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7 ways to commit financial suicide

These common mistakes make it difficult to set aside money for emergencies and save for a comfortable retirement.

By MSN Money Partner Nov 2, 2012 11:57AM

This post comes from Len Penzo at partner blog Len Penzo dot Com.


Len Penzo dot Com logoI recently got back from a vacation that included a family wedding on the central California coast and a sightseeing trip around the San Francisco Bay area.


Image: Couple arguing © CorbisOf course, one of the most popular attractions in San Francisco is the beautiful Golden Gate Bridge. It's absolutely breathtaking to behold in all its majesty.


The gorgeous span is also an extremely popular suicide location; more than 1,300 people have jumped off the Golden Gate Bridge since it was completed in 1937.


While most people would never consider committing physical self-destruction, more than a few folks unwittingly choose to commit financial suicide every day.


How so? Here are seven of the most popular methods:


Having children too early

There is nothing more destructive to one's financial future than bringing children into the world without having an established and stable means to support them. Raising children requires a tremendous investment, not only of money, but of time as well. Unfortunately, when those resources are in short supply, it becomes extremely difficult to start a business or gain the necessary experience, on-the-job training and/or education required for the type of career advancement opportunities that lead to significantly increased earning power.


Abusing credit cards

There are thousands upon thousands of careless people who have been driven to financial ruin by burying themselves under a mountain of debt via credit card abuse. In most cases, it's because they lacked the financial acumen and discipline to understand that credit cards must be treated with respect and used responsibly.

Maintaining financial dependency on others

We are constantly being admonished by officials to avoid feeding bears, squirrels and other wildlife in order to prevent them from eventually becoming dependent on handouts. For the exact same reason, I'm absolutely convinced that the longer we stay dependent on government assistance or friends and family for financial support, the tougher it becomes for us humans to achieve financial independence.


Failing to accurately track income and expenses

Trying to get a handle on your personal finances without knowing how much money you are earning and where it is all going is tantamount to trying to drive while blindfolded. People who fail to take the time to analyze their finances typically end up crashing and burning because they lack a means of ensuring they get the most from their income. As a result, they end up succumbing to a severe case of lifestyle inflation.


Setting down roots in the wrong location

Whether you realize it or not, one of the most critical financial decisions you'll ever make is where to live. True, sometimes we have little choice in the matter. However, it's important to keep in mind that choosing to live in a high-cost-of-living locale without the income to support such a lifestyle makes it extremely difficult not only to make ends meet, but also to accumulate wealth over the long haul.


Failing to establish a plan for the future

The young always seem to have more time than money, which is why financially important things like putting aside money for short- and longer-term emergencies -- or feathering a retirement nest egg -- often are never even considered until people approach their golden years. Of course, by then, it's usually much too late. The old bromide really is true: Failing to plan is the same thing as planning to fail.


Marrying the wrong person

Choosing a spouse is another epic decision with major implications. Remember: Marriage is a financial contract. As such, it can be a financially dangerous proposition. There are countless responsible people who ended up bankrupt becasue of the antics of a financially undisciplined spouse. And those who eventually recognize their matrimonial mistake after saying "I do," still often end up paying dearly. The average cost of a divorce is about $20,000, which just goes to show that the people who prosper from a divorce are usually the lawyers.


More from Len Penzo dot Com and MSN Money:

Nov 2, 2012 4:40PM

My husband and I married at age 21 and had our first child at age 22 and second at 24. I was a stay at home mom until my youngest was in first grade. I then got a job as a teacher's aide, so I could be on the same schedule as our children. Money was extremely tight, but, we learned to economize. It became a long lasting habit. Our family took frugal, but fun camping/hiking vacations, played chess and Monopoly and took advantage of borrowing books and movies from our library. We made our meals at home, with the occasional dinner out. We were involved in church and school activities. Our children got financial aid and merit scholarships to pay for college, in addition to small student loans. My husband got promoted in his company several times over the past 35 years. He went from making $16,000. in 1977 to $110,000 in 2012. We are still frugal, but have a good life. Our children are on their own, with good jobs. Now here is the point of my story: we have friends and relatives, like us in their late 50's. They either had children late in life, or not at all. They took expensive vacations, bought new cars, lots of clothes and lavish homes. They ate out often. Since the economy tanked in 2008, they have been struggling to get by financially.  They never learned to economize when they were younger, because they didn't feel they had to. They got into the habit of spending money freely and sometimes foolishly. Now, they are under water on mortgages for houses that they can't afford, steeped in credit card debt  and stating that they can't afford to retire.  So, having children young is not necessarily financial suicide....but, not learning frugality when young, certainly can be.

