The Most Financially Irresponsible Guy I Know Might Be Better Off Than You

Photo: Ajay Batra.

This is my good friend Joe Carroll dancing at my wedding last year.

It's OK to judge.

Many of the thoughts rolling around in your head are probably correct: He's goofy, perpetually single, and by most accounts immature for his age.

If you wouldn't trust him to pick you up at the airport as promised, you'd be right 50% of the time.

And in line with not understanding the concept of sleeves, he isn't big on following social norms or conventional thinking. Heck, his brain allows him to believe in Sasquatch, Catholicism, and UFOs all at the same time.

Is there anything he doesn't believe in? Yes ...

Delayed gratification
Joe's 38 years old, and on days that aren't paydays, his bank account balance is lucky to hit three figures.

If that doesn't surprise you, this might: At his job working with mentally challenged youth, he's actually very responsible. Having seen him interacting with his clients a number of times over the years, I can attest that he's darn good at what he does. He cares, and he's a natural. 

The job pays decently, and he works hard, putting in a good amount of overtime. His annual income isn't far off from that of the average Joe.

So where does the money go?

All over the place, but not where you'd think.

Joe doesn't blow his money in the standard, cliched ways. As you'll hear about soon enough, he shares housing. His car is a decade-old PT Cruiser that had to have come at a discount based on color scheme alone (a bright, unnatural shade of green, if you're wondering). He doesn't do fancy restaurants or bars. He has no addictions. You've seen his clothes. Vacations aren't elaborate -- he's flown only once (for work). And he can usually play his favorite pastime, Frisbee golf, for free.

Heck, he doesn't even pay credit card interest or fees, because he doesn't have a credit card. As he puts it, "I'm responsible enough to know I'm not responsible enough to have a credit card."

Since Joe isn't one for detailed paperwork, the best I can figure it is that there are three ways Joe drives that bank account toward zero:

1. Gas. Frisbee golf greens fees are free, but when one of your life goals is playing every Frisbee golf course in Ohio (surprisingly, there are more than 150 of them), you rack up some miles. He also loves driving his not-so-fuel-efficient car the two hours back to our hometown to get slaw dogs (a chili dog with cole slaw mixed in) or the hour south to get Ski -- the soda he drank at Boy Scout camp as a kid. Add in the occasional day trip from his home in Columbus to places as far away as St. Louis and Buffalo, and you can easily see how rising gas prices get to Joe more than to most.

2. Lack of impulse control. If you hear him start with the phrase "when else am I ever going to get the chance to," hide his wallet before he nickels and dimes his retirement away. Yes, he'd like fries with that. He'll also take that Mr. T nostalgia item and sign up for that tour of the haunted house while he's in the neighborhood.

3. Not paying attention. Forget reading the fine print; Joe doesn't even read the headlines. I've seen him get docked an entire week of pay because he didn't follow his job's vacation paperwork directions. I've also seen him pay more than $100 in Canadian roaming charges for a call lasting less than five minutes. Yes, that was after my clear, explicit warning that that would happen.

Throw in more colorful versions of the financial speed bumps we all face (car repairs, health problems, parking tickets, what have you), and Joe's always got an extenuating circumstance for why you can't cash his check just yet.

As you'd expect, playing his financial life that close to the razor's edge makes for many a mini-crisis. He's like the James Bond of getting by -- relying on his disarming calm and cheeky smirk in the face of danger. And a little help from his friends ...

Here's a slice of life. He rents a room from our mutual friend, Chris Costine. Since he can't trust himself to save up for a monthly payment, each payday he places cash equal to half his monthly rent on the countertop.

When Joe does pay on time (not a given), it's on Chris to grab the money off the counter before Joe runs into a crunch and self-approves a loan to himself.

His savings grace
But I promised to show you why, in the face of all this, he's better off than you'd think he is ... perhaps even better off than you.

He did it by by answering just one question correctly.

In 2002, in his late 20s, he began work at one of the two companies he currently splits time between. As part of the new-hire paperwork process, the HR guy asked him if he wanted to participate in the company's 401(k) program. Joe shrugged and said "sure" in the same way you'd say "sure" to someone offering you the uneaten half of their sandwich. You aren't really hungry, you don't particularly like tuna, but why not?

Perhaps predictably, he was enrolled at the minimum of 4%. But that seemingly small step did a lot. It took money out of his slippery, irresponsible hands and put it somewhere he'd be too lazy to access. It got him a few hundred bucks in free money each year via the company match. And it got him into the habit of saying "yes" to automatic savings.

About five years later, when he added his second job, their HR guy asked Joe the same question. This time, he ended up choosing to sock away 10% of his salary. When I pressed Joe, he said it was probably because the company had him meet with a 401(k) representative who suggested the higher percentage.

Today, he's still as irresponsible and cash-strapped as ever. As I write this, he has $60 in his checking account and $40 in his savings account. But thanks to that one good decision a dozen years ago, he's sitting on more than $50,000 in his retirement accounts.

Scroll back up and take another look at that picture of Joe. Are you really going to tell me you can't do better?

For after you contribute to your 401(k) ...
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Read/Post Comments (18) | Recommend This Article (78)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 18, 2014, at 6:09 PM, PSUPhil wrote:

    Funny how this article almost directly goes against the advice TMFJamesEarly is preaching in his article also posted today --- I side with you.

  • Report this Comment On February 18, 2014, at 10:04 PM, dwot wrote:

    Made me want to look around, found this,

  • Report this Comment On February 19, 2014, at 6:23 AM, Mathman6577 wrote:

    If Joe puts at least half of his current 401k money in a SP500 index fund (and invests no more) in 30 years it will grow to $250,000.

  • Report this Comment On February 19, 2014, at 8:33 AM, TMFBomb wrote:


    I'm curious..which advice of James Early's does my article disagree with?



