“House, car, education. Take care of those three and you can drink all the coffee you want.”

I heard something on the radio this morning that got me fired up. It was a segment about tips on how to save more money. What came was a predictable list of “brew your own coffee,” “buy generic products,” and “bring your lunch to work!”

I can’t stand these lists. I think they’re dangerous, because the average American’s dismal financial state has little to do with coffee, name brands, or lunch. The people writing these articles mean well. But they’re the equivalent of telling a drowning man how to dry his clothes — advice that seems helpful but misses the bigger problem.

Explain Like I’m 5: Stock Stuff

I like to believe I’m a smart man, but when my company started talking about its benefits packages, I think they just assumed I knew what all of these things were. I don’t even remember what I agreed to, cause I didn’t know what the hell I was talking about.

Although I’m not sure a 5-year old would understand this, you could do worse than reading through this reddit thread if you want to understand the difference between investment accounts.

Fractions of a Penny

Young people don’t like banks.

…this digital-savvy cohort is looking to the tech sector to provide banking solutions. Half of respondents said they were counting on startups to overhaul how banks work, and three-quarters said they would be more excited in financial services provided by Google, Amazon, Apple, PayPal, or Square than from their own banks.

You know how fragmented messaging services are because you need all the people in your life on one service? Wait until that happens in banking.”

What It Means to Be ‘Wealthy’ in America Today

A new report from UBS surveyed investors who on the surface all appear to be pretty well off. Of the survey’s 4,450 participants, half had $1 million or more in investable assets, and all had at least $250,000 in investments. Compared with the huge portion of the population that barely has any savings — about half of Americans don’t have an emergency fund that’d cover three months of expenses — it sure seems like the people in the survey are doing quite well financially. But do these people think they’re rich? For the most part, the answer is no.

That’s a UBS poll. If there was a poll of people who invested with Fidelity or Vanguard I bet the results would be different.

Put The Excuses Aside

Regarding people’s poor financial education.

Listen up, crybabies: This isn’t your grandma’s house and I’m not going to bake you cookies and coddle you. A lot of your financial problems are caused by one person: you. Instead of blaming “the economy” and corporate America for your financial situation, you need to focus on what you can change yourself. Just as the diet industry has overwhelmed us with too many choices, personal finance is a confusing mess of overblown hype, myths, outright deception—and us, feeling guilty about not doing enough or not doing it right. But we can’t just blame corporations and the media: With both food and money, we’re not taking personal responsibility to step up, learn this stuff, and get started.

- Sethi, Ramit (2009-03-23). I Will Teach You To Be Rich (p. 7). Workman Publishing. Kindle Edition.

I struggle to think of a better alternative for retirement savings than the 401(k)/IRA model.

“Our Ridiculous Approach To Retirement”

Teresa Ghilarduccia:

It is now more than 30 years since the 401(k)/Individual Retirement Account model appeared on the scene. This do-it-yourself pension system has failed. It has failed because it expects individuals without investment expertise to reap the same results as professional investors and money managers. What results would you expect if you were asked to pull your own teeth or do your own electrical wiring?

Even the professional investors and money managers aren’t that good.

Walt “Clyde” Frazier on the transition from a professional basketball career to normal life

That is a daunting task that I would say 80% of professional players never make. Their marriages dissolve. Drugs and alcohol problems. Many of the players I played with or against are destitute now. Sometimes the players are so bad the teams have to bury them when they die. Sports Illustrated did an article, I guess two or three years ago, about 80% of the guys, once they leave the game – professional players – seven, eight years after they leave the game they’re broke.

…You could imagine today how players – we should fly commercially, we stay at Holiday Inns. Today these guys stay at the Ritz Carlton, Four Seasons. They have their own private plane. They’re making millions of dollars. So how do you come down from that? How do you make the transition from that, after you’ve squandered your money?

How Personal Finance Led Us Astray

On The Media reports on personal finance gurus. Helaine Olen on Jim Cramer:

When people look at his record the best thing you could actually do is, the second he says to buy something, is to immediately short it or bet against it. That might be his stock picking abilities, but there’s also another thing going on. He yells out “buy IBM” – a lot of other people are about to go buy it. As a result it’s gonna run up, and that has nothing to do with the quality of their business. So what happens is over a period of a couple of weeks it’s gonna run up and then it runs back down. This is definitively not the way to get your stock picking advice.

Some Seniors Still Paying For College

…the New York Fed estimates that Americans owed $870 billion in student loans during the third quarter of last year, significantly outpacing credit card debt or auto loans. Borrowers age 60 and above accounted for 5 percent of that debt. The share for Americans age 50 and older is 17 percent.

What a great business model. Claim that state schools are shit, that private colleges are the only ones worth going to, and that you’ll need a loan from your institution in order to pay a private school’s expensive tuition and get ahead in life. Then collect loan payments for a 4-year program for 40 years.

And we’re talking about people who went to college 30-40 years ago.

“This current generation of borrowers is going to be a generation of seniors who are burdened with debt,” she said.


Parents Aren’t Good Financial Role Models

I don’t understand why we don’t teach some personal finance basics in high school. Before you think that would be over a 17-year old student’s head, my high school had us do an economics course where you enter a mock stock market competition.1

When you’re that young is the time to start thinking about this stuff. Too many people in their adult lives live to regret financial decisions they made in their early adult lives.

We leave this kind of education to parents, but studies like this make it clear that doing this ensures that each generation rides a wave of debt and bad advice, if they’re taught anything at all.

I think the difficultly in teaching personal finance to young people isn’t really about personal finance. It’s about teaching someone who’s just getting their first paychecks that it might not be smart to spend $100 a weekend on movies, takeout, bumper cars, and pimping a ride, or whatever these teenagers do these days.

Does planking cost a lot to do, or coning?

  1. My team was doing pretty well, like in the top 500 of all teams nationwide, until this happened. Then we were living on the mock streets.