This Has Never Happened Before | Financial Audit
Quick Read
Summary
Takeaways
- ❖Tommy, a 31-year-old Navy veteran, receives $4,000 monthly from 100% VA disability for mental health and joint issues.
- ❖His primary income dropped from $200,000 to $60,000, yet his spending habits remained unchecked.
- ❖He carries over $550,000 in total debt, with a quarter-million classified as 'bad debt' from credit cards and personal loans.
- ❖Tommy's girlfriend, concerned by his financial behavior, signed him up for the audit, despite his belief he 'knows everything about money.'
- ❖He spent thousands on art from a cruise, custom frames, multiple vehicles (including a BMW with a 13% interest loan), and over $100,000 on solar panels.
- ❖He invested $10,000 into his mother's massage business and $15,000 into a gun manufacturing hobby, neither generating income.
- ❖Tommy frequently justifies his spending as 'investments' or coping mechanisms for his mental health, lacking accountability for his financial state.
Insights
1Drastic Income Cut and Unchanged Spending
Tommy's primary income plummeted from $200,000 to $60,000 after a company change, but his spending habits did not adjust, leading to increased reliance on credit and accumulating debt.
Guest states his income was cut from $200,000 to $60,000 overnight in May of last year.
2100% VA Disability as a Financial Lifeline
Tommy receives $4,000 monthly from 100% VA disability for mental health and joint issues. This, combined with his $60,000 salary, brings his household income over $100,000. The host critically questions the extent to which his conditions are service-related versus pre-existing, and how the system is susceptible to abuse.
Guest confirms 100% disability for mental health and joint issues, receiving $4,000/month, in addition to his $2,500 bi-weekly paycheck.
3Massive and Diversified Bad Debt
Tommy accumulated over $550,000 in total debt, with approximately $250,000 being 'bad debt' across numerous credit cards and personal loans, including $21,000 on a business credit card for non-generating ventures, $10,000 for cruise art, and over $100,000 in solar loans.
Guest states total debt is '550,000 range'. Host details $21,000 on a Blue Business Plus card, $10,111 for cruise art, and over $100,000 across two solar loans.
4Justification of Impulse Purchases as 'Investments' or 'Therapy'
Tommy consistently rationalizes significant impulse purchases, such as $8,000 in art from a cruise, $5,000 for custom frames, and multiple cars, as 'investments' or 'therapeutic' for his mental health, despite these items being liabilities or depreciating assets.
Guest states he bought a car for 'therapeutic reasons' and views it as 'a good investment' (, ). He claims art from a cruise was 'a good investment' and 'maintains its value' ().
5Failed Business Ventures and Financial Support for Others
He has two non-revenue-generating businesses (a holdings company and a claims company for veterans) and invested $10,000 from a 0% interest credit card into his mother's new massage business, which has not repaid him. He also spent $15,000 on gun manufacturing equipment for a hobby, not a licensed business.
Guest states his holdings company makes 'nothing at the moment' () and his claims company hasn't taken on many clients (). He used $10,000 from a credit card to help his mom's business, which hasn't paid him back (, ). He spent $15,000 on gun manufacturing equipment for personal experience, not a licensed business ().
6Girlfriend's Intervention
His 19-year-old, unemployed girlfriend, who is working on her GED, was the one who signed him up for the financial audit, indicating her concern over his financial irresponsibility, despite his claims of teaching her about money.
Host explicitly states, 'Your jobless whatever girlfriend is who made you apply' () and 'Your girlfriend who you were sugar daddy, who you can no longer sugar daddy... has now signed you up because you are cutting back' ().
Lessons
- Prioritize debt elimination, especially high-interest 'bad debt,' by cutting all non-essential spending and redirecting available income.
- Develop a realistic budget and track all expenses to understand where money is actually going, rather than relying on perceived financial knowledge.
- Distinguish between genuine investments and depreciating assets or hobbies; avoid justifying impulse purchases as 'investments' or 'therapy.'
- Seek professional financial guidance from unbiased sources instead of being easily swayed by sales pitches for high-cost products like cruise art or expensive solar loans.
- Focus on increasing income through reliable employment and career development, rather than speculative ventures like day trading or unproven businesses.
Quotes
"I think I have the cash tucked away somewhere to pay that off if I needed to."
"You're not a victim of this world. You are the victim of yourself."
"I consider it a good financial investment, too. I I got the car."
"I'm not used to budgeting when it comes to my [medical supplies]."
Q&A
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