Biggest Threats to Financial Well-Being

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
youngin87
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Biggest Threats to Financial Well-Being

Post by youngin87 » Thu Aug 09, 2018 5:30 am

As I start building my wealth at the age of 30, I wonder what are the biggest threats to my finances. I have the following listed but if anyone has experienced or seen additional factors, please add.

1. Death - obvious
2. Extended length of unemployment - I can shake off a few weeks or even months of unemployment, but anything longer than 6 months would significantly dent my savings account
3. Major medical illness
4. Divorce

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climber2020
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Re: Biggest Threats to Financial Well-Being

Post by climber2020 » Thu Aug 09, 2018 5:46 am

Peer pressure. This one's a big problem for many people in my line of work.

Too much house.
Vacation house.
Too much car.
Buying a boat when one is not anything close to being wealthy.
Student loans.

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celia
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Re: Biggest Threats to Financial Well-Being

Post by celia » Thu Aug 09, 2018 5:53 am

lack of an education or employable skills
disability (can be worse than death since some of your income may be needed for the disability, in addition to regular living expenses)
lack of proper insurance(s)--medical, auto, homeowners, liability, etc

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LiveSimple
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Re: Biggest Threats to Financial Well-Being

Post by LiveSimple » Thu Aug 09, 2018 5:55 am

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound and six, result misery.

Not living below your means and not investing or greed.

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jimgour
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Re: Biggest Threats to Financial Well-Being

Post by jimgour » Thu Aug 09, 2018 6:08 am

Thinking or believing that any of the daily financial porn might be good advice or actionable.

warner25
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Re: Biggest Threats to Financial Well-Being

Post by warner25 » Thu Aug 09, 2018 6:16 am

I wouldn't list death on there. Maybe for your family, but with sufficient life insurance death is probably a financial windfall for them. Actually the risk to you, personally, is longevity.

To expound on unemployment, it depends. At some point you'll be able to withstand 6 months of unemployment easily, and might even choose it as a sabbatical in between jobs while waiting for the right opportunity. But if unemployment is due to some structural economic or technological shift that renders your skills obsolete, then you're in trouble. Or if it's due to disability. It seems hard to get really sufficient disability insurance, and that's on top of the medical costs as you mentioned.

I'll add political discontinuity. You play by the rules your whole life to establish a strong financial position, and then the rules change. See what happened to investors in Russia and China last century. Bernstein writes about this being a 20% risk in our lifetime, given a global, historical perspective, but I don't think there are many reasonable precautions you can make.

Many investment mistakes can ruin someone who doesn't follow Boglehead principles.
Last edited by warner25 on Thu Aug 09, 2018 6:23 am, edited 1 time in total.

KlangFool
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Re: Biggest Threats to Financial Well-Being

Post by KlangFool » Thu Aug 09, 2018 6:20 am

OP,

Overspending on the college education and the house. Once you made that mistake, only a few can recover from that.

KlangFool

Grt2bOutdoors
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Re: Biggest Threats to Financial Well-Being

Post by Grt2bOutdoors » Thu Aug 09, 2018 6:34 am

1. Poor health. Lack of health insurance.

2.Bad relationships I.e. spend-aholic girlfriend/boyfriend, husband or wife. Make sure you get on the same page before you “move in”, co-habitat or officially get married. Divorce with a non working wife and/or kids in the picture.

3. Disability on an extended timeframe.

4. Credit card debt, high interest loans. They are the modern day indenture of the past.

5. Non-dischargeable private student loans, where said student either majored in a non marketable degree and/or failed to complete schooling leading to a less than optimal ability to earn a livable wage, enabling them to successfully service the debt.

Watch Or listen to Dave Ramsey podcasts for examples of what not to do (learn from the callers) and what to do.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
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Re: Biggest Threats to Financial Well-Being

Post by Grt2bOutdoors » Thu Aug 09, 2018 6:38 am

climber2020 wrote:
Thu Aug 09, 2018 5:46 am
Peer pressure. This one's a big problem for many people in my line of work.

