Last week, I went running with my friend Mac. As we ran, we talked. Mac asked me how it felt to be out of debt, to actually be saving money. Like many of my friends, he’s watched my financial turnaround with interest.
“It feels great,” I said. “I should have learned from you and Pam earlier.” Mac and Pam have always made smart financial choices. They’re not misers, but they’re thrifty, carefully choosing where they spend.
“I’m glad you’ve finally seen the light,” Mac said, and though he didn’t say anything further, I could tell what he was thinking.
Over the past couple of years, many of my friends have told me, “I can’t believe you write about personal finance.” To be honest, I can’t believe it either. For years, I was the poster boy for poor financial choices.
Once, Kris and I were riding to an Independence Day rodeo with Mac and Pam. We were talking about something expensive (let’s say computers, because I can’t remember exactly), and I said, “I just got a bonus at work. Now I can buy that new iBook I’ve been wanting.”
Pam turned around to look at me in disbelief. “But J.D., just last week you were complaining about how broke you are. How can you afford to buy a computer? Aren’t you in debt?”
At the time, I was angry. Who was Pam to tell me how to spend my money? In retrospect, she was absolutely right. Now I recognize that this conversation was a turning point in my attitude toward money. I gained a glimmer of insight that day. I started to see how others perceived my spending habits. I was living paycheck-to-paycheck by choice. I was earning enough to save money, but I had nothing saved, nothing to show for my efforts but a lot of toys.
Tightening the belt
As the economy worsens, I see the effects everywhere. “This reminds me of the early eighties,” I told Kris last Saturday as we drove to dinner at her sister’s house. “That was a rough time for my family. The pervasive gloom and the constant bad news feel exactly the same right now. It’s eerie.”
Over homemade beef stew, Kris and I talked with Tiffany about the recession. Business is slumping at my family’s box factory. It’s slumping everywhere. When Kris and I meet with contractors for our upcoming home projects, they’re all eager to start as soon as possible. Three of my friends have lost their jobs, and several others are worried they might be next. Nearly everyone we know is looking for ways to save money.
We talked about how belt-tightening is hard for some. Kris and I are fortunate because we’ve been pursuing a policy of thrift for several years. We’ve already cut back, and have identified areas where we could cut back even more. (Dining out, for example.) For other people, though, it’s not as easy. Some don’t have room to cut back — and others who could do so cannot see their own bad habits.
Fumbling in the dark
“I have a friend who complains about how tight his budget is,” Kris said, “but his family shops at Whole Foods. He just signed a long-term contract at a gym. He drives an SUV and bought a hot tub. Whenever I suggest that he exercise at home or forgo the latest gadget, he laughs at the idea. He says he’s tightening his belt and trying to start saving, but from the outside, that’s not how it looks. If you’re committed to buying all of your groceries at Whole Foods, you’re going to have to cut back in other areas. You can’t have it all.”
“Yeah,” said Tiffany. “Our society has become used to getting everything it wants. It’s used to instant gratification. Now that things are tight, it seems like people don’t know how to choose. What’s more important? Eating organic or sending the kids to summer camp?”
“You can’t have everything you want at once,” Kris said. “That’s a quick way to get in over your head. And you can’t have the best of everything. You have to choose what’s important to you and make sacrifices elsewhere. I’ve learned that when I can save money in areas that are less important to me, it doesn’t feel like a sacrifice — it feels like a victory. Food is important to me, but I’m not willing to pay full-price for new clothes.”
Tiffany nodded. “It’s hard to listen to the complaints when you can see inconsistencies. It’s one thing if the person really is cutting back as far as possible and they still can’t make it, but it’s another when the behavior isn’t consistent with the talk. I think we may all need to adjust our expectations of what we deserve to have.”
“That’s true,” I said, but I was remembering my conversation with Mac and Pam on our drive to the rodeo. “It can be frustrating to watch others struggle. Like my brother, for example. At the same time, I try not to be judgmental. I’ve been there. It feels different from the other side. Sometimes when you’re making poor choices, you’re not even aware of it. Or if you are aware of it, you don’t know how to stop. I see my friends who are struggling, and I want to help, but I’m afraid to offer unsolicited advice. I used to resent it, and I’m afraid they will too.”
“Each person has to come to it on their own,” said Kris. “You can’t force them to see. It’s like when Michael gave you a copy of Your Money or Your Life. He was trying to tell you he could see what you were doing, but you weren’t ready to listen. You took the book from him and put it on the bookshelf for a year or two. But eventually, when you were ready, you picked it up and you read it. Then it made a difference.”
