Do We Need to Fire the Entire Financial Advice Industry?

advisersAhh, Financial Media. It is a key cog in today’s ever-churning news machine, because hey, who isn’t interested in money?

Everyone has a go at it, from the tanning-salon-smile hosts of the regional news shows reporting the daily close of the Dow index, up to the Ph.D. credentialed economists who debate economic indicators and fiscal policy on Wall Street Week.

The New York Times is fond of publishing mature-sounding, sympathetic stories about the hard times we as a culture have with money, with nary a face punch in sight. Other newspapers do their own take on things, usually with a slant towards the sensational rather than the practical. And a zoo full of financial advice peddlers, Mr. Money Mustache included, has filled up the bookshelves with all sorts of advice on how to get ahead.

There are some great writers, researchers, and reporters out there. With a mixture of pedigree, brilliance, sharp wit, burly work ethic and even good looks, the collective abilities of these people put a blog like Mr. Money Mustache to shame.

And yet almost all of this financial writing is lacking an absolutely critical underpinning. Without this foundation, the rest of their arguments are rendered floppy and useless, and thus the entire financial media industry is mostly wasting everyone’s time. This is a pretty monumental accusation for a lone writer to make from the vantage point of his living room couch, but here I am doing it, and with good reasons to back it up.

Are you ready to hear what they’re missing?

It’s the fact that most of our modern assumptions about money are bullshit.

To illustrate this in a particularly grating way, let’s review a little video from a big-time personal finance guru named Suze Orman:


In this clip, an earnest 48-year-old woman dutifully reports her financial stats to Suze. It turns out she has $1.4 million dollars in net worth, $7500 per month in income, lives in a reasonably-priced house, and would really like to know if she can retire in seven more years at age 55. You know, seven years – about the total career length of some Mustachians who maintain a 75% savings rate?

The professional’s advice? “You’re at a D Minus right now, as you’ll only have $1.6 million (plus a paid-off house) by age 55. I advise you to work just an extra fourteen years instead of seven, so you can have $2.5 million saved (plus, presumably a lot fewer of those pesky expensive “years of life remaining” that you need to fund).

I hope I am not the only one who finds the above advice fucking insane. 

Really, there are two factors at work here: Suze Orman uses ultra-conservative withdrawal assumptions for retirees, assuming they will forego the better returns of stocks and hold only government bonds, which pay almost nothing these days. This leads to roughly a 2% withdrawal rate assumption, versus the 4% I am fond of here. That’s fair enough – to each their own assumptions and I’ll happily stick to my stocks, rental houses and Lending Club, where I could easily maintain 6% or higher withdrawals while the principal keeps up with inflation.

But that still leaves the fact that the caller listed her current monthly expenses at $6100. This was probably including income taxes, but I found it interesting that the figure was left unchallenged, as if it is reasonable and essential for a household of two to exist on $73,000 per year (and she’s in friendly old low-cost Colorado, no less!) And of course there was no allowance for lower costs when her 17-year-old son strikes out on his own.

And it’s not just the boisterous gurus with books and DVDs to sell that follow this trend.

This New York Times piece states that “deciding to take your lunch to work or cutting cable won’t help as much as you think.” (to which I say, “It will probably help a lot more than you think – unless you consider $60,000 every ten years to be chump change.”)  Instead, we are encouraged to blame the rising cost of school tuition and medical care for our financial problems.  The same author pops up again here, repeating the message that it is our world that has become difficult, and we are not at fault for financial problems.

Look, if it really was so much easier for our parents’ generation to stay out of financial trouble, great, good for them. But given the fact that I was able to retire about 25 years younger than my own Dad, who is himself an intelligent and frugal man, I’d say the crushing forces of society on today’s middle class are still not overly powerful.

In a Marketwatch story called “Retire early? There’s one big catch”, they say “Uhh.. yeah, you could save your money and retire early, but you might wish you still had a job, or you might day-trade away all your investments and end up broke!” In another Marketwatch article, they say “Work until you’re 67 and hopefully have 8 times your salary saved up by that point”. (Hello? Does your annual spending factor into your retirement needs at all here?)

In a 2008 CNN story about a 27-year-old couple known as the Rodrigueses, they pull the lever on the Financial Pro Advice Machine, and it spits out this: “You’ll have only $2.9 million by age 40.  You can’t retire on that! Stuff might happen! Plan on working an additional 5 years!” – while totally missing the fact that this couple really has a base cost of living of of only $25,000 per year right now, even living in the Bay Area, with a WRX Sti rally racing habit. Realistically, they can retire earlier than planned, not later.

So what would I change, if I could start an imaginary school for financial advisers? I would start by ensuring that every curriculum in monetary matters begins with this overlooked concept:

Right now, we are already living at a level far beyond the basics that are required to maximize our happiness. You don’t have to feel guilty or run out and change that, but just acknowledge it, because that knowledge is freedom. You could live on much less, and with the right tricks, end up even happier than you are now. It’s true for virtually everyone. So what is more efficient and satisfying: keeping an unwanted job for 20 additional years to earn more money, or learning the right tricks?

The answer to that should depend on how much you like trading your time for money at your job, versus how much various material conveniences and luxuries are worth to you.

For example, it takes a lot of time to fetch and carry your own water from a stream every day, and only $25 per month or so to have clean drinking water piped right to your kitchen faucet. For most of us, this is a worthwhile trade and we’ll flip burgers or sit in the cubicle as required to get the need covered.

But it takes only a few hours to learn to drive a manual transmission car, and yet the skill will save you many thousands of dollars in car purchases and gas every decade. Is it efficient to trade hundreds of hours of work to avoid this single 4-hour lesson? At least 200 million Americans have missed this little bit of math.

There is no difference in the speed at which a 2004 Honda Civic and a 2013 Honda Accord will get you to work, but the difference in operating costs will add up to many hundreds of hours of your work over the cars’ lifetimes. Bikes improve your life even while reducing your need to pay for cars. Bringing your own lunch to work provides you with healthier food while allowing you to keep much more of the money earned while working. Spending a few hours learning about investing, debt, and frugality before borrowing $50,000 for a university education cuts years off of the debt a young person needs to incur.

This list could go on and on, until we simplified the typical person’s life down to something that would cost between $5,000 and $25,000 per person per year in the US, without compromising their ability to live a happy life. Most of the remaining things we have in our lives – even ones we happen to enjoy – aren’t fundamentals for human happiness. They are just cultural norms, programmed in differently for each country by the marketing of corporations who sell the non-fundamental products.

But the assumption by financial advisers these days is that consumption is just a personal choice, all of it is reasonable and none is ridiculous, and more is naturally better if you can afford it. Frugal people are written up as mildly entertaining oddities – “Wow, things sure work out well for them – too bad you can’t do that in real life”.

