The article everyone is talking about today

July 21 54 Comments latest by reader

…is the phenomenal New York Times article written about how a woman named Diane McLeod got into thousands of dollars of debt. It’s remarkable because it includes a rich set of multimedia features that let you understand how many of us get into so much debt — and also allow you to compare yourself to others. They include:

• An overview article: Given a Shovel, Americans Dig Deeper Into Debt
• A timeline of debt from the 1920s until now
• A haunting video of Diane McLeod. Just watch her attitude and how her debt affects her.
• 700+ comments from people (I suggest sorting by Readers’ Recommendations). The condemnation is both enlightening and saddening. We seem to take pleasure in seeing other people’s pain (”She could have made better choices…Idon’t buy all that crap”) and yet, some of it is very true. I agree with most of the comments about the evilness of credit-card companies, and yet, we do have choices.
• A tool that lets you compare how much debt you have with others like you

Want to watch it all? Click here to start.

Here’s my take: On one hand, we all know people like Diane, who make poor financial decisions, never take the time to get educated about money, and sink into a hole of financial quicksand. These people are easy to judge because they have all the visible signs of financial stupidity: New cars every two years, expensive high-definition TVs, vacations, houses they can’t afford. And yet, on the other hand, financial institutions, advertising, and social influence have all coordinated an attack on us to spend more. In fact, we’ve been told for decades that owning a house is the single-best financial decision we can make. It’s not.

Is education the answer? Maybe, but it’s not a panacea.

Should we just stop spending so much? Of course we should, but that’s like saying we should all lose weight by making better choices. Easy to say, extremely difficult to do. I’m hopeful that the current environment calls for a restructuring of our priorities. I hope that we get conscious about our spending and start prioritizing saving over spending. With extended hardship, this will become more likely. We all need to be conscious of our finances, but we’re playing in a world with the deck stacked against us.

I’m tired of demonizing people for making poor spending decisions. It might make you feel good about yourself, but it doesn’t actually change behavior.

And fundamentally, that’s what this site is about. It’s not about making people feel better about themselves by looking down at other people. It’s about getting behavioral change. In that vein, the 557 examples of changes people have made as a result of reading this site are probably my biggest success.

I fully expect lots of commenters to brag about how you got out of debt by making hard choices (just as they annoyingly bragged about their inexpensive weddings in the comments of this post). That’s great. But I’m sick of those comments that tell people to “just spend less.” Not everyone can stop spending 30% of their money on going out, because a lot of people don’t have that extra money.

There’s nuance to these arguments that’s missed by idiots who blather about how we should all “make better choices” and “start being responsible.” Of course we should, and if you’re reading this blog, you’re already doing this. But there are details that are missed by such superficial statements.

Here’s what I suggest: Read the New York Times article. Then, read the 152 comments from other iwillteachyoutoberich readers about how they got into debt. That’s 67 pages of startlingly honest stories, most of them having to do with educational loans. Then, I would encourage you to carve out some time for two resources to understand some of the nuances of why many people — especially poor people — can’t get ahead. Here are two resources I fully recommend:

Also, check out 30 Days of Working Minimum Wage, a video in which Morgan Spurlock (who brought you Super Size Me) and his girlfriend work minimum wage. Sure, it’s gimmicky, but it’s a truly eye-opening movie that provides insights on why it’s nearly impossible to get ahead if you’re earning a certain income.

I’d love to hear your comments.

(9 votes, average: 4.67 out of 5)

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54 Comments latest by reader

The 1 question to ask about $1,300 in overdraft fees

May 16 64 Comments latest by Jason

I was having breakfast with someone today who told me the most interesting story. He had been dating his girlfriend for two years before they talked about finances. “It took me that long to get her trust,” he said. She was a public school teacher, so she didn’t make that much money. When he looked at her finances, he noticed that she had a lot of overdraft fees. He asked her to guess how much she had spent in overdraft fees. “About $100 or $200?” she guessed.

It turns out that her overdraft fees totaled $1,300 in the last year.

Here’s where it gets really interesting. He didn’t freak out or start yelling about how to negotiate out of bank fees. He simply pointed out something very gently: “What if you could focus on your overdrafts? If you eliminated just that fee, you’d be so much better off.”

Not set up an entire investment plan and global asset allocation. Not create a fully automated system with multiple accounts and savings strategies. Just focus on one big problem.

Now the question is…what’s your one big problem?

(Mine is eating out too much.)

(5 votes, average: 3.6 out of 5)

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64 Comments latest by Jason

Look how men’s and women’s magazines write about money

October 18 63 Comments latest by Queercents » Blog Archive » The Top Personal Finance Blogs by Women

I read Oprah’s magazine once in a while. Yes, I said it. And my jaw drops when I see an article like the recent, “25 things you don’t have to worry about.” What? Why do I need a magazine to tell me what I don’t need to worry about?

-Ramit

Investment advice comes in all shapes and sizes. Grab a few back issues of Esquire and a quick scan of its “investing” columns reveals “investing” advice. For example, they give opinions on buying Wal-Mart, selling Apple, and buying the Baby Bells vs. Cable Companies.

