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The Seven Deadly Sins of Personal Finance

March 11, 2015 by Justin Weinger 11 Comments

77bfa26a-7aeb-434b-8aa9-ea8f783c5610_560_420Managing your money isn’t easy. It doesn’t help that there are thousands of different opinions out there on what you should do in regards to things like budgets, credit cards, debt, saving, retirement, and so on. I’m usually the last person to throw out my opinions as absolutes. In fact, there are at least three good reasons why you shouldn’t take my advice at all.

But in this age of relativism, the motto “personal finance is personal” is intended to empower people to pursue financial freedom, not to encourage them to use it as an excuse to make stupid decisions. People who get defensive and say “Don’t judge me” are usually more interested in justifying their behavior than taking a good hard look in the mirror. So let’s take a look at some of the worst things you can do (the seven deadly sins—original, right?) if you ever want to be financially independent.

Pride

Screen-shot-2011-10-15-at-4.42.15-PMConsider this quote from former U.S. Secretary of Agriculture Ezra Taft Benson:

“Pride is a sin that can readily be seen in others but is rarely admitted in ourselves. Most of us consider pride to be a sin of those on the top, such as the rich…looking down on the rest of us. There is, however, a far more common ailment among us—and that is pride from the bottom looking up.”

Listen, I don’t deny there is a major wealth distribution problem. I wish there was a ready solution. In fact, I’d like to think that there are enough politicians on Capitol Hill who would try to change that, but it seems like no matter the side, they’re all in some billionaire’s pocket. So we’ll file that under wishful thinking. In the meantime, though, no amount of whining, bashing or occupying Wall Street is going to improve your situation. Instead, spend your time creating opportunities for yourself.

Greed

For some people, money is just a means to get stuff. No matter what their income is, it’s maxed out on an oversized mortgage, brand new cars and a slew of other toys. Their desire for more stuff is insatiable, and they don’t care what they have to do to get evolution-greed-money-284152it. They max out their credit cards, throw their money at “get rich quick” schemes and resort to dishonest and unethical means to get ahead. They end up with a lot of garbage and nothing meaningful to show for it in the long run. So the question for you is what is your motivation when you buy things? There’s nothing wrong with spending your money, but it’s important to know the why—and to see the patterns.

Sloth

The optimal way to reach financial independence is to have a slew of passive or residual income sources. With the Internet, thesloth-meme-fu opportunities for passive income are endless. But most people who are just starting out don’t realize how much work goes into getting there—whether it’s hustling to improve your offense (income), or flexing those defensive muscles (budgeting, saving, etc). When I was doing a financial planning internship, I spent a lot of time helping young couples put together a plan to start getting on the right track. When I presented it, it all made sense. They were always so excited to get started! But when I called six months later to follow up, the vast majority of them had done nothing.

Sloth is one of the worst of the deadly sins because the time value of money is constantly working, whether for or against you. If you start saving $263.67 a month at age 20, you will have $1,000,000 at the age of 65 (assuming a 7% return). But if you start at age 30, you’ll have only about $475,000. Yikes!

Lust (sorry no pic, we like to keep things rated G here)

The funny thing about lust is that it’s an almost perfect counterfeit of the real deal. Love, for example, provides us with lasting peace and happiness because it’s selfless. Lust, on the other hand, is the epitome of selfishness and is only concerned about instant gratification. In general, most of the stuff we see from Hollywood is the former rather than the latter. Here’s the thing, though. There’s nothing wrong with wanting to have a lot of money. But lusting after it means you want it for all the wrong reasons. The people who lust after money are the people who become consumed by it. They’re the Scrooge McDuck’s of the world who are more interested in the size of their bank accounts than just about everything else. It’s never a bad time to ask yourself what your motivation for becoming wealthy is.

Wrath

This one’s a little tough, but I promise it’ll make sense. 🙂 I haven’t had any violent rages recently (or at all, I don’t think). But from what I’ve seen, the rager usually exhibits one very distinct characteristic: complete denial that he or she is wrong.

funny-angry-grapes-of-wrathAre you doing everything you need to in order to reach financial freedom? If you answered yes, you’re probably lying to yourself. In fact, I always found it funny during my internship if they had everything in place to retire, and they would respond, “Oh yeah, I’ve got a 401(k).” Errrrr. Unless you’re maxing that baby out, there’s more to do. Get rid of the denial today or reality will take care of that when you’re in your 50s.