These aren’t really personal choices, they are fundamental financial rights and wrongs, which should be considered just as core to good financial advice as “don’t use lottery tickets and casinos as your investment vehicle”. If you converted this financial advice into medical advice, you’d have doctors advising patients to start missing sleep so they can spend 50 hours per week running on a treadmill – just because they happen to like eating 5 gallons of ice cream and a deep-dish pizza every day. Nobody would dare mention the pizza and ice cream, because that would be “preachy”, or promoting “scrimping and saving only to live a deprived lifestyle”.

A more useful type of financial advice? First get your shit together (develop a life where you can live happily on any amount), then from the vantage point of financial maturity, you can decide if you want to go on to become Mr. or Mrs. Fancypants by branching out into some extreme form of extreme consumer connoisseur specialty like 250-horsepower vehicles or 5-star hotel hopping.

To do it the other way around is just to create a lifetime of unnecessary monetary stress – which is bad advice.

  • Mrs PoP @ Planting Our Pennies May 20, 2013, 1:09 pm

    I think there’s a couple of things going on here.
    1 – Fear of reputation loss by mainstream financial pundits. They make their money by doling out this advice, so they can’t afford to give anything but the most conservative advice in terms of draw-downs lest someone come back and say, “You’re a liar! I took your advice and am destitute because of it!” MMM has more freedom because he doesn’t *need* to use this blog to make money, so he can give advice that is a bit less conservative without fear of a reputation risk causing a drop in his own income.

    2 – They’re picking advice that’s going to be well received by most people. Telling someone to cut their spending feels to that person like an attack and a value judgement. Most people are naturally averse to that. Whereas telling them they need to do the same thing, just a bit longer… well, people are like, “okay, I can keep going a few more years”. Again, it comes back to the mainstream advice givers needing to be likeable to get a paycheck. If their advice made most people go on the defensive, I’m just not sure how long they’d be in business.

  • No Name Guy May 20, 2013, 1:10 pm

    MMM –

    (said slowly, while clapping slowly at the same time)


  • Debt Blag May 20, 2013, 1:12 pm

    It is such a shocker that she would give advice like that. She frequently tells people that they can’t afford Purchase X, but she never tells people they can’t afford *Lifestyle* X. Not sure why.

    • ivyhedge May 20, 2013, 2:00 pm

      @ Debt: because that’s how you lose viewership!

      We used to tune in for giggles years ago…saw an episode where SO recommended a particular car as a “fine example” of what to buy, despite (fairly) common knowledge of the vehicle’s planned obsolescence. In the commercial segment immediately following her recommendation there was an advert for that vehicle. Game over, SO.

  • BNL May 20, 2013, 1:29 pm

    Should we fire them? Yes.

    Can we? Unfortunately, no.

    It seems to me that the most successful media (blogs included) cater to what people want to hear and, unfortunately, that means a further progression of crappy financial advice. There’s no doubt your advice is more sound, your writing more entertaining, and your attitude more inspirational than the financial crap you’ll see on the Today Show or on Suze Orman. And yet, despite your well-deserved blogging success, there are some really terrible blogs that still have more readers than you while simply promoting ideas about cutting coupons, banking credit card points, and limiting their Starbucks consumption.

    I’m not suggesting any of us should stop fighting the good fight, but it’s unfortunate that so many people & advisors start with a virtuous goal of helping, then slowly sell out to the masses.

    Then again, there’s no need to sell out when you already have more than you need. Which is one of the things that makes MMM so special. So keep up the good fight! :)

  • Jonny May 20, 2013, 1:31 pm

    Reading your blog – especially this one about the fundamental truth a lot of the talking heads are missing – reminds me of one of the better takes on consumerist culture, John Carpenter’s “They Live”.


    For those not in the know, Rowdy Roddy Piper finds a pair of glasses that, when worn, show the world as it “really is”. Billboards command people to “Stay Asleep”, “Consume” and “Obey”. People in positions of power are really weird aliens orchestrating the enslavement people as consumers.

    Ok, ok, so it’s not a cinematic masterpiece. And the commentary on consumerist culture is mostly a set-up for a B-grade alien invasion flick. But it did give rise to one of the best – and most mustachian – movie lines ever:


    • David C May 20, 2013, 2:47 pm

      I thought that almost everyone had forgotten this classic. And that fantastic line.

      Now if we can just get more people to put on those glasses…

  • Laura May 20, 2013, 1:39 pm

    Yes, let’s start with Lifestyle training=Financial training. A friend cried to me the other day:
    F: I’m so stressed, I can’t pay the Electric bill and the Cable bill at the same time, because I have no cash flow.
    Me: Why don’t you cancel Cable then?
    F: I need my baseball and C needs his cartoons.
    Me: Okay, well, how much do you spend a week on groceries?
    F: $150
    Me.: I spend $30, why not try eating rice and beans until you get back on your feet?
    F: Hmm..I do buy a lot of convenience things…it’s my luxury, since I’m so tired after work. C hates both rice and beans.
    Me: What do you do when the milk runs out, but you’ve spent all your budgeted grocery money for the week? Do you go back to the store or tell C you only have water until next week?
    F: Oh, I go back to the store – sometimes 2 or 3 times.
    Me: Sounds like you’re over $150 then on food, too. Why not show C an empty envelope and say – We’re drinking water until next Monday when our new budget week kicks in?
    F: C loves his milk – he drinks gallons of it every week.

    If she thinks we’re rich because of the money my husband earns, she is greatly mistaken, we are rich because of how I have managed our household for the past 25 years.

    • chc4444 May 21, 2013, 1:18 pm

      Laura May: I love your post. I once offered to give a car to a friend so she could sell her car and get out from under her payments and she “just couldn’t do it”. That was years ago and she’s still broke and we’re happily retired and “rich” not from earning a lot, but from living frugally.

      • Laura May 21, 2013, 8:38 pm

        Wow – that was a sweet offer. I guess it’s like most things in Life, you can only really figure these things out when you are ready to hear them.

        • Emmers May 26, 2013, 12:32 pm

          A “sweet offer” unless the free car was an unknown, that is. I’m sure it was well-intentioned on the giver’s end, but for the receiver, that’s WAY too much uncertainty. (Unless they know each other better than the comment implies, which is possible – like if they were actually siblings or something, and lived very close by, and the receiver knew all the car’s maintenance history and so forth.)

          • IAmNotABartender November 8, 2015, 10:09 am

            Given that everyone here recommends used cars bought on Craigslist, this car has the same unknown history but with the bonuses of being free and coming from a friend (who we can presume is trustworthy and good hearted).

  • Tortoise1000 May 20, 2013, 2:01 pm

    I noticed in the Orman interview that she took the opportunity to recommend an additional financial product. One million dollars’ worth of term life insurance, for the benefit of the lady’s 17 year old son. Why? She is rich beyond most people’s dreams. Her son is almost adult. In the unlikely event of her dying in the next few years, he will inherit $1.4 million. Why on earth does she need insurance to leave him any more?

