Originally Posted by kane

Here is a very good example of this. I have a friend who works for a company that does industrial sheet metal work. He is in a union and has worked his way up the ladder. He started out 13 years ago making $9 per hour. Now he is making around $32 per hour. He works a lot of overtime so he makes around $85K per year (pre tax). He is married and has a couple of kids. his wife works part time and makes around 15K per year. They spend every cent they bring in. They rent a nice, big house, they have a couple of nice cars and literally live paycheck to paycheck. He admits to me that if he ever lost this job he would be screwed because the odds of him finding another job where he made anywhere near this much money are next to zero. So he knows he is living beyond his means, yet refuses to plan ahead.

I ask him why doesn't he downsize their life. Get decent, but cheaper cars. Move from the five bedroom huge house into a 3 bedroom average house and put some of that money away just in case. I tell him they could easily live a decent life on what he makes and put everything she makes away for a rainy day. This way if something were to happen he could likely get a job that could help him maintain the life they had instead of losing everything they have. He says that just doesn't sound good to him. If he were to ever lose his job he would hold out and try to find another at this wage and if, eventually he couldn't then they would just declare bankruptcy and he would start over.

Here is the kicker. He has two kids. The oldest just finished her freshman year of high school. She is a smart kid, straight A's, plays sports and is very good at some of them. All-American girl kind of kid. She is already talking about wanting to go to college. My buddy went to a meeting at the school for parents to get ideas on saving money and getting ready to pay for college and was shocked when the financial aid person told him that his daughter would never qualify for need based grants because he made way too much. When he told her had nothing in savings, she told him he needs to spend less That he and his wife make twice what the average household income in the nation is so they need to shift their priorities so they can help pay for her college. He just shrugged and told her she better get a sports scholarship or something. The idea of downsizing just seems so foreign it is like he feels like he would be losing a contest if he did that.