Things you need to watch out for when dealing with personal finance teachers.

Please do not drown in the sea of nonsense and tomfoolery. A lot of teachers want to waste your time and keep you poor. They want you to be better, but only a little bit better so that you have to keep coming back to them.

Not me, and while I do not have all the answers, I promise that whatever I recommend you do ( or don't’ do) you won't have to ever have  pay me another dime or a cent of attention.

What they say: Extreme saving

those who work in my area I write in ( Personal Finance) have a tendency to live on the extreme side of saving.  What's worse is that they expect you to also make the same sacrifices. Living on $8,000 year sounds simple, and it is. But, what they don’t tell you is that there is little to no wiggle room for much real living. Who wants to live in Florida, without an AC because it will save you $60 or $70 dollars a year? It's hard to give up every luxury in life. That’s why people like us fail to reach financial independence. Living like a nomad isn’t all it's crack up to be.

What we think

Personal finance is about finding what matters, what you can't live without, amplifying them to the max and eliminate all the things that don't fit. I like eating at home, but I also like eating out. I love to read, but I also like playing Madden football games. What I like to do is probably different from what you like but that’s ok. The joy is knowing you have the freedom to do what you want to do.  

What they say: Cut up your credit cards

Dave Ramsey is the perfect example of a credit card absolutist. He is all for taking your credit cards and getting rid of them. stating that credit cards are bad and that people should live without them.

What we think
Your debt troubles have nothing to do with your credit cards - it's called personal responsibility.  Credit cards like 401ks are tools to make your life easier. The Capital One Venture card has a great rewards program, why would I give that up to buy with cash?  Want to take a trip? My points from my day to day spending can pay for my plane ticket and/or hotel. My points from my Skymiles Amex card paid for my plane ticket, and the rental car I will use while I am on vacation in a few weeks.

What they Say: Your money troubles stem from your education levels.

I have heard, all we need to make better spending choices is to learn about money in high school. “ Financial Literacy is key to a better spending habits” they say.

What we think

Yes, being aware of cognitive biases has allowed me to make more rational spending choices. However, I am well aware that you may not care about cognitive biases - what you want are
actionable steps that don’t require you to think long and hard about the steps you going to take next. That's why I am big into automation. Bills come out... automatically, investments flow into your IRA... automatically. Studies show that when we take choice out of the equation the results are nearly bulletproof.

What they say: A $1,000 emergency fund is enough if you’re paying off credit card debt.

If everything goes well you won't need that $1,000 anyway right so you might as well pay off your debt as fast as you can.

What We think

That logic is dangerous,  what you need is a minimum of 2 months saved up for your emergency fund. The whole point of an emergency fund is to have a hedge against the terrors of life.  How will your bills get paid if you are fired? What about if you break your ankle playing basketball, and you can’t work for a month? I don’t know about you but $1,000 isn’t covering my bills for two months.

Are you getting it? It's ok to challenge the so called smart people. If it doesn’t make sense then it probably isn’t for you.

  P.S. have you joined the Cult of Personal Finance yet? what are you waiting on?

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