Blog – Page 73

Just Stop. You’re Going To Be Poor Forever.

March 22, 2013

Can’t decide? Then buy all 3! YOLO!

Not you, dear reader, unless you have the same attitude toward debt that today’s protagonist does. A little backstory:

Almost 3 years ago, we ran a post on the anonymous woman who runs a blog called Digging Out From Our Mess. You might want to read that first. If not, no big deal.

At the time, she was $71,930.29 in debt. But on the other hand, she

had gone to the trouble of creating a blog on which to display her debt load, presumably to publicly shame herself into taking lasting action;
saved a few bucks by going with the free Blogspot address instead of buying her own URL;
wanted, really really wanted, to get out of debt. And shouldn’t intentions be enough?

We’re not sure, but she might have been our first exposure to this crawling subspecies known as debt bloggers. If you’ve seen one, you’ve seen them all, and if you haven’t seen one, click our archives for any “Financial Retard of the Month” who isn’t Trent Hamm. The template never changes, only the tiniest details do. Typically female. Had or is planning an ostentatious wedding. Student loans, usually multiple ones. And they were all taken out to finance a degree with no earning potential, hence the debt. There are often lots of toys, too. If not multiple cars, then consumer electronics and/or exotic vacations. (If you’re in debt, visiting the neighboring town ought to count as an exotic vacation.) She’d also taken out something called a “retirement loan,” a term then unfamiliar to us, and hopefully to you. It’s an advance on a 401(k), withdrawn with a staggering 10% penalty.

So let’s catch up, see what progress the Digging Out From Our Mess woman has made in the ensuing 34 months.

For one thing, she now has a name: “Mysti”, a pseudonym presumably created to imply that her identity will remain under wraps. She’s married to G-Man, and isn’t that precious? Together they live with Bossy Boy and Sassy Girl, and in 2013 America, with its Calebs and its Nevaehs, we can only hope that “Mysti”‘s kids’ names are pseudonyms too.

Okay, what about her debt load? Someone who goes to this much trouble to share details must be disciplined enough to have paid a huge chunk of her debt down, right?

There it is in bright red font on her main page. She’s lowered her $71,930.29 deficiency all the way to $73,445.13. Or as any of her commenters would say,

Awesome job, Mysti! I KNEW you could do it!!!!

Her debt is now only 102% of what it used to be. By our calculations, assuming that her debt moves linearly (it doesn’t, but it’s not as if that’s going to matter to her), it’s going to take her… -135 years to pay off that debt. That’s a minus sign, not an em dash.

Since her debt reached that local nadir of $71,930.29 so many moons ago, “Mysti” has managed to

Install new carpet on her stairs and bedrooms
Makeover the paint, floor and fixtures in her main bathroom
Buy a new Jeep.

You think we’re joking, but click this link if you don’t believe us. It’s “Mysti”’s “wish list”, and…what the hell, we’ll just reprint it:

Here are things we would like to do in the future, assuming that Retirement loans are being funded appropriately, and debt is gone!!!
Kids
College fund
Home Improvements
Minor Renovation:
~~Carpet the stairs and bedrooms~~ (Bossy’s room completed June 2012)
~~Makeover main bathroom (paint, floor, fixtures)~~ Completed 2011
Refinish hardwood floors
Resurface deck
Major Renovation:
Makeover of the main bathroom (new shower with glass tile, upgraded fixtures)
Kitchen (gut the whole thing and start over!)
Windows
Regrade yard and sod
Furnishings:
New living room furniture
New kitchen set
New dining room set and matching hutch
Upgrade living room TV
Vehicles
~~New Car for Mysti~~ “New to Us” Jeep Liberty purchased November 2011
New Car for G-man
New Boat for G-man
Travel
Take the kids to Disneyworld
Take the honeymoon we never had and renew our wedding vows
Bling
Reset engagement ring
Anniversary band
New wedding band for G-man

Wait, we forgot the paragraph that begins that page, which really belongs at the end like some deft plot twist that’s way too strange for fiction:

Call it materialistic. Call it selfish. Call it whatever you like, but we all have things in life we would like to have or would like to do. We all know that being debt free will afford us the opportunity to do amazing things. And saving up for items will be a cinch.

“Do amazing things” should refer to something like swimming the English Channel, or even just creating a profitable business while paying employees. For “Mysti”, it means being an even bigger and more gluttonous consumer than before. In case you’re feeling stupidly generous, she even provided links to the engagement ring and dining room set that she has her eyes on, links which we mercifully deleted.

It’s not often that you come across a document whose every single word is a lie, but Digging Out From Our Mess is special in several ways. “[S]aving up for items will be a cinch”? Not for you it won’t, Toots. You will be poor until you die. Not because the cosmos is working against you, but because you (and the G-Man) are working against yourself. “New boat”? Why not go all the way and ask for a new tennis estate at Isleworth while you’re at it? It doesn’t hurt to dream, right?

