Financial Planning

An excellent piece from Tom Naughton, Financial Planning, that might be even funnier if the situation weren't so dire...

“Let me get out a worksheet here … I like to start by looking at your income first, okay?”

“No problem.”

“Great. How much would you say you take in during an average month?”

“About 20,000 dollars.”

“Excellent! I’m sure we find you some very attractive investment opportunities at that income level. And what would you say your average monthly expenses add up to?”

“About 36,000 dollars.”

“Great, so … I’m sorry, could you say that again?”

“About 36,000 dollars.”

“You’re running 16,000 short every month?”

“That’s right. I wouldn’t be here if I knew what I was doing.”

“So you’re eating up all your savings, right?”

“Savings? No, I don’t have any savings.”

...

"Okay, then, here’s what’s going to happen. You’re going to keep piling up debts, and the interest on those debts is going to keep piling up too. Mr. Kwang will keep lending you money as long as you pay the interest, but eventually you’ll owe in more in interest every month than you can possibly take in. Then you won’t be able to pay the interest, and Mr. Kwang will call in your debts. Then you’ll owe him everything you have. Understand? Everything. And then, Mr. Sam, you won’t be able to help anybody. Your nieces and nephews will be completely cut off, and everything they earn will go to Mr. Kwang. And all they’ll get out of the deal is the fond memory of how generous you used to be. Am I being clear here?”

“Wow. So the whole thing will come crashing down, huh?”

“You bet it will. You keep spending like this, it’s a foregone conclusion. It’s only a matter of when.”

“And when do think the when will be? How long, exactly?”

“Fifteen years if you’re lucky.”

“Really? Fifteen years?”

“That’s right.”

“Okay, great! Let me come back in another ten years or so and we’ll figure out what to do about this.”

Read it all...