Too much house.
Vacation house.
Too much car.
Buying a boat when one is not anything close to being wealthy.
Student loans.
+1 - you don’t need a $600 a month lease or car payment.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

The Wizard
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Re: Biggest Threats to Financial Well-Being

Post by The Wizard » Thu Aug 09, 2018 6:41 am

Divorce isn't necessarily that bad.
Your per capita net worth doesn't necessarily change that much.
Assuming your own employment prospects are decent, things will likely work out fine.
Ask me how I know...
Attempted new signature...

NotWhoYouThink
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Re: Biggest Threats to Financial Well-Being

Post by NotWhoYouThink » Thu Aug 09, 2018 6:59 am

Lending to family
Weak parenting (letting your kids make decisions instead of being the adult)
Saving what's left after you spend, instead of spending what's left after you save
Having a "guy" (financial advisor)

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goingup
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Re: Biggest Threats to Financial Well-Being

Post by goingup » Thu Aug 09, 2018 9:40 am

youngin87 wrote:
Thu Aug 09, 2018 5:30 am
1. Death - obvious
2. Extended length of unemployment - I can shake off a few weeks or even months of unemployment, but anything longer than 6 months would significantly dent my savings account
3. Major medical illness
4. Divorce
^That's a good list of the big dangers. Less obvious things that can hamper financial success, too.
*Not saving enough
*Spending beyond means
*Poor career choice

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Raybo
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Re: Biggest Threats to Financial Well-Being

Post by Raybo » Thu Aug 09, 2018 9:55 am

An addiction to anything.
No matter how long the hill, if you keep pedaling you'll eventually get up to the top.

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lthenderson
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Re: Biggest Threats to Financial Well-Being

Post by lthenderson » Thu Aug 09, 2018 10:08 am

1. Keeping up with the Jones's with house, car and possessions.
2. Not saving first for an adequate retirement.
3. Spending too much time looking for easy money instead of just earning it the old fashioned way.

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MnyGrl
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Re: Biggest Threats to Financial Well-Being

Post by MnyGrl » Thu Aug 09, 2018 10:13 am

Kids :D

delamer
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Re: Biggest Threats to Financial Well-Being

Post by delamer » Thu Aug 09, 2018 10:34 am

A spouse with very different attitudes toward spending, saving, and investing.

deltaneutral83
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Re: Biggest Threats to Financial Well-Being

Post by deltaneutral83 » Thu Aug 09, 2018 10:40 am

College choice- Spending $150k on a degree that can be had for $40k will teach you compounding interest in reverse real quick.
Cars- Most people cannot afford to spend $25k on a car and watch it go down to $15k in 2.5 years, but this is disguised in monthly payments. Works the same way for higher earners buying $50k new cars only to be worth $25k after 4 years.
Impulse purchases - not setting "X" amount per month as fun money and sticking to it. In other words, no budget at all.

41Fin
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Re: Biggest Threats to Financial Well-Being

Post by 41Fin » Thu Aug 09, 2018 10:42 am

The internet...

Never has it been so easy to part with your money either willingly or through peer pressure.

Ironically enough, the internet is also the biggest resource to financial well-being.

Mike Scott
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Re: Biggest Threats to Financial Well-Being

Post by Mike Scott » Thu Aug 09, 2018 10:46 am

We all have a plan vs real life. Some of the differences between the two are in your control and some are not. Do the ones you can do something about.

Call_Me_Op
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Re: Biggest Threats to Financial Well-Being

Post by Call_Me_Op » Thu Aug 09, 2018 11:26 am

Lawsuit - especially if not covered by excess liability insurance.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

Mr.BB
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Re: Biggest Threats to Financial Well-Being

Post by Mr.BB » Thu Aug 09, 2018 11:31 am

Too small of an emergency account (try to have 9 months to 1 year)
Failing to continuously contribute to your retirement accounts
Not adding more to your retirement accounts when there is a recession or market turn down
Not setting specific goals
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

John Laurens
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Re: Biggest Threats to Financial Well-Being

Post by John Laurens » Thu Aug 09, 2018 11:35 am

Edward Jones, Boats, Cocaine, Strippers...in that order


Regards,
John

ponyboy
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Re: Biggest Threats to Financial Well-Being

Post by ponyboy » Thu Aug 09, 2018 11:36 am

In no particular order...

