I know you well (must be the polite Canadian in me). I typically listen in on discussions and see where the discussions end up going. Recently I have encountered 5 financial fails that simply don’t make any sense to me. They resulted in me scratching my head wondering what the heck. Perhaps I really should be more vocal when people talk about personal finance and provide a tip or two…
#1 Apps and in-game purchases.
During a conversation someone stated that he buys apps and makes in-game purchases at $0.99 almost every other day. When we started talking about saving for retirement this person kept saying that he didn’t have any money to put toward retirement savings. Not even $5 each week.
#2 Gadget reviews and investment tips
Are you one of these people that spend hours and hours reading reviews on a gadget before pulling the buy trigger? I certainly am one of these people.
How often do you invest money in a stock or mutual fund without doing any research? How often do you invest money in a stock or mutual fund because someone gave you a hot tip?
So many people invest in a stock without reading the quarterly and annual financial results or researching how the company performed over the last 3 or 5 years. They also fail to evaluate company’s future growth. Some people invest in mutual funds without even taking a look at the MER fees. They invest in these mutual funds simply because the funds have been performing better than the market the past year. Unfortunately, past performance doesn’t guarantee future performance.
A recent conversation goes something along the line that a person spent hours on comparing between Google Pixel XL and Apple iPhone 7 Plus before making a purchase decision. The same person then went on saying he just purchased $7,000 worth of Twitter stock in his RRSP because “everyone uses Twitter” and his gut feeling tells him that Twitter stock price will only go up after down from its all time high of over $60. I kept my mouth shut during this conversation…
Spending hours and hours when spending a few hundred of dollars but no research when buying an investment for your retirement?
#3 Buy a car with 0% finance
Can you believe that some people believe that buying a car on a 84 month 0% financing term with $5,000 down is an excellent deal? Dude & dudette, that’s a 7 year term! Are you going to keep the car for more than 7 years? Oh wait, you like to change your car every 3 years and trade in your year with a 4 year lease term left? Boy oh boy, you’ll be surprised what the numbers look like…
What’s doesn’t make sense is when these people start ridiculing someone for buying a car using cash. Whatever happen to the tenet, “If you can’t pay for something in cash, you can’t afford it?”
#4 Drive extra distance to save on gas
I drive to the states to fill up my car about every 2 weeks. According to my calculation, the saving is about $0.30 per liter, which corresponds to about $33 saving per month. The total driving distance is about 8 km per trip. At about 7 liter/100km fuel consumption (about 40 MPG), the monthly cross border trips cost me about $0.34 in total. So it makes a lot of sense to drive a little extra distance to save money.
BUT some people drive extra distance just to save as little as $0.05 per liter on gas. When calculate the fuel cost on the extra distance, it’s higher than the actual saving. That totally doesn’t make any sense at all.
#5 Flying extra distance to earn frequent miles
On our return from Denmark we were told that we were being rerouted to fly through Beijing from Frankfurt to come back to Vancouver. We thought it was a ridiculous idea. A few readers joked about all the extra frequent miles we would be able to accumulate if we were to do that.
As funny is it sounds, I actually encountered a few people that decided to fly extra distance just to earn frequent miles. Instead of a quick 3 hour trip with a non Star Alliance airline, one person decided to fly with a Star Alliance airline to sit in a connection airport for 6 hours, making the entire trip to about 10 hours. This person did all this to get some Start Alliance frequent miles. Similarly, another person decided that it was a great idea to make two separate Asian trips from North America in back to back weeks rather than simply staying in Asia for the weekend. This person decided to fly extra 10+ hours each way just so he could get some extra frequent miles.
Didn’t you know that time is money? Sorry to break your bubble, I’m pretty sure those extra frequent miles don’t worth as much as your time.
Unfortunately, not considering how much your time worth it one of the biggest financial failures that many people do on a regular basis.
Dear readers, have you encountered any financial failures recently that you want to share?