I was reading a few articles on Yahoo Finance recently, and I came across one where the people they interviewed were struggling with making ends meet They decided to take on student loans to pay for rent, groceries, and their daily living expenses. “NO!!!!” What are they doing? I yelled. Another article spoke about a lady in her 50s who was laid off from her job as a legal secretary who decided to take on a 6 figure student loan debt to go back to school for Social Work. These articles seem to be written to elicit sympathy to those who are stuck in a bad predicament, but all I could think was that they made horrible decisions.
It’s kind of unfair to judge someone’s predicament based on the small amount of information the media stories provide us. It seems that many times when we read about the average person struggling with money, many personal finance bloggers, myself included, will suggest the following: cut the cable, brown bag your lunch, stop going out to eat, stop shopping, cut up your credit cards.
“Each time I read about educational and personal finance tips here, I can’t avoid feeling that they were written by privileged folks with textbooks solutions to real life problems” – Yahoo commenter
In an article entitled 35 Things You Can Do Right Away To Start Spending Less Money which was reposted in Yahoo Finance, the list of things include the generic tips most personal finance bloggers often tout. But in the comments section (I know I really shouldn’t read the comments section in Yahoo, but I can’t help it), a commenter wrote: “Each time I read about educational and personal finance tips here, I can’t avoid feeling that they were written by privileged folks with textbooks solutions to real life problems.” I’ve also read comments in similar articles where people seem to shake their head and say, “I already do this, but I am still struggling!”
Pound Foolish: Exposing the Dark Side of the Personal Finance Industry
In Helaine Olen’s book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, she criticizes personal finance gurus like Dave Ramsey, Suze Orman, Robert Kiyosaki and David Bach. While I’m not a big fan of some of these personal finance gurus, I do probably agree with a lot of things they say. As for Bach, his book The Automatic Millionaire was the first personal finance book I read, and I like his advice.
Here are a few excerpts of what Olen had to say about the advice given by personal finance gurus in an interview on Deseret News:
The point is there is this great myth out there that Americans went on a financial bender. The leading cause of bankruptcy is not buying lattes, it’s health care, followed by the usual fractured families, unemployment, sort of all of the plagues of the 21st century — economic plagues.
It depends on if you think this is a self-help problem or a political problem. I believe it is a political and economic problem.
Self-help gurus are basically saying, “Yeah, the economy (is poor), but you’re in it on your own, and therefore you should be able to solve this on your own.” Realistically, that’s just not true for most people.
Dave Ramsey tells people, “You can choose not to participate in a recession.” That’s not possible.
And here are few more excerpts from The American Prospect:
We idealize the myth of Horatio Alger in this country. Anyone can make it. Anyone. But we forget that Horatio Alger was a writer of fiction. In our nonfiction lives, we are suffering from some of the worst income inequality in our nation’s history, our salaries are stagnant and falling, and our class mobility is significantly worse than supposedly class-bound Europe. Yet, to talk about our financial setbacks and inability to get ahead is to challenge the heart of the American dream. We believe we are failures and, as a result, there is deep shame involved.
It’s almost as if we are living through economic Hurricane Sandy, and they are telling us that if we put up a few sandbags and umbrellas (that they might well be selling us, by the way) we’ll be fine. This stuff starts veering toward blaming the financial victim for greater economic problems.
Olen makes some valid points about some of the advice given by personal finance gurus. There may be circumstances which make it difficult to overcome their financial obstacles. It’s possible the person may be dealing with physical or mental disabilities, he or she may be caring for someone with those conditions, or they may have no access to the opportunities that we may have. You have to walk a mile in the shoes of someone else before you can judge them. No, cutting cable television may not be a panacea for all financial problems. But we have to start somewhere. I understand that there are economic conditions that make it tough, and we cannot attribute the blame solely on the individual. But there is just so much we can do to change political and economic conditions, maybe vote for politicians who’s policies we support or write to our local politicians. While we don’t have much control of economic conditions we live in, we do have control over our spending habits and our ability to acquire skills to get jobs. So for most people, the advice given by personal finance bloggers are indeed valid. While Olen believes that class mobility is just a myth, I’d like to think moving up an economic rung is still possible through hard-work and sacrifice. It’s not easy, but attainable for most.
If you have a minute, check out this Saturday Night Live skit where Kristen Wiig parodies Suze Orman. It’s hilarious. I couldn’t find a link to the video, but here’s the transcript. Josh Brolin plays Dick Dunkendirk, a caller to the Suze Orman show who is in dire economic straits. He tells Orman that he “took a sponge bath this morning in a TJ Maxx bathroom” and slept on “four opened pizza boxes lined with Pampers.” Wiig, playing Orman responds by telling him to tap into his emergency savings account, and to immediately put his money into a Roth IRA.
Do you think personal finance gurus and bloggers give valid advice? Do we sometimes give advice thinking it applies to everyone, no matter their circumstances?
Thank you to Jacob from Cash Cow Couple for letting me guest post on his blog. If you haven’t read it, check it out: Don’t Act Rich. Be Rich
And last, but not least, thank you to Kendal from Hassle Free Savings for mentioning Are We Overworked over at her blog.