- lifestyle creep (keeping up with kardashians)
- marrying someone who isnt financially compatible with you
- divorce
- too much house (this is a big one!)

- health...although a lot of times this is something that is out of your hands...so not sure if this should be on list

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AllieTB1323
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Re: Biggest Threats to Financial Well-Being

Post by AllieTB1323 » Thu Aug 09, 2018 11:39 am

climber2020 wrote:
Thu Aug 09, 2018 5:46 am
Peer pressure. This one's a big problem for many people in my line of work.

Too much house.
Vacation house.
Too much car.
Buying a boat when one is not anything close to being wealthy.
Student loans.
Love it! The best boat is owned by your best buddy :sharebeer :sharebeer

dpc
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Re: Biggest Threats to Financial Well-Being

Post by dpc » Thu Aug 09, 2018 11:40 am

Pretty sure that most bankruptcy claims in the US are related illness and medical expenses. I think most people drastically underestimate how quickly life savings can be depleted during extended serious illness, as well as the assumption that "it won't happen to me".
"Worrying is like paying interest on a debt that you might never owe" -- Will Rogers

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wabbajack
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Re: Biggest Threats to Financial Well-Being

Post by wabbajack » Thu Aug 09, 2018 11:43 am

youngin87 wrote:
Thu Aug 09, 2018 5:30 am
As I start building my wealth at the age of 30, I wonder what are the biggest threats to my finances. I have the following listed but if anyone has experienced or seen additional factors, please add.

1. Death - obvious
2. Extended length of unemployment - I can shake off a few weeks or even months of unemployment, but anything longer than 6 months would significantly dent my savings account
3. Major medical illness
4. Divorce
Let me suggest striking #1 immediately. If you die, it's no longer your problem. As for #4, are you married?
If so, putting that on your list tells me that you should probably discuss a few things with your spouse.

Texanbybirth
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Re: Biggest Threats to Financial Well-Being

Post by Texanbybirth » Thu Aug 09, 2018 12:01 pm

climber2020 wrote:
Thu Aug 09, 2018 5:46 am
Peer pressure. This one's a big problem for many people in my line of work.

Too much house.
Vacation house.
Too much car.
Buying a boat when one is not anything close to being wealthy.
Student loans.
I like this list, and it seems to imply a more basic rule (the breaking of which would be a threat): LBYM. I can't tell you how many people I know are hurting right now because of the above. I think financially-crippling medical emergencies are unfortunately a possibility, too.

genedios966
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Re: Biggest Threats to Financial Well-Being

Post by genedios966 » Thu Aug 09, 2018 12:02 pm

Living beyond means and accumulating debt.
Having spouse who is financially incompatible will either result in you taking on their debts or divorce.
"The shortest route to wealth is the contempt of wealth." ~ Seneca

H-Town
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Re: Biggest Threats to Financial Well-Being

Post by H-Town » Thu Aug 09, 2018 12:10 pm

MnyGrl wrote:
Thu Aug 09, 2018 10:13 am
Kids :D
LOL
youngin87 wrote: As I start building my wealth at the age of 30, I wonder what are the biggest threats to my finances. I have the following listed but if anyone has experienced or seen additional factors, please add.
All above responses are good. I just want to add a couple more items haven't been mentioned:

1) Not making enough money.
2) Not saving enough money.

However, only you can define your "enough".

bhsince87
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Re: Biggest Threats to Financial Well-Being

Post by bhsince87 » Thu Aug 09, 2018 12:29 pm

Divorce can be a good thing financially. Mine certainly was. My ex was a spendaholic. The divorce cost me $150, and I made that back in the first rwo weeks!

And seriosuly, as someone above mentioned, addictions to anything. alcohol, drugs, ciggarettes, gambling, sex, spending, etc. Most everyone I know who had financial difficulties succomed t one of the above.

