Our Appearance On The Suze Orman Show!

January 25, 2012

Suze Orman

(Note: We deliberately waited a couple of weeks for this, hoping the hullabaloo would have subsided. It hasn’t. Also, even though we still have a few more posts scheduled for January, you can consider this our Financial Retard of the Month. No one else is going to top it.)

Here’s the transcript of our recent television appearance on The Suze Orman Show, hosted by America’s favorite financial professional. It has yet to air.

 

It’s The Suze Orman Show! Today, Suze’s guest is Greg McFarlane of Control Your Cash!

SUZE: I understand you and Betty Kincaid have written a book, and a series of e-books, and you say your website is different than other personal finance websites. How is it different?

GREG: It’s different because we call other people out on their horseshit. Can I say “horseshit” on TV?

SUZE: No, this is basic cable.

GREG: Well, it’s your guys’ FCC license. Not my problem.

Look, you created this ridiculous prepaid card a couple of weeks ago which would have been a horrible idea if Russell Brand was behind it. Instead, it’s you – the woman whom Oprah’s minions trust to teach them about personal finance because watching daytime TV is easier than thinking.

I have nothing against separating suckers from their money – if they’re willing to part with it, why should that be anyone else’s problem – but you do realize you’re destroying your credibility with this card, right?

SUZE: Hold. It. Right. There. Mister. The Approved Card is a revolution in personal finance. People can use it to improve—

GREG: No, I’m going to cut you off. It’s someone else’s turn to be the angry lesbian. You were going to say “…their credit scores”, which is laughable. How can a debit card improve, or worsen, someone’s credit score?

Just because this card gives people a free look at one of their three credit scores – a perk with a retail value of 0 – doesn’t mean it can improve anybody’s score.

SUZE: Nuh-uh –

GREG: Still talking. I give you credit for telling your audience that this card is going to cost them $3 a month. $36 a year for using their own money. But then you follow that up with the list of tremendous benefits they get for that $36. They’re the first things listed on your website.

One, free use of certain ATMs. You call that a cardholder benefit? That’s like telling people the card comes with its very own shiny magnetic stripe. And they don’t even get the free ATM use until they sign up for direct deposit. Not that they shouldn’t anyway, but again, how is this a benefit?

SUZE: It’s –

GREG: Rhetorical question. Sucks when a person just keeps on talking while you’re trying to interrupt, doesn’t it?

SUZE: Ye–

GREG: I’m not close to done. You list 5 more benefits, one of which is that “your deposits are individually insured up to $250,000.”

Of course they are! It’s a freaking bank! Anyone who keeps his money in a federally regulated institution, as opposed to a pickle jar in the back yard, gets this “perk”. My God, how do you live with yourself? Another rhetorical question, by the way. Free online bill pay, which almost every payee offers anyway. A free “emergency fund account”, whatever that is. How much money does your partner, Bancorp Bank, put in the account? I’ll let you answer.

SUZE: Zero, but –

GREG: And how much interest do these accounts earn?

SUZE: That’d be zero, too.

GREG: Thank you. And, cardholders get “free activity alerts and balance updates.” Again, that’s like telling them that if they walk into a branch, they’ll get free deposit slips. And the ink to fill them out with is on the house. I know Bancorp Bank doesn’t have branches, but hopefully you see the point I’m making.

SUZE: Now, you don’t have any credentials, so who are you to discuss personal finance with people?

GREG: No credentials? (chortle) You should see where we live. (snicker) And live. (guffaw) And live. Besides, aren’t you the one with the degree in social work?

You even charge people for replacement cards. I’ve been with multiple banks in my life, and no one’s ever done that. Nor do they charge me for the original card. You guys do. How is that better?

SUZE: It’s better because The Approved Card is better than cash. If your cash gets stolen –

GREG: You mean if someone tries to steal cash out of my wallet, on my person?

SUZE: Maybe.

GREG: Then I’ll shoot them. But I never carry more than a few bucks anyway, because I already have a debit card. From my bank. Not Bancorp Bank. And it’s free. There’s no monthly fee, there’s no fee for using in-network ATMs, my money’s guaranteed up to $250,000 – basically all the benefits your card promises, and none of the costs. Would you be interested in this Bank of Nevada VISA card that’s in my hand? You can apply right online. You’re rich, I can’t imagine that they’d turn you down.

SUZE: Exactly. My card is for people who aren’t rich yet.

GREG: Sister, your card is for people who will never be rich, largely because they’re swallowing advice undigested from an imbecile. Your card is only for people whose credit is already so horrible, no bank or credit union will let them open an account.

Again, I respect that you’re trying to get rich off people dumber than you. And if it were Carlos Mencia or Blake Griffin putting his name on this card, that’d be one thing.

SUZE: I didn’t just put my name on this card. I created it.

GREG: Yeah, you keep saying that, as if proud of this. But you telling people to spend money to spend their own money would be like Jillian Michaels telling people they can carve chessboard abs for themselves by eating Jillian Michaels®-brand strawberry cheesecake.

