Illogical Debt

The following is a post by staff writer Crystal at Budgeting in the Fun Stuff. Her blog covers living expenses, saving for your future, and the fun stuff along the way.

There is supposedly good debt like home loans, bad debt like credit cards, and then there is debt that just truly baffles me. This article at Yahoo! Finance covers several stories of crazy debt:

1) One lady ran up about $30,000 in calls to a telephone psychic. She ended up having to declare bankruptcy.

This one makes me cringe the worst since it feels the most wasteful to me. I can imagine the woman becoming enamored with the idea of actually hearing true fortunes of the future, but spending into bankruptcy for it sounds more like an addiction.

2) Another woman ended up with $11,000 in debt by buying men drinks at bars to get their attention.

I know this may sound bad, but even as a slightly chubby woman, I think a low cut blouse would work better for me than buying every good looking dude a drink. This just made me sad because the woman didn’t have enough self-confidence to pick up men in a cheaper way…

3) One couple threw themselves into bankruptcy through random acts of kindness. They wanted to help homeless men and women, but charged hotel stays and food to the point that they lost their home and car.

If you have to spend yourself into problems, this seems like the nicest way to do it. I don’t think that becoming homeless will actually help the homeless in the long run, but this was the sweetest story of debt that I’ve heard lately.

4) One woman had lost control and was spending thousands of dollars on wigs to the detriment of her actual living expenses.

I know a new hairstyle makes me feel good, but I do hope my friends would let me know if I start going too far. Thousands of dollars a year on wigs when you actually have a full head of hair seems like yet another addiction to me.

5) One poor widow ended up putting a $30,000 basement remodel on credit cards after using all of the insurance money to buy the new house.

I cannot guess how I’d react if Mr. BFS passes away before me, but I do hope I don’t do something out of character like this. I know I spend more when I’m stressed on convenience items to make life a tiny bit easier, but I’ve never been so traumatized that I started buying nesting items. This will remind me to seek counseling if life ever throws me a huge curve ball…

My most illogical purchases happen after I research a specific item for weeks or more.

I’ll finally settle on my choice and buy one but I’ll still have the urge to keep searching and buying for a month after that. For example, when I decided to start carrying a purse, I went purse crazy and ended up with 3 expensive bags in 2 months simply because I could not get the purse idea out of my head. I try to control urges like that now by disallowing myself to buy a second whatever for at least 30 days after I buy the first one. That usually works like a charm.

What’s the craziest thing you ever bought? Have you ever ran up illogical debt?

15 Responses to Illogical Debt

  1. Everyday Tips says:

    This is an easy one for me. My biggest waste of an expense was the Roomba. It is sitting in my basement, begging for use. However, it seems too time consuming to get it set up that first time. I was lured to buy this during a ‘Woot Off’.

    • Daniel says:

      @Everyday Tips, so why not sell it? I’m sure you could make back most of your money and suddenly your ‘biggest waste’ won’t seem as bad.

      I think we talked about limiting your mistakes to small ones. Maybe we need to institute a $100 maximum mistake rule? Anything less is still characterized as a ‘win.’

      So if you can sell the Roomba and you lose less than $100 overall, no use worrying about it!

    • @Everyday Tips,

      We thought about getting a Roomba too, but after giving it a test trial we decided not to. our floor is too split up and complex.

      We were lucky though, I borrowed it from my sister how had one, just for a test period.

      Let’s see the dumbest thing I ever bought, hmmm… Probably out wireless electronic dog fence. The neighbors swore by it, but when we tried it, it was too unreliable because of our walls (we think…)

      Perhaps I should see what it sells for on ebay and go that route (indirectly, thanks Daniel :) )

    • @Everyday Tips, I loved our Roomba until our cheap berber carpet killed it! I’ve been wanting to find a new one now that we have wood laminate – is yours for sell? :-) I really did love how easy the one we had was and it was always full in the morning, so I was cleaning without having to do anything, yay!

  2. Evan says:

    Roomba is bad ass! We named our Rosie (reference anyone?)

    I say my biggest was over the course of freshman year of college. I was spending 50 to 75 a night at a college bar! COLLEGE BAR! Idiot 18 year old Evan

  3. The best story one of our clients had was; she took out $100,000 on cash advance from 5 credit cards and took it too a “money blessing ceremony” where a “priest” was going to bless it she would take it back to the banks and it would some how multiply (i’m not sure if it was literal or metaphorical). Anyway the priest take it out the back to bless it and then get’s into a car and disappears.

  4. Andrea says:

    Number 2 made me feel really sad here… It’s really upsetting to think she felt she had to do that.

    Agree with you here, Crystal, the low cut top might have been a better alternative lol! Better for the bank account at least….

  5. Khaleef @ KNS Financial says:

    Honestly, I expected to see a list of more common debt – like over-sized houses, or expensive clothing. Didn’t plan on reading about wigs and becoming bankrupt helping the homeless. Where did you find these?

  6. Oh boy…I am glad my Randon Act of Kindness Challenge is just $5 a month! It’s not good if you become a charity yourself:). Nice post.

  7. Darwin's Money says:

    A very common illogical debt is taking on more home than you can afford. So many people are keeping up with the Joneses while bankrupting their future. It’s so common that it’s not viewed as that illogical I guess – but it seems like it is given the magnitude and implications.

  8. Tommy Douglas says:

    I agree many people buy more of a home than they can afford or for that matter even need. The high payments, maintenance costs and utilities add up to more than they can handle. The same can be said for their cars.

  9. Don Bank - Loans Australia says:

    The biggest illogical debt that I can think of is to buy a luxury car in order to show off to other people, watching the car depreciate immediately and then end up owing more that it is worth.

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