    • Mr. Money Mustache May 20, 2013, 5:23 pm

      Oh yeah – I was tempted to make fun of that part too, but my article was already pretty long.

      Just for contrast, I have never carried a cent of life insurance, and never will. When getting married, I was fortunate enough to attract a lady who is fully capable of getting jobs whenever she chooses, so obviously she didn’t need a lottery ticket that was payable upon my death. By the time we had a child, we had saved more than the amount required to raise a child, so if we died, he would go to a guardian in the family, accompanied by a package of money that would allow them to raise him without having to use their own money. Life insurance wouldn’t be too helpful in this case, just as it wouldn’t with the Suze Orman viewer.

  • Greg May 20, 2013, 2:56 pm

    MMM, I have a feeling that it would be hilarious if you were featured in a Suze segment. You would inform her of your assets and whatnot, and state that you would like to be retired now. Then she would tell you no way, you simply must work until you are 60 to have a safe retirement. And then – AH HA! – you reveal that you have already been retired for years. And – BAM – everyone’s brains are blown.

    • Punching Myself May 21, 2013, 10:12 am

      …and then Suze would get a punch in the face through the TV.

  • Johnny Aloha May 20, 2013, 2:57 pm

    Finally, a post with some swearing! It’s been a while …

    • Mr. Money Mustache May 20, 2013, 4:40 pm

      And finally, a comment from Johnny Aloha! We don’t get enough of those around here :-)

      • Johnny Aloha May 20, 2013, 4:48 pm

        After all the comments from your well informed and motivating readers, there’s not much left to be said! I just had to point out the obvious today.

    • JCamasto May 20, 2013, 11:53 pm

      Even JLC was swearing like a sailor…!

  • sticks May 20, 2013, 3:13 pm

    Another great post! Thanks for your thoughtfulness.

    I first started reading your blog about 2 weeks ago – I think from a link on Facebook a friend posted. I love all the specific content, but also like how your general approach has permeated my general approach and made me question my expenses. For example, I started a new job about six months ago and making good money. Partly out of convenience, I have been eating breakfast and lunch away from the house and spend easily $10 for lunch and $5-10 breakfast and occasionally even buy cup of tea from Starbucks in the afternoon for another couple of dollars. I was doing this pretty casually with stopping and realizing how much money I was wasting and over the course of a few years of work, how much that would add up to. So I’ve bought a PlayMate lunch pale and stock if full of good foods from home at a fraction of the cost. I bought some bulk tea and a nice stainless steal vessel and put that in my desk. Just in the last two weeks I have easily saved between $110-140 depending on what I would have eaten.

    Anyway, that is just an example, but I love your blog posts.

  • sticks May 20, 2013, 3:29 pm

    You mention: “But it takes only a few hours to learn to drive a manual transmission car, and yet the skill will save you many thousands of dollars in car purchases and gas every decade.”

    Something similar to this is how to drive a trailer well. Many people drive a truck or have one as a second vehicle because they need to haul things. But many need to haul only infrequently. A good little trailer can turn a small car into a small truck and bigger car into a bigger truck. Trailers are so incredibly handy. They don’t require insurance, can be park out of the way, registration is much cheap than a truck and generally are incredibly handy.

    • Heath May 20, 2013, 4:19 pm

      I’m totally using this idea for my next vehicle. People close to me have suggested that I buy an SUV for when I want to carry all of my bulky climbing gear out into the wilderness. At first, it was compelling, but something about it seemed wrong. Then I remembered this MMM article about making sure your car is useful for 99% of the situations your in, not the 1% exceptions.

      This was the post, actually: http://www.mrmoneymustache.com/2011/12/08/turning-a-little-car-into-a-big-one/

      Anyway, I’m definitely going to use a trailer or an aerodynamic roof rack with my next car (a Scion D, probably)!

      • sticks May 20, 2013, 5:59 pm

        My dad use to love Chevy Chevettes and had a trailer (actually handmade by a friend in a welding class) that we used all the time. We even moved from Minnesota to Colorado with it in the 80s and the car loaded down, so little cars can do a lot of work.

        I currently have a Subaru and a really nice 4′ by 8′ trailer with a long tailgate that when I lower it makes the perfect loading ramp. I cant tell you how much I have used this set up. We took it to Alaska (Fairbanks) and bank carrying my endure motorcycle, two kayaks, fishing gear, etc with no trouble. I built my own house in Salida, CO and for big loads had those delivered professionally, but for small loads my little trailer and Subaru always came through.

        I also have a roof rack that I made and use *all the time to haul my kayaks, bikes, sheets of plywood, lumber and countless big things. I always have a bag of good ratchet straps in the car.

    • Nate R May 20, 2013, 4:29 pm

      sticks, excellent point! A trailer can make it work.

      My wife drives a (manual!) 2002 Civic daily. I drive a (manual) 2001 Insight. But what about when we need to haul brush to the dump? Buy a used stove on craigslist for a rental unit? Haul a rototiller that I’m borrowing? Go camping, bringing all our food and shelter for a week, but we have 2 dogs taking up the backseat? Haul a motorcycle 100 miles that I got for free to resell? We spent a few hundred dollars, got a hitch that I installed on her Civic, and a tiny trailer. It’s been MUCH less expensive than her driving a larger vehicle around. So, I second the suggestion of trailers on compact cars. (As an example: The 2012 Civic isn’t recommended for towing in the US, but somehow it can handle towing 500 kilos in the UK!? Yeah, most small cars can tow more than you think!)

      • sticks May 20, 2013, 6:06 pm

        Nate, I couldn’t agree more. A small car can easily haul all of those things. We were in Greece about 4 years ago for an extended trip around the mainland and islands and I saw so many German cars (almost exclusively cars, generally station wagons) pulling relatively large campers (in German parlance “caravan”) around. So the cars are very capable of doing it.

    • Nerode May 22, 2013, 1:04 pm

      Just a note that “they don’t require insurance” needs to be checked for where you live. They certainly do require (inexpensive) insurance where I live, and safety checks and a separate licence.

      Which doesn’t invalidate your basic argument, with which I agree.

  • Brent May 20, 2013, 3:56 pm

    250-hp vehicles… Man, I was imagining that 650-hp Shelby Mustang! Had no idea people thought 250-hp was a lot. Smh. No worries tho, I’m replacing my car dreams with frugality dreams and dreams about financial freedom!

    • Mr. Money Mustache May 20, 2013, 4:39 pm

      Yeah – the key to all of this is learning to identify ridiculousness. My car puts out something like 108 HP from its 1.5L engine (actually more like 90hp at the 5000 ft elevation where I live), and even THAT is a ridiculous amount of power. After all, even my legs, at less than 1/3 of a horsepower of continuous output, can get me and a bike across 100 miles of road in a single day. 250 horses is enough for a school bus or a small dump truck!