Learning to see
As we ate our dessert of rice krispie treats, I thought of my friend Gillian, the woman who is very good at spending money, but not so good at saving it. Gillian is still living the same lifestyle, unable to cut back on cable television or the housekeeper or her cell phone — and still wondering why she struggles to make ends meet. She can’t see how her choices affect her financial situation.
Not so long ago, I was in this position myself. With the help of friends, I was able to open my eyes. I began to see how even small choices I made had a big impact. As I learned more about money, as I learned more about my own behavior, everything started to make sense. I made changes in my life. I sacrificed some of the things I wanted. I worked hard to boost my income. Today, as the national economy crumbles around me, I feel relatively secure.
The road ahead looks rough, at least for a little ways. I encourage you to do what you can to tighten your belt. And if you know you have a decent income but still feel pinched, don’t be afraid to ask for advice. Sometimes a friend or family member can see things about your habits that you can’t.
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I love how you were eating Rice Krispie Treats for dessert. They are my hubby’s favorite and one of his Valentine’s Day presents. Wal-Mart brand Krispies and marshmellows put me back about $3. The smile on his face: priceless!
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I have had a lifetime of issues with money and have had an exceptionally difficult time managing it as it comes in and out. Thanks to a close friend I finally managed to make some major changes in my life financially.
I’m working on living a more frugal existence, tracking my expenses and income by hand, and increasing my income. Thanks to her I have managed to stay out of overdrafts and have started putting money away. This is a major accomplishment for me.
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To Normal Healthy –
When it is 2 degrees below zero, when the rabbits that the neighbors think are so “cute” eat over half the garden during the summer and Whole Foods is the cheapest place to buy perishables & the only place to buy human quality grain then, how is that elitist???
BTW – the farmers market out here (for the three – four months it’s open) is about twice the cost of Whole foods. It used to be cheaper but the last 2-3 years it hasn’t been due to gas prices for the farmers that still drive in. And much of the produce at the farmers market is trucked in from California anyway – they don’t even take the produce out of the boxes it comes in! Farmers here in the midwest grow corn & soybeans for their cows & for market – not veggies for a farmers market in the nearest big city. As it is, the farmers market here is mostly baked goods, flowers and crafts.
Oh & one other thing – if Whole Foods is the same price as or cheaper then the regular grocery store then how is that expensive and elitist? Whole Foods is the only place in in my state now that I can get hormone free dairy (hormone free doesn’t cause me to get sick) so I have to go there anyway. I’d love to just buy a cow or goat but thats against my city ordinances.
You should never assume that someone has all the same resources and the same climate that you enjoy.
Just like it’s frustrating to get my friends with 2 car payments, maxed out CC, concerts that @ $80 a ticket and buying 2 new DVDs a week to understand why I cook with whole grains, never buy DVDs, fix everything with my own two hands, grind up my own grain and try to grow my own veggies, it’s also frustrating when people who don’t live here make such assumptions and cast such labels.
There was a very good family owned organic market down the street from my house but they couldn’t compete when Whole Foods opened, not enough customers stayed loyal & they closed almost 4 years ago. I don’t know why Whole Foods is cheaper here – maybe they’re buying all the produce from the farmers that no longer make it to the farmer’s market. I simply don’t know – all I know are the hard numbers. My Aunt from Chicago has told me the prices at the one I go to are about a third as much as the Whole Foods by her house. I just go where it’s cheapest because I have to make every penny count regardless of “elitism”. I feed my family in a healthy manner on $184 a month thanks to that store. I’d love to see a family owned store open up again, but in this economy I know it’ll probably never happen.
To everyone else – sorry for the rant.
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It seems that one of the reasons so many people overspend and overconsume is a sense of entitlement: in order to be part of the upper middle-class, it is thought that one must spend and consume accordingly.
I was like that to some extent through grad school, but thankfully wasn’t so wrapped up in the latest gadgets and prestige items to wreck my life. As I took on my first job and paid down my debts I slowly began to realize that I didn’t need to spend everything just because I had the money. As time went by, and as I became more consciously frugal, I realized that even though my income wasn’t so amazing, I still couldn’t possibly spend all of my income. And that holds true to this today. I work for the state, so I’ll see no pay raises for years to come, but I live off of half of my salary anyway. I’ve come a long way.
Most of my friends and family are reasonably frugal, but I still have friends who let money slip away from them, and they wonder why they can barely pay the bills. I try to have an impact by dropping uncontroversial hints and ideas when it seems okay, but ultimately, each person has to figure it out on his or her own. Figuring it out is a lot of work, and the work expended makes the realization so much more meaningful. I just hope my friends get there sooner rather than later.