But do the same with O, the Oprah Magazine and this is what the editors categorize as “investing”:

• How to buy life insurance
• The basics of financial planning and investing
• Home finance basics everyone should know
• Know how much home you can afford
• How to play rollover with your 401(k)

So here’s my Aha! moment: why do men get “investing” advice in their magazines and we get financial basics in ours?

Women get touchy-feely encouragement
Suze Orman is an O Magazine columnist and typically I like her advice. She’s spot on when it comes to buying a used car and term life insurance. But when speaking to women, is she talking down to us?

Case in point: look at what she says about establishing a rainy day fund in this O article. She writes, “Ideally, you will have eight months of living expenses stashed in a savings account. I know that sounds daunting, but make it a goal. Start putting away a little each month. Every penny you save is a step toward building your own personal insurance plan.”

Ahem… “I know that sounds daunting but make it a goal.”

Would a male personal finance expert ever instruct a man this way?

Men get hard-hitting advice
Ken Kurson, the columnist at Esquire and author of The Green Magazine Guide to Personal Finance: A No B.S. Money Book for Your Twenties and Thirties writes, “You’re keeping your emergency cash in a money market fund. In other words, don’t fund the expansion of your portfolio into stocks and bonds with the money you’re keeping on reserve, but feel free to consider that money part of your portfolio.”

See the difference? First let’s consider the demographics of O Magazine: The median age is 45, readership is predictably female (91%), married (66%), and a median household income of $88,000. Their readers aren’t exactly females fresh out of college.

So Orman is encouraging forty year old women to make sure they have an emergency fund and Kurson assumes twentysomething guys already have a stash in reserve. Perhaps this is why CNBC gets Jim Cramer and The Today Show has Jean Chatzky.

A commenter at BloggingStocks had this analysis of Orman’s writings by saying, “When someone is talking to me about money, I want math. I bought one of Suze’s books and when she started talking about how I ‘felt’ about my money, I put the book down in disgust. Behavior patterns as applied to money fall under psychology; everything else is quantifiable. I don’t need to have a good relationship with my money; I need to understand how the stock market, the housing market and my 401K work.”

Gender-specific behaviors with money
But do female money experts talk down to us or are we inviting the tone by behavior? After all, according to Manisha Thakor and Sharon Kedar, authors of On My Own Two Feet, the average woman between ages 24 and 35 has only $500 in savings.

Woman’s Day acts like their readers only have $500 in savings as well and I don’t know any women under fifty subscribing to that magazine. Mary Hunt is their columnist and a quick glance at her 2007 columns reveal topics like “Big Online Bargains” and “Slash Your Food Bills”.

Kay Bell, the blogger at Don’t Mess with Taxes, gives her perception on the male vs. female financial behaviors. She writes, “Even today, some gender-specific societal expectations manage to persist… That is, a lot of women take a more ‘supportive’ fiscal approach, focusing on money maintenance, holding on to what they have, instead of taking steps to advance it.”

“We need to get over that right now and get more aggressive when it comes to money – making it, saving it, investing it. The go-for-it approach seems to be more typical of male financial bloggers. Men, at least in my anecdotal observations, are more apt to be risk takers with their money. They embrace the idea that to make more money you sometimes have to take some financial risks with what you’ve got.”

And it’s not just Oprah
I couldn’t find any money advice in InStyle magazine, but they offer plenty of ideas on how to spend it. Glamour claims to have a money expert, but the only thing I could find was an online debt quiz. Take it and see how you stack up with their readers. If you’re a regular follower of personal finance blogs then it’s likely you’re way of ahead of these well-heeled and in style consumers.

Just to be fair and balanced, I reviewed some other men’s magazines and money was either missing or sexualized and presented by young, attractive female writers. Check out the article by Anya Kamenetz in Men’s Health called, 7 Financial Habits of Highly Laid Men. Enough said – otherwise this might segue into a different discussion.

But maybe money is missing from general interest magazines because men go to the source for their financial advice by subscribing to the money periodicals. As an example here is the male / female readership break down for Fortune and Money:

Money: Male/Female (64% / 36%)
Fortune: Male/Female (79% / 21%)

And guess who is reading The Wall Street Journal and Financial Times?

Money spends the same whether it’s carried in a purse or wallet
So does tone and depth of the advice really matter? In the end, money is money and basic truths are better than nothing at all. But if empowerment and financial independence are what Suze Orman wants for the ladies, then maybe it’s time to butch up the advice. Don’t sugarcoat or wrap it in a soft, pretty package. We’re ready to take it like a man! That’s how you turn women savers into women investors!

Finally, for the sake of starting a conversation below, do you agree that women get fed the softer side of money from women’s magazines? Or will some of you accuse me of gender-generalizing? If you agree, then what should we do about it? Write to Oprah? Or just subscribe to Fortune and Money like the big boys?

—————
Nina blogs about money at Queercents.

(2 votes, average: 4.5 out of 5)

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63 Comments latest by Queercents » Blog Archive » The Top Personal Finance Blogs by Women

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