  • Evan Lynch May 20, 2013, 4:04 pm

    Reading this reminded me that I needed to send in my 401k Rollover paperwork to get my old Fidelity 401k sent in to my Vanguard account. I also agree with some of the commenters who said this is another of your classic posts, I’m going to share this one with my Facebook friends.

    Also, you’d like this. I gave a friend of mine the url to your blog and she later told me that she’s going to start saving 100% of her salary to accelerate her savings as of this coming semester. (She and I are in the same graduate program.) She’s married, and I guess she crunched the numbers and realized that her husband’s income is enough to cover both their expenses.

  • Accidental Miser May 20, 2013, 4:26 pm

    The financial advice industry is … wait for it… an industry. They can’t go around teaching people to be frugal, they would work themselves out of a job! How many Suze Ormans would the world need if everyone was a mustachian? Zero.

    As Mrs. Miser likes to say, “There are a hell of a lot of industries that would cease to exist if they depended on people like us to buy their crap!”

    How True.

  • The Old Chief May 20, 2013, 4:56 pm

    It’s attitudes like Suze Orman’s and other so called experts that drive people to actually believe they have to work all those extra years. I really think its gotten to the point where it is just part of our culture. No one dares challenge the status quo…and certainly not a talking head on tv! I center my blog on folks prepping to retire from the military, where almost everyone thinks you need to get out and go find yet another career to work at for 20 or 30 years…ludicrous! I just posted an article about that yesterday at realmilitaryretirement.com
    Thanks for being another voice of reason.
    –The Old Chief

  • Naners May 20, 2013, 5:56 pm

    I have a somewhat different take on the financial advice industry, and more generally how personal finance is portrayed in the mainstream media. In the media, there’s often a lot of finger wagging: people should spend less, how were they so stupid to get into huge mortgages before the crash, people don’t save enough etc. Now, this is the message of MMM, and I think it’s right. BUT there are also real injustices in the system. Wages have stagnated for the middle class, while the rich get ever richer. Costs for health care and college have increased tremendously. Pensions have been replaced with 401k’s where the individual assumes all the risk. Companies spend billions of dollars and leverage fifty years’ of psychological research to make people want want want. Credit is easy and pushed like there’s no tomorrow.

    In other words, people are set up to fail and then blamed when they do. People who succeed do it in spite of the system, not because of it.

    I am all for personal responsibility and the message here at MMM: Wake up drone people, you’ve been had! But I don’t think we should ignore the real problems in the system while patting ourselves on the back for seeing through it. MMM is doing a great job for spreading the word, but there’s more to be done!

  • MarkIV May 20, 2013, 6:22 pm

    Terrible advice MMM. Casinos can be a great investment vehicle. https://www.google.com/finance?q=NASDAQ%3AASCA&ei=9b2aUYCUI46ckgWUVg

  • Dividend Mantra May 20, 2013, 6:49 pm


    Great post, as always.

    I think some of it comes down to the old Plato’s cave analogy. Certainly you have some people out there (like yourself and I) that choose to break free from the chains, and walk out of the cave and allow themselves to see the world as it truly is, rather than what the puppeteers would have you believe it is through the broadcasts on the wall (T.V. anyone?). But then you have millions of other people who see that the chains can be broken and the world is bigger, but choose to stay in the chains and continue watching the figures on the wall because it’s comfortable and that’s what they’re used to.

    It’s a bit of a cycle that feeds upon itself. You have financial “gurus” peddle relatively worthless information to the masses because, in a sense, the masses demand that worthless information.

    Keep fighting the good fight! Hopefully there will be others that will join us outside, in a free world full of light.

    Best wishes!

  • Andrew Winker May 20, 2013, 7:17 pm

    I’m always intrigued by the “it’s way too risky to retire early argument” Maybe it’s because i’m in my 20’s and would be considered naive about risk, especially in the financial sense. But risk is always going to be there no matter what path you take. You could spend the extra years saving tons of money and retire at 65+ thinking there is no way you will ever run out of money now, only to be mowed down by an runaway golf cart while at the links. Now all that extra time to eliminate “risk” was completely pointless.

    The other thought is do they think the extreme savers who are aiming for early retirement are some impulsive drones. Only targeting this because it caught their interest and as soon as the next fad comes along, they will wipe out their savings? Someone who has taken the time to carefully build their stache over the years is going to have a good sense of what is all going on. In addition, they are going to know what to do should a massive set back occur. The mustachians aren’t just thinking about the next step, they are thinking about the next couple steps. So to think that they aren’t going to be prepared for the worst case scenario is pretty stupid in my eyes.

  • Mr. Frugal Toque May 20, 2013, 8:01 pm

    Well, thank you for posting that irritating video. I was having such a problem with low blood pressure until I saw it. Poof! That problem’s gone.
    This goes back to my view of Consumption as a kind of bulletproof, unassailable religion. If someone says, “I’ve got 14 kids and we can’t make ends meet”, and you’d heard this complaint after the birth of each of his previous ten children, you might feel like advising that person to get a vasectomy.
    But he might then tell you that his religion forbids it and you’d feel obliged to stop talking. It’s the same way with Consumption. You’re just not allowed to speak against it.
    I mean, YOU are, obviously, but you’re also allowed to swear, because this is the fucking Internet and that’s what we do here.
    So Suze Orman speaking against Consumption on national TV would get censored out until she sounded like R2-D2:
    “Well, Megan, I’d advise you to BEEP-BEEP-BOOP down to BOOP dollars per month. You could do this by buying BOOP stuff and therefore saving BEEP percent of your income.”
    Well, you get the idea.
    It’s a good thing the Internet is here. Along with giving us the ability to use avatars to vicariously teabag people in distant places, it also allows for the spreading of a great number of healthy heresies.

    • Neo May 20, 2013, 8:53 pm

      I used to work with a guy that had 6 kids and he told me he would never be able to afford a house and would always rent.

      At the time he was playing around on his smartphone so I asked how much was his plan? $100 per month and your wife has one too? Yes , so $200 per month he was only 35yrs old so I said in 10 yrs you would have $24,000 plus whatever investment returns as a deposit for your house?

      Isnt that more important for your family than smartphones?

      He still has the phones :)

  • Mr. Risky Startup May 20, 2013, 8:23 pm

    What got me going on the path towards financial independence was changing the question “How MUCH money do I need to retire” into “How LITTLE money I need to retire”?

    I went from 100% focus on income to 90% focus on spending.

  • Lord Highbrow May 20, 2013, 8:23 pm

    Hi MMM and other Moustachians! Firstly, let me say that I work in the financial advisory industry (don’t hate me!). Have been working here for 8 years now and MMM, I wholeheartedly agree with your post. Almost without exception, when I have discussed client situations with advisers (I work in the back office as a paraplanner, which means I do all the technical advice stuff) and tell them they should be telling people to curb their spending, I get either a completely ‘does not compute’ blank look or they make up some sort of excuse not to say that to the clients.

