Archives for August 2013

August’s (Financial) Retard of the Month Is A Good One

August 30, 2013
Time for good old common pennies, amirite?

Time for good old common pennies, amirite?

 

No, no, no, no, no. 58,000 times, no. Because we haven’t made fun of enough of these undifferentiated debt bloggers yet. So here’s another one! Lindsey Thurston at Cents & Sensibility. These vermin are so indistinguishable, so repetitive, so devoid of originality that they think they’ve uncovered new strata of cleverness every time they fashion a pun on “cents” and its homonym “sense”. The sad(der) part is that the logo on Ms. Thurston’s site doesn’t even spell its own name correctly. It uses the wrong homonym: “Sense and Sensibility”, just like the original (unreadable) Jane Austen novel. She also used the same image from the Lauren Graham movie Bad Santa that we did a few months back. Sister, if someone’s going to violate copyright law around here, it’ll be us, OK? Besides, you clearly stole this line in your bio from every other Financial Retard of the Month we’ve already objurgated over the years:

I graduated with a Bachelor of Arts (in Psychology) and a monstrous $45,000 student loan.

Do you people realize how tiresome this gets, this general first-person declaration that you borrowed far more money than you could afford (to achieve an empty goal, no less) and now think that your broke posterior is qualified to write a single word about money? (Other than “Keep me away from it, before I burn my fingers with it again”?) It’s the same 1-chord song, but only the singer changes. We’d now link to every Lindsey Thurston clone who’s already brought similar steaming plates of rotten lutefisk to our attention, but there are literally dozens of them and it’d take forever.

Blue-collar champion and master of the practical Mike Rowe recently summarized the state of self-destructive higher theoretic education and the accompanying student loan industry, stating “We are lending money we don’t have to kids who can’t pay it back to train them for jobs that no longer exist.” Or in the case of what one can do with a B.A. in psychology, jobs that never existed. As always with these people, it gets better.

Lindsey got knocked up at 19. (Fat girls really are more fun!) She and the father went their separate ways, and if there’s a worse preparation for adulthood than being a single teenage mom and then proceeding to incur $45,000 in debt while attending college for a useless degree, we don’t know what it might be.

That’s only the start. Lindsey graduated in 7 years, which we’re guessing wasn’t due to a Mormon mission and a medical redshirt. She then met a guy who thought that hitching his wagon to a single mom with a 7-year old kid and a Lake Baikal of red ink would be a prudent decision. You’re not going to believe this, but their fairytale romance didn’t work out. 2 years later they split, and she returned home with…well, when it comes to these pathos research projects it’s best to quote the original sources:

I ended up getting the job (but with low pay) back in my hometown  and went about trying to start over. I never seemed to have enough to make ends meet though. I was working three jobs at one point trying to “catch up”.

But how can that be possible, given that she had an invaluable university (not “college”, she’s Canadian) degree? Nothing’s more important than an education, so how did that impressive psychology B.A. not attract hundreds of employers with lucrative job offers? Especially since she spent so much time crafting it?

This gets weirder. Ms. Thurston continually refers to her blog as “Sense & Sensibility.” The only reference to “Cents & Sensibility” seems to be in the URL. She can’t even do rehashed puns right. Nor has she figured out the one homonym that mastery of should be a prerequisite for attending the 2nd grade:

I made too much too (sic) qualify for “interest relief” on my student loans and other social programs and too little to make ends meet.

So by all means, create a personal finance website then. We learn that Ms. Thurston is currently $35,000 in debt, but that’s totally cool because she used to be $67,000 in debt. You see, this stuff is all relative. And if we were to point out that the Control Your Cash principals are several multiples beyond that, but in the other direction, then that would just mean that we’re ostentatious and insecure blowhards who love rubbing our good fortune in poor people’s faces.

(Actually, it would mean that we refrained from making calamitous decisions such as reproducing far too early and handing stacks of third-party cash over to a university, but most people don’t like to hear the truth.)

