The Things We Learn From Our Parents
This is my parents stupid tax story, it???s long but I promise it???s all true (sadly).
When I was in Middle School (in the 90???s) my parents went to sears to get my brother some new shoes and came home with a brand new 60 inch big screen (we could barely afford our rent each month). The cashier had asked them if they wanted to apply for a store credit card and they did. They were approved for a $3500 credit limit so they bought the shoes, trekked over to the TVs and walked out with the big screen for around $3000. Later when I was near the end of college (2005) I was watching my dad do bills and noticed he was making a check for a Sears payment so I looked at the statement, somehow his $3000 dollar TV from the 90s had turned into over $9000 still owed and he hadn???t even noticed! He just made the payments each month and didn???t think twice. My mom was our primary earner (as a waitress) and had a couple periods in between jobs. Apparently she had signed up for some ???payment protection insurance??? that allowed her not to make payments when she wasn???t working, she didn???t understand those payments still had to be made at some point (they weren???t actually making payments for her) and this allowed them to increase her APRs as well. I finally had a friend that was a lawyer get it settled for them so they no longer had to make payments but I don???t even want to think about how much they actually paid for that $3000 tv over the years.
You???d think they would learn right? Not even close. In 2007 my dad had almost paid off a nice double cab truck, they moved in with my aunt who was too heavy to fit ???comfortably??? in the back of his truck (she had a car of her own) so he went and traded it in for a bigger truck and a bigger payment; my parents and my aunt had a falling out and she moved out of town less than a year later. One day my parents went to the dealership to do some maintenance on my dad???s truck and my mom came home with a brand new 2007 PT cruiser, because ???it wasn???t fair that she was the one that worked and he got all the toys???. So now they were paying over $800 a month in car payments.
Fast forward to 2009, my mom calls me one day and tells me she just got a cool new car. She traded in her PT cruiser (that they were upside down on) for a brand new Dodge Nitro. They had gotten a flyer in the mail for $2000 off the sticker price and on top of that the dealership was willing to pay off what she owed on the old car; she did not realize this just meant the balance would be rolled into the new loan. Who buys a car based on a flyer?! My parents. About an hour later I got a second call that my dad also bought a new 2010 truck hot off the lot; why? Because he liked that color better than the one he had! They were now making almost $1400 in car payments and complaining about not being able to afford rent; they could make a MORTGAGE payment for that price.
By the end of 2010 they were in the process of filing bankruptcy when my mother died suddenly. My dad received about 20k in life insurance. He had gone through with the bankruptcy and lost both the cars. He was talking about using some of the money as a down payment on a new truck; my siblings and I convinced him to pay cash for an older smaller truck as he didn???t have kids or a wife anymore and didn???t need something so big. I was so proud of him the day he bought that truck, in cash. Until I stopped by to visit him and he was setting up a new big screen. He said he went down to buy it with cash but they offered him a 20% discount if he opened a credit card (how he got approved I don???t know) and on top of that he gets 20% every time he uses it; I told him I wasn???t sure it worked that way when he later went to buy a laptop he found out I was right, the 20% was a one-time thing. He said he bought this new TV on the card but was going to pay it off when the statement came in. I asked him last month if he had paid it off, he said ???yeah I pay it off every month??? I wanted to SCREAM. Sadly, some of the greatest lessons my parents have taught me are what NOT to do.