Nov 5, 2012 8:24AM

Most of the time when you marry young you don't know who you are married to until they turn 28. I got married young also and my first wife was a lie, steal and cheat type. It takes two to be married and one cannot make it work alone. I paid child support on two children and raise a third a lone without any support from the mother. The judges were not kind to men in my day. You can work your way out financially but it does mean not much spare time. The wrong mate male or female is a big step backwards financially. How can you save or gain when you can't trust the one your with? Most must learn that it's not what you want but what you don't want in the other person that makes a successful marriage.

Nov 2, 2012 4:09PM
Being financially responsible, should be paramount in any relationship. Sex, don't pay the bills. Creditors could care less, how your world is rocked.
Nov 5, 2012 10:55AM
You left off cars for some reason.  That is a mistake many people make over and over again.  Too much car, financed, way too often.   As I have become older, the less often I have spent on autos (and never new anymore).  It really shows in my finances.
Nov 2, 2012 2:29PM
To be financially responsible is becoming an ever harder thing to do with the continued erosion of the median earning potential courtesy of ever more greedy elites who forever want to add another zero to their wealth. If one cannot generate a decent income, they are doomed to fail acquiring adequate wealth in their working lifetime and will be reliant on the mercy of the government safety nets. A return to feudal times with the loss of the middle class.
Nov 2, 2012 9:10PM
The 8th way to commit financial suicide is to sign-up with and allow FISHER INVESTMENTS, a financial advisory/money management firm (KEN FISHER, CEO and Principal Owner) to manage your money (investments ).  After they have sucked the financial life out of you, you may literally want to commit suicide.  Don't fall for their deceptive, slick "snake oil" ads smeared on almost every page of MSN Money and many other financial websites.  Mr. Fisher has become a multi-billionaire (listed on Forbes 400 wealthiest Americans) by "investing" other peoples' money!  BE AWARE and BEWARE of FISHER INVESTMENTS!

Don Moore
Nov 2, 2012 4:43PM

YES People...listen to this article and BE RESPONSIBLE FINANCIALLY...follow the example set forth by the American Financial industries where the experts know, Banks, Wall Street Financial whiz's (ala Bernie Madoff, a clown deemed brilliant for 20+ years by the pundits), Congress, the Federal Reserve, Mortgage Houses et al.

Nov 4, 2012 3:39PM
My wife loves giving every extra nickel to her church. The bills do not matter to her. As long as she gives that $500 a month everything is fine. Family comes second. It has thrown our finances into a mess. I am at wits end on this one. She will not even cut back.
Nov 2, 2012 8:42PM

In contra to this article, here are the top ways you can commit "character suicide:"

You place your personal finances above everyone else

You commit security fraud

You take a huge corporate bonus at the tax payers expense

You act like a miser and deny and begrudge charity to those less fortunate

You don't work a day in your life and complain about having to pay your employees a living wage and giving them benefits.

You refuse to enter into a committed relationship because you only want to spend your money for your own personal benefit.

All of us should place more value on moral character and less on financial character