We’re skeptical of the $35,000 figure, too. If the graphics on her site are any indication, and are calibrated arithmetically and not logarithmically, it’d seem that she’s more like $53,000 in debt. She has two bars on the right column of her main page, one showing that she’s paid off half a $50,000 debt and the other showing that she’s paid off maybe 1/20 of a $29,000 debt. She gave these bars the precious names “Makin’ A Dent-O-Meter” and “Kickin’ Ass-O-Meter”, and would it kill these net drains on society to act like adults and take this stuff seriously? Then again, why should they when there’s endless reinforcement in the comments? One commenter wrote “Hey 32k is a lot!!! Great job!” Taking that on its own merits, 35k is an even bigger lot. (!!!)

Imagine if there existed a personal finance blogger who created a “Kickin’ Ass-O-Meter” to quantify her augmenting positive net worth. Her monthly cash flow rose $2000 last month, her net worth $16,000, and the Kickin’ Ass-O-Meter documented the increases. Most people would regard that as unseemly, a crass display of one’s materialistic bent and the kind of thing better kept private.

Then how the hell is it any different when you’re trying to reach zero instead of some other number? Ms. Thurston ought to keep this to herself, but this is 2013. Accruing consumer debt is no longer something embarrassing, but rather something to be proud of as it cements one’s position as a victim yearning to break free – a Strong Woman Who Shall Overcome Whatever Life Can Throw At Her, even if what life’s throwing at her is a 16-lb. shot put and she’s the one who hoisted it in the first place.

Ms. Thurston even admits that she was inspired to create her blog after discovering one called, ahem, “Making Cents of Sense.” You see what the author did there? Here, we’ll walk you through it one more time. She noticed that “cents” and “sense” sound identical (though they’re spelled differently), and considered it dexterous wordplay to bring that coincidence to her readers’ attention.

Our favorite part was when Ms. Thurston offered financial advice to her kid, now 16. The easy joke to make here would be that the advice was “Do everything I didn’t do,” but that’s exactly what it is.

[S]he doesn’t understand the value of money in any real sense. She connects the two facts that there are things she wants and that they cost money but that’s about it for insight. The idea that she has to earn money before she can spend it seems to be the missing link in her brain.

That’s a blockquote. Which means it’s Ms. Thurston referring to her kid, not us referring to Ms. Thurston.

Jesus H. Of course she splurged on a wedding.* Of course she’s going back to college for another bachelor’s degree, because 7 years in university just weren’t enough. And of course she’s made a list of goals (people who never accomplish anything love to list goals), one of which is…that she promises to spend 45 minutes a day entering contests. Because you never know what you might win. What she’d win from spending 45 minutes a day on a StairClimber is more certain, more beneficial, and more tangible. But it’s also less fanciful, and considerably more difficult, so we can discard it immediately.

If you take one thing away from our site, let it be this: By and large, people want to be poor. They make the decisions and willingly execute the activities that will invariably result in being poor, therefore it stands to reason that they must want to be poor. Nothing will convince them otherwise, as they happily continue with the same destructive habits (spending too much, overeducating, writing interminable self-referential blog posts) that got them poor in the first place.

The good news is that thanks to them, the field is a lot less crowded for the rest of us. Don’t crank out kids when you’re a teenager, don’t spend money you can’t afford, don’t borrow money to exacerbate the problem of spending money you can’t afford, and stop selling assets and buying liabilities. Read this and you’ll never be anyone’s retard.

*If you’re $35,000 in debt, and you do anything beyond paying $50 to have a justice of the peace marry you, you’re splurging. 

 

Filed Under: Bad Examples, Consumer Debt, Financial Retard of the Month Tagged With: , , , ,

The 5 Best Places To Live in America

August 28, 2013
St. George, Utah, the 6th-best place to live in America.

St. George, Utah, the 6th-best place to live in America.

 

San Diego? No. Prices are too high and California is a test kitchen of awful laws.

Sharon, Massachusetts (Money magazine’s top place to live)? Similarly restrictive laws, with the added benefit of cold weather. Also, you’d be surrounded by Massholes.

San Francisco? “What’s this foul-smelling squishy thing I just stepped in? Why, it’s a homeless person. Yeah, another one. We’ve been walking on an unbroken carpet of them all the way from Fisherman’s Wharf. I hope the hypodermic needle that last one stabbed me with is at least infected with a treatable strain of hepatitis.”

Louisville, Colorado (also on Money’s list)? No offense, but we’ve never heard of you.

