Since you’re filling your head with financial know-how by reading such a wonderful and brainy site as this one, you’re most likely an ant. As you carefully plot out your money future, the grasshoppers are off spending themselves into oblivion without a care, assuming everything will work out OK.
As pragmatic, intelligent ants, it’s easy to look down on foolish, frivolous grasshoppers. But somewhere in the back of our amazing ant brains lurks a creeping fear — that we’re the ones doing it wrong.
In some cases, that fear is well justified. Traipsing through life ignorant of financial pitfalls can occasionally yield results as impressive or even better than those who stick with the smart, responsible plays.
Here are four ways being “dumb” with money can pay off. We don’t recommend trying any of these financial stunts, just sneering in derision at those who manage to pull them off.
Maxing out credit cards, then settling the debt.
Oh, to be young, free of responsibilities and armed with a wallet full of high-limit credit cards. When you’re first introduced to the world of plastic, it’s fascinating to watch merchants hand over goods and services you can’t afford with paper. It seems like free money, and for some it turns out to be.
I’m sure we all know people who have went way, way overboard on credit card debt, then let their balances fester until the institutions they owed were willing to cut them deals, shaving as much as 50 percent off their balances. Sure, the settlers suffer a nasty hit to their credit ratings, but they also wound up getting away with spending as much as tens of thousands of dollars without having to pay it back.
Buying a too-expensive home and squatting.
Taking advantage of the slug-like slowness of the mortgage foreclosure system, those who get in over their heads on pricey homes can be best off just neglecting their mortgage payments entirely. Although squatters may contend with nasty letters or phone calls, most will be able to stay in their houses a year or longer before the eviction squad finally comes to lock them out. In all that time, delinquents can build up a huge savings account with thousands upon thousands in mortgage payments.
Just joking. They’ll just spend the thousands upon thousands on silly stuff.
Staying ignorant of financial news.
If you ended up listening to financial gurus who breathlessly recommended that you invest in gold, you most likely came to regret that hot tip. Staying on top of hot investment trends can be costly, because investors who pull in the real money anticipate the next big thing rather than following the movements of the herd.
Of course, wrongly anticipating the next big thing, which is amazingly easy to do, also tends to end in shattering your nest egg beyond repair. In many cases, it’s best just to stay ignorant of what’s going on in the world of finance, if only to avoid the temptation of making a huge, uninformed investment risk.
Running up debt so huge you can’t possibly pay it back in your lifetime.
This one is just like the one from three paragraphs ago, except for the whole part about paying back any of the debt. And in juxtaposition as to how the former is best suited for the young, this one is for the oldsters.
Those who have lived long, responsible financial lives can take advantage of the fact that banks trust them. Piling up massive debts with no intention of repaying them may anger inheritance-craving offspring, but it sure is a way to live it up before your time on earth passes. The phrase “you can’t take it with you” applies to debt just as it does wealth.
What do you think about these “dumb” tips that can pay off?