    I think it is because they are worried that the clients will think they are not doing their job properly. Kind of like ‘Hey! I didn’t come here to be told to reduce my spending, I came here to be given advice as to how to increase my wealth!’ like the two are mutually exclusive.

    I genuinely believe that an advisers primary objective is to educate their clients, then focus on building assets and wealth. But you need to keep in mind also, that most advisers aren’t ‘investment savvy’ but just regular joes looking to make a buck. You would be amazed how few advisers actually have investments or are building an asset base for themselves. Yes, that’s right dudes. In my estimation, at least 80% of advisers have very little or no assets themselves, aside from the usual stuff most people have. So that means it is highly probable that the guy giving you advice on your investments doesn’t have any himself. Pretty frightening, no?

    Something else that is interesting though, is that I also post on an investment property forum and most people on there are the stock standard ‘I want 100K in passive income’ types. When I say to people that I live a simple life and will be financially independent as a result in much shorter timeframe’ their response usually is ‘Yeah well, I want all the luxury items and lifestyle! I don’t invest to eat baked beans on toast.’

    For most people, even most so-called investment savvy people, they simply can’t (or won’t) break the ‘must have’ mode of thinking. I recently had a conversation with a guy who told me that he wouldn’t consider retiring on less than 250K in passive income per annum. He’s single, with no kids, by the way.

    I try and explain that living simply means you can retire much much earlier and continue to build wealth, but it just doesn’t get through.

  • Neo May 20, 2013, 8:45 pm

    In Australia this is the result of a check on financial planners.

    The Australian Securities and Investments Commission (ASIC) conducted an undercover surveillance operation – known as a ‘shadow shop’, which unveiled that of the 64 plans assessed, only two were found to be ‘good’ for clients, while 36% were labelled as ‘poor’, and the remaining 61% just ‘adequate.

    On another blog a financial planner had charged a client $1200 for advice to rollover(change) their superannuation(401k) plan from one company to another . I commented that it had cost me 60cents (the cost of a stamp) to do it myself!

    There’s hardly any truly independant advice , planners are affiliated with banks, insurance or investment companies and will push those products.

  • Wes May 20, 2013, 9:00 pm

    The other day, I was considering writing a blog post about how the assumptions underlying traditional retirement planning – age 65, save relative to your income, etc. – are all wrong. But this says everything I wanted to say and more. Thanks MMM.

  • thepotatohead May 20, 2013, 9:34 pm

    Right on MMM. The so called financial gurus that say that cutting the “small things” like coffee and cable don’t make a difference are fools. While each item may not be big individually, the combination of all of them saves a large sum. A sum which compounded each year will certainly let you retire a lot earlier then they grey haired days of 65. Your grass seems way greener MMM.

  • Sara May 21, 2013, 3:58 am

    This is a great, great post. And it really is true that so much spending .goes completely unchallenged, Because fear SELLS. Fear of an uncontrollable economic world around us creates that panicky feeling inside of all of us that sends us reaching to buy the book, the insurance policy, the computer software, the smartphone so we can keep track of the dow at all times, whatever. I have this unusual existence in that I live essentially like my grandmother did, I cook at home, I eat at home, I even get up in the morning and cook an egg or some oatmeal and make my own coffee. I hang my clothes to dry. I play games with my kids, go for walks, make quilts or make music or read books in my spare time. I recently pushed myself a little bit and now I can my own jams and jellies and soon I will making my own wine. Wish that I could walk to work the way my grandfather did, but I am working on that. I easily live on around $30000 a year with my two kids. When I buy a house (soon), my housing costs will stay more or less the same as my rental but the house, small and simple, should get paid off quickly and then my expenses will go down. And I fully expect my income to go up. It does pretty reliably every year. I always look around and think: why do people live like they do with the crazy commutes and the stress and the giant debt loads?

  • Chucks May 21, 2013, 7:03 am

    I’m just going to niggle a bit here with your manual car advice. Automatics today get better mileage than manuals and are essentially just as reliable. But here’s the big thing- most people under 30 don’t know how to drive a manual. I had to call 5 different driving schools in Philly to find a place that could even teach me. If you go to sell your stick in 5-10 years, you’re cutting out a big market and might lose on the retail.

    • ChronoGN May 21, 2013, 7:14 am

      I think it will be the opposite. If you go to sell your stick in 5-10 years, you can probably get a premium for it because stick shift cars are getting harder and harder to find. Automotive enthusiasts will still want manual trans. You can already see this going on with some models.

      • ClevrChico May 22, 2013, 1:16 pm

        For niche/sports cars, manuals do command a premium. I would never own a car with an auto!

        Once we all go electric, the manual transmission will be extinct, though.

    • Dave May 21, 2013, 8:23 am

      Current CVT automagics (or autotragics) certainly do a good job, but this is because they are really, REALLY complicated. Manuals are cheaper to maintain and cheaper to replace.

    • Lisa May 21, 2013, 9:01 am

      I’m not sure where you get the idea that automatics get better fuel economy than manuals. Here’s Consumer Reports from February:


      You pay less for a manual, so you don’t take any additional hit when you sell it. Better yet, teach your kid to drive it and save him/her a lifetime of higher gas bills.

      • RetiredGal May 21, 2013, 2:10 pm

        Bought my first brand new car (Chevy Cavalier coupe) back when I graduated college – my 6 brothers talked me into buying a manual – which I had no idea how to drive. I was sweating bullets the night before I was to get my car – “what the hell was I thinking???!!” Went to pick up the car with my dad – got in it and after a few stalls, I got that puppy rolling and home! I flippin love to drive a manual! Had a 2004 Honda Accord manual that I drove for 15 years (and finally gave away to a friend) – and miss that thing almost every day! I currently have a 09 Camry automatic, but my next car (about 10 years from now) will be a manual – if I can find one!

        • T-Lou May 23, 2013, 9:04 pm

          2004 + 15 years = 2019 – huh?

          • Marcia May 24, 2013, 12:51 pm

            probably meant 1994…I make that mistake all the time. I completely lost the 90’s somewhere…

    • David James May 21, 2013, 10:03 am

      Chucks, while there are indeed automatic transmissions that do as well or better than manuals, they are far from the norm at this point. I would be willing to bet that in a few more years (10?) we’ll see the automatics surpass manuals as a general rule, but the added complexity has to come at a cost.

      The automatics that are more efficient seem (in my observations) to be the 7 and 8-speed models that generally aren’t seen on reasonably-priced cars. You can’t profitably sell a ludicrously-complicated transmission on a smaller (i.e. non-gluttonous) car with a reasonable engine, because the margins just aren’t there to support it.

      This is, of course, ignoring the fact that a manual transmission is going to be much cheaper to maintain/repair than a crazy automatic that is as complicated as the entire rest of the car put together.