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Looking around for turning point to squeeze expenses, is what you look for role model in your life, that is not easy especially when you are already living in consumptive attitude, requires more discipline and attitude.Good luck to all of you who wants to squeeze their expenses.Cheers
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I liken it to drug abuse.
What would you do if you noticed that a friend is abusing drugs?
While it might seem like throwing a tantrum at them might be what you want to do (I know I would), but I am not their parents and they are no longer children. As adults, they are making their own choices, right or wrong.
This does not mean I do nothing. I certainly would not enable them. It’s commonly a delicate situation: you dont want them to be so turned off they don’t want to hear, but you also don’t want to handle them with such kid gloves that they don’t listen.
So, then what to do? As someone who has had some exposure to this world, I can say that the Alanon approach to alcoholic is a good one.
An intervention-style of confrontation might occasionally work, but is risky and is often inappropriate.
As mentioned in some of the posts above…
>>But if that’s what they want to do now, then that’s okay. All I can control is my own financial house.
>>in the end it’s going to be something he has to learn how to do in his own time. The best I can do is be there for him if he ever needs advice.
>> etc.
= I cannot control anyone else.
= I can only control myself.
= I can love them, even if they are hurting themselves.
= I can make it easy for them to ask for help or advice if they want it. I can offer to assist.
= I can say, “You know, I had that problem at one time, and I changed, so things are better now.” And offer some advice which direction to go in. If they want to know more, they’ll let you know. But I cannot force them to get better or make the choices I think is best for them.
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JD,
It isn’t surprising to hear that friends didn’t think YOU would be authoring a blog on good spending habits. Usually the best advocate is someone who learned the hard way. The ex-smoker is the strongest anti-smoking fighter.
Separately, someone mentioned hamburger helper derisively. To each their own, but my kids love my tuna helper. When dinner for four is less than $10 you are doing pretty good. When it is less that $10 and your kids say it is better than mom’s cooking then it is priceless.
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Wow. It’s fascinating how this post on how to help others nonjudgmentally turned into a veritable torrent of judging!
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I know this has been discussed in other posts, but I’m dealing with this issue with my significant other, and it’s really tearing me up. I went through an irresponsible period years ago, but turned things around and paid off my debt. Thanks to this blog and others I started an emergency fund, and it’s almost at my goal. I use my CC for miles but pay it off each month. I’m paying extra on my mortgage and watching all my spending more carefully. I’m not perfect, of course, but I am more on track with each passing month. My SO is carrying thousands of dollars in credit card debt, does not have a savings account, and only recently started putting away a small amount into a 401(k). I see late bill notices and there are indications of a mediocre credit rating. My SO has started tracking spending a bit more but does not have a budget and does not really have any sort of plan that I can see. I have explained that financial responsibility is very important to me, and becomes even more important in a marriage, but beyond that I don’t know what else to do. I don’t want to be judgmental and as everyone has said, people won’t change until they are ready. I just don’t know if I can wait for that. I can’t assume that the aha! moment will happen, just because it happened for me. This is a wonderful person and a wonderful relationship…but is the financial disconnect a deal-breaker? I don’t know how to make that decision.
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This is a timely post. It always seems difficult to talk to friends, and lovers over money at times, the best advice I can give is referring people to sites like these. I realise I can only help myself first, and that by helping myself first, I can help others by practicing what I preach. Pay cash, plan ahead, live within my means, and always be thankful for the life that surrounds. No matter how grumpy I get sometimes
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Excellent post! I’ve been reading your website for about a year and it’s been great! You are so right about priorities in life. They are difficult to choose and to place in order. Most of the time, we just fly by the seat of our pants doing anything we want, just for that quick instant gratification. It usually takes a pretty major shake up to bring you to your senses and to figure out what is really important. It’s almost like this economic situation that we are in now. Many of my friends, including myself, are learning what really is important in life. Best thing is to educate yourself on financial organization and to follow through.
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I think that much of America has been told by advertisers…”You deserve the best” or something like that. You don’t notice it unless you are away from it for years and then come back and watch tv commercials again.
It is amazing how often either radio or tv commercials get you to buy something because “you deserve it”. When we’ve come back to the states, I’ve noticed that theme quite often running through commercials.
When I was back last October, though, I noticed it was more about “saving money” …”buy 3 pair save 25%”. I really have a hard time thinking people fall for it.
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I guess we should all hold our temptation by commercial, just by living simple live and not wanting many things, I hope we all can do that.
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Marketing and advertisers can hold much of the blame for the current predicament. I remember hearing a BMW commercial on the radio, featuring a mid-30′s woman talking about her friend’s BMW and how she now wanted one too. She sounded like a little kid in a toy store not getting what she wanted. Then it advised to go out and lease one to drive at your local dealer.
