The people you sit with every day might just be concealing their awful financial health.
You work with people for one third of each day. And over time, you have the opportunity to observe those who have good financial habits, as well as those whose financial habits are leading them down the path to ruin. If you haven't been paying close attention, here are 6 signs you co-workers have debt problems.
1. New clothes every day
Clothing ain’t cheap. And people who make it a point to keep up with the latest fashions usually are not concerned much about price. There’s a reason the latest fashion is more expensive: everybody wants it.
As demand increases with a limited supply – or at least a limited ability to produce the supply of clothes - then prices go up. Inevitably, once people return to their senses, they realize that the clothes purchased to keep up with the trends weren’t worth the money.
Just as quickly as the trend ignites, it goes out. So guess where the clothes go? That’s right, like a baseball pitcher who can’t hit the strike zone, they’re out of the rotation: into the garbage; sold on-line for an enormous discount, or donated to a thrift shop.
2. Never seen them bring their lunch to work
Bad as clothes are on your bank account, eating meals out at restaurants is even worse. We’ve already talked about the 11 industry groups jacking up your restaurant bill. The costs involved in having a nice meal out go far beyond the food you eat.
Unlike clothes, its not like you can choose not to spend money on new food. You kind of, like, need it. You can avoid making a clothing purchase and wear the same jeans for 30 days in a row, even if the fashion police give you a citation. But not eating for 30 days? The police who visit in that case will be accompanied by the coroner.
And talk about mark-up.
If you consider just the actual food you eat at a restaurant, it accounts for less than 50% of what you actually pay. That’s a lot of cash emptying your wallet just to fill your stomach. Even co-workers who brown bag it once or twice a week are better off.
I once worked with someone who literally owned a new car every three months. And he knew that he was flushing his money down the toilet. He was an otherwise smart guy, but in this one way, he was just addicted to new cars and time and again made a horrific financial decision.
Every. Three. Months.
And some of the cars he bought…they were just awful. It was almost as though the car company made the model just to fill the market for people with new car addiction. They would break down within those first 3 months, or they would have a design so ridiculous, they would look dated before three months was up.
When you think about the nature of depreciation on a car, the amount you can expect to lose within 1 month of purchasing it is 30%. Fortunately, it does taper off after that initial drop, but to lose 30% of a purchase as large as a car every three months is a virtual guarantee you are on the path to major debt problems.
4. Their cell phone is always the bleeding edge
Granted, cell phones and their accompanying contracts are a rip off no matter who you are. But those contracts typically tether you to a single device for 2 or 3 years. The cell phone companies do this so they can bury the cost of the device in your monthly payments, making it seem as though you are getting a device for $0 or a very similar low price.
In reality, devices - particularly high end devices - have a huge price tag: sometimes $1,000.00 or more. That's crazy of course, but what is more crazy is to not only shell out for the latest device, but to do so on a repeated schedule.
If you observe a co-worker who is upgrading the cell phone multiple times a year, there is only one way they are making it happen: by accruing debt.
5. They take vacations you can only dream of
Everyone deserves a nice vacation once in a while. But if you have a co-worker who takes multiple dream vacations every year, chances are good their are fueling the high life with debt.
Vacations have costs all over the place. There is the hotel or resort, but also the food. Then there is the transportation to get there. Many destinations have hidden taxes, and prices in tourist markets are typically marked up significantly. And don't forget travel insurance, because without it, you might get sick and have to pay for healthcare in a foreign country.
Co-workers who travel frequently to exotic destinations may live a better actual life than you, but they are not living a better financial life. Eventually, the party will end for these folks, and it will happen as they are approaching their retirement age...not exactly the time you want to be dealing with financial problems.
6. They also work full time at another job
On the other end of the spectrum are your co-workers who are also working at another job. Unlike co-workers who spend their money enjoying life, these co-workers are spending money and having to live like a prisoner in a labor camp.
Working multiple jobs might be doable or even enjoyable for a short period of time. But eventually the novelty of multiple jobs wears off. Two jobs is two bosses, two sets of annoying co-workers (like you, for example), and two sets of commutes to and from work.
The good news is that although this type of co-worker is clearly showing signs of having debt issues, they are also clearly showing signs that they are doing something about it. With any luck, the pain they endure from multiple jobs can stay short term after they use their earnings to pay off the debt.
Summary
Given you spend most of your waking life surrounded by your co-workers, watch for these signs of debt problems. Things you can do to help might include offering advice or setting a good example for them to follow. Invite them to sit with you for a brown-bag lunch in the office. If you are in the market for a new car, offer to buy one of their 3 month old vehicles to help prevent car dealerships from shafting them on their trade-in. With co-workers who are fighting to leave debt through working multiple jobs, try to keep them focused on debt freedom after they have used their extra income to pay down their debts.