When I am outside and observe people (and sometimes myself) the ideas about wasting our time and wealth, come often to my mind. Largest killers of wealth, time and happiness, in my view, are below.

Alcohol and other drugs (including many prescription ones)

Kills your focus, life balance, health, relationships. Even when you are not, or do not feel to be addicted to them and use it for “FUN”, it always takes away at least life focus and health. Also you might be slowly mixing with the “wrong crowd”, which might push you into unwanted life direction. This is not only outside observation but also very personal experience.

I haven’t been drunk for a decade now, but I used to be drinking enthusiast. Why? I come from the country where we happily sacrifice our livers (Czech Republic). It was fun. I had not too heavy hangovers. I was usually quite good with money, so there was always cash for drinks. I had many friends and though none of them could not go out with me five times a week for time or money reasons, when I kept them rotating, there was always someone who could go. I used to be quite shy, so drinking made me very friendly, social person, so I thought. Also we have alcohol addiction running in our extended family which might be an extra reason why I used to enjoy partying. I never felt addicted and at the time I did not have any serious consequences but I could easily imagine how it could happen on such a slippery slope.

I am very happy I have quit the dangerous drinking freight train as I feel my motivation, health, happiness, life control got a lot better. Oh, and I feel lucky that at the silly youth time I never got to contact or did not seek any other illegal or prescription party drugs. Probably it was good that I grew up in the backwater country in a small village. So I had one less problem to solve.

Gambling

Luckily here I do not have personal experience. But as everybody I have seen many sad cases. Also living in Australia where gambling is totally out of control thanks to greedy governments. Gambling lobby totally controls federal and most of state parliaments and makes sure no legislation is passed if it eats away their profits. Gambling losses per capita are according to couple of years old study almost double of next western countries like Finland or New Zealand. Even Hong Kong and Singapore are still quite behind. And our governments say what is the problem? There is nothing to see here!

Grannies gambling away their often miniscule pensions in various clubs and pubs pokies are here very common sight. Topped up by organised crime around casinos (as criminals seem to like to gamble and to launder their funds there) and hard to control online gambling linked to sport, it seems that this unproductive and addictive way of spending “mostly” hard earned cash is here to stay and grow, unless something gets in the lobbyists way.

It looks like large portion of these losses are from people who can least afford it. Pensioners and lower income citizens.

So no. Do not think about having occasional pokie game or having an online bet on the soccer match. Gambling is highly addictive and gambling businesses know their trade. And even lottery is very silly game for ordinary folk. It pulls money out of their pockets and some of them even consider it almost part of their retirement plan, of course without too much knowledge about probability.

Expensive hobbies

You think you need a boat. There is a reason in saying that boat owner is happy only two days. The day he purchased the boat and the day he sold it. It is VERY expensive and time demanding hobby . Cost of the actual boat, fuel, maintenance, insurance, mooring, registration. In the same category would be car racing, vintage car collection, motorbikes, high end TV and audio electronics.

At least in Australia, skiing can be prohibitively expensive. Either you need to accept extremely high costs of ski lifts, food and accommodation due to extremely short Australian (and to some extent NZ) ski seasons, or you have to accept high travel costs to other destinations like Japan, Canada and Europe. Second option is currently out of question due to COVID as you would unlikely get travel permit from authorities with the skiing as single purpose of your travel.

I used to be keen skier since 5 years old, but last 20 years I have not seen snow and I have switched  to surfing where you do not have to pay for ski lift and travel to snow destinations (as long as you live close to beaches which I do not plan to change in near future).

Of course there are many other expensive hobbies but you get my idea. If your hobby costs a packet then it probably is not very good for your wealth and you might have to make some difficult decisions. Reality is that there are some very cheap and reasonably priced hobbies you might to like. My most expensive hobby is jiujitsu (martial art) due to weekly payments, but it makes me happy, fit and is good against stress. Other hobbies I like are soccer, hiking, swimming, reading and working in the garden don’t cost as much and keep me physically and mentally fit.

Spending on credit

Hmm. This is big one especially in the western world. I guess I was helped here by growing up in quite poor country, where if you did not have money, you could not buy it. There was a short time when I thought credit cards would be handy for purchases online. Once I found debit cards, where you actually pay with cash in your bank account, I could really not understand purpose of the credit cards. Does it mean people cannot afford to pay now and try to spread the payments for the future months, where there are already waiting repayments from previous purchases? I can clearly see that only purpose is to suck in shoppers to spend more, than they can afford and pay to financial institutions interest rates often exceeding 20%. In the same category I can see current innovations Buy now, Pay later apps. Purpose same like credit cards, differently regulated. These unfortunately often suck in young spenders, who can get in financial difficulties even faster with lower income and less experience.  