You’re a crock, a charlatan, a mountebank, a fraud, and those epithets are far more complimentary than what you had to say to anyone who disagreed with you during your recent Twitter meltdown. So I’m going to end this interview prematurely, with a ruffle and a flourish, and leave you to filibuster for the rest of the segment. I’m sure you’ve got plenty to tell your viewers about. Goodbye.

SUZE: Look, before you leave…where do you get your pantsuits?

GREG: This isn’t a pantsuit. These are just pants.

This article is featured in:

**The Carnival of Personal Finance #346-Editor’s Pick!**

**Top Personal Finance Posts of the Week-Super Bowl XLVI Edition**

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

Warren Buffett is a Hypocrite, Part I

September 23, 2011

Amass an 11-digit fortune, and you should probably forgo a name tag

We’ve never done a post on The Oracle of Omaha, which makes us unique among personal finance blogs. We also didn’t misspell his name as “Buffet”, which also makes us unique among personal finance blogs.

Yes, he’s the greatest investor of all time. No one disputes this. The problem is when he starts talking about topics he either knows nothing about, or is being deliberately obtuse about. Amassing wealth doesn’t make you an authority on every subject. Case in point, his recent lament about taxes.

Buffett wrote in The New York Times that the current progressive tax system in this country, in which rich people bankroll most everything, just isn’t progressive enough. He pointed out, yet again, the absurdity of his secretary paying a higher percentage of her salary in taxes than he does.

Summarizing, Buffett claims that at least one of his employees allegedly pays an effective tax rate of around 41% on income, while Buffett himself pays 17%.

First, the former claim is a lie. The highest marginal tax rate in this country isn’t even 41%, let alone the highest average tax rate. The highest marginal tax rate is 35%, and given the income level at which the IRS administers it, to pay an effective tax rate of 35% you’d have to make $6 million a year.

So Buffett’s not comparing himself to the woman who answers phones at Berkshire Hathaway. He’s comparing himself to a manager who makes a higher salary than almost everyone in America, even more than your average NBA or major league baseball player.

We’re giving Buffett the benefit of the doubt here, assuming that he meant 35% instead of 41% even though those numbers are easy to distinguish. No one knows where he got the 41% figure from.

Furthermore, that 35% maximum rate is on taxable income. Anyone who’s ever filled out a 1040, or had someone else do it, knows that taxable income is considerably less than total income. There are these things called deductions and credits, which Buffett is presumably familiar with (and which any manager who makes $6 million a year must be familiar with, too.)

It makes for a great class warfare talking point: every dollar that I fail to make is somehow some richer person’s doing. And who better to inspire envy among the poor salaried millions than a tycoon who’s finally seen the error of his ways?

Buffett – and we salute him for this – has spent a lifetime earning money via capital gains, rather than salary. Do we think this is a good idea? Hell, we wrote a book about it.

Capital gains are taxed at lower rates than salaries are. The people who write the tax code, and make it the most cumbersome and impenetrable thing on the planet, ensure this. Of course they do. Legislators write the code to accommodate and exploit this, because they derive most of their income through capital gains.

Let’s assume that Buffett indeed has employees who are paying twice the proportion of their income in taxes as he is. What’s the fairest way to make things fair? Again, multiple-choice.

  1. Further soak the rich.
  2. Get government’s foot off the throat of the poor.

Raise the rich people’s taxes to make things even, or lower the poor’s? Rich people seem to enjoy being rich. Why not reduce rates on the salaried masses to put them in line with whatever Buffett’s definition of “rich” is, instead of the other way around? Instead of creating prosthetic limbs for amputees, Buffett wants to break the right arms of the able-bodied.

The reactionary answer is “Because it’ll reduce much-needed tax revenue.” It wouldn’t. People respond to incentives, and will have incentive to work harder, longer hours if they get to keep more of what they make. When I can keep 84¢ of my next marginal dollar, there’s a better chance I’ll work for that dollar than if I only get to keep 67¢.

It’s the height of arrogance to complain about the tax system not because it hurts you, but because it benefits you. Especially when there are so many ways for Buffett to fix this perceived injustice. Sure, he could cut Washington a check for whatever amount he feels he should be paying. He could increase his employees’ pay enough to offset any tax advantage.

Or, and this is the least likely of the three, he could rework the dividends that flow through his corporations so that he could receive all his income as salary, rather than capital gains.  The chance of this happening is roughly equivalent to the likelihood of Buffett running a 4-minute mile.

————————-

We’ve been pushing the concept of a diagonal tax since we were old enough to understand the concept. Everyone gets a basic personal deduction – say $20,000 – and pays some percentage – say 17 – on the rest.

The guy making $6 million would thus pay 16.94% of his income in taxes. The guy making $30,000 would pay 6% of his income in taxes. The guy whose net worth increases $10 billion in a year would pay 16.99997% of his income in taxes.

People who want to soak the rich should love this system. It treats the rich and the hyper-rich almost identically, biting them almost 3 times as hard as the working stiff, relative to what all three make. If that’s not enough, just manipulate the deduction and percentage numbers until it all makes sense.

 **This article is featured in the Yakezie Carnival-October 2, 2011 Welcome Fall Edition**

Filed Under: Bad Examples, Economy, Education, Estate Planning Tagged With: , , , ,