Tuesday, January 9, 2007

Boring Financial Advice

I've been getting sick of a few pieces of advice I keep hearing. This advice has been repeated so often that it is starting to make me physically sick. You don't need to know anything to repeat this advice, yet people act like geniuses when they throw these little nuggets out there. Suze Orman, I'm talking to you. Two bit hack bloggers, I'm talking to you.

The magazines, websites and TV shows are bad, but I think bloggers are the biggest offenders.

Anyway, in no particular order, here are some of the boring pieces of hackneyed financial advice everybody and his mother thinks they are qualified to give out:

1) Be sure to contribute enough to your company's 401(k) plan so your company matches your contribution. If you don't, you're giving away free money.


Please, financial people! For the love of all that is good, stop repeating this sentence!

2) Buy things that are on sale.

You mean... pay less for something than it normally costs?? You, my friend, are a personal finance maven. I will surely become A MILLIONAIRE now.

3) Don't buy X. X being some incredibly cheap thing that makes no difference in your budget, but the blogger multiplies X by some huge number and shows how it ends up costing you $2,000 OVER YOUR LIFETIME if it was invested at some high rate.

I found the perfect illustration of number 4 while looking at some different personal finance blogs last week. I pulled up this one blog at Getting-Green.blogspot.com. This site’s tagline is “Information for people who want to be millionaires.”

What a great premise for a site. Information for people who want to be millionaires. I figured there would be some great stuff there, but instead, I was met with this post (I kid you not), entitled Say No to Soda. In your quest to become a millionaire, the author suggests that you stop drinking soda because of how much its costs. The following is a direct quote from this post, with no emphasis added. For some reason his apostrophes show up as a bunch of gobbledygook symbols:

“How much is that pop costing you? Let’s say you get one twelve pack a week, plus buy another 4 soda’s from gas stations or vending machines. That’s about $8 a week on pop, or $416 a year, or $4160 every decade. It adds up to be a lot over time. Instead drink nice cold healthy and delicious water.”

I am sure if you could have asked Andrew Carnegie what contributed most to his great wealth, he would probably say it was the fact that he drank water instead of pop.

This is completely useless information! First of all, who buys 16 sodas a week?
Second of all, we already know how much soda costs. The price is often advertised on the shelf, printed on the box, it shows up at the cash register, and you can even see it on your credit card statement if you use your card to pay for it. Where is the information here?

People already know that they buy stuff that costs money. It is no big secret that not buying something lets you avoid paying for it. I can’t count the number of similar blog posts I’ve seen. “Don’t subscribe to magazines you don’t read, because you could save the subscription fees. Don’t buy that expensive new TV because you could save thousands of dollars.”

Are we really that stupid? Do we need to be told that not buying something will save us money?

I looked around the site to find some description of the author… maybe something that would qualify him to give advice to millionaires. A college degree, a million dollars, a successful business, rich parents… anything that would give him some credibility. However, there was nothing. Not even a brief biography. For all I know this could be a 12 year old kid who got pumped up after reading a copy of “The Automatic Millionaire” or something.

4) The budgeting post. Write down what you spend for a month, then make a budget.

You can see a good example of this budgeting advice in this post, entitled staying afloat financially in college. Sorry to pick on that one blogger but man, the stuff he is putting out is just sad.

If anyone out there is tempted to write an article or a blog post about anything in the list above, please do me a favor... don't.


Matthew Paulson said...

I see that you've decided to use me as the example for your boring financial advice.

My blog (Getting Green) is dedicated to teaching people a way of life that helps them recognize inefficencies and glut in their finances, so that they are doing smart things with money. Over a long period of time, this will make a person very wealthy. I'm not saying that giving up Soda it self will make you rich, but doing that along with a lot of other things will make you very rich.

You are also missing the point of the post that there are many other physical and economic problems related to soda. How many times to you hear articles about the effect of pop on your financial life? Do a google search, you won't find much.

My advice can't be too boring as my blog has been up for three weeks and is already average 500 unique visitors a day.

Take your tired and misdirected criticisms somehere else.

Matthew Paulson

zack said...

Someone's in a bad mood today! The 401k match is good advice no matter how many times you hear it because there are so many people who simply do not do it because people's eyes glaze over when someone says 401k.

The others, yeah, I can see your gripe.

TFB said...

Right on, MoneyMan. I'd like to add save $X per day. Somehow saving $10 a day sounds easier than saving $300 a month although they are the same thing.

The Finance Buff

MoneyMan said...

Wow... I was in a bad mood when I wrote that post and I apologize to Matthew Paulson. Hopefully I helped Matt out a little by sending a few new readers his way.

I was considering deleting the post, but I'm not going to censor anything I write in here and will stick to my guns, even though it might be a bit controversial. It's just one man's reaction to all of the crap I keep seeing out there.

Admittedly I don't see many articles on the effect of pop on my financial life. Substitute the word coffee or latte for pop, though, and you will find a trillion. It's the same underlying useless tripe. Don't spend money on this little thing, and you will have that much more money.

If you need to be told that not spending money is how you save money, I'm sorry but you're an idiot. If it is a revelation to you that 10 cans of soda per week at 75 cents a can is going to cost you $7.50, you need much more than a financial blog, you need a second grade education first.

I think the main problem is that unqualified people tend to start "personal finance" blogs and consider basic spending/saving tips to be useful financial advice. I don't care if you got 28c off of a box of stale donuts. That's not going to make me a millionaire.

Wow, I'm getting worked up again :)

Anyway, it is nothing personal Matthew.


Matthew Paulson said...

Apology accepted. :-}

Darren said...

just because its boring or repeated often at various sites doesnt make it worthless or wrong. a lot of times people get into a routine, or are preoccupied and dont think about this stuff while they are on the go at work, or doing whatever. seeing this while focused on the subject of saving money can help make it sink in more and make it easier for you to pause and think before you act out of habit later on.

also, most good advice in general is boring. theres a reason it gets repeated

MoneyMan said...

Darren - comments appreciated. I stick to my guns though. A lot of this advice is boring, not very helpful, and people often try to pass it off as if they thought it up themselves. I hope my blog offers a little more than the things I described in the post.