Out first and only credit card was one which offers extremely good exchange rates and no fee for foreign currency purchases. It was very good for our travels and also for purchases from US and UK. BUT. It is not really credit card for our use as far as I am concerned. We do not pay any interest as we have it set up to pay off the balance in full each month. So it is almost like debit card. But as we are not travelling currently and not shopping online overseas much I am considering to get rid of it.

I am keen listener of podcasts from Choose FI about financial independence. They often talk about getting best credit cards for accumulating points convertible for hotel accommodation, flights and car rentals. Unfortunately in Australia the choice of cards is very limited compared to US. I did my research and as we still spend quite a lot of money for living expenses, I thought we can get some good card and collect free points.

Well I was wrong. It turned up we cannot get one, as we are not receiving salary. Our rental income exceeds $100k and easily covers all our expenses for last 4 years. Assets (mostly properties, shares and pension fund) exceed $3 millions. Never had any bad credit. Currently we have in the line of credit undrawn almost $500k available for ANY expense. Both of us are University educated (Accounting). But we do not have a job and do not get salary. Customer service could not tick few boxes, so we got declined. We were bit disappointed, especially when a year later I managed to do some mortgage refinance for almost half a million dollar. But we were not good enough for credit card for $5,000. Well we can live without it, but I was surprised. Clearly we would not be great customers for the bank anyway as we planned to pay everything within the interest free period and just collect the points.

Love for brands

I must note here that I like good brands as anybody. But I know I have to make choices. Also I am type of person trying to get value for money. I don’t mind second hand stuff like cars or furniture. I got it few times wrong with dishwasher or other electric items so this time we bought new TV after extensive research to get a good deal. Same research we do with computers and mobiles which we always buy new and reasonably high end models at the time when these are well discounted. But I also usually managed to sell many items once we upgrade often recovering about third of the purchase price.

Clothes we don’t buy second hand as you can get cheap ones on various sales and of very good quality. I don’t like paying $70 for a t-shirt. So brands like LV, Gucci, Dior have no place in our house. I believe these are for genuinely rich people (maybe wealth upwards $10M). There are nations (usually at the south of Europe) where people (often men) are famous to get dressed really well. But many of these guys live with their parents until late 30s due to not being able to afford own accommodation. Dutch or Swiss people are not famous as the best dressers. But they are often good savers.

Cars

I wrote quite a bit about our car purchases in other posts but I must mention it here as love for expensive cars is great wealth destroyer. We like nice cars too and now we have car which we love (Subaru Outback anyone?) but we bought it used.

Here in Australia lots of European car brands like to place themselves as premium often offering slightly premium product which can be used for flashing the status around. Volkswagen, Audi, BMW, Mercedes, Landrover, etc. They mostly cost a lot more than my favourite Japanese and Korean brands and some are quite inferior in quality and reliability in my view – at least their lower priced models. Now as I live in the country town I cannot believe number of various Toyotas I can see. And their resale value seems like never going down. They are not cheap either with new Landcruisers easily topping $120k.

Everyone has their take on cars. For example my mum like German brands (she lives in Europe) as long as they are blue.

No saving, no investing

We know many of these guys, don’t we? I will save later, once I am old. Once, when I start making more money. Hopefully I can marry well. Can I inherit something? Lottery?

Many people go through various ways towards wealth with most of them including someone else’s involvement. Which they cannot control and get frustrated when the things do not go their way.

Simplest way towards financially secure future and wealth is the ordinary skill of being able to consistently save and invest significant portion of income. Example in Australia. We are getting about 10% contribution from our income towards our retirement fund. For someone on a good pay it can result in reasonable retirement living standards without saving anything else. Obviously that is after about 45 years career. If you would like to shorten the working time, it is necessary to increase the savings rate beyond only the employer contribution.

I have noticed many people when they get their salary, pay off all necessary expenses, and then spend the rest on extra desired expenses. When they get unexpected windfall (profit, inheritance, gift, bonus, winnings) they start immediately thinking what to spend it on.

In financial independence community I have noticed that more common is the attitude of minimising expenditures. And with the low expenditures any leftovers are by default swept to some simple investment vehicle.

Also before even creating this simple investment (I like index funds and residential property) everyone should have an access to some emergency fund).

These above are some great tips how to stay poor. Me and my family are hoping to avoid them and you might want too. Good luck.