The global attitude of the new millennium concerning the possession of things is, sadly, comprised of traits related to 1. impatience, 2. over-consumption, 3. waste, 4. ostentation, 5. swaggering; and the irrational fear of being the only one in any given peer group not able to express traits 1 through 5. The result of this unfounded fear is the almost irresistible drive to avoid peer-group-comparative failure, by grasping at one particular financial source, rational or not, then instantly spending it all in a way, not smart or not, but idiotic only. What is one particular financial source? It’s a retirement account.
Worldwide, funds saved for impending retirement, by mostly sensible, hardworking people, are currently 68% depleted, though years from maturity. The money has been siphoned off, prematurely, and used to buy show-off stuff, most of which will never do anything but adorn a neck or finger, or provide a ride on a highway, or be consumed with expensive wine, or recreationally instill a temporary state of mind. But, any resulting emotional condition will most often be one of disappointment, even mourning for the realization, too late, of the loss of what was but is no more, that being a financially secure future. You may loath yourself.
In almost every case, people borrow against their own future for the best of reasons: simply because they want nice things, and so those they love can have nice things, too. This is not a bad thing. It’s almost selfless. The problem begins when desire outruns the ability to pay, then the ability to pay is enhanced with money from a retirement account, then the restoration of the retirement account outruns the ability to pay it back, then…..well, that’s the end of a very sad story.
Speaking of sad stories, here’s one, now, told in bullet form.
- An nice, elderly mother was cared for by her equally nice daughter.
- The daughter had control of the mother’s finances.
- The daughter took wonderful care of both Mom and money.
- The daughter felt like she deserved some reward for all her efforts, so over several years, she used some of Mom’s money to fix up her own house with a new privacy fence and a renovated kitchen, some new clothes for herself and her husband, and several trips to faraway vacation spots, sometimes sandy, sometimes snowy. The plan was always to pay the money back. Every once in a while the daughter put back some of the borrowed money.
- Then, unexpectedly, the mother’s physical condition worsened. Care givers were hired, paid from the mother’s remaining funds. In a short time, all of the mother’s money was spent, and the daughter had to start using her own money. This ended any thought if paying Mother back.
- Finally the mother’s condition worsened to the point, that for the best care, she had to be placed into a nursing home.
- The daughter prepared to sell her mother’s old house, but it needed extensive and expensive repairs to make it marketable.
- The daughter decided to borrow enough from her own retirement account to pay for the repairs, expecting a quick sale. Then, she planned, after the sale, there would be enough money from her share of the expected, future inheritance to finish paying back the money she had borrowed from Mother. (Of course, this would be based on the time after the mother would have died, so there’d be no need to pay her back.)
- Surprisingly, the mother’s condition remained marginal, but stable. She didn’t die, so no inheritance.
- Not surprisingly, the home has not sold, even after years of trying.
- Now, because she has retired, the daughter needs the money which had been saved in her retirement account, but can’t get it until she has restored all that was borrowed.
- Mom is still just fine.
- Daughter is not well, at all.
Not scared, yet? Here’s another story.
- A couple fell in love, married, had a child, built a house, had another child.
- The relationship failed, so the couple separated and filed for divorce.
- The wife moved out.
- A lightening storm caused the house to burn to the ground.
- The husband stopped making mortgage payments for two reasons – 1. He wrongly thought he could stop making payments because the house was unlivable, and it wasn’t his fault; 2. He mistakenly thought his homeowners insurance was automatically making the house payments, anyway, so he didn’t even have to think about it.
- A foreclosure notice was delivered.
- The insurance company couldn’t payout to rebuild because the house was in foreclosure.
- The husband panicked. This was probably the right thing to do.
- First he had to fix the foreclosure
- Second, as far as selling the house, he thought of increasing the value by including substantial upgrades with the re-build. That would mean a bigger profit when the house was sold.
- To make these things happen, he needed a lot of money, but had none.
- He went to his aunt. Her name was Aunt (really).
- Though cash-poor, herself, she did possess a sizable retirement account.
- She listened to and liked his proposal; and saw two opportunities: 1. to help her nephew; 2. to make money while helping her nephew.
- Aunt raided the cash cushion, intended to support her through old age, and invested in the nephew’s project.
- The foreclosure was fixed.
- The insurance paid to rebuild the house.
- The nephew-aunt investment fund paid for lots of attractive upgrades, making the house worth a lot more.
- Remember point #2 – filed for divorce? It wasn’t final.
- The wife wanted a big slice of the upgrade pie.
- Husband and wife fought fiercely with each other.
- Aunt worried that her profit would be diluted, thus threatening her ability to age with security.
- Husband and wife stopped fighting, got back together, and decided that because the house was so nice, they would keep it and live there.
- Husband and wife are just fine.
- Aunt is not well, at all.
If this still doesn’t make you sure to never loan your own retirement money to anybody, at all, period; or to never use it for yourself for any reason except its original, intended purpose, to survive old age by outliving your money; or if you know someone who just isn’t getting the point, then read many more similar stories of dire warning in the Kindle eBook, by Andy Bozeman, GHOST BUBBLE.
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