Nov 3, 2012 12:46AM
The biggest issue of all these, and quite honestly the hardest thing to plan for, is picking the right spouse.  Their is no magic formula for this.  Divorce is hell on financial wealth building.  Yes the perception is the man is the one who loses most but really both husband and wife lose horribly in a divorce.  Even for those who remain in love, and in a happy marriage, it often does not turn out exactly how they pictured it.  Now throw in a divorce rate in this nation that is 50% or higher and you can see how many folks end up a disaster.  Their is no magic formula for marriage.  Divorce hits all people equally.  Those with solid moral back grounds are just as likely to get divorces as those with less than idea family background.  I have always said marriage is crap shoot.  Sometimes you hit sometimes you don't.    The second leading cause of financial strain is lack of a defined pension.  When companies get completely out of the pension business and only adopt 401k plans it forces the worker to save drastically for retirement, often having to pick additional 401k plans or mutual funds.  I said it before, and I'll say it again, if all you have is one single 401k plan, nothing else, then you likely will never retire.  The average 401k plan only produces about 200,000 dollars in a 30 year investment period.  I'm talking the average company matching investment 401k plan.  If you got a 401k plan with no matching then your be lucky to have a hundred thousand in 30 years.  I sincerely hope that defined pension plans make a come back.   Even if they only pay a couple thousand per month after 30 years it would beat any average 401k out their.  A 401k was never designed to be your soul source of retirement.  Thats why it's failing.  Good Day, Joe.
Nov 2, 2012 8:28PM
Having children too early?  Did I read that correctly?  What age is one supposed to have children... 35... 37??  And when you're 55 and don't have a job as you've been laid off due to your age - oh that's right - that never happens. 
Nov 5, 2012 6:07PM

 I suggest you learn about Dave Ramsey. If you like what you see, it is easy enough to follow his advice. Basically he says track your money, don't spend more than you make, avoid debt and be an equal partner with you spouse on all financial matters. I'm not 100% on board but I'm trying. I'm close to being totally out of debt and I swear I will never go back. And on top of that, my life is the best it's ever been.

Nov 5, 2012 2:03PM
"7 ways to commit financial suicide"

1. Vote for Obama
2. Vote for Obama
3. Vote for Obama
4. Vote for Obama
6. Vote for Obama
7. Vote for Obama
Jan 4, 2013 2:10PM
This article missed the point, too late to start learning about financial basics when you are a so-called adult, "financial acumen" starts early on, taught by parents starting when kids put coins in the piggy bank.  Huge mistake people make is not educating themselves about basic finances, show your kids by example, sadly you cannot teach common sense. The education is free at the public library (well your tax $$ pay for it if you use it or not), or maybe try community college, not the brokers seminars trying to sell you whatever pieces of the Brooklyn Bridge.  Young folks who are financially dependant on the parents at 25 years old (unless they are seriously disabled), well somebody missed the boat 20 years ago. I was a barber, hub worked on a dairy farm, well below average incomes but in retirement we do OK, food on the table, no mortgage, all the bills paid and a couple dollars left in the checkbook, not how much we had but what we did with it. and smart enough to not live over our heads, life is good.
Nov 2, 2012 3:33PM
Its funny that it mentions kids...  You know what?  I waited 17 years in my marriage to have kids and it still is tough 10 years later because you cannot account for the variables they add to your life.  Let alone the variables that life throws at you otherwise.  I have a two sets of friends that have skated through life without job loss, or any other significant "X" factor that you cannot account for in your life... One set does not have kids and do not intend to have kids.  I am happy for them for their good luck.  Credit cards almost become a necessity in many ways as a result of having kids and just overall life situations.  You cannot control those things.
Nov 2, 2012 5:28PM
I stopped reading this blogger but when I saw this post I didn't realize it was him.  I don't need some condescending look-down-your-nose judgmental blogger telling me what to do.  It's not advice, it's judgment.  Don't marry the wrong person?  Gee, that's an easy on to control because you always know what people are going to do.  and if you make that mistake, it's all your fault.  Please let's not post this blogger's "advice".  We need real advice and not condescending opinion,. thanks.  
Nov 5, 2012 5:44PM
"comfortable retirement"   That's the problem right there. Not enough resources on three planets for all these decadent baby boomers to 'retire comfortably'
Feb 26, 2013 2:43PM
A few of these posts make a good point that it's tough to pick the right spouse, especially when you're young. A lot of other cultures figured this out centuries ago and came up with arranged marriage. It's also the reason for religious and cultural prohibitions against sex before marriage. It prevents kids from being born out of wedlock or into marriage situations that are likely to end in divorce.

Feb 26, 2013 2:37PM
The one thing that never gets mentioned in articles like this is having kids out of wedlock. I guess they assume everyone knows that, but 41% of kids born today are born to unmarried parents.

Jan 6, 2013 6:24PM
With all due respect a 401k is not designed to be your sole retirement source and unless the stars always align properly you will never retire on a 401k alone unless you are allowed to contribute a very high amount and can actually contribute said amount.
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