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Everything You Thought You Knew About Personal Finance Is Dead Wrong—Here's the Truth: [View all]
http://www.alternet.org/economy/everything-you-thought-you-knew-about-personal-finance-dead-wrong-heres-truthLP:Media figures like Suze Orman, David Bach and David Ramsey tell us, "Follow my advice and everything will be OK." Why is this promise a lie?
HO: All of these people are in the business of selling simplistic solutions to complex problems. Should we live below our means? Of course. Is it always possible to do so? No. It’s not easy to live within your means if your means are a $300-a-week unemployment check. As if that were not enough, some of the advice they are purveying is flat-out wrong. Our financial woes are not the result of spending our funds on lattes and other small luxuries, like David Bach says. You can’t choose not to participate in a recession, despite what Dave Ramsey thinks. Personal finance can’t do it all for us.
LP:You write about the financial literacy movement, which, on first glance, looks like a helpful educational crusade. How has it conspired to make us poorer? What does it mean that big banks like Capital One promote it?
HO: Financial literacy classes sure sound good. But students who take the classes don’t seem to retain much of the knowledge. And, when you think about it for a moment, that makes sense. The idea that taking a class on how finance works at the age of 17 can save someone from a predatory 100-page small-print mortgage when they are 40 is just preposterous. Don’t believe me? Tell me how the French and Indian War contributed to the American Revolution. See what I mean? I swear that was taught in your high school history class.
HO: All of these people are in the business of selling simplistic solutions to complex problems. Should we live below our means? Of course. Is it always possible to do so? No. It’s not easy to live within your means if your means are a $300-a-week unemployment check. As if that were not enough, some of the advice they are purveying is flat-out wrong. Our financial woes are not the result of spending our funds on lattes and other small luxuries, like David Bach says. You can’t choose not to participate in a recession, despite what Dave Ramsey thinks. Personal finance can’t do it all for us.
LP:You write about the financial literacy movement, which, on first glance, looks like a helpful educational crusade. How has it conspired to make us poorer? What does it mean that big banks like Capital One promote it?
HO: Financial literacy classes sure sound good. But students who take the classes don’t seem to retain much of the knowledge. And, when you think about it for a moment, that makes sense. The idea that taking a class on how finance works at the age of 17 can save someone from a predatory 100-page small-print mortgage when they are 40 is just preposterous. Don’t believe me? Tell me how the French and Indian War contributed to the American Revolution. See what I mean? I swear that was taught in your high school history class.
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