Another thing to watch out for is a negative attitude. I have a coworker who is a brilliant enginer, 30+ years of experience, in a high demand, high income field. But he has a terrible attitude, complains constantly and acts entitled. I've known him since he started his carreer, and he has always been like this. He's been coached and mentored many times. But he can't or won't change. He's been laid off or fired from 7 different jobs because of this, and he's close to that again. And he's making about 30% less than what he could/should be making.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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whodidntante
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Re: Biggest Threats to Financial Well-Being

Post by whodidntante » Thu Aug 09, 2018 12:51 pm

Having no marketable skills.
Having children when you have no marketable skills.
A series of life choices that make you dependent on the kindness and liquidity of others.
I see real human tragedy at casinos. It gets much worse than elderly people flushing their social security checks.

stoptothink
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Re: Biggest Threats to Financial Well-Being

Post by stoptothink » Thu Aug 09, 2018 2:49 pm

The Wizard wrote:
Thu Aug 09, 2018 6:41 am
Divorce isn't necessarily that bad.
Your per capita net worth doesn't necessarily change that much.
Assuming your own employment prospects are decent, things will likely work out fine.
Ask me how I know...
Maybe it wasn't that bad for you. I walked down the aisle the first time at age 26 with a net-worth in the $300k range. After paying off (ex) wife's undergrad and car debt, cash-flowing her dental school, working 50-60hrs/wk to pay our living expenses, I walked out of court a single man 5yrs later with a low 5-figure net-worth. She had come into the marriage with a negative net-worth and left it with ~$30k between retirement assets and cash, a paid-off newer car, and a freshly minted DDS with zero debt, after having not earned a penny during the entirety of our marriage. It was pretty darn bad for me, but quite a good investment for her. Things are working out fine though as I made a much better decision the 2nd time.

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sunny_socal
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Re: Biggest Threats to Financial Well-Being

Post by sunny_socal » Thu Aug 09, 2018 2:55 pm

Buying too much stuff :oops:

The Wizard
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Re: Biggest Threats to Financial Well-Being

Post by The Wizard » Thu Aug 09, 2018 3:21 pm

stoptothink wrote:
Thu Aug 09, 2018 2:49 pm
The Wizard wrote:
Thu Aug 09, 2018 6:41 am
Divorce isn't necessarily that bad.
Your per capita net worth doesn't necessarily change that much.
Assuming your own employment prospects are decent, things will likely work out fine.
Ask me how I know...
Maybe it wasn't that bad for you. I walked down the aisle the first time at age 26 with a net-worth in the $300k range. After paying off (ex) wife's undergrad and car debt, cash-flowing her dental school, working 50-60hrs/wk to pay our living expenses, I walked out of court a single man 5yrs later with a low 5-figure net-worth. She had come into the marriage with a negative net-worth and left it with ~$30k between retirement assets and cash, a paid-off newer car, and a freshly minted DDS with zero debt, after having not earned a penny during the entirety of our marriage. It was pretty darn bad for me, but quite a good investment for her. Things are working out fine though as I made a much better decision the 2nd time.
Sorry to hear that.
No question that Your Mileage Will Vary considerably in divorce situations depending on the details...
Attempted new signature...

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Toons
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Re: Biggest Threats to Financial Well-Being

Post by Toons » Thu Aug 09, 2018 3:26 pm

Debt
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Hockey10
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Re: Biggest Threats to Financial Well-Being

Post by Hockey10 » Thu Aug 09, 2018 3:35 pm

Changing jobs too often.

I know people that have spent decades changing jobs once every 1 - 2 years. Some of the changes were involuntary, but most were by choice. Most of the changes were lateral moves. The megacorp where I worked had specific rules about pension and 401k eligibility and how long you had to be employed to qualify. I suspect my job hopping friends were not at many of their employers long enough to qualify for any meaningful retirement benefits.
Last edited by Hockey10 on Thu Aug 09, 2018 4:35 pm, edited 1 time in total.

likegarden
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Re: Biggest Threats to Financial Well-Being

Post by likegarden » Thu Aug 09, 2018 3:38 pm

- Do market timing.
- Invest not in the Boglehead ways.

