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Dollar by dollar, I managed to unload over $100,000 in less than three years. I am pretty sure I kept a few retailers in business and helped pay for a few mall fast food employees' college tuition with the way I blew through my cash. Now, I did not earn any of this money, mind you. I actually received it in a lump sum at age 18.
How Did I Get It?
It's actually a sad story how I received the money. At age 4, my father passed away from melanoma skin cancer. Unfortunately, he was not properly diagnosed resulting in a failure to catch the cancer before it had metastasized (entered his blood stream). By the time they figured it out, it was too late. I'm a little sparse on details, but some kind of law suit happened and money was put away for me in an annuity. I would receive this money at age 18, 21, 23, and 25.
I was also in a car accident just before I turned 18. My buddy and I were in his speedy little car on a small highway near my home. At least, that's what I was told. I actually have no recollection of the accident and can't remember anything up until 2 hours before it. My buddy was driving about 120MPH and decided to try and pass a car at this speed. The car tried to move out of the way, my buddy hit the brakes and turned the wheel and we ended up sideways on an embankment. The car flipped 6 times, each time landing on the roof on the passenger side. My head was compressed each time and the pressure exploded the vertebrae in my neck. My bones literally exploded from the pressure.
All I remember was waking up in the hospital, hooked to a bunch of wires and my neck was sore. It was an absolute miracle I was alive. I was just an eighth of an inch away from severing my lifeline in my spine. I was not paralyzed and didn't even have to wear a halo neck brace. I was set for recovery in 3 months. During recovery, we resolved details of the settlement with the insurance company to recover money for damages (and future medical bills!).
What Did I Do With The Money?
At this point, I had close to $100k in the bank. A RIDICULOUS AMOUNT for an 18-year-old kid without much financial training and no plans after high school. I had no idea what a budget was, let alone how to save money for anything. Of course, the first thing I was going to do was to get a sweet ride!
But instead, since I didn't really know ANYTHING about cars at the time, I decided to get a two-seater low rider truck with tinted windows. It was the shiniest thing on the lot, so naturally I gravitated toward it and bought it quickly, because hey, I had the cash (I have since learned about cars and regret this decision). That's $9500 gone in a day. And what's a car without a bumpin' stereo (don't forget, I was a gangster)? So I went to a recommended car stereo shop and dropped $4,500 like it was nothing. Subwoofers, new speakers all around, and of course, a DVD player. I ended up hooking up my Xbox and Playstation 2 in the car, along with a rear-facing camera, black lights on the interior, and red underglow (to match the candy-red paint). Pretty much a baller. To top it off, I bought some hot 100-spoke 18″ rims (by hot, I don’t mean temperature).
I was in and out of Community College and then decided that school was for suckers (I was an idiot). But not before dropping about $4,000 getting a few credits. I did end up buying my mom a Cadillac for $4,000 for Christmas because her car was dying. That was kind of cool. And after playing a lot of HALO, I decided that I should probably go to school again. I enrolled in an art school, but only paid half the tuition and pulled out loans for the rest (though I had the money to pay it all). There's another $16,000 gone. I decided I was going to take this seriously, because you know, I was going to be some famous music producer after school. So I quit my job and lived off my extra cash. At $1,500 a month for 18 months, that's another $27,000 smackaroos down the drain.
And that's all I remember spending my money on. Which is weird, because it doesn't account for the other $35,000 THAT I SPENT SOMEWHERE?!?!?! Wow. I do remember eating a lot of mall food, buying a lot of clothes at Abercrombie (because I was now a rich, preppy kid and had to dress the part), and generally not looking at receipts. But I honestly could not tell you with any sort of accuracy where that $35k went off to. All I can fathom is that I help stimulate the economy for a few years and helped a few employees earn their commission for the month. UGH! I kind of feel sick every time I think about it.