    • RIK May 21, 2013, 1:59 pm

      You don’t need to go to school to learn a manual transmission — just borrow a friend’s stick shift and go to a parking lot on a Saturday. If none of your friends have a manual — just buy an old POS with like 250K on it and drive it until it dies.

    • Jen May 21, 2013, 8:00 pm

      I agree with those that say that used manuals may be harder to re-sell (though mustachians are not re-sellers, but rather buyers of used cars). With driver-less car technology just around the corner, manuals are likely to become more like a hobby.

      However, if you travel in some other parts of the world, it really pays to drive a stick. For instance, in Europe it may cost 2 or even 3 times (!) less to rent a manual than an automatic. Really worth a couple of hours of practice! :)

      • Andrew May 21, 2013, 10:34 pm

        Good point about traveling, I’ve been at many rental counters overseas that didn’t offer anything but a manual tranny car. I’m glad I learned at an early age, like riding a bike.

      • IAmNotABartender November 8, 2015, 12:29 pm

        Or just take the public transportation that is so much better in Europe and Japan. :)

    • Matt May 22, 2013, 9:17 pm

      It might be true that some automatics have a better EPA rating than the corresponding manual version of the car, but that doesn’t mean that you couldn’t drive the manual more efficiently by shifting such that you stay in the highest efficiency range of the engine.

      I have a modern (computerized) automatic car, and I generally consider it to be very good. For normal driving it probably does as well as I would in a manual because I don’t always shift at the right time and I don’t know the most efficient operating points for my engine. But it’s not perfect. I just spent 12 hours driving across the country today, and I noticed a few trade-offs in the transmission algorithm to make it more smooth, responsive, and “normal”.

      If I’m driving along at high (over 70) highway speed and it a hill, the car sometimes can’t maintain speed in 5th gear. I’m not sure that the engine is at full throttle when it shifts, but a better question is whether it’s at an efficient operating point. I noticed that if I’m driving normally, a lot of times it will just unlock the torque converter instead of shifting down a gear. That sends the engine speed up, but doesn’t really make the car go that much faster. On the other hand, if I’m using the cruise control under the same conditions it will go straight to 4th gear and lock the torque converter, which seems more effective. My theory is that if the driver is controlling the throttle input, it unlocks the torque converter in anticipation of shifting and to keep the transition smooth.

      There are certain situations where there is practically no way to maintain a constant speed. The car will either choose a high gear and decelerate, or if I increase pressure on the gas, it will downshift and accelerate. If I let off the gas enough to keep a constant speed in the higher gear, it will upshift and start to decelerate again. At this point, if I make it downshift again it will hold the lower gear for a while, to the point where it is difficult to go back to the higher gear when I want without slowing down because of engine braking with my foot almost completely off the gas.

      The cruise control in my car was definitely not designed for efficiency. It will do everything it can to maintain speed up a hill, even if that means shifting from fifth to third gear when going up a short overpass at 80mph, increasing the engine speed to over 6000 RPM. Driving slower or on more gradual hills the problem is more subtle, but still there. If I just set the cruise control and sit back and relax I’ll be wasting gas flying by people going up hills and getting passed by trucks on the down hills. There should be a way to program the cruise control to slow down a bit on up hills and speed back up on down hills.

      On another note, one of my friends bought a car with a fancy new automatic transmission with lots of speeds (more than 6). He says that there is no way to service the transmission without hooking the car up to a computer because it has to cycle stuff internally to move fluid out of several chambers, or something like that. Basically he has to take it to the dealer for anything to do with the transmission.

  • Joey @ the green gazelle May 21, 2013, 7:25 am

    YES! You are spot on. The trouble is that we are taught to be good capitalists, not to be thrifty. Even those of us that are taught to be thrifty often want more stuff – just found at a better price (the fact that a 1000 square foot home is seen as small is evidence of that). Yours is the first blog I’ve read that shows you don’t need as much as a retirement calculator would tell you in order to stop working. THANK YOU for giving us hope!

    • jf May 21, 2013, 10:46 am

      One small addendum. I would change the word “capitalist” to “consumer.” I consider myself a frugal capitalist. Without capital, not sure we could retire early ;)

  • Miram Berkmar May 21, 2013, 8:10 am

    Suze Orman was a financial advisor before she became a media personality. I have worked on the edge of the financial industry- in estate planning. I must have seen a thousand estates, but no true Mustachians. Many did very well for themselves on very modest salaries a la Millionaire Next Door, but no 30-year-old retirees. If there are some in my neck of the woods, they must have drafted their own wills and trusts or not yet contemplated their own mortality. (A side note: the DIY estate plans I did see were pretty scary. Please do you homework or pay to have it done right).

    My point is that the kind of people who are into MMM do not pay for financial advice either. We do not need to fire the advice industry, but ignore it. Frugal types should be their own investment adviser. IMHO, the small investor would be hard-pressed to beat the returns available from simply going to the Vanguard web site and using the asset allocation and other tools available there. The same goes to the lifestyle side. Can you imagine driving your leased Escalade to an office within biking distance of MMM’s home and paying him cash money to punch you in the face? Maybe this could the next MMM side business. ;-)

  • Gigi May 21, 2013, 9:25 am

    I just discovered your blog last week and wanted to say thank you for what you’re doing! This kind of financial education is sorely lacking.

    My best friend and I talk about this often because we both have done a lot in our relatively short (both under 30) lives. We’ve been to Switzerland, Australia, Africa. We’ve seen and done things that many people say they can’t afford. But the reality is that having money is all about having priorities – and in most cases about having priorities that go against our consumer culture grain.

    Bravo, MM! Thanks for sharing your wisdom.

  • Ron May 21, 2013, 10:52 am

    Average American family of four thinks they need $58k/year.


  • Andrew May 21, 2013, 11:49 am

    I almost punched my computer screen when Suze said to work “JUST” 14 more years. The caller was asking if she could retire in 7. Work that 7 plus 7 more is not a legitimate answer. And then the ridiculousness expanded when the new monthly retirement income that Suze projected didn’t even meet the caller’s monthly “expenses.” On a side note, you cannot have EXPENSES of $6100 per month. Expenses are essentials. Basics. The bare minimum. You can certainly have monthly SPENDING of whatever the heck you want. She could’ve already retired and been traveling a bunch if she’d curb that ridiculous spending! But I’m not telling y’all anything new . . .

    • Chris May 21, 2013, 1:02 pm

      Laughable how Suzie wanted the caller to add in another 20k into her “emergency fund,” presumably earning 0.5% interest.

    • BonzoGal May 21, 2013, 3:17 pm

      Amen, Andrew. I think that what you just wrote is key: “expenses” vs. “spending.” Too many people confuse the two!

  • Lisa May 21, 2013, 12:18 pm

    I recently read a Suze Orman “financial savvy” quiz that began with a question about buying a car. The choices all had to do with how to finance either a new or used car. Saving up your money until you could afford a modest car, or just riding your bike, were not options.

