Welcome to the first Financial Contrarian blog post!
Today’s the day I launch Money Coach Group, so I thought I’d kick off the Financial Contrarian blog (your guide to dispel personal finance myths!). My mission is to help working folks to BE. DEBT. FREE.
“What’s with the name?” you might ask. I came up with the name because of what I’m seeing.
“What am I seeing?” you might ask. I’m seeing hard-working people getting screwed out of their money by evil people who have learned to monetize the “financial advice and concepts” we have always been able to trust. People being coerced into bad financial decisions. People being taken advantage of for profit.
“Do you have any examples?” you might ask.
Sure. I’ll be elaborating on all of these in future blog posts that will focus on each one. But in a nutshell, here are just a few personal financial myths that I’m contrarian about (hence the name, Financial Contrarian!).
- “Laws exist to protect us from financial scams.” This used to be the case. But, deregulation led to the mortgage crisis and Great Recession. The fiduciary rule (or law) that said investors must put their clients’ interest ahead of their own was struck down recently. Those regulations that you keep hearing politicians brag about cutting are there to protect us from getting scammed (not to mention keeping cars, boats, planes, and our food, water, roads, bridges, and tunnels safe). The current administration is making it harder to get help if you’re a victim of student loan scams.
- “A home is your best investment.” Not so much anymore, as the folks who bought their homes before the housing bust learned. Owning a home is expensive, and there’s no longer a guaranteed return on that investment. Many financial models show that renting is a better way to go, depending on your circumstances.
- “The bank won’t loan us the money if we can’t afford it.” Yeah, well that one went out the window some time ago (see #1 above). They’ll gladly loan you money they know you can’t pay back, and when you lose your house to them, they’ll auction it off and pocket the cash.
- “Bonds are safe.” Bonds are only as safe as the government entities and companies that you are loaning the money to. If they go bust, so does your money. Our country is essentially bankrupt and over-leveraged (in debt), particularly to China. The President has hinted that he would consider defaulting on our debt, which would destroy the US world-wide credit rating and bond market. We’ve seen the first municipal bond defaults happen, which is something previously unheard of. You might think corporate bonds are safe. Most companies are over-leveraged in debt and propping their earnings up by financial engineering gimmicks like stock buy-back. I’m not even talking about junk bonds! We’re long overdue for a correction/recession and making incredibly bad moves in the government and corporate sectors. That affects the safety of bonds.
- “A college degree from a fine institution is your best investment in yourself.” Unfortunately, many universities have now turned into greedy profit-driven corporations that fuel the huge student loan crisis we have today. Fortunately, a lot of younger folks are rejecting this “normalcy” and hitting inexpensive trade schools, community colleges, state schools, or just taking an entrepreneurial path right out of high school.
- “Follow the recipe for success: go to college, buy a house, get a few nice cars, take nice vacations…” Sure, and work until you die to pay for it all. The problem is that we’re encouraged to finance everything now. People even finance their cell phones! It’s a sucker’s game, don’t get sucked into it. If you’re young, read up on the FIRE movement. FOMO and YOLO are killing YO. We’re buying stuff we can’t afford with money we don’t have to impress people we don’t even like. Disregard that fake highlight reel of other people’s lives on Facebook. They’re in debt up to their ears to put up that pretense. Free yourself. Today. I could buy a Tesla, but I happily drive a beater. When granny bashes her shopping cart into it at ShopRite, I just wave and smile.
- “I’ll live off Social Security and Medicare in retirement.” Better think twice. We’re increasingly on our own. Certain politicians are hell-bent on cutting back and even eliminating all such “entitlements.” I put that in quotes because the phrase angers me, as someone who has paid into those systems my entire life, and it’s coming from people who have very nice health care plans paid for by us, the taxpayers.
- “My credit score is important!” That’s what they want you to think. They want us obsessed with it. It’s just a means to borrow more money, to buy more things on credit, which we shouldn’t be doing. Get off the FICO score hamster wheel.
- “Debt is the American way (everybody’s doing it).” Bull. That’s what they want you to think. Your grandparents didn’t have credit cards, car loans, and student loans when they were your age. Get off that crack. BE. DEBT. FREE. It feels beautiful to get a paycheck and not have to divvy it up between your creditors, and to check the mail without being afraid.
- “I’ll get student loan forgiveness.” Not so much. A very, very small fraction of applicants for this are accepted. Pay the debt off, free yourself. You can do it. We can help.
Don’t Get Played
Anyhoo, my point is that I see people getting played from every angle.
The government is now in on the scam instead of protecting people, by running lotteries (bad idea) and endorsing bad ideas like sports betting just so they can get their cut.
Sports figures, actors, entertainers that folks feel they can “trust” because they may have played someone trustworthy or likable on the screen are pitching us horrible ideas like reverse mortgages and whole life insurance policies.
Keep Paying (and Paying…)
Things we used to just buy and be done with are now turned into subscriptions, i.e. a way to get you to keep that money flowing from your account to theirs.
We’re bombarded with the latest medical fads and commercials for expensive drugs. Those are lovely while dining, especially the part about the potential side-effects.
These are just my opinion, and you know what they say about those. If you need help paying off your debt, head to http://moneycoachgroup.com and begin your journey to BE. DEBT. FREE.