Occasionally we run guest posts. If you’d like to submit one, see our requirements here. Today’s is written by one of the very few submitters capable enough to meet all our criteria, Froofy the Dog.

He already writes better than most Carnival of Wealth submitters

Hi, this is Froofy! My brain can do the following, and not much else:

• remember which people I can trust
• know where my food and water are
• allow me to whimper so the people mentioned above will open the door and let me out when required.

Yet even I know that you’ve got to be some kind of lower vertebrate to take to heart half the tripe I read that’s passed off as personal finance advice. (Yes, I occasionally read. That contradicts what I wrote earlier, but I want you to suspend your disbelief, at least until the end of the post.) These self-styled experts and bloggers repeat the same incessantly dumb stuff and think that a) it’ll make a difference if executed, and b) anyone’s going to act on their awful advice anyway. Here, I’ll list some of the most offending personal finance mantras I’ve come across. I’ll use point form, the preferred method of communication for dimwits:

1. Create an emergency fund.

What’s an “emergency”? Yes, I know, it’s a relatively simple word, but what, specifically, could it mean in this context? Give me an example, humans.

Medical bills?
Car accident?

Wow, you folks are unimaginative. Then again, you cite the same emergencies repeatedly because there just aren’t that many occurrences that can legitimately qualify as “emergencies”. That’s if you define an emergency as something that requires you to draw down funds that you’ve set aside for such an unfortunate occasion.

Let’s examine the examples above.

You can buy health insurance. Yeah, I know, it’s too expensive. Waah, waah, waah. Get off that doughy posterior of yours, eat better, and maybe your premia will decrease.

Besides, if your finances are so tight that you consider insurance to be expensive, why do you want to sock away money in an inert account anyway? Shouldn’t you be growing that money instead? Explain this to me. I’m just a dog.

Okay, #2. Car accident. You have insurance for that, too. In fact, it’s required.

I know what you’re thinking. What about an unforeseen expense that insurance doesn’t cover, something like a cylinder head assembly that needs replacing?

This is easy. You withdraw the $3000 or so that that’ll cost out of one of your investments. Dropping $3000 is something you’d obviously rather avoid doing, but when the time comes, you’re going to have to do it anyway. To quote business author Harvey Mackay, you’re supposed to dig your well before you’re thirsty. That’s not a retroactive argument for creating an emergency fund. Rather, it’s a retroactive argument for putting your money somewhere it could grow.

Confused? I usually communicate in barks, so you need to work with me here.

When someone recommends an “emergency fund”, they mean a highly liquid account – one you can take money out of easily. Most of the time, that’s going to mean a savings account that earns either no interest or minimal interest. This is stupid. If you’ve got the discipline to sock away $5000 or whatever and not touch it, good for you. But it also means you’ve got the discipline to amass $5000 and actually, you know, do something with it. Five large is a down payment on a condo. A cheap one, anyway. Or it’s a substantial piece of a real estate investment trust. Or it’s 223 shares of Hewlett-Packard, which is trading at close to a 52-week nadir. They recently switched out CEOs, can’t possibly make any more dumb acquisitions anytime soon, and probably should have been selected by the folks behind Control Your Cash in Financial Uproar’s stock-picking contest. Not sure why they didn’t.

When you create an emergency fund, you’re saying, “I want my money to stagnate.” If I get lucky, something costly will happen and it’ll all be worth it. Dang, Mark Twain wasn’t kidding. You people really do love to rationalize.

2. If you can’t handle credit, freeze your cards in a block of ice.

Come on. You’re screwing with me, right? This is like a personal-finance version of the hidden-ball trick, isn’t it?

Why do you have credit cards if you’re not going to use them? Oh, for emergencies? See above. To build credit? Don’t you have to occasionally use them, then?

I know a guy, a Dobermann. Nice fella. From Germany, which is why he uses the additional “n”. His owner tried to quit smoking once. Well, several dozen times. He’d buy cigarettes, then get his girlfriend to hide the packs in the house. Why you’d possess something and not use it, we couldn’t tell you. Flirting with lung cancer seems at least a little more straightforward than trying to fool yourself into being tobacco-free. If you’re afraid that being able to access your cards means you’re going to go on a spree and end up thousands of dollars in debt…well, have you tried being an adult? Try it and see how that works.

3. Create a budget and stick to it.

How does this one work, exactly?
Let’s say you get a call from a friend on the 30^th of the month. He asks if you’d like to meet him for lunch. At a restaurant, which presumes you’ll be spending some amount of money.

What do you say? “Sorry. Went a little crazy at Chili’s last Monday – I ordered an appetizer and an entrée. Long story short, I reached my allotment for the month (Expenses: Food & Entertainment category) and can’t meet you. Unless you want to pay for me, or perhaps you’d rather I just order water while watching you eat.”

You’ll lose a friend, and you’ll deserve to.

Budgets are for business entities. They have to have them. Businesses have multiple decision-makers pulling in different directions, and not everyone can have their way. The research & development team would love to have an extra few hundred thousand to experiment with, but the CFO has owners to answer to and finite resources to manage. The factions have to reach a compromise, thus every department gets a budget.

But you’re not a company. You’re one person, with no one else to answer to. Try this: spend necessarily. Don’t squander your money. Make a conscious decision every time you take out your wallet. Don’t freak when you’re in line at the supermarket and you find that that 60¢ bag of cilantro put you over your self-prescribed limit. Life’s too short. And are you really going to spend time fixated on a spreadsheet, categorizing your expenses for the sheer fun of it? Come on. Unless you’re naturally inclined to do so, you don’t. Stop kidding yourself.

Those 3 useless pieces of advice just perpetuate bad habits among people who were never going to change anyway. You don’t need an emergency fund: you need assets. You don’t need to save yourself from yourself: you need to grow up. And you don’t need a budget. You just need to stop spending stupidly.

That wasn’t so bad, was it? (It wasn’t.) Told you we were smarter than cats.