Updated on 11.10.06

The Road to Financial Armageddon #4: The First Taste of Real Money

Trent Hamm

Yesterday, we watched as I stumbled through college making a series of classic financial errors. Yet I finished (albeit in six years) with a pair of degrees, and I was able to find work utilizing both of them. I was suddenly making more money per year than my parents had made combined in any year, ever. Surely the lessons of my childhood poverty would instruct me on how to be thrifty with my windfall? Think again.

Rather than living thrifty, as I had observed growing up, my financial windfalls led me into a giant buying spree. I bought a monstrous television, a state-of-the-art computer, a brand new vehicle, tons and tons of DVDs and music and games of all kinds, expensive gifts for my family (including buying my niece a computer for Christmas)… I bought and bought and bought and bought, because I had learned as a young child that happiness comes from fulfilling every whim of your heart.

Now, this wouldn’t be so bad, but my spending quickly spiraled out of control. I was making a lot of money, but I was soon spending more than I was bringing in. I got a couple credit cards and it wasn’t long before I maxed them out. I just kept buying stuff I didn’t need without any rhyme or reason because I didn’t understand what it all really meant.

It wasn’t long before I was making minimum payments on the cards in the area of $200 a month simply to cover all of the foolish things I had purchased. You would think that this might be a wakeup call, but it wasn’t… I would just pay the bill and then go buy something else that would bring a few moments of joy.

Even that could have been at least somewhat overlooked except for the fact that I had no savings plan whatsoever. I was saving absolutely nothing of what I was bringing in. Even though I had more money than anyone in my family could imagine, I was actually living paycheck to paycheck because I was spending so much on frivolous things.

Perhaps the biggest problem was that I allowed myself to appear much richer to my family in friends than I actually was. They began to have this impression that I was just made of money – and it just wasn’t true. But I felt this desire to keep up the charade because… well, because it made me feel good. I thought I was an inspiration, particularly to my nieces and nephews, and a source of pride.

To sum it up, I became a complete consumer. My focus was on buying things immediately that would make me feel good and I believed that the future would just take care of itself. It is a stage that I fear many people find themselves in today, a stage that I was eventually forced to move myself out of by seeing the financial havok that I had wreaked not only on myself, but on my family as well.

I allowed this spending to continue on for a while, even as other things in my life were changing. I began to date a wonderful woman and eventually we decided to get married. If you’re thinking “Uh-oh,” you’re probably right. Tune in tomorrow to read the whole sordid story.

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

#1: The Earliest Mistakes
#2: Early Profits … Lost
#3: Cash & College
#4: The First Taste of Real Money
#5: Love & Marriage
#6: The Yuppie Years
#7: Here Comes Baby
#8: Meltdown
#9: The Road to Recovery
#10: What I Learned

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  1. dimes says:

    We see this problem all the time with young military personnel. They don’t realize that you lose a lot of income to taxes right off the bat, and that friends who seem to have more may be getting a lot of help from parents or may be up to their eyeballs in debt. It’s dangerous to start getting a paycheck without having a budget in place first.

  2. BigBuddha says:

    This is a part of your story that resonates so strongly with me because that was me coming out of college .. spending up big because I’d landed a good paying position … but my dream became a nightmare as more and more debt payments kept eating more and more into my pay until I barely had enough to pay to feed myself and pay the debts … crazy stuff … I must read on …

  3. ERAU Student says:

    I find this series of articles absolutely intriguing. I’m 18 and entering my dream college this year, although I come from an affulent background, I am a huge saver. I would rather save my money than spend it, with the exception on one thing, that I have wanted ever since ’97, a large SUV (my parents are environmentalists).

    At any rate reading your transformation is proving to be entertaining, and insightful. Congratulations, on you transformation.

  4. Tara Bartee says:

    I think I stayed in this stage a lot longer than you did. Buying stuff I didn’t need to impress people I didn’t like with money I didn’t have. Eventually this passed. Not because I was so smart, or because I finally “got it”, but as I aged I found I just didn’t want as much stuff. I hope this happens to those of you who still consume more than you need, and I hope it happens to you earlier than it happened to me.

  5. Lee says:

    It took me 7 years to realise this. Ho hum.

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