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Personal finance experts don’t get wealthy by following their own advice

larryludwig.com

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Re: Personal finance experts don’t get wealthy by following their own advice

#221

Post by mjklin »

> Six decades ago, Fred Schwed wrote a book called Where Are the Customers' Yachts? The title came from a story about a visitor in New York more than a century ago. After admiring yachts Wall Street bought with money earned giving financial advice to customers, he wondered where the customers' yachts were. Of course, there were none. There is far more money in providing financial advice than there is in receiving financial advice.

> The title is as relevant today as it was back then. There are few industries that pay themselves so much for doing so little as financial services.

https://www.fool.com/investing/general/2014/02/21/where-are-...

Re: Personal finance experts don’t get wealthy by following their own advice

#222

Post by wincy »

zhdc1 wrote: post #152
wincy wrote: post #43

This seems like a good place to be vulnerable and ask for advice. I am 35 and still spend like in a teenager. I grew up really poor where if the money didn’t get spent right away it would just sort of disappear, into drugs or beer or whatever my mom and stepdad were spending it on. My only real asset is my house which has appreciate significantly in value, but all it would take is one job loss to get me behind on tha…

> Is there anyone here who has gone from being extremely irresponsible with money to having savings? How do I get over the trauma of my grandparents losing millions of dollars in the 2008 financial collapse, which happened right as I came of age? How do I stop “shopscrolling” Amazon until 2 in the morning? Partner with someone who is disciplined, such as a potential spouse/partner, a friend, or even a support group o…

My wife said she had savings before she met me. Apparently I have a very dominating personality. She owned her house outright which we sold so we could put a down payment on a much larger house.

Her and I have been talking today and I think having her approve purchases could help. I’m nervous about giving up control like that though, and thinking about it more I definitely get pleasure in buying new gadgets. But I need to trust her that she has my best interests in mind (which she does, but it’s hard to convince some part of me deep down of that).

Re: Personal finance experts don’t get wealthy by following their own advice

#223

Post by wincy »

cowpig wrote: post #67
wincy wrote: post #43

This seems like a good place to be vulnerable and ask for advice. I am 35 and still spend like in a teenager. I grew up really poor where if the money didn’t get spent right away it would just sort of disappear, into drugs or beer or whatever my mom and stepdad were spending it on. My only real asset is my house which has appreciate significantly in value, but all it would take is one job loss to get me behind on tha…

What you're describing sounds to me like a mental health issue. Sounds like you've hacked a dopamine reward loop and now can't stop it. Have you tried therapy?

I have. Maybe I haven’t found the right one. I think cognitive behavioral therapy might help.

Re: Personal finance experts don’t get wealthy by following their own advice

#224

Post by astura »

foogazi wrote: post #144
astura wrote: post #100

>Dave Ramsey down-talks to his callers as if they were petulant children and tells you to cut up your credit cards. Dave says they are the work of the devil and you aren’t mature enough to use them. Except we used our cards to make $3,624 in spendable cash last year, all while paying zero in interest — because we paid the cards off in full each month. The big thing you have to know about Dave Ramsey is he has a bibli…

I think there’s a place for Dave Ramsey’s advice. I don’t care for the religious stuff- but the advice is solid to get out of debt He mostly talks to people that don’t realize the stranglehold debt has on them. The first step is to acknowledge the problem

Yeah, there probably is.

I just don't know that people really understand that his view of finance is biblical based rather than empirical based and advice is extremely one sized fits all.

At the same time it is the kick in the ass that already well-to-do-people with too many Lexusus who are deep in debt probably need. People who don't have much income? Not sure what they are going to get from Ramsey other than shame. These people have a cash flow problem, they don't need to called a moron. Like TFA says, this advice is more about maintaining wealth, not creating it.

(Of course, TFA ignores the risks of starting a business, but that's another topic)

For me, the best thing I ever did in my life was take out loans to live while in college so that I could devote 100% of my time to my studies. It's the only way I would be able to graduate, and I'm glad I didn't worship the altar of Dave Ramsey at the time (or even know who he was) because I really didn't need extra stress or guilt, I put enough on myself. Dave just thinks people like me don't exist - people who take out debt reluctantly after cost-benefit analysis, pay it back ASAP, and who are better off for it.

Of course, God says debt is bad, so Ramsey doesn't care if I exist.

Re: Personal finance experts don’t get wealthy by following their own advice

#225

Post by tamaharbor »

zhdc1 wrote: post #149
dheera wrote: post #39

Earlier quoted context omitted.

