Twin Tier Financial

"David has been a God sent. He is very knowledgeable in all areas of finance and has directed me to a better way of living and preparing me for retirement!" - Susan Thorne; Elmira, NY

Dear Dave: What’s Wrong With Personal Finance Blogs?

February 27th, 2011 · 2 Comments · Philosophy In Financial Planning, Psychology In Financial Planning

I've had several people recently tell me that they really like this blog and they wanted to know if I could recommend any other good personal finance blogs. I'll tell you what I've told them: I wish I could.

I don't like personal finance blogs (for the most part). They're pretty slick-looking with, what looks like, a Las Vegas strip of banner ads and google adsense running all up and down the page. The text of the page is sometimes even laced with contextual ads that produce little pop-ups that talk to you (i.e. play videos) or flash some ad for something totally unrelated to what you're reading.

I normally do not swear on my own blog, so this may come as a shock if you're a regular reader, but I fucking hate pop-up ads, banner ads, and every other type of dog shit flashing advertisement that interrupts me when I'm in the middle of reading something. If they're off to the side or non intrusive, fine. That's why I don't mind google ads--sometimes--if they are non-intrusive and don't get me to click on them through tricking me into believing they are a link to some other information on the site I am viewing. Now, the website owner can do whatever they want with their site. It is, after all, their website. But, in my view, you lose a lot of credibility with me if I have to spend more time ducking and dodging your adverts than reading the information on your site.

Naturally, I exclude my own blog from the hot mess that is the financial blogosphere (or whatever it is that they're calling it these days). I know I hate it when I land on a site and have to play spyhunter with the mouse to avoid advertisements when I'm in the middle of learning something new and exciting. I'll bet I'm not the only one who hates that too. Call me radical, but I don't want to annoy my readers with ads that beg them to leave my site, which is why I've opted not to do that with my site.

Yes, I used to use google ads myself. But, I eventually decided to take a tip from Jakob Nielsen. I dropped them so that I could offer my readers what I really wanted to offer them: good information on my blog and the opportunity to get better information by signing up to my relatively mild mannered email list in the sidebar.

Am I some kind of narcissist? Do I think I have all the answers? Am I some arrogant ass parading around the Internet beating his chest fiercely aiming to put down everyone I deem to be inferior?

No, not at all. I wished there were more blogs on personal finance that cranked out good advice. I wished there were fewer personal finance sites that didn't look like the midway at a state fair. It seems like many personal finance blogs are trying to make money by offering free advice. Sometimes that free advice is decent. Sometimes, it sucks.

But, in both cases, the free advice doesn't pay (Q.E.D.). So the next step is monetizing the site with adverts. But, if you're like me, you spend more time trying to avoid the adverts than reading the content that you came looking for (especially if the site has those adverts that look like links and when you float your mouse over the link a pop-up appears; and then you say "oh shit" and move your mouse really quickly away from the link hoping that the ad will go away but you run into another link-ad, and then another and another...and before you know it, you're looking at 16 different adverts and you can't even find the content). Eventually, I give up (as I suspect many people do) and close the web page.

Aside from the site design, I see many sites that are also (by and large) plagued by the same ideas that I write about in my special report. I am a guy who regards ideas as serious, and important.

Ideas move the world. They affect how people approach every aspect of their life from choosing values to managing money. And, it's the latter that many personal finance blogs have hinted at and yet haven't really grasped.

Case in point: Moolanomy. The site's slogan is: Earn more. Spend Less. Live Smarter. On the surface this seems like good, simple, advice. Who doesn't want to earn more? Spend less? Live smarter? Me, that's who. OK, I should probably qualify that last sentence.

Years ago, I was approached by a guy who was pitching Amway (yes, that old multi-level marketing company that sells toilet paper, soap, potato chips and energy drinks...oh yes, and makeup for you ladies in the audience). The pitch is simple: Do you want to earn more money? In fact, the rep really pushed the idea of making some extra cash "on the side." Well, at the time, I didn't know much about Amway (believe it or not). I had just heard it described as "that pyramid thing." I bought a kit with the understanding that my deposit was refundable within the first 30 days. I was expecting to return it right from the get go, unless I was somehow knocked off my feet with its coolness. I wasn't. It was returned, and I got my money back. But, I also got what I wanted out of it. An education on how this company works.

After giving it some thought, I could finally answer "no" to the question of "do you want to make more money?" without sounding like I was a few bricks shy of a load. You see, it really depends on what you have to do for that money. If all I cared about was making extra money, I could sell crack on the corner. I'd have to live with the fact that I was killing my customer base and addicting them to an immunosuppressive drug. But, if all I cared about was making a quick and easy buck, what would it matter?

The same thing applies to personal finance. There are probably 1,000 different ways to trim a budget. But, the easiest and best way to save the most money is to move back in with your parents, sell all your stuff (save maybe a few days worth of clothes) and eat rice and peanut butter for the rest of your days. Let's stop dancing around the coupon issue. Just eat less food (and potentially starve yourself--incidentally, I'm not making that last one up as a suggestion. I actually read that as "advice" on one personal finance blog dealing with the topic of how to trim your grocery budget). Car? What car? Sell it and walk or buy a bike and use that. It's 20 miles to work? Well, then you'll get good exercise. What if it rains? Well, you'll get a free shower. Just bring some soap and you'll save money on your water usage at home. I mean, how far do you want to take this? What do you base your money-saving advice on anyway?