Is this a modern phenomenon, these adults who fantasize like impatient children and have zero feet planted in reality? We swear that people in their late 30s and early 40s weren’t this immature when we were kids.

Call it materialistic. Call it selfish.

She did get that part right.

Do we even need to mention that she has that panacea of all poor and indebted people, an “emergency fund”? With $1000 or so in it. It never occured to “Mysti” that being 72 grand in debt, let alone having that debt grow to over 73 grand, might constitute an emergency. She also has, or had, a car repair fund. You’re not going to believe this, but “Mysti” now has a $1091 repair bill that she never anticipated.

Instead of getting excited about placing your meager savings into various funds and giving them descriptive names, thus enabling you to add more columns to the Excel spreadsheets that you share with your idiot readers, how about not buying flotsam? Yes, carpeting and new bathroom fixtures absolutely count as such if you’re tens of thousands of dollars in debt and can’t afford them. And jewelry is always pretty stupid.

But who cares? Delayed gratification is for suckers! YOLO!

We’re not writing this post to shame some (literally) poor woman who’s been beaten down by life. We’re writing it to show you that for most people, inertia is the most powerful force in the world. Please don’t think of “Mysti” as an exemplar of everyday modern society, average woman just trying to get by. She isn’t. She’s a willful stooge in a game of I’m-Going-To-Stick-My-Head-In-The-Sand-Until-I’m-Dead. Her intentions are every bit as perverted as her blog’s laughable title. White is black. Up is down. Left is right. And Exacerbating Our Mess is now Digging Out From Our Mess.

Just…just stop. If you’re reading this and you happen to be in (consumer) debt, the worst thing you can do is give yourself a long window to get out of debt while buying cars and home furnishings. It pains us to admit this, but this is where Trent Hamm makes a modicum of sense. Be as miserly as Iowa’s #1 frugality potentate until you get out of debt. Yes, it’s uncomfortable, but the good news is it won’t last long if you have anything approaching discipline. Then you can start building wealth. Or you can be like “Mysti”, and see how far she’s ~~gotten~~ fallen behind in the last 3 years. You might not want to wait until you’ve eaten your vegetables before you get dessert, but that’s how money works. All the exclamation points and good intentions in the world won’t change that. Buy our book and join us on the positive side of the ledger. It’s less crowded here.

(Apologies to the now-forgotten reader who brought this to our attention.)

GUEST POST: We’re Off to Off the Wizard

March 20, 2013

Last week we ran a guest post from MD, an…MD who exemplifies beautifully what we preach here at Control Your Cash: buy assets, sell liabilities, go into debt but only for economically viable reasons. (A humanities degree is not an economically viable reason.) Today he’s back, this time in epistolary form. His viewpoint is similar but not identical to ours, which is yet another reason why we’re running his posts. Now excuse us as we remove WebMD from our bookmarks:

This handsome fella is Dr. Oz, right?

Dear CYC principals,

I have to admit, writing the last guest post took far more time than it should have. I’m flattered you accepted the post, really. Although good writing does take a long time, I have another excuse, I promise. I haven’t written a full page of prose in years. Besides, my natural style is illegible point form, and no, I haven’t heard that joke about poor physician handwriting. Nor the one aboot being a passive Canadian.

I don’t have a Facebook or Twitter account, so I can’t (and wouldn’t) read any of the comments about my previous article. I just don’t find either service to be useful. I like the approach you take to reader comments, too. Yes, I understand the irony, given that I’m writing anonymously. And yes, that was a pre-emptive strike. When the overwhelming urge to see pictures of my snotty-nosed nieces and nephews rears its bubbly head, I use my wife’s Facebook account. For most communication, I use e-mail or pick up the phone. That makes me old school, I know. And surprisingly productive.

I’m a medical rookie chomping at the bit, wading into a swamp of old doctors, new ideas, and an internet-savvy patient population.¹ Most intelligent forums on medical issues are policed by doctors with a Bostonian pedigree.² Few doctors write well enough to keep readers awake and it makes me feel good that since you’re still reading this, I’m unique. CYC seems to do a reasonable job of separating the wheat from the chaff. Continue to do that. The last thing this world needs is another terrible personal finance blog. Not that anyone is asking me to, but I won’t stop practicing medicine to write, it’s that enjoyable. Plus, I leveraged debt to finance my education and I’ll work doing what I trained to do. It’s silly to borrow for school unless you do.

The topics in medicine and personal finance that share common ground are legion. Here are two: Gastric Bypass Should Be Mandated for Every “Disabled” Medicaid Recipient ³, and There Should Be a Scale at the Airport Check-In Counter for You, Not Your Bags. I once casually suggested the former cost-cutting solution to my attending bariatric surgeon as a medical student and spent the next 4 hours retracting a 150-pound pannus. I was never really sure where on the patient’s body it originated. Are you also tired of paying for other people’s gluttony and sloth?