    Suze needs a punch in the face, but she’s like every “financial adviser” I know. They live in McMansions in new subdivisions far from the office, with garages full of expensive cars and toys and second homes in resort areas. From getting to know the wives, I know that this is financed mostly on debt. Why in the world would I take financial advice from someone like that?

  • Joe May 21, 2013, 12:18 pm

    Somebody help me out here: in watching the video, the lady getting the advice from Suze Orman has enough liquid assets to pay off her car AND possibly her home right now. Why doesn’t she do that, instead of the investment account churning away at 6% or so? Am i correct in this assumption? My feeling is if she has a setback (illness, layoff, etc), at least the house and car are paid for.

    • Chadnudj May 21, 2013, 2:20 pm

      Simple answer? If that mortgage and/or car loan is at a low enough percentage (4% or so), her money is technically better off earning her 6% interest than paying off that debt earlier (6% > 4%). I’m sure if she lost her job, her first move would likely to be to pay those off with some of her investments, however.

      My bigger question is why someone with $300k plus in a non-retirement investment account has a $23,000 emergency fund earning very little in interest? Put that same $23k into an investment account earning 6% a year and in just 7 more years she has nearly $35k. I mean, I understand the purpose of having an emergency fund is to have liquid cash available in the event of an emergency, but at a certain point I think you’re better off putting your money to work and “risking” that if/when an emergency comes you’ll have to sell some shares and pay the transaction fees/capital gains….especially is you’re fairly confident in the stability of your job (because truly the biggest emergency tends to be the loss of your job).

    • Leslie May 21, 2013, 3:43 pm

      I agree. The monthly interest payments saved on the car and home loans could be automatically transferred into a retirement account.

  • Rockstache May 21, 2013, 12:48 pm

    I would argue that doctors ARE converting this financial advice to medical advice. The only difference is that instead of telling people to get on the treadmill to eat what they want, they are handing out medication.

  • early FI May 21, 2013, 1:11 pm

    Can we find the woman in the video and tell her she can retire yesterday? I am horrified to think she might take the advice she was given.

  • Matt May 21, 2013, 2:56 pm


    I have recently gone back and read some of your earlier blogs, specifically from 2011. I don’t mean to take anything away from the newest ones but some of the old ones are genius. Very direct and with concrete numbers to back up the talk. I think I’ll reread all the old blogs.

  • BankBucksBeard May 21, 2013, 4:06 pm

    I had to stop watching the video at “D-“. I almost spit out my beer. I’m 10 years younger than Megan and if I had 1.4 million and a house nearly paid off I’d retire right now.

    I feel like we need to reach out and rescue Megan from another 10 years of working ASAP!!

    Megan, if you’re reading this: RETIRE NOW!! (And nice job saving! A+)

  • Mr. 1500 May 21, 2013, 9:09 pm

    One other thing, That Suzy Orman picture on the book scares this shit out of me. She looks like she’s hopped up on meth or something.

  • Mr. Bonner May 21, 2013, 11:37 pm

    In one word…no. Some of the faces of the industry might not represent the whole industry or even the best interests of the industry, but there are many that preach similar values found here and on many other PF blogs. I personally can’t stand Suze O. Her voice sounds like nails on a chalkboard to me.

  • abraxas May 22, 2013, 8:23 am

    I think using 4% as a safe withdrawal rate is pushing it Mr MMM. The current manipulation by the central banks is repressing returns on cash to the point where the bond yields of the ten year notes of the government of Rwanda are under 7%. No disrespect to the great people of Rwanda but would you be comfy with lending their government your money for 10 years at 7% interest?

    This is not just unique to Rwanda. Junk bonds are now yielding under 6% so Mr MMM please do tell how you arrive at a 4% SWR in this no yield environment? You say, you bought some stocks in 2003 when they yielded 9%? Good for you! How about the rest of us who don’t yet have an income producing portfolio?

    • Mr. Money Mustache May 22, 2013, 8:50 am

      Abraxas – did you read the 4% rule article I linked to under the text “4%” in the article? You don’t need to base your retirement planning so much on on current bond yields, as on, “would I be covered in the worst situation that has happened over the last 70 years”?. Because both stocks and bonds will be going up and down plenty over your retirement period and you’ll be rebalancing between them.

      Even more important than what stocks do, is your lifestyle flexibility as explained my own 4% rule post: http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

      For example, I have assets that would allow roughly a 6% withdrawal rate right now, but I’m withdrawing less than 0% because retirement hobbies have started more than paying for the groceries. This is not an unusual situation for early retirees. For example, even the lady in the Suze Orman call-in said that she was interested in working part-time after retiring.

      So the suggestion? First get your investments to the 25-times-spending level. Then see how your lifestyle looks and whether are you are emotionally ready to quit your job. Financially, you’ll be fine.

      • abraxas May 23, 2013, 1:18 pm

        I read your earlier blog post. Thanks. But I still do not feel that 4% is a SWR at this point here is why:
        To me the equation boils down to a simple math equation: your investments have to deliver inflation adjusted returns of 4% or better or else you’re depleting your nest egg.

        Currently there is no investment that I am personally comfortable with that offers a 4% after inflation return. The typical 60/40 stocks/bonds portfolio is not for me as I believe it puts too much faith in the continuing prosperity and the bond component seems to have ran its course over the past couple of decades.

        The Harry Browne Permanent Portfolio 25/25/25/25 Cash/Bonds/Stocks/Gold has had mixed results in different economies around the globe and is really only good for wealth preservation in many cases only giving returns equal to the rate of inflation.

        The idea of buying a rental property to throw off regular income is not appealing to me for at this point. I currently live in Canada where property prices are overly inflated anyway. Alas I live in a province with relatively reasonably priced real estate (NB). However, in order to create more slumlords and discourage any RE investment, our province charges 2x the property tax for non-owner occupied properties. Combine that with income from rental being taxed at full marginal rates it makes it financially very unappealing versus buying some dividend paying stocks.

        I’m sitting on about 12x of my annual expenses (about 7x my annual net income) nearly all in CASH because I don’t know what to do with it all. Ben Bernanke and Mark Carney seem to really hate me (or people like me).

        • BadAss CPA May 23, 2013, 2:40 pm

          There’s no law against depleting your nest egg, your goal shouldn’t be to amass a million dollars and then die with it all still there. If your returns are below 4% at some point (and there will be those times), then you deplete your stash a bit OR cut back on the expense side.

          For example, say you only got a 2% return this year, and fund the other 2% from the asset base. You could theoretically do this for 50 years before using up 100% of your funds. Yes, there will be years below 2%, including those with losses, but there will also be many more years over that will let it balance out. I’m sure the order in which this all happens fudges up the math, but in general what I’m saying is not to worry about years when the stash is depleted.

