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Here’s Why Your Friends Are
Going Broke
Sincenobodywearstheirnetworthpinnedtotheirchest,we
trulyhavenoinklingwhatourneighborsrealpersonalfinancial
situationisatanygivenpointandtime.Whatwepromiseyouto
betrueisthatwhatappearstobeanoceanofsuccessaround
youismerelynothingmorethanamirageofmanypeopleliving
onanobligatorybasistopaytheirbills.Yourfriendswillnever
tellyoutheyaredrowninginquicksand,butpeoplearoundyou
aregoingbrokeeverydayandherearethereasonswhy.
Youregoissomethingthatcanmakeyoustrongerorbecomean
insurmountableobstacletoachievingsuccess.Remember,youregois
thepartofyourmindthatcontainsmemory.Itisultimatelywhatshapes
yourplanningandyourreality.Whenitcomestomoney,egoisoneof
thosedriversthatmakepeopleyouknowbroke.Thisdoesn’tmeanthat
theyarelivingoutinatrailerpark,butitdoesmeanthattheyarefulfilled
bykeepingupwiththeJones’andeatingoutatthelatestandgreatest
restaurant.Howwillyouregoreactwhenyourneighborbuysanew
RangeRover?Orputsinanewpoolintheirbackyard?Ortakesa10day
vacationcomeChristmastimeintheBritishVirginIslands?
ostofthetimewhenwetalkaboutpersonalfinance,
topicsincludingcreditcarddebt,savings,investments,
insurance,andcouponscreepintothediscussion.M
1. EGO
Agreatbookis‘PredictablyIrrational’byDanAriely.Thebookhas
somefascinatingstories,butthetruthisthatmostofyourfriendsmake
irrationaldecisionsaroundtheirmoneyinspiteofthefactsinfrontof
them.Somepeopledon’ttakeadvantageofthe‘free’matchfromtheir
401(k)atworkbecausetheydon’tbelievetheycansavemoney.Weare
talkingaboutFREEmoney!Peopledon’t takegainsintheirinvest-
mentsafteragreatrunbecausetheybelievetheirportfoliowillgoup
forever.It’ssimilartobeingattheblackjacktableandthinkingyoucan
beatthedealerforever.They’llconvincethemselvestobuyapooltelling
theirbrainthatthevalueoftheirhousewillgoupwhenallother
statisticssayotherwise.Thisiswhyhavingoutsidecounselissoimpor-
tantwhenmakingbigfinancialdecisions.
2. IRRATIONALITY
Timeisnowthenumberonemoneykillerintoday’ssocietyinouropinion. Thereissomuchinformationcomingattheaverage
consumer,it’sverydifficulttodecipherfactfromfiction.Peopleyouknowwhoarebroke(orgoingbroke)aretooashamedto
askforhelpbecausetheywenttoatoprankedcollegeorhaveanMBAbehindtheirname.Theyjustassumeaquicksearchon
Googlewillhelpthemgetalloftheinformationtheyneed.However,bothpurchasingdecisionsandinvestmentdecisionshave
becomemorecomplex.Benefitsatworkaremoredifficulttounderstand.Creditcardcontractsrequireyoureadthefineprint.
Justbecauseyouarecollegeeducateddoesn’tmeanyouarefinanciallyeducated.Infact,whenwasthelasttimeyoutooka
seriouspersonalfinancecourse?
Therealitybehindallofthisisthatknowinganddoingaretwoverydifferentconcepts.Weallknowweneedtoloseweight,
yetwithoutaprogrammostpeoplefail.Weallknowweneedtoexercise,yetwithoutaweeklyregimenmostofusgetoff
track.Ifyoumeetsomeoneintheir40’sorearly50’sandaskthemwhattheirbiggestworryisinlifetheywon’tsaytheirhealth,
butinsteadthey’llrespond“money”.Ifthat’sthecase,thenwhyaresomanypeoplegoingbrokeandlivingjusttomeetthe
standardoflifethattheyhavebuiltforthemselves?Askyourfriends...thatisiftheyarewillingtoputtheiregoonthetable!
3. EDUCATION
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