The Personal Finance and Investment Advice Fallacy

A few weeks ago I spoke on my podcast (Mr. Podcast) with reporter David Ruddock about career personal finance gurus, in particular career “gurus” like David Ramsey and their generic advice, and then got reminded about it again last night by a great New York Times article about how personal finance influencers.

In short, there’s a multi-billion dollar industry that is predicated on giving you advice that either doesn’t work anymore or never worked to begin with. David Ramsey - an evangelical that made his money in the 80s and 90s and made up the letters he was responding to in his Gannett column - has spent his career tutting at people for having credit card debt, or spending too much on cars, or saying “oh, just pay off small balances first,” and has made millions doing so. Jim Cramer has grown a huge audience by screaming at the camera to buy stocks and giving his buddies free press, while failing to beat the market and knowing full well that any advice he gives on air is old news.

The insatiable hunger for more investment and personal finance exists as a symptom of overwhelming despair and desperation. It’s the same shared delusion that people have when they say that the only thing between you and massive wealth is “hustle” - that these pieces of advice, in gestalt, will be enough to make you thousands or millions of dollars. Conversely, they they frame their personal finance advice as a consumption-based, evangelical panacea - if you take enough of their advice, you’ll be fine, and your failure to do so is a moral problem, a problem of your own creation by not taking enough of their advice.

The problem with a lot of this personal finance advice is that it’s rooted in, at best, advice that made sense in the 90s. The classic “rule of thumb” is that you want to have 10 times your income in retirement by age 67, which is totally impossible for the majority of people, especially considering 63% of Americans live paycheck-to-paycheck. Ramsey’s “top tips” are usually predicated on being anti-credit card (which means your credit score never builds) or paying off a balance in its entirety - and he even says dumb shit like “you don’t actually need a credit score,” which is both incorrect and legitimately harmful.

Most people don’t have the luxury of having an emergency fund, or paying off credit card balances all at once, or paying cash for everything - these are all rules that made sense when housing was easier and cheaper to get, when education was cheaper, and this advice is predominantly delivered by people who haven’t experienced the hardships of the era they’re giving advice in.

Gary Vaynerchuk is one of the worst personal finance cretins, encouraging people to get into the world of retail arbitrage - taking things that are on clearance and trying to flip them on eBay, claiming (with no evidence) that he’s “watched people literally go from being homeless to building up $50,000 to $100,000.” The crassness and irresponsibility of this advice is the classic personal finance advice scam - it makes the result (a large amount of money) seem as if it’s just there for the taking, and you’d be a fool to miss it. The problem is that it also requires both excess capital to invest in shit going on clearance at Walmart, the luck that said clearance shit is selling for more on eBay, and for people to actually buy it.

And it always comes back to people making the choice to be poor:

What Gary Vee thinks it comes down to is people’s ambition: “It takes grinding. … I see people that are in debt that are like ‘I’m not going to Marshalls’ and I’m like ‘That’s why you’re a loser.’”

No, you are not a loser if you don’t decide to play retail arbitrage because a guy who got given a wine store and has a giant social media agency and hasn’t experienced an actual hardship in decades.

The personal finance circuit and the hustle economy are some of the most public acts of cruelty in capitalism. It exists to kick people when they’re down - telling those who are suffering because inherent unfairness of capitalism (where so much is based on where you are born, when you were born and whom you are born to) that it’s their fault, and that the reason they’re doing badly is because they haven’t taken the right advice or done the right thing.

Sure, people make mistakes and spend money on stupid things, but our education system rarely if ever teaches basic personal finance, and our culture pushes people to consume and consume and consume. It oftentimes comes down to parents teaching kids about money, and even then it’s tough to teach abstract concepts while also applying the cultural and societal knowledge - the pressures of consumption and keeping up with the joneses - and combining that with what shit actually costs.

Rarely does personal finance advice actually take into account the real, tangible cost of existence in today’s society. Those giving it likely do not have to sweat individual purchases, and do not give pragmatic advice to evaluate your costs (or even know what those might be). So much of financial advice is dogmatic - that it’s wrong to do this and right to do this, and only by obeying these rules can you reach financial independence.

And, even more cruelly, there are plenty of people who do follow these rules who still get their asses kicked by the world. Many, many people keep their books balanced and are careful with every penny yet still suffer, because of the lack of jobs that actually pay a living wage. People buy used cars and pay cash for everything and scrimp and save and still get whammied by medical bills, or lose their jobs because of at will employment, even outside of a pandemic. The evangelism of the credit-free human being that doesn’t buy new cars and saves every cent they can is still vulnerable, and it isn’t because they didn’t follow the rules of a guy who makes millions off of giving them false hope.

Every charlatan that gives advice about “what to do to save money” knows deep down in their rotten soul that nothing they say actually changes anything. They repeat advice that sounds nice in theory knowing that in practice they either don’t need to or simply don’t follow it, and that most people actually struggling aren’t doing so because they don’t follow that advice. It’s the same as every over-religious freak that tells someone that their suffering is because they don’t pray, or because they don’t go to Church, or that “God Thinks” something that would change their life. It’s an excuse - an unforgivable one at that - to sacrifice empathy.

Choosing to promote and extol the beliefs of the Vaynerchuks and Ramseys of the world is choosing to ignore reality, and continue to perpetuate a culture that punishes people for living in many structures and situations that they had no hand in choosing. Each piece of advice is divorced from reality, dripping in privilege and distance from pain, unaware of real struggle and actual suffering.

And deep down, they know that it’s a lie.

“Vaynerchuk admits in his #TrashTalk series that not everything can be flipped. But the “grinders” who can spot trends and are willing to hustle can turn a quick profit.”

They always have an excuse for your pain, and that excuse is always that you’re just not trying hard enough.