> max out 401k plan works What are the advantages of 401k instead of say dumping it into half-VOO half-crypto and making millions one way or another?

Tax deferment and stability.

And hopefully, taxes will be same or lower when you retire.

Re: Personal finance experts don’t get wealthy by following their own advice

#226

Post by timsneath »

wincy wrote: post #43

This seems like a good place to be vulnerable and ask for advice. I am 35 and still spend like in a teenager. I grew up really poor where if the money didn’t get spent right away it would just sort of disappear, into drugs or beer or whatever my mom and stepdad were spending it on. My only real asset is my house which has appreciate significantly in value, but all it would take is one job loss to get me behind on tha…

There are some good answers here (along with some less good ones), but I wanted to just pause to applaud you for this post.

Even though HN is full of smart, data-orientated people, it's rare to see this level of self-awareness, vulnerability and curiosity demonstrated in a single comment. We could all benefit from more of this set of skills. Most of us dole out advice far more willingly than we ask for it. Through revealing your own frailty, you've opened the door for others who are less courageous to hear some good advice.

There's nothing pathetic here at all -- it's how we learn and grow. I hope this doesn't come across as condescending: I genuinely wanted to say, "thank you".

Re: Personal finance experts don’t get wealthy by following their own advice

#227

Post by windsignaling »

larryludwig wrote: post #153

Thanks for the mention! As I expected from this audience, some of the comments are funny and completely miss the mark of my article. But such is life.

Actually these seem like fair criticisms especially regarding your mischaracterization of Ramit Sethi.

Your conclusion in the article (under "What would I recommend you do?") turns out to be the same thing Ramit Sethi recommends you do (among other points in the article which are in agreement with his writings).

So, you are not calling out Ramit Sethi as much as you think you are.

It also conflates the fundamentals (not having credit card debt, investing in a tax-advantaged retirement fund) with the next step of not trading money for time.

How is someone who can't manage their (small) amount of money going to manage the large amount of money earned from a successful business? They can't.

As a further thought to consider, what are the chances they would be able to start a successful business to begin with?

In other words, "you learn to crawl before you walk".

Re: Personal finance experts don’t get wealthy by following their own advice

#228

Post by zhdc1 »

dragonwriter wrote: post #167
zhdc1 wrote: post #147

Earlier quoted context omitted.

> So sure, their advice might work for the top 5%, but the rest of people will never "get rich" using that advice The median household income in the United States is $79.9K. Assuming that a family of four can live on $50K (including taxes) in - most - locations, which is twice the poverty limit, they can theoretically save $30K a year in a mix of 401K, IRA, and general investment accounts. This amount, if invested ov…

> The median household income in the United States is $79.9K. No, its not, that's the median family income, which only counts groups of two or more people related by birth, marriage, or adoption living in the same home, whereas median family income includes single-member households and those whose members have no family relation, and thus is significantly lower, about $65K.

If we want to be pedantic, I was using the median - family - income estimate from HUD, which includes Puerto Rico and extrapolates off of the 2018 ACS. The Census Bureau, which lags by a year or so, puts the figure at $86K.

Re: Personal finance experts don’t get wealthy by following their own advice

#229

Post by jhanschoo »

jacquesm wrote: post #194
logicalmonster wrote: post #55

I think this is a pretty good article, though I'd think that most financial gurus aren't trying to lie, they're just trying to give advice that's feasible for a mass audience to try and learn. To give an example; the article mentions Dave Ramsey talking down to his callers and giving generic advice such as cutting up your credit cards. I don't follow Ramsey too closely and can't read his mind, but I'd bet he's optimi…

> If I had to give 1 bit of general financial advice though: develop your talent stack. It doesn't matter if it's learning a new programming language, wood-working, learning to fix cars or toilets, taking a foreign language class, learning how to paint, or growing a great garden. If you have multiple skills you have more opportunities to make money as well as combining those skills in unique ways to create new busine…

> Fortunes are to be found on the intersection of almost any two skills, if you can add more to the pile you are adding more chances for capturing that value.

Do you have some anecdotes to share regarding this?

Re: Personal finance experts don’t get wealthy by following their own advice

#230

Post by mproud »

Counter argument: I have a salary not that far from $49k. Over the span of about 15 years I’ve put in 10% to my ESPP and put in even more to my 401k and I do have a million dollars now.

I’ve gotten lucky; the company I work for has done really well. If it hadn’t, sure, I’d have a fraction of my overall wealth.

But I did follow the advice, and it did work for me.

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