Without setting financial goals and defining explicit, integrated, values and a central purpose in life, you end up defining money saving and efficiency strategies the only way you can define them: arbitrarily (which Moolanomy does now and again).

The same thing can be said for "living smarter." 

But, it doesn't end there. Moolanomy's Pinyo put up a post back in 2009 about Dave Ramsey's "Baby Steps" approach to financial planning. In that post, Pinyo argues that there should be a "step zero" (which I take as pure silliness on the number count--which, for the record, I am a fan of sensible silliness) called "make a commitment to change." While I don't like most of what Dave Ramsey says when it comes to personal finance, I think that it's important to note that "change" isn't a proper first step in personal finance. The first question one would have to ask is "change from what to what?" I think it's an excellent idea to be committed to change. But, you have to know what you're changing and, most importantly, why.

Well, when finance bloggers suggest that you change your financial life (usually this is expressed as changing behavior), they are suggesting that you change it in a manner that they would like to see you change it. Otherwise, they're suggesting changes that they would make themselves if they were in your situation (or so you hope). Either way, that advice is necessarily authoritarian. A great example of this authoritarian approach is when bloggers start out with a title like "7 Easy Ways To Keep Food Costs Down".

Usually, these kinds of posts call for a change in behavior or lifestyle. The motivation is supposed to be external--presumably from the personal finance blogger or guru.

Now, I realize people need guidance, but providing advice this way always comes across as authoritarian even if it's only subtly so. A person who doesn't know much about personal finance is left asking "what do I do?" The personal finance "guru" or blogger answers "do this." The argument is always rationalistic because it's never tied into the person's own values. Instead, the advice is given based on the guru's values.

In fact, to make most of the personal finance blogs out there really work, you need an advice giver to serve as the voice of authority ready to dispense "good ideas." Good for whom? That question is often left unanswered, but the implication is "good for the reader." How does the advice giver know what's best for a reader whom he's never met and knows nothing about? Blank out.

Now, does this mean that all personal finance blogs (Moolanomy's included) are bad? Not at all. Am I against "7 steps to" articles? Not if they're done properly. Heck I've done similar "how to save money" posts. But, I offer guidance, not authoritarian advice. There are many ways to save money. Not all of them are appropriate for everyone. And, even though I've written "how to save money" posts, I try to stay away from them. It's just not possible to interact with many of the people coming to the blog and there's no way to know what would really help them without actually speaking to them and getting to know who they are.

I don't want you to think that I'm unfairly picking on Moolanomy. There's definitely some good stuff in there. And, not all personal finance bloggers honor themselves with the title of "guru." Some of them take the title of "plain old guy/gal." In fact, code name "Francis X. Curmudgeon" of Bad Money Advice writes some of the funniest stuff I've ever read as far as personal finance is concerned. And, he manages to make a few good points along the way. He even goes as far as to say that he adopts the view that "All I can do is share my experiences and what I’ve learned along the way."

There's nothing wrong with that approach. Not at all. But, you should really take stock of what's behind that message. When a blogger says "this is what I have learned", it only carries any significance for that blogger or personal finance writer.

In other words, if I've learned something about personal finance, that's wonderful...for me. But, you haven't learned it yet. Not really. I could tell you what I've learned. I could lay out the process by which I've learned it. But, in the end, it's all rationalism. Unless you can see what I saw, for yourself, on the perceptual level and then reach the same conclusion through logic, then the whole thing is entertaining but ultimately unhelpful.

For example, one blogger advocates investing passively. He tells you that investing in index mutual funds is the only way to go. Does he know that? Really? Or did he just read it in a book somewhere? How does he know it?

Should you listen to him? It depends. Do you really know, for a fact, that actively investing is a waste of time? All of the time or just sometimes? Be honest with yourself. How much do you really know? You might not know much about investing in stocks. But, maybe you know a lot about real estate. Should you ditch land and pick up a mutual fund on someone else's say so? I don't think so.

The kind of posts I really enjoy are the ones that are more or less informative. Take the oblivious investor on predicting stock prices. I agree with that post 100 percent. He even gets it right when he says that Monte Carlo Simulators show probability of success, instead of making the mistake of saying that it shows hypothetical returns.

A note about my own blog: You'll notice that I often use the word "if" in my posts. That or the phrase "it depends." Some people say this is a cop out. It's not. Each person's life is different. Everyone has different values, goals, personal experiences, and their level of knowledge varies. All of this means that financial advice really does depend on the individual.

It depends on the context of their life. If I ever forget to use the word "if" or the phrase "it depends", assume that I meant to put it in there and that I somehow forgot. I am going to go ahead and dub myself as the king of all financial gurus and am now going to proclaim the ultimate truth in personal finance. Listen to me now and hear me later: financial advice is dependent entirely on the context of an individual's life. There is no intrinsic (inherent) solution for everyone on any issue.

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2 Comments so far ↓

  • brenda

    I am in the process of getting a flexible premium universal life insurance plan with Protective Inc. and I plan to keep it for life and leave it for my kids. The agent assures me the premium will never change.
    The policy doesnt build cash value. Do you have any advice

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