Stop pondering. Stop considering. And while you're at it, get rid of that ridiculous facial hair.
WARNING: Self-reference coming hard in today’s post.
It’s the weakest, foulest word in the English language. It’s the first line of defense for the timid and the recreant. Most of the time, when someone uses it he’s saying, “I don’t have the strength of my convictions. In fact, I might not even have convictions. Essentially, I’m saying nothing.”
The word? “Consider”. As in, “Consider raising your real savings percent after 401K contribution to 50% as soon as comfortably possible” (sic). Or “consider buying last year’s (consumer electronics) models” to save money.
The author wants us to consider saving half our income, in the roundabout way he phrased it? Okay.
(pause)
Done!
Let’s consider some other things. We’ll start by considering moving to Wyoming with its business-friendly tax climate. Then, let’s consider buying a fuel-efficient and relentlessly douchey Nissan Leaf, so we can simultaneously save the planet and look down our noses at the Prius owners.
(pause)
Done! Again! This considering business is easy.
Let’s see if “consider” becomes any more robust when used in a non-personal finance scenario:
Your friend: My boyfriend gave me a black eye last night. He said he’d give me another one if I didn’t have dinner on the table by 6:00 sharp.
You: Consider ending the relationship.
Any site that – or for that matter, any person who – tells you to “consider” doing something might as well sit there silent. It’s an effete way of attempting to make a point, which doesn’t stop countless other personal finance bloggers from doing so. Largely because they have nothing important nor interesting to say. We promise never to use the word on this site, at least not in that particular context.
That being said, here are a couple of financial steps you should take. Don’t “consider” taking them, just freaking take them. Or not, and be poorer:
1. Get a credit card with, in ascending order of importance: no annual fee, either cash back or rewards for something you use anyway, and a big limit.
Practically speaking, you can’t rely on cash for everything. (For instance, buying event tickets, renting a car, or buying expensive items that it’s impractical to carry cash for.) And you need to build credit, which you can’t do if you conduct business solely in cash. The bigger the limit, the less you have to rely on cash (and the more the issuer will entice you with offers unavailable to its customers with smaller limits.)
Convenience, discretion, and disclosure are major reasons for using a credit card. “Disclosure” just means that you have a paper trail in case you have any discrepancies. It’s hard to dispute a $3000 transmission replacement done by an incompetent auto technician if you paid cash.
Oh yeah, we neglected to mention interest rate. Who cares? Interest rate is meaningless. You know how much every credit card issuer charges on balances paid by the due date? 0%, without exception. We’re assuming you’re paying your bill in full every month, thus letting the credit card issuer profit off its hundreds of thousands of other cardholders. If you aren’t doing this, you shouldn’t be buying things with a credit card. In fact, you shouldn’t be buying things, period.
2. FORGET about “building an emergency fund”, the go-to financial advice from people who either don’t know what they’re talking about or are too lazy to think about the issue critically.
It sounds great in theory. The very name “emergency fund” implies that you’re avoiding the possibility of spending your retirement years holding a sign on a street corner because you sat there unmotivated while misfortune struck.
What are true emergencies?
-House burns down
-Contract lethal case of malaria or some other fatal disease.
-Get fired.
There are probably others, but these and variations were the most common ones cited in our informal poll. And every last one of them, you can insure against.
Having an insurance policy in effect on your residence is pretty much a law. Even if it wasn’t, the chance of your home burning to the ground is almost negligible. Control Your Cash world headquarters is located in a city with 240,710 “housing units”. Last year there were 396 residential fires in the city, and of those, only 20 resulted in the house becoming uninhabitable. Assuming that people are as likely to smoke in bed in any other part of the country as they are here, that means you have about a 12,000-to-1 shot of losing your house. And again, even if that happened, you’d almost certainly be covered.
What about health?
Well, what about it? Again, there’s this thing called insurance. You buy it, it covers you. If you think a sufficiently comprehensive policy is too expensive, then a) how much were you planning on committing to your emergency fund and b) what did you think such an emergency fund was going to pay for if you had to tap it?
And if you lose your job, again, unemployment insurance. You’ve been paying into it for years. Never mind that losing a job is the best thing that could possibly happen to many people, exactly how far is an emergency fund supposed to take you after you lose a job?
If you’ve got excess cash that you’re antsy to save somewhere, put it in your 401(k). Invest in an undervalued stock. Whatever you do, don’t be like this idiot and put an extra $1000 a year in a savings account where it’ll stagnate and won’t gain a penny of interest. Plus you’ll forgo the opportunity to have put your money in a place where it could have actually built wealth.
There. Now instead of considering subscribing to our RSS feed, do it. Click this link. You’re welcome.