In the malls, you see signs everywhere advising that you save $xx when you spend $xx… How does spending more help you save? Comeback-coupons as I call them do have their benefits when you have a true-need for some new clothes or a suit, but buying clothes just because they are on sale is not good.
Whatever…
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I can’t help wondering if organic food advocates realize that their elitist eating preferences are partly to blame for the rampant malnutrition and starvation throughout the planet. Growing a crop organically drastically reduces its yield, which of course is why organic food costs more at the grocery store. Consequently, only the world’s richest people get to eat it, while the world’s poor must do without.
I’m sure the fact that rich Westerners don’t have to wash their veggies is a comforting thought to them as they fight through hunger pains, even though the farmland was perfectly capable of producing enough food for everybody if rich Western snobs weren’t so lazy about washing their food.
Organic food is an irresponsible and selfish way of farming land.
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As long as we’re ranting, my pet peeve is all the advertising of expensive drugs on TV. A lot of the time, they don’t even tell you what they are for! They just show one or a couple of people happy, on vacation, looking at a sunset and just enjoying life in general with no cares in the world. If you follow their instructions and waste your doctor’s time by asking them if XXXXX is for you, like the ads want you to do, only then do you learn that the drug may be for teenage acne or hemorrhoids. I trust my doctor to keep track of what might be good for me, should I need something. If I didn’t, I’d find another doctor…not watch more TV.
Those TV ads just add to the cost of medicine as well as waste valuable medical time.
It’s our fault for falling for the garbage….
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Eating organic is not elitist. You do realize that that is how crops used to be raised, right? Is eating non-GMO elitist as well?
In many places such as Ethiopia, Peru, Brazil there are studies that show that organic farming actually increasing crop yields, sometimes by up to 200%.
Organic farming is more sustainable in the end.
Did you know that Cuba had an organic revolution of sorts? Are they rich westerners?
Put down your Monsanto brochures…
Most people that buy organic still wash their food……. you ever hear of bugs? There’s more of those on organic farms. Organic spinach, just like “regular” spinach, is full of dirt and such.
Organic food does not cost more necessarily because of its yield (per area, which is what I assume you mean) but because it may be more labor intensive.
In the end, I think that you’re the elitist snob that is judging people.
Go talk to an organic farmer…
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Once upon a time, all fruits and vegetables were organic. So does that mean that we’re all descended from elitists?
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Also, as long as we get to rant and blame people for the problems of the world…
I’m going to go out and say that eating meat is wasteful, and elitist.
If you think of the amount of land, petrol, etc. that goes in to the production of livestock for no need. Cut out the middle man. Use the land to produce human grade food and you can feed many more people.
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This conversation is getting interesting, it’s up to us whether on elitist or not, we chose the path, not others.
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@Kevin said “I can’t help wondering if organic food advocates realize that their elitist eating preferences are partly to blame for the rampant malnutrition and starvation throughout the planet.”
This is utter trash. The world is producing enough food. The problem is distribution.
If you cared to look into the facts, you would find that one of the biggest problems in ensuring adequate nutrition is the fact that corporate agriculture has displaced small-scale farming communities in many parts of the world. If small farmers can’t compete or worse, get thrown off their land, they end up swelling the world’s slums. If we support them, they can stay on the land and feed their family as well as us.
It’s true that in some cases organic farming can lead to a lower yield but the higher yield of ‘conventional agriculture’ comes at a human and environmental cost. Also when mechanised farming does lead to a higher yield, this is not a good thing since it helps put small family farms out of business. We don’t need to increase yields – we need better distribution of the food we’ve already got.
And in fact the yield issue is actually not always true. According to numerous studies, smaller, more diversified farms have a higher yield per hectare. (This discovery was first made in 1962 by the Nobel economist Amartya Sen, and has since been confirmed by dozens of studies).
Another reason for starvation is the increasing desertification of formerly arable land, caused in part by corporate farming depleting the soil, cutting down trees, and running down scarce water supplies. Also pesticides help kill off bees and other pollinators that form a necessary part of agriculture, unless you want to be locked into buying patented seeds from a company every single year.
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Hee, there is a little bit of me in this post. I *could* save more money if I gave up my gym membership and controlled my grocery spending (you can pry my organic milk out of my cold, dead hands!). However, I have a decent savings account, no CC debt, and I pay a lot extra on my student loans every month.
I should show this to a girl at work. She is constantly complaining about how she needs to move out of her parents’ house, but it’s too expensive. And yet, just the other day she told me she was planning on getting a weekend car! She was a bit annoyed when instead of encouraging her, I said that sounded like a waste of money.