 

Money and common knowledge are idiots. Here’s our list, the definitive one. We’ll do them in ascending order, add to the drama. Presenting the 5 Best Places To Live in America:

 

5. An apartment you’re renting.

It’s not like we haven’t said this before, repetition being endemic to personal finance blogging, but every dollar you spend here is a waste. Think about the way this transaction works:

You: Hi! Here’s 1/4, maybe 1/3 of my gross income.
Landlord: Thanks. Here’s a floor. Oh, and I still get to keep it. I also get to keep your money.

You’re an adult, right? Then buy a house. Or at least a townhome or a condo. One more time: this is about building wealth. While wealth doesn’t drop out of the sky, at least for most people, it also doesn’t grow of its own accord. You need to start with the raw material, i.e. some amount of money, before you can do anything with, i.e. invest it. Renting, and thus forking over a big chunk of that investable money, handicaps you from the start. You have to live somewhere anyway, so why wouldn’t you build equity while doing so? Renting is a great way to enrich someone else.

Yeah, let’s hear it. “The housing market crashed and people got foreclosed upon. Why should I let those greedy mortgage companies have another opportunity to profit off my hide?”

The only people who got hurt by the housing “crisis”, which is now over, were those who were in over their heads in the first place. They bought too much house, they crossed their fingers in hopes of appreciation, and plenty of them lied about their income on their applications. (Just the same, those overmatched borrowers should probably blame the lending agents for believing their lies in the first place. Nothing is ever anyone’s own fault.) Being in over your head with anything, whether house payments, student loans or credit card debt is beyond the scope of this site anyway. Go join the other hand-wringers at the more querulous blogs if finding commiseration is more important to you than being rich is.

After a 4-year double nadir, prices and mortgage rates are finally rising but still historically low. You can use that as an excuse for not buying if you want, or you can see it as the tremendous opportunity it is.

No, you can’t afford a house when you begin the transition from student to wage-earner. Renting is an unfortunate necessity for most of us at some point in our lives. That point should be as early as possible. Save like your life depends on it – or your livelihood, which it does – until you’ve got enough for a down payment. Once you do, and if you’re motivated enough it shouldn’t take more than a few months, a standard monthly mortgage payment won’t be much more than what you’d otherwise pay in rent. And even if it is, you’re building wealth. Even in a bad-case scenario in which your home doesn’t appreciate as much as you’d like. Your house isn’t going to lose 100% of its value unless you live in Detroit. Your rent payment will lose 100% of its value every single time.

That is, unless you choose

4. An apartment you’ve signed a lease option for.

A lease option. It’s like an ordinary lease, except that at the end of the term you have the option (not the obligation) to buy the property. Lease option renters love this because they think that they’re building toward something, unlike the poor folks under item No. 5. Lease option holders are indeed in a better position than those who have no hope of buying their residences, but…

Care to guess how many lease option holders actually exercise the option? Here’s a quote from Maggie Hawk, who sells real estate in east-central Florida:

In 18 years selling real estate, I’ve never seen it happen.

Renters, by and large, embody certain characteristics. If you smoke, buy lottery tickets, own a pit bull, have a neck tattoo, have ever paid for a UFC pay-per-view, and/or have a couple of DUIs and should’ve walked on one of them but your lawyer screwed you over, it’s far more likely that you rent than own. If you hold a lease option you might think that by the end of the term you’ll have enough wherewithal to buy the place and take advantage of an unsuspecting landlord, but the real world shows a glaring paucity of such renters. Should you be disciplined enough to be one of the few renters who can capitalize on a lease option, you’ll do fine. And will eventually leapfrog over No. 3:

3. An apartment you’re sharing.

Life is going to have financially unhappy episodes. The idea is to compress them into as short a time as possible. If you’re dumb enough to have incurred credit card debt, paying it off in 9 months is always going to be better than just making one more splurge and then ending up taking 18 months to pay it off. Debt bloggers and the staff at MSN Money either don’t know or won’t acknowledge this, but that’s their problem.

Having roommates blows unless you’re one of those odd extroverted people who actually enjoy others’ company more than their own privacy, but again, it’s about minimizing the duration of the pain. Paying half or a third of the rent instead of all the rent means you’ll be on the road to No. 2 all the more quickly:

2. Your own home.

Congratulations. This is where it leads to. Read again from the top if you’re unclear. Equity buildup. Mortgage interest deductions. No matter how much you choose to insist that the glass is half-empty, and that renters are blessed because they don’t have to spend money on everything from landscaping to basic home repair, it’s hard to find a valid counterargument to the point that rent always gives a return of 0.

