Why do people do what they do?
Why does someone buy a brand new car and finance 106% of it (sales tax and all!)?
Why does someone go to college and finance it 100% with student loans while obtaining a degree in basket weaving?
Why does someone take a very expensive vacation to Hawaii and put it 100% on their credit card?
Why does someone withdraw all the equity out of their home to start a new business?
It happens every day! Look around! You can see it! You may have to only look into the mirror to see someone who has done one of these financially horrendous items. That is as far as I have to look!!!
Back to my question. Why?
1. No plan. They wanted to spend the money on the item, but they did not plan for the expense. Consequently, they only money available when the purchase was made was very expensive debt money.
2. No control. They wanted it! They wanted it now! They did not want to wait. No! Must have item … Must have item now … Will be emotionally scarred for life if item is not obtained now …
3. Not willing to face up to the fact that the item may not be available for them at this time, so they buy it anyway hoping that “the money will come from somewhere”.
4. Talked into it. See #1, #2, and #3. You’ve seen it happen. The friends start talking about it. The friends are going on the vacation. The friends have the new car. Your friends are going to college and are not having to work while there. Justification is found through others’ circumstances.
If I were to attempt to sum the reasons that people do stupid things with money, I would say it is because they were ignorant of the COST of those major financial decisions. If they truly knew the COST of those decisions, many tears of sorrow and regret and many money fights with their spouse could be avoided.