As rewarding as helping these patients is, preventable illnesses like obesity (and sloppy debt) are the product of ignorance and poor education, both of which I strive to change.

Let’s start with this comparison: Too many people swallow Dr. Mehmet Oz’s pills in the same way they swallow Suze Orman’s. You’ve interviewed her already, and Dr. Oz is a comparable menace to people’s health (and net worth). It’s a farce. Patients bring his pseudoscientific medical advice into the office all the time and ask questions about it. For example: “I sit on the couch all day eating pork rinds watching TV and Dr. Oz says to wash my face in my cat’s urine for its antioxidant properties, what do you think?” A cursory glance at his Wikipedia page is helpful, and more authoritative than most of the sources he uses to back up his claims.

I don’t know how to rank his broad skill set in order of aptitude, but I’ll give it a shot. Since I’ve never seen him operate, I owe him the professional courtesy of omitting “cardiothoracic surgeon” from my ranking. That he’s a good one, I have little doubt. It’s what he went to school for. At one of those floridly consanguineous ones, too.

In order, these are his remaining claims to fame: TV personality > American > Turk > author > source of quality medical advice. Why do people listen to this wizard? Probably for the same reason they listen to his Oracle at Elcaro Studios.⁴ Someone’s printing money in Chicago, and it’s not Al Capone.

Here’s my first piece of official medical advice for your blog: If your doctor dresses like an investment banker and is in cahoots with Oprah, find another doctor. When I see Dr. Oz on TV before I have a chance to change the channel, I probably react in an analogous fashion to when you’re confronted with the financial garbage submitted to your weekly Carnival of Wealth.

The issues with the medical system (both mine and the soon-to-be-mine) provide a great platform for repeating the same advice you give at every available opportunity at CYC: buy assets and sell liabilities. Those medical assets (among others) are your ideal body weight, your ideal blood pressure, and your age-specific preventative screening tests. It’s the application of such simple principles, compounded over time, that will make (and save) thousands. Billions on the national scale, literally.

Profit is an important motivator, and has been responsible for the transfer of vast amounts of wealth from the insured to the insurers (those assessing and pooling risk). As a general rule, those who bear risk are rewarded. This has made health insurance companies so profitable that the current elected government stepped in to cap their profits and disrupt free markets. All at the behest of the 99%, or the 47%, but who’s counting?

The passage of the Affordable Care Act (ACA) attempts to correct a product of unbridled capitalism and greed: the unacceptable reality of lifelong coverage limits for an insured 3 year-old who develops leukemia. Until the ACA was passed into law, this was commonplace and legal. This is an instance of where you should stop complaining about The Man’s existence. Seriously. I’m sure your readers understand there is a role for governments, albeit small ones. Denial of coverage based on preexisting conditions, I can live with.

(Let me clarify: I don’t feel sorry for people who don’t buy adequate health insurance. The onus is on them to find coverage [and read the contract] before they need it, not after. Still, some unfortunate kids have parents who cover them adequately, only to find at age 12 that the leukemia treatments from 9 years earlier ate up the lifetime limit. Leukemia returns, and bankruptcy ensues. Call me a softie, but we can do better.)

Advise your readers that instead of throwing feces across the aisle like the chimps in Congress, they should understand what has actually been proposed by the ACA, and what has been implemented thus far. They’ll be glad they did. They may also begin to realize just how much the media warps the facts for political gain, on the off chance they’re not reading real journalism.

While we’re drawing comparisons, concepts like “herd immunity” apply to both medicine and finance, specifically to the realm of insurance. It almost sounds like a form of socialism, and yeah, those needles sometimes hurt. Your intelligent readers will be able to figure it out; the others will have to wait for a future guest post. That reminds me, if your readers haven’t done so already, they should have their children vaccinated.⁶ Yesterday.

¹ Do not bring the results of a Google search containing your physical complaints to your physician. You’re wasting everyone’s time. There’s a reason an M.D. takes 4 years to obtain. Listen to CYC and hire professionals. Good ones, avoiding wizards at all costs.

² A prime example of one such publication can be found here. For those who loathe the sort and have spare time, please revive this after you read this and this.

³ There are good studies from Scandinavia that indicate this could save billions of taxpayer dollars.

⁴ I’m so proud of you for putting that together.

⁵ Those colored tabs at the top of the page have the potential to save you thousands of dollars and hours of frustration. As a special bonus, see if you can find the best hospital in your area. I might be there.

⁶ See and adhere to the guidelines at the right side of the web page, under “For Everyone”.

Just Stop. You’re Going To Be Poor Forever.

GUEST POST: We’re Off to Off the Wizard

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