Envy

I’ll be honest, I got caught up in this one for a long time after graduating from college. While all my other finance classmates went on to corporate finance, private capital, investment banking and public accounting jobs, I was stuck behind a bank counterlife-is-not-fair making $9.75 an hour. But the funny thing is that once I moved down to Texas for a new job and started freelance writing, I was making more than most of my peers who graduated with me.

Here’s the dealio. Everyone has a different path in this life. We all have different trials and circumstances we have to deal with every day. The more time you spend comparing your income or lifestyle to someone else, the more likely you’re going to overspend to try to make it look like you’ve closed the gap (all the while you’re slowly drowning in debt). Let the Joneses do their own thing. You just focus on you.

Gluttony

gluttonyThe gluttonous are all about overdoing things to the point of waste. In finances, you can go both ways with this. On one hand, the stingy put so much energy into saving money that they waste opportunities to appreciate what money can do for them and their loved ones. On the other side of the coin, some overspend on things they never use. For them, it’s not for any reason other than because they can. Both sides of the spectrum are harmful.

Are you guilty of any of these seven deadly sins? What can you do to make good with the financial gods?

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Filed Under: Deep Thoughts, Featured

Comments

  1. Stefanie says

    March 11, 2015 at 7:46 am

    I have a tendency to get envious. Lately though, I’ve found the success of others more inspiring than envy-inducing though.

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    • Ben Luthi says

      March 11, 2015 at 11:29 pm

      That’s great! I noticed that I was usually envying other people who worked for corporations, but as soon as I got into the freelancing scene, that’s when I started getting inspired.

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  2. Brian says

    March 11, 2015 at 10:00 pm

    I think you could say we were a little gluttonous on our way to racking up over $100k in debt. With all of that spending and not much to show for it. I’m glad we past that now!

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    • Ben Luthi says

      March 11, 2015 at 11:27 pm

      I bet you are! Your story is a perfect example that those kinds of behaviors aren’t permanent.

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  3. Syed says

    March 12, 2015 at 11:08 am

    Very entertaining post. I think for lust you could’ve put a picture of the Apple Watch, since that’s what half of America will be dreaming about for a few months. Put an iPhone on your wrist. Genius stuff Apple!

    Being envious when it comes to money can be a slippery slope. Constantly comparing yourself to others is futile, since everyone had different starting points and different circumstances along the way. There’s always going to be someone who makes more money at what you do. I try to focus on improving myself and my performance over time. What else can you do?

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    • Ben Luthi says

      March 12, 2015 at 5:43 pm

      Very true, especially one of those $10k watches (quite unnecessary).

      You’re right, if I compare where I am now with where I was a year ago, I’m inspired, and that’s the way it should be.

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  4. Jon says

    March 13, 2015 at 7:49 am

    I agree with the income disparity as well. I hate when people blindly say that the Republicans are for the rich and the Democrats are for the poor. They are both for the lobbyists that pay them enough money to get their agendas pushed through. Most long-term politicians are the 1% – both Republicans and Democrats.

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  5. Lovely says

    March 14, 2015 at 10:56 am

    Thanks for this post. I agree with all of these especially envy. Envy can cause you to feel like you never have enough

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    • Ben Luthi says

      March 16, 2015 at 1:01 pm

      Absolutely! For a long time, I always thought it would go away once I had what my peers had. But then I realized that there’s always someone better or making more money than I am. The solution isn’t what other people are/aren’t doing, it’s all about me.

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Trackbacks

  1. Diamonds in the Rough Roundup 3/13/15 - The Broke Professional says:
    March 13, 2015 at 11:49 am

    […] -The Seven Deadly Sins of Personal Finance by Wealth Gospel:  Personal finance has so many layers, including moral and psychological.  Good read on what traditional sins can look like in personal finance. […]

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  2. Week End Round Up #73 - Debt Discipline says:
    March 18, 2015 at 11:29 am

    […] The Seven Deadly Sins of personal Finance @ The Wealth Gospel […]

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