Lessons Learned
Mostly, I learned that you should NEVER GIVE MONEY TO A KID WHO DOESN'T KNOW WHAT TO DO WITH IT! Heck, you shouldn't give money to ANYONE who doesn't know what they are doing with it. If you don't set out a plan and set goals for your money, it will disappear faster than Britney Spears' acting career. That's why most lottery winners go broke within something like 5 years. They couldn't manage their money before winning the lottery (evidenced by them buying lottery tickets) and the only thing that changes is now they have a ton more money to mismanage. I also learned that if you’re a spender, you should lock your money away where you can't touch it until you have a solid plan. Luckily, I threw $10k in a Roth IRA so that money is still there today. I had also put $50k in CD's earning about 5.5% (Oh, how I wish I could get that rate now). BUT, I had put a contingency on the account saying I could withdraw the money anytime I wanted without penalty. And withdraw I did!
It's sickening to think about the interest I could have earned with an extra $100k in the bank for 8 years. I could have paid off half my house by now! Heck, I could have bought a rental home and started making some extra passive income. I could have at least bought a Toyota Supra Mk4 and had a real race car to show for the money! Well, looking back, it's easy to see all the mistakes I made and regret not making different decisions, but there's nothing I can do about it now. All I can do is appreciate any dollar that passes through my hands and make sure that I use them all THE RIGHT WAY from now on. Now that we have gotten on a good financial plan, I know exactly what I would do with $100k. Pay off debt ($15k), Max out our retirement accounts (401k $17k, Roth IRA's $10k), start a college fund ($3k-ish), pay down our mortgage so we can refi (probably like $40k-ish), put $10k away for our job replacement fund (Mrs. iHB is now a stay-at-home mom, still working out the income loss), and go on an all-inclusive vacation to Jamaica ($5k). Woohoo!
Comments: Have you blown through a large sum of money? How do you feel looking back at all the money you have spent somewhere, but you have no idea where it went? What would YOU do with a cool extra $100k in you bank? Anyone want to help me lay 2000 bricks in a few weeks? I'll pay you nothing and even play some Journey on my outdoor speakers (who doesn't like Journey, amirite?)
Thoughts from Mrs. iHB:
Though that shiny red truck was a worthless investment it sure did get him noticed! Only reason I started talking to him was because of that thing! Now if “hot chicks” were on the top of his priority list at the time, he spent his dollars wisely 😉 What 17-year-old girl doesn’t want to date a baller?? If not for those black lights and bumpin’ bass, I’m not sure where we’d be today 😉 But seriously, he has a good personality too…it’s not all about the money….
Wow, that’s quite a yarn! Your right: Money + Immaturity = Disaster. This doesn’t compare to your story (but then I didn’t have $100k at my disposal or it might), but the summer before I went to college I bought a 1963 Cadillac Eldorado convertible, red with white leather seats. It got 9 mpg and required premium gasoline. As your wife notes, the girls loved it! I did smarten up enough to sell it before heading off to school.
Whoa, that’s a pretty crazy story. Sure, I blew through 100k in 3 years once, when we purchased our condo and the market dropped like a rock. 🙂 Oh well, that’s life. We just have to learn from our experience and keep going. If I have an extra 100k now, I’ll put it in my dividend stock account to increase the dividend payout.
Nice ride! Yes, we all have a tendancy to blow insane amounts of cash if we have never been taught the value of handling money properly. Bummer is, if I have listened to some Dave Ramsey when I was in high school, things would be MUCH different now, seeing as I had access to $100k at a young age.
Bummer about the condo. My house is underwater as well, but I don’t really care because we’re not moving anytime soon 🙂 Dividend stocks are something I REALLY want to do some more research on and get into once my income is up enough. Passive income is the way to go!
Jake,
Your story is insane and wild at the same time.
I’ve never came close to that kinda money, but I’m a glad I didn’t either.
It’s one of the times I am fortunate not to have that much money. I’ve always just had enough to pay my bills. I’m sorry to hear about the causes for getting that money, but happy that you learned your lesson.
I never came close to that amount of money but I remember getting “extra” money back from school. It wasn’t extra as it actually paid my rent/utilites as I lived off campus but the bad part is that I was working full time through school and should have started paying back my student loans. Instead, I blew through money like it was nothing.
I feel like when money is tough to come by as a kid, any windfall as an adult will be spent in a flurry of “rewarding ourselves.” That’s what happened to my paychecks after college. Very interesting story. This leads you to one of the other most important personal finance lessons: we can’t obsess about bad decisions in the past, we can only move forward and sunk costs be damned!
