UPDATE: 'The past 7 days have been the worst of my financial life'
By Quentin Fottrell, MarketWatch
And he didn't even buy one stock
There's always someone somewhere who is worse off than you.
Often, you can find them on Reddit (https://www.reddit.com/r/personalfinance/comments/7vv3bk/lost_12000_gambling_in_a_week_distressed_to_put/). Some people are betting big on bitcoin (http://www.marketwatch.com/story/millennials-are-afraid-stocks-are-too-risky-so-theyre-investing-in-bitcoin-2018-02-06), others are fretting over the Dow Jones Industrial Average (http://www.marketwatch.com/story/at-what-age-should-you-be-most-worried-about-a-stock-market-downturn-2018-02-06) and S&P 500 . Meanwhile, millions of Americans continue to lose their shirt the old-fashioned way.
This Reddit user, the appropriately named MaxedOut79, is 28-year-old independent contractor who earns $80,000 to $90,000 per year. He's doing pretty well for a man of his years, given that he earns 50% more than the median U.S. household. And this week, it all went horribly wrong.
"Before this past week, I was only an occasional gambler," he wrote. "I'd buy $5 to $10 in scratch off tickets every couple of months at convenience stores. Last week, I discovered online casinos. I wish I never had. I started off with a mere $100 deposit. Lost it. Then another $100. Lost it."
"Distressed about losing $200, I was determined to get it back. I threw down $500 on a deposit. I managed to hit a high on the roulette wheel of over $6,000. I thought the game was broken. How was I doing so well? Naturally, I lost all of that. I didn't think I could lose. I was wrong."
And then things went from bad to worse: "This is no longer about fun or 'striking it big,' but about getting my money back," MaxedOut79 wrote. "This has had DISASTROUS consequences. I have now maxed out a credit card of $6,000, in addition to thousands lost in my checking account."
He was doing what no one should do. Not even Warren Buffett (http://www.marketwatch.com/story/even-warren-buffett-made-big-mistakes-in-2008-heres-how-to-avoid-them-now-2018-02-07). He was, he admitted, chasing his losses: "$12,000 later, and here I am, wondering what the hell happened. I have not told anybody about this. The shame and guilt is too great. I cannot believe I was so stupid."
Don't miss:Reasons to avoid lottery fever have nothing to do with the impossible odds (http://www.marketwatch.com/story/is-this-1-billion-scratch-card-game-a-new-high-or-low-for-us-lotteries-2017-05-12)
Not only did he lose the $12,000 gambling, he also owes $10,000 to the Internal Revenue Service and now has $24,000 in credit-card debt. He has two checks for recently completely contract work worth a combined total of $12,000. "This is enough money to last me 3 months." But he had set all of that aside for taxes.
His plan: 1. "Plead with the IRS to let them add my 2017 tax debt to the previous installment agreement." 2. "Save money wherever possible. No more eating out." 3. "Hustle my ass off to get more work." 4. "Join gambling addiction online communities." 5. "Never f***ing gamble again."
It could be worse: The average gambling debt for a problem male gambler is $50,000 to $90,000 (https://www.debt.org/advice/gambling/) (MaxedOut79's annual salary). Reddit users gave him advice: "I would move the gambling support group to No. 1," one person said. (Perhaps Gambling Anonymous rather than online.)
If his thinking got him into this mess, after all, will his thinking get him out of it? Studies suggest (http://gambling.addictionblog.org/is-compulsive-gambling-progressive-the-cycle-of-a-gambler/) that there is a cycle of shame associated with compulsive gambling. "Nothing short of telling some very trusted loved ones and having them force accountability will fix this," another Reddit users wrote.
Fortunately, the IRS offers installment agreements (https://www.irs.gov/payments/payment-plans-installment-agreements) just for that. Paying off high-interest credit cards first makes sense. Avoid minimum payments at all costs. It takes longer to pay a $2,000 credit card on minimum payments than it does to raise a child to adulthood, and then some (http://www.marketwatch.com/story/how-long-does-it-take-to-clear-a-2000-credit-card-with-minimum-payments-2015-07-07).
Another wrote: "The sunk cost fallacy can be a bitch, delete your gaming account, learn your lesson and move on." In fact, that applies to everything from time spent in relationships (http://www.marketwatch.com/story/why-we-have-trouble-breaking-up-with-people-and-investments-2018-01-19) to investing. The more money or time you have spent on something, the greater the need of sticking with it.
His story illustrates that one of the oldest ways to empty your bank account and rack up credit-card debt is just as popular, if not more so, than timing the stock market or bitcoin .
-Quentin Fottrell; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
02-11-18 1101ETCopyright (c) 2018 Dow Jones & Company, Inc.