But regretfully, my neighbors think it is. My lovely neighbors have been having issues and some money problems this past year. I'm getting concerned about the money problems. So many red flags are being tossed up it's scary!
At a holiday party, one of them won a home theater surround sound system. A very nice one I might add. They have an older TV and have said that they wanted to replace it. Two weeks ago they got a delivery of a 40 or 42" Sony Flat Screen Plasma TV. I was given their old surround sound system (still not installed, I need a new set of wires to connect to the TV). I offered to give them some money for it and they said no.
Fast forward to Wednesday night. I stop over to drop off a six pack and some of their mail that ended up in my mail box. The six pack was a thank you for the surround sound and in my mail was a disconnect notice from the local electric company for either this house or the apartment they are footing the bills for for their oldest daughter. Our local electric company sends out envelopes with a large IMPORTANT NOTICE on the front so you won't miss the disconnect notice.
We get to talking since I've not seen them for a few days. Here is the very scary part. My neighbor tells me that she owes $900 to the IRS and she is paying it by credit card. And she then tells me it's great timing that they got this new credit card since they have no money set aside to pay the IRS. She also tells me they put the new Plasma Flat Screen on the credit card as well and she will go to the bank, get a cash advance and pay the overdue electric bill, plus a few others.
Seems my neighbors got a new credit card about a month ago and have been having a grand time using the card. Hence the new TV. I was caught speechless. It's pretty hard to leave me speechless, but I was.
A couple things bother me
1) My neighbors husband has been running his own business for a number of years, they don't pay quarterly taxes, so each year at tax time they know they owe money and each year they put it on a credit card. They do no planning during the year to save for the payments or make any kind of estimated payments each quarter. They asked me what I did about my part time cash jobs I declare and I told them that I set aside a portion of money each quarter and pay estimated taxes so I'm not caught totally out come tax time.
2) Their oldest daughter is going to college and has moved out of the house to her own apartment. Her parents, my neighbors, not only help pay tuition, but have also picked up a large majority of the apartment expenses BECAUSE oldest child is either unwilling or unable to work more hours or get a cheaper place. My take is she is unwilling to work more hours or get a better paying job because it is easier for mummy and daddy to pay the bills. Like most 19 or 20 year olds, she would rather hang out with her unemployed boyfriend and listen to music. I see her at the house a lot eating meals,doing her laundry and oh, yeah, leaving the electric heat on 70F when she's not home.
3) My neighbors have been thinking about a new TV for a few months. I can attest to the fact that their old TV was starting to die. It may be time for a new one, but a new 40 or 42 inch plasma bought on credit?
4) They have no savings account and have already maxed out a HELOC and another credit card. They now consider this Credit Card their savings account.
I'm sure there is more I can add to the list.
I know how we all choose to spend our money is our own business, that's what makes personal finance personal. BUT it is distressing to see the above. Especially since I've had frank discussions about my own finances with my neighbors. My neighbors wife has asked me on a number of occasions what I'm doing with my money and budgets post Bankruptcy and I've told her that pretty much I live a cash only life and budget/plan for my expenses. Like my March trip, which was all in cash, save for a limited amount of items I put on my credit card, but them promptly paid off within three weeks of returning home. My new TV was paid for in cash once I saved up the funds and I set a price limit. I will have the money by the end of next week to FINALLY purchase a new lap top, again with cash.
The very scary part is even with the best of intentions, I know my neighbor won't stop buying things with the new card. I've seen them burn through a $20,000 HELOC and for what ever reason, they have a really hard time saying No to their kids and seem to be constantly forking over cash or buying items for both girls. All I can say is a new credit card is not an E-fund.