        • Mike September 3, 2014, 5:44 pm

          Since you posted the S&P 500 (VFIAX) is up 21.47% (not including dividends), and the total bond market (BND) is down 1.05% (up 2.37% when including non-reinvested dividends), so I think that typical 60/40 stock/bond portfolio is looking pretty good. How does that compare with the safety of your all cash holding, where you are guaranteed to lose money at the rate of inflation?

          If you are really concerned about the markets to the point where you would be unable to keep your money invested, then perhaps buying a deferred annuity to cover say 25% of your expenses starting when you retire would improve your comfort level. This would just be emotional insurance though, since your returns in the market should always outperform what the insurance company gives you after they take their share of your money.

          Also, as the prior reply states, you should expect to draw down your principal over time, and I believe the 4% rule assumes this will happen, so that you are expected to run out of money at some point around 100 years old. Since you will be retired for many decades, you have time to fine-tune your withdrawal rate, dropping it down slightly if it looks like you will be running short, or increasing it if it looks like you will have too large of a surplus.

  • MikeL May 22, 2013, 12:38 pm

    The video clip is almost too much to believe. 1.4 million at 48 is a D-! I don’t understand how so many people can be so foolish that these “advisors” have a job. Wow. Thanks for the clear thinking, face punches, great posts, and sanity! If only MMM was mainstream.

  • Maia May 22, 2013, 1:14 pm

    Yup. I don’t buy stuff, but I do get to occasionally travel and I get to play an expensive sport. I’ve been to Starbucks once in my life and I paid $2.50 for a green tea. The $2.50 didn’t hurt me financially, but if I did that everyday instead of making my own, it would add up in time-plus they didn’t even have lemons to put in it. People just don’t think of the choices they are making and live unconsciously.

  • Rachel May 22, 2013, 3:57 pm

    The thing that annoys me about the Suze Orman clip is that Suze brushed over the woman’s concerns and wishes for her life and instead told her what she assumed she would want. Suze assumed that the woman would prefer to continue her current spending patterns. She very well may want to, but is that worth trading an additional 7 years of her life for? That is a very personal decision, but Suze just swooped over it with the apparent assumption that no one would be willing to give up extra expenses in exchange for 7 years of life free of the constraints of a full time job.

    A responsible response would have been to tell the woman the options, and let the woman make her significant life decisions based on how she valued the various trade offs. Then again, I guess that doesn’t make for great “know-it-all in 30 seconds” television.

  • modestmustache May 22, 2013, 9:03 pm

    What it boils down to is that the financial services industry has no financial incentive to educate, or to provide simple and practical advice. On the contrary, misinformation and scare tactics are primary drivers of revenue. Misinformation will elicit many to believe they need $3 million plus to retire, plus college savings accounts, etc. Misinformation will make investing sound like a daunting task that should only be entertained by highly caffeinated MBA’s from the Wharton school. On the low end of the spectrum understand that nearly 90% of branch bank revenues can be traced to overdraft and other fee income – exacerbated by ‘pay biggest item first’ banking and the outright lie that the bank couldn’t tell customers in real time that the debit card or ATM transaction they are doing will overdraw them.

    I’ve worked in the financial services industry for just over a decade, and it definitely needs to be fired. Let’s start with financial planners or ‘registered representatives’ for the banks, who for a mere 4.5% sales load (and annual expense ratios over 1%, typically) will put you into a ‘fund of funds.’ Want diversification – we have 4 to choose from – conservative, moderate, aggressive, and money market! Of course with all that diversification you are paying far too much for what is essentially an index fund.

    Don’t like your investment returns in a down market (2008) we can put you in a nice fixed annuity at 2%. In a few years when you don’t like 2% since the market has rebounded we’ll put you back into stocks and charge you another 4.5% sales load. And no, this doesn’t count as ‘churning.’ Good advice like ‘stick it out,’ and ‘remember that time we talked about market risk’ doesn’t pay. This type of churning does, and handsomely.

    In that role we salivated over ‘early retirements/buyouts’ from the auto companies because it was easy to get 401k rollovers (at 4.5%, again). It didn’t matter that the investments they were already in were essentially the same moderate or conservative basket of funds we were selling, ours were better and of course paid.

    If someone can give me one reason why these people are anything other than glorified door-to-door salesmen in nice suits I’m all ears.

    I could talk about the outright lies and predatory lending of the mortgage industry, the payday lending industry, and the credit card industry. In my opinion the majority of the people in these industries are either don’t know any better or don’t care. I have little respect for either type of person when they pass themselves off as a professional.

    • Freeyourchains May 23, 2013, 9:47 am

      Thank you modestmustache!!! That was quite enlightening! I have been learning more and more about the business models of these industries so i can avoid their tricks on consumers who follow what they are told to do by others without question.

      I hate being a financial slave to the system, so i chose to ignore most of the mental chains and question them all, thus i am learning all i can to “free my chains”. Glad i picked up on early retirement extreme when i was 23 and a bit of frugal skills in college, and at the first job.

  • Mr. 1500 May 22, 2013, 9:14 pm

    OK, one more comment on the Orman book. On the bottom, it states “create what you deserve.”

    I hate the word deserve. No-one deserves anything. You get what you you get through hard work and making the most of your 100 billion neurons. That’s all there is to it.

    • Fangs May 27, 2013, 11:40 am

      What about people who inherit? Plenty of people get what they get by working the system, luck, and plain ol’ being born to the right family.

  • Freeyourchains May 23, 2013, 8:08 am

    Another option for water, make a big surface area cistern with a valve, a filtration system, and solar boiler attached to it; then pipe it throughout your house as needed. Learn how by watching the Discovery Channel’s, “The Colony” dvd from your local library or online. They survived 16++ weeks without money just fine, then decided to tour around, leaving their self-sufficient systems behind to go make more.

  • Freeyourchains May 23, 2013, 8:49 am

    These same financial gurus are spouting out “Max out your 401k, and IRA accounts, then roll-over to us!” too. This really makes me hesitate in giving all my investment money (except employer matching) to the hands of “age restricted, fund restricted, withdraw restricted, federal policy variabled, admin fee’d, complete tax power and complete tax control over you” non-taxable accounts. Just a thought.

  • Doug May 23, 2013, 10:01 am

    Well, that settles it. I will NEVER read any trash by Suzy Orman, none whatsoever. If you have a net worth of $1.4 million, why not retire right now? If a large part of that money is tied up in a house and a big part of that $6100 a month is going to mortgage payments sell the house, move to a location where housing is much cheaper, and retire there. If that $1.4 million is invested in liquid assets, then at a 5% rate of return that’s $70 grand a year. Who in their right mind couldn’t retire on that amount?

  • Jim May 23, 2013, 1:17 pm

    Not everyone has the option of working seven or fourteen more years, so getting your affairs in order so you can survive on what you have, particularly once you reach 50 or 55, is important, even if you want to keep working.


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