1. Your own 2nd home.

No one said you had to stop at one. Find a renter – God knows there are enough of them – and you can solve your residential cash flow deficiency easily. Repeat as necessary, and passive income goes from a nebulous concept into something tangible that can make a real difference in your life. It beats the hell out of obsessing over replacing your light bulbs with CFLs and keeping your tires properly inflated, too.

Once you’ve bought a first house, buying a second is surprisingly doable. And relatively easy to achieve if, as we’ve been saying since we learned how to talk, you buy assets and sell liabilities. It’s all in here.

Filed Under: Education, Real Estate, Uncategorized

Carnival of Wealth, Here Lies Edition

August 26, 2013

 

In the 1930s, this was a school. Never underestimate the importance of education.

In the 1930s, this was a school. Never underestimate the importance of education.

 

Time for another edition of the Carnival of Wealth, our weekly roundup of personal finance blog posts both good and rotten. Let’s go:

Mother-and-son team Boomer & Echo return after a pronounced hiatus. They’ve given their site over to Sandi Martin of Spring Personal Finance, at least temporarily. We can think of many sites that would improve if they’d let her take over permanently. Ms. Martin reminds you how dumb you are if you turn your investment advisor into an investment oracle. You need to do your homework first and then ask questions, not throw yourself at the advisor’s mercy and say “Handle this for me.” Especially since investment advisors have an incentive to sell you packages that might not necessarily benefit you more than they benefit the advisors themselves.

PKamp3 at DQYDJ.net (here’s our quarterly reminder that it stands for “Don’t Quit Your Day Job”) eschewed numbers for prose in his objective look at the absurd custom that is obligatory tipping. How can it be “To Insure Promptness” if you’re doing it at the end of the meal? There’s at least one restaurant that has removed gratuities from the diners’ discretion, and likely more to follow.

For our American readers who think tipping is counterintuitive, here’s a tip of our own, in the sense of “unsolicited advice”. Eat in locales that are frequented by foreign tourists, and watch the wait staff drop what they’re doing to embrace you. An example is Moab, Utah, the gateway to Arches and Canyonlands National Parks. You’ll hear more German, French and Japanese being spoken on Main Street in Moab than you will American English. When a local waitress lucks out and finds an American party sitting in her section, she knows she’ll be in for something beyond her standard tip of 0.

New submitter, JW at All Things Finance who explains what bidding and asking are. Hey, everyone’s got to start somewhere. (Bonus: One of JW’s co-conspirators was our February Retard of the Month!)

In defense of Michael Lux at Student Loan Sherpa, he wrote his submission before seeing the piece we posted on Friday. Michael is an attorney who already had an engineering degree before entering law school. For some reason he chose the dark side, but the good news is it came with its own built-in punishment: “a medium sized fortune in student loans,” to quote Michael. His financial advice is curious and sometimes internally contradictory, such as telling students to “(not) be stupid” and then giving them alcohol consumption pointers in the very next sentence. Also, recommending that you use student loans to pay the interest on your student loans (sic) is yet another example of going for the small victory. If you instead enroll in a practical school that you can afford without subsidies, you can laugh at all the overeducated losers in the unemployment line while cashing your paychecks.

Daniel at Sweating the Big Stuff, who’s usually one of our most thoughtful contributors, decided to wind down his limited liability company because of the tax hit it brought on. Which seems rash, seeing as he’s now presumably going to be a sole proprietor and will start paying taxes at ordinary income rates. Make sure you read the comment from Leigh, who must have read Chapter X in The Greatest Personal Finance Book Ever Written and who understands that just because Daniel lives in the business-unfriendly state that is California, that doesn’t mean he has to incorporate there.

Michael at Financial Ramblings barely met the deadline last week, then overcompensated by being the first to submit this week. So we’re placing him firmly in the middle of today’s CoW, and the universe is in balance. Michael discusses when to rebalance a portfolio, and says you shouldn’t be a slave to the calendar. Only fix if fixing is warranted, and stay within 5% of your targets.