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Doom&Gloom
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Re: Biggest Threats to Financial Well-Being

Post by Doom&Gloom » Thu Aug 09, 2018 4:01 pm

Hockey10 wrote:
Thu Aug 09, 2018 3:35 pm
Changing jobs too often.

I know people that have spent decades changing jobs once every 1 - 2 years. Some of the changes were involuntary, but most were by choice. Most if the changes were lateral moves. The megacorp where I worked had specific rules about pension and 401k eligibility and how long you had to be employed to qualify. I suspect my job hopping friends were not at many of their employers long enough to qualify for any meaningful retirement benefits.
I think this is a very "under the radar" one. I know quite a few people like that as well. And when they leave one job for another they invariably withdraw any contributions they may have in a retirement plan and spend it.

Reading this thread, it seems that the three categories of bad decisions, major health issues, and unemployment would catch the vast majority of these threats.

drawpoker
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Re: Biggest Threats to Financial Well-Being

Post by drawpoker » Thu Aug 09, 2018 4:09 pm

A real bad bear market.
Like the one from 1973-74

simple man
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Re: Biggest Threats to Financial Well-Being

Post by simple man » Thu Aug 09, 2018 4:22 pm

Your daughter wants a horse....trust me, even worse than a boat...

H-Town
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Re: Biggest Threats to Financial Well-Being

Post by H-Town » Thu Aug 09, 2018 4:24 pm

drawpoker wrote:
Thu Aug 09, 2018 4:09 pm
A real bad bear market.
Like the one from 1973-74
Should it be a good thing for people who in accumulation period? Nothing can get you to your financial independence goal faster than a real bad bear market.

Grt2bOutdoors
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Re: Biggest Threats to Financial Well-Being

Post by Grt2bOutdoors » Thu Aug 09, 2018 4:37 pm

simple man wrote:
Thu Aug 09, 2018 4:22 pm
Your daughter wants a horse....trust me, even worse than a boat...
I’ll bet between the vet, boarding and food, it costs a pretty penny to keep Blackie satisfied.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

jehovasfitness
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Re: Biggest Threats to Financial Well-Being

Post by jehovasfitness » Thu Aug 09, 2018 5:01 pm

kids..

Grt2bOutdoors
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Re: Biggest Threats to Financial Well-Being

Post by Grt2bOutdoors » Thu Aug 09, 2018 5:12 pm

jehovasfitness wrote:
Thu Aug 09, 2018 5:01 pm
kids..
Depends on how many you have, in addition to other factors.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

ddurrett896
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Re: Biggest Threats to Financial Well-Being

Post by ddurrett896 » Thu Aug 09, 2018 5:22 pm

Politicians

rgs92
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Re: Biggest Threats to Financial Well-Being

Post by rgs92 » Thu Aug 09, 2018 5:27 pm

Vacations.

GoofyOne
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Re: Biggest Threats to Financial Well-Being

Post by GoofyOne » Thu Aug 09, 2018 5:58 pm

The future

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Sandtrap
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Re: Biggest Threats to Financial Well-Being

Post by Sandtrap » Thu Aug 09, 2018 6:00 pm

delamer wrote:
Thu Aug 09, 2018 10:34 am
A spouse with very different attitudes toward spending, saving, and investing.
+1
Ignorance. Pride. Ego. Gullibility. and other behavioral/lifestyle defects.
j

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DanMahowny
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Re: Biggest Threats to Financial Well-Being

Post by DanMahowny » Thu Aug 09, 2018 6:02 pm

Long-term disability. Much worse than dead.
Funding secured

John Laurens
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Re: Biggest Threats to Financial Well-Being

Post by John Laurens » Thu Aug 09, 2018 6:11 pm

2 things..

The most famous of which...getting involved in a land war in asia. And the second, slightly lesser known...well you can probably guess.

Regards,
John

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