  • Report this Comment On February 19, 2014, at 8:39 AM, TMFBomb wrote:


    That's an interesting's rough, especially on the income side, but I had fun playing with it. Thanks for sharing it!


    Haha, I'm terrified what Joe would do if he knew that!

    You bring up a good topic on allocation (and returns and expenses among funds)...but that's for another day.


  • Report this Comment On February 19, 2014, at 10:10 AM, brigidl wrote:

    I know you said that Joe is your friend, after this article are you sure he is still your friend??

  • Report this Comment On February 19, 2014, at 10:44 AM, TMFBomb wrote:


    Hahaha...yes, absolutely. He read every word before I published the article and could have changed anything he found objectionable.

    Joe's ability to not take himself too seriously will hopefully help a lot of people take important financial matters more seriously.



  • Report this Comment On February 21, 2014, at 2:15 PM, Zombie111 wrote:

    This reminds me of a co-worker whose wife was a senior manager. He had worked with a young, intellectually disabled couple who did what Joe did, invest in the company retirement plan with 10% of their income. They had far more in their savings than my co-worker and spouse, who were both in their 40s and who worked full-time.

    Maybe there is such a thing as being "too smart". If I can't be Warren Buffett, maybe I should be Joe.

  • Report this Comment On February 21, 2014, at 2:37 PM, TMFBomb wrote:


    "If I can't be Warren Buffett, maybe I should be Joe."

    Great line...truer words are rarely written.


  • Report this Comment On February 21, 2014, at 3:39 PM, suziathome wrote:

    Our first advice to each of our sons once they began working for companies that had a 401K was put in the max you can. Eat Ramen Noodles if you must but keep contributing to the 401K. It's getting free money! One of our sons is a spendthrift who will help anyone with a sob story so he never has a penny to his name and one of our sons is a miser who loves Ramen Noodles. They're still young, so we'll see if our advice helped them down the road.

  • Report this Comment On February 21, 2014, at 6:43 PM, MCCrockett wrote:

    An employer's "match" might be "free" money at the time it is granted but, I can assure you that it will not be "free" when it is withdrawn.

    You will be paying income tax on the "free" money and all the dividends and capital gains attributed to it.

    If you are lucky (or unlucky, if you prefer) in your investment choices, you'll discover that you will be moving up one or more marginal tax brackets after you retire.

    In 1983, I thought that I was only deferring income taxes on my contribution and my employer's match and that everything else would be taxed as capital gains. I had done a "joe" and forgot about it until 4 years ago when I started thinking about retirement.

    The only positive spin that I can put on it is that I won't make that mistake again. Oh! I can't! I am retired.

  • Report this Comment On February 22, 2014, at 4:44 AM, 2motley4words wrote:

    @MCCrockett: I'm curious as to what prompted you to think that, because they were accrued in a 401(k) account, the tax treatment of dividends would/should be alchemically transmuted from income-tax rates to capital-gains rates.

  • Report this Comment On February 22, 2014, at 5:41 AM, Danno133 wrote:

    Frisbees Rule !

    If I ever get to Ohio I'd like to play a round of Firsbee Golf at Joe's favorite course :)

  • Report this Comment On February 22, 2014, at 7:28 AM, Mathman6577 wrote:

    The key to any "deferred" retirement plan (401k, IRA, etc.) is to ensure you in a lower tax bracket when withdrawing the money. If you plan it right reducing your marginal rate from say 28% to 15% will pay off in retirement, not only for your 401k withdraws but also taxes on dividends and other investment income outside the 401k will be lower too. Another useful thing to do is to move to a state that doesn't have an income tax or a tax on non-public pensions.

  • Report this Comment On February 22, 2014, at 11:33 AM, XXF wrote:

    I'm totally unsure as to why anyone would be "against" tax deferred accounts, but one thing I haven't seen mentioned is the fact that if you stick cash in a tax deferred account you earn money on earnings within the account that would otherwise be taxed.

    Looking at a lump sum of money with no additional contributions when someone is 30 using a 10% return until the person is 65, $100,000 in a tax deferred account will grow to $2.8MM that still needs to be taxed, if you apply a 40% tax rate to the whole thing you're still left with $1.7MM, which ignores the fact that you'll withdraw it over time taking multiple trips up the rate ladder.

    $100,000 where the earnings are taxed each year at 25% grows to only $1.35MM over the same time, and if you only had $75,000 to invest (because that other 25% went to taxes since it isn't tax deferred) then that would grow only to $1MM.

    Tax deferred accounts are great for savers, no question about it.

  • Report this Comment On February 24, 2014, at 9:08 AM, ScoopHoop wrote:

    Fantastic article. Cheers to Joe. A friend of mine is quite similar to Joe. My friend has multiple German cars, tons of musical instruments and no cash savings. He buys stuff constantly. Yet my friend did one thing right, he has a 401k that is worth a quarter million because he has put over 5% of his income with company match for over 12 years. I recently read that one-third of people over age 50 have no retirement savings, none. We need more people like Joe. He is my hero.

  • Report this Comment On April 25, 2014, at 2:28 PM, cstevens21 wrote:

    What bothers me about the article is why doesn't Joe have more than $50,000 if he stared in his early 20s and is now 38? Is it just me or doesn't that seem extremely low?

  • Report this Comment On April 25, 2014, at 10:32 PM, Mastur wrote:

    ROTH, if you really don't like later taxes and your employer offers it Roth 401K's are a great way to go. Especially if you, like Joe, cash the cash you have in your wallet/ pocket/ purse what ever- with out looking anyway.


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Anand Chokkavelu

Anand is the Editorial Director of He loves pithiness, clever turns of phrase, and analyzing the banking sector.

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