Kristen at My Dollar Plan spent 4 seconds cobbling together a 131-word post about how she and her boring husband are saving money for Christmas. You know, that holiday just 4 months down the road. Kristen dared us to run her cocktail napkin scratchings dressed up as a blog post, and we did. Next week, Kristen will share with us one of the notes she placed in her kid’s lunch box.

Mike St. Pierre at the aptly named Annuity Rates HQ is still clanging that annuity bell. Just read his introductory definition of an annuity, then buy one from him regardless of what kind of payments it promises and then we can all go home. This post includes a video that was still loading at press time.

Bryan Chau at Success Pen Pal sent us what we can only assume is his grade-school report on the color green. You read it and tell us otherwise. Bryan gets a C- (needs improvement), only because he spelled most of the words correctly and didn’t make it too obvious that he cribbed several excerpts from Wikipedia.

Something called Buck Inspire offers an audio submission, an interview with financial planner and Iraq War veteran Jeff Rose. SSgt Rose saw combat, came home in one piece, became a CFA and is now writing books. That makes him at least 4 times as impressive as us.

Zero, and you’re a uxorious sap if you argue otherwise. Todd at Fearless Men tells you how much you should spend on an engagement ring, a costly trinket with no value outside of its ceremonial, non-economic one. (Excluding its very real economic value to the jeweler.) Todd goes halfway, at least acknowledging that the prospective fiancée should understand that her betrothed will likely put himself (and by extension, her) into hock should he buy a pricey ring. Why you’d acknowledge that yet still sign off on the purchase, we have no idea. We also aren’t carrying a nickel of consumer debt, so understand that we don’t know what we’re talking about. You need to hear from a debt blogger for the proper perspective on this.

American “energy independence” is another of those meaningless stock phrases politicians love to bust out, like “affordable health care” and “common-sense gun laws.” They frame the terms of the debate before it even begins, and everyone who has a counterpoint to make must therefore be advocating expensive health care or nonsensical gun laws.

The U.S. doesn’t have “food independence” nor “clothing independence”. No one considers it a crisis that your bananas come from Costa Rica and your t-shirts from Bangladesh. So why is energy the one commodity that has to be produced within our borders? Is Alberta Tar Sands oil inherently flawed? This rant is a preface to Dividend Growth Investor’s latest, in which he questions the sanity of Warren Buffett’s right-hand man Charlie Munger. He sees importing oil as something a prosperous modern country does, while Dividend Growth Investor disagrees with Munger’s formulation of his argument.

Much in the same way that fat people don’t know they’re fat, stupid people don’t know they’re stupid. (Yes, there’s quite a bit of overlap.) Harry Campbell at Your PF Pro made the latter observation while explaining his latest discovery: companies will sometimes go to outrageous lengths to keep you happy these days, now that Twitter exists as a forum in which to publicly criticize companies. Calling the customer service complaint line wasn’t quite as fruitful back when the conversation was just between the company and a wronged patron.

Barbara Friedberg suggests 7 ways to make money fast, 6 of which we (and Barbara) know none of you are ever going to attempt. You might sell your junk on eBay, though.

Sandi Martin of Spring Personal Finance is so good she gets to make an encore before we’re even finished. Here’s the best line of this week’s Carnival:

I’ve seen a lot of debt consolidation train wrecks, and about five of them were due to circumstances beyond the borrower’s control. The other 7,256,219 were due to the window slamming shut, either because the borrower didn’t know or didn’t care

Don’t confuse consolidating debt with merely moving it around. But you’re probably going to do it anyway, assuming you were irresponsible enough to have required debt consolidation in the first place.

Finally, the prolific Jason at Hull Financial Planning. (Prolific in the John Creasey sense, not the Travis Henry sense.) Even someone as absurdly accomplished as Jason can think that he’s somehow wasting his time. Jason posts a list of 101 things he needs to remind himself of more often, and does so publicly to doubtless spur himself to even greater action. Years out of the army and he still does more before 9 a.m. than most of us do all day.

And we’re done. See us for a new Anti-Tip of the Day every day, and new posts Wednesdays and Fridays. New CoW next Monday, as always. ‘Til then.

Filed Under: Carnivals Tagged With:
Next Page »