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Some of my friends continue to make the same mistakes with money that I used to make not so long ago. I guess we all have to come to our own conclusions about our actions when we’re ready to.
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Talk about a nice topic becoming obtuse. Bringing out lots of defensive and offensive comments about food of all things. Sheesh! We all make choices and we all bear the fruit of those choices…pardon the pun.
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Tracking my spending is useful, but I’m still refining my system. Somehow I seem to be spending more than I used to, so I think I need to re-think how I handle my “okay to spend” money.
I remember a friend’s comment that opened my eyes. This was about ten years ago, and we were planning a trip to Italy about a year in advance. She asked me, “Have you figured out a budget for the trip yet? How much are you saving each month toward it?” It was such an obvious question, but I hadn’t given a thought to saving in advance. Fortunately she planted the seed a year in advance, so I COULD save for the trip, because when it rolled around I’d just been laid off. Without the money set aside for the trip, it would have been a very huge negative impact on my financial situation for a long time going forward. As it was, I gave myself permission to really enjoy the three weeks in Italy (which was pretty frugally planned), and I was able to get home and find a job without a huge credit card balance hanging over my head.
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JD, it’d be interesting if you could talk some more about handling the peer pressure for those that are new to this. I’m transitioning into being more frugal (never was a big ‘clothes/purses’ spender but all my money went to eating out & education…ALL). My husband is great but I find my family members (mother especially) asking if we’re going out, do I need to buy more clothes, do I need money & etc …She and my dad are drowning in debt.
We’re not poor but I really want to be debt free…this means some very frugal living. It makes me angry and I’m at a loss of what to say.
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Saro, I have the same problem. A lot of my friends make more money than I do, and can’t understand why I’m doing without things in order to pay down debt and put money towards retirement. They think I’m cheap, and I think they feel like I’m judging them for how they spend their money when I explain that I can’t afford this or that.
Ultimately, their (momentary) disappointment isn’t as important as my financial goals. Their point of view is useful, and does help me maintain some balance.
Oddly enough, the recession had made it easier on me because now everyone else is feeling the pinch, and it’s becoming trendier to live lean.
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I bite my tongue all the time when high earning, over-extended, big spenders cry to me about being broke . . . it’s uncanny how people live week to week.
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I come across this problem a lot. My 3 closest friends are all at the stage where they are living pay-cheque to pay-cheque, running up their credit card debt and continually whinging to me that they have no money. They make the same (if not more than me) and for the most part live at home so don’t have the same expenses as me either yet I have no debt, a $10k emerhency fund and about $25k saved for a house deposit, plus $5k saved for a trip at the end of the year. I love expensive things (mainly clothes and homewares but also the odd gadget) and also enjoy eating out. I just know how to say “no” to myself… or at the very least “in time”.
The other day I went out for lunch with one of these friends. After lunch we meandered through the shops for a while and she noticed me reading the back cover of a book I’ve been wanting for a while. When I put it down and went to leave the shop she was surprised and said “I thought you said you wanted that?”. I replied “yep, I want it but it’ll have to wait until next week – I only have $X left this week for spending and I’m saving it for brunch on the weekend”. She looked back at me blankly then replied “so just put it on your credit card”.
She just didn’t understand that, yes I wanted the book, and yes one day I will probably buy it, but that I can’t buy everything I want as soon as I want it. I had enough cash in my purse to buy the book. I had plenty of money in my bank account to buy the book. And yes, I could have very easily handed over my CC. But I had already spent money on myself that week – for starters I had just had lunch out with her. So rather than mindlessly buying the book because I wanted it I was going to wait until my spending money (I’m a beleiver in the adult guilt-free allowance) allowed me to buy it.
My friend didn’t buy herself anything during our shopping trip. I don’t think it was a coincidence. There were plenty of things I could tell she wanted. Things she would have normally just charged mindlessly. For some reason on that day she decided not to spend. I like to think it was becasue of my example and hopefully she will keep it up.
Great post JD and I totally agree with you on modelling behaviour. Adults don’t need lectures and they don’t need to be judged. When the time comes for them to turn their lives around they will look to the people who they see as managing their finances responsibly for advice. And if you have been a good and non-judgemental friend then hopefully they will recognise you as someone to turn to.
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I have a friend who is struggling with CC debt and always asks for advice, but dismisses everything I say and continues the same behavior. She asks for tips on saving money, then she and her fiance buy new granite countertops. I finally told her I couldn’t help her until she wanted to be helped. It’s too frustrating.
Her new idea is to save money by asking my handy husband to do all these home improvements for her instead of hiring someone. Like he has time for that. Not our problem!
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