I have not blown 100K in a year, but I have blown some amount during my year stint at university. Sure, I got a Bachelor’s and Master’s. But sometimes I wonder where all the money went apart from rent. Did I really spend that much on food? One of the reasons why I started my blog was to motivate myself to track our expenses and savings goals. It’s wonderful that the PF community is strong! It definitely motivates me to be better!
Ahhhh, the post I’ve been waiting for! Commenting now BEFORE I read, and will come back and comment again 🙂
You two are hilarious — great story, and great lessons. I’m sorry you had to be the bad example!
You gave a little glimpse into your current (and recent) financial decisions here… I’d love to hear more about the way you’ve chosen to manage your money in terms of buying a house, having debt, and moving to one income. Future post on “How to Not Put Your Life on Hold Because of Student Loans”? 🙂
Jacob, I’m back!
First and foremost, I am HAPPY YOU ARE ALIVE!!!!!!!!!!!!!!!!!!!!!!!! I’m also happy you are not paralyzed or anything. You must think about how fortunate you are almost every single day! That experience is probably going to make you never take anything for granted and make you a big success!
That is interesting how you cannot recollect where the $35K went. But alas, that is the cost of living since you didn’t have a job.
Will you be coming into equal sums of money at 21, 23, 25? I donno how old you are. The money got you your truck, which got you your wife, which got you your baby. I’d say that was $100K well spent!!
Best,
Sam
Awesome story Jacob. I wonder how many kids in that position are actually able to resist that kind of temptation. Unless you were raised with extremely strong financial values, that is just a green light to have some fun and live the high life. Your truck sounds like it’s pretty sweet though. So it’s not as if you have nothing to show for it. I guess we have a somewhat similar background. I blew through at least that money in about the same time frame, but it was from website income. So it was that sudden windfall where you can pay for everything with cash. It’s amazing how much money can disappear just from a lot of eating out, drinking and partying. Add in a nice vehicle and you wonder where the money all went.
All of my college roomates did the same thing. You pay it back one way or another! But getting money back from school (aka, extra loan money) for some reason feels like free money and is almost imposible to hang on to. Now you know better and you can inform others how to avoid your mistakes, which is what I hope to do here as well!
Haha! It was an interesting ride. I worked during some of that time, but then quit work to go to school. I honestly don’t remember where a ton of that money went, probably because I had no appreciation for it. I didn’t earn it, per se, so it left just as quickly as it came.
I hope the lessons learned can be passed onto as many people possible. I am actually really excited to teach my kids about money and help them build appreciation for what we DO have instead of taking it for granted.
True that! Though it sometimes hurt a little when thinking about the potential of this money, there’s no turning back. I have to take the lessons learned and know that if I ever get my hands on $100,000 again I can take those lessons learned and apply them. Though I do miss having all that bass in my car!
I hear you. Not knowing where $35k of my money went baffles me to no end. I can’t imagine spending over $1k a month on eating out!! But, alas, the money is gone. I’m so glad to now be on a budget and rockin’ the frugal lifestyle. Us thrifters have more fun, anyways!
I knew you’d come out to the party, Sam. I’ll see you when you get back!
Wow! I thought I was terrible when I ran through $2500 worth of student loans in one month that were supposed to last four months! You definitely know how to make me feel better.
I always play the “if I had 100k” game or “if I won the lottery” game. All I can think of is paying down my student loans, investing, and getting a new car. I’d blow through that money in 30 seconds flat.
I know nothing about laying bricks, call me when you need electrical work. Journey music is all the incentive I need.
Brynna, great to see you here! Thanks for the encouragement! I’ll definitely be walking people through our buying decisions. House, Car, moving to one income. And I’ll make sure to give a snapshot of where we were at with debt, income and expenses. There are definitely things I would advise other NOT to do, but I will also challenge the concept of not having enough money to buy a home!
Also, I’ve added your blog to my feed reader. I’ll be dropping by 🙂
We always say at the office that money can do good things or money can do very bad things: http://www.myjourneytomillions.com/articles/money-can-do-good-things-money-can-do-bad-things/
First time to the site so I have to ask – how old are you now? What payments do you have left? also do you have that “sweet” ride still?
I am definitely happy to be alive. It’s weird, you would have thought I learned my lesson, but I honestly didn’t really care and was out partying in my neckbrace, doing stupid stuff again. It really took a while for it to sink in that it was an absolute miracle that I was alive.
I did receieve the other sums of money (I am now 26) and that was more productive. Paid for a wedding, ring and honeymoon. Paid off all my debt, helped buy a house, built up savings for my wife to quit work. It didn’t pay for everything, and getting on a budget has really enabled us to get where we are now, but I was able to use it for much more productive things rather than Mt. Dew and video games.
Having my wife and baby are definitely worth every impractical penny I spent on that ridiculous truck. BTW, that is a real picture of the truck I owned. I wish I had a pic at night with the underglow on, haha!
Thanks for dropping by Sam!
For reals! I didn’t have any real financial training except “pay for your cars with cash”. OK, no problem! What I didn’t think about was keeping any of that money. It’s like the money had some kind of cooties and I needed ot get it our of my hands as soon as possible! WHO NEEDS COOTIES?! I did have some fun times annoying old people at traffic lights with that truck 🙂 . I don’t have the truck anymore, I ran out of money and had to sell it to pay rent. That’s when my money ride was over and reality hit, hard!
I’m glad my misery can lift others up. THANKS A LOT! Totally j/k 🙂 . I think paying off debt, investing and a new vehicle are reasonable things to want if you had some cash. I know I’d do the same.
We need to run power out to the corner of our yard for hanging patio lights, so let me know how to do that. iheartbudgets @ gmail
Thanks for dropping by!
Money can definitely do good and bad things. Like the Biblical saying that everyone messes up “the LOVE of money is the root of all KINDS of evils.” But there are many generous wealthy people who do great things with their money as well.
I am 26 years old. We have about $15k in student loans and a ginormous house payment 🙂
Had to sell the sweet ride to pay rent. Yea, things went bad pretty quick once the money ran out. Now I’m Ballin’ on a Budget! 😉
Your story is redonkulous. I’ve encountered several kids in your position and most of them end up spending around 2k/week at Walmart. What on Earth are they buying?
With the way you explained it, it’s easy to see how a windfall can quickly disappear.
If I ever get any sort of large sum of cash from family, or anything else in my life, I will make sure to do what you said, Set goals. $20,000 in a CD for a few years might be the smartest thing, while we think about what we want to do with the money. Placing that money in a checking account is the last thing I want to do. Thanks for the advice.
Wow, at WALMART?! That’s a lot of camo pants and….nm, I won’t go there. But yes, you can definitely blow cash in a hurry without a good plan. I had no plan, so that was even worse. I guess I could call it “how fast can I spend this money and not know where it went” plan…hmmmm…
Yes, having that much liquid cash without a plan is disasterous! Sure, it may be a fun disaster, but when your tornado of “spend until my debit card magnetic strip stops working” spree is over, it’s quite a mess picking up the pieces. But that’s partly how I ended up here, so I can help people avoid making the same mistakes I did. That’s why I display them publicly to be mocked and have rotten tomotoes thrown at them (or something…I think I’m getting dizzy…)
Not bad at all man. Well, imagine if you didn’t go through this process. Maybe you would have never learned and woken up one day at age 50 with nothing! Hence, I see this experience as an absolute positive!
Yikes! What an interesting story… I think the most amount of money I spent in one transaction was $1,000 and that was on my wedding dress. Haha.
If I had $100K in my bank account at 18 I am sure I would have nothing to show for it now.
Most importantly, a lesson was learned! 🙂
Loved your wife’s comments. I may or may not have fallen for a tanning-bed-on-wheels or two in the day. I’ve never had an inheritance or any rich, generous relatives.
What a terrible story! Not how you told it, but the circumstances surrounding your gain and loss of the money! Glad to hear you’re alive! I work with car accidents a lot and you are right about the possibility of injury. Anyways, you’re right – a kid should not be given this much money. I would have probably blown through it the same way. And not the way I would today!