Devil’s Advocate Column

If you read enough personal finance news articles or watch enough television, you’ll notice the pundits telling you the same exact principles. Buy for the long term, invest in index funds, don’t try to time the market, your home is the best investment you can make, etc. In this column, we argue the other side of conventional personal finance wisdom to shed light on whether these beliefs are justified or merely the echoes of nicely dressed parrots. Sometimes these articles are paired with an Angel’s Advocate post.


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 Devil's Advocate 
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Is a Home Security System Worth It?

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This is a Devil's Advocate post.

A security system is a waste of money, many people say. And they may be right, it is a waste of money, until a burglar tries to break into your home and steal your valuables. In that case, a security system can save you tens of thousands of dollars as well emotional turmoil and fear.

Sure, there are ways that you can protect your home that don’t involve paying a company monthly, and you should implement those strategies, but I would also urge you to consider buying a home security system. Jeanne M. Salvatore of the Insurance Information Institue suggests ways to protect your home.  “Key measures include making sure outside areas are well-lit, doors and windows are protected with locks or grates, and alarm systems are in place to scare off home invaders or trigger a response by a security firm” (USA Today).

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 Devil's Advocate 
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Devil’s Advocate: Bonds Are Not Safe

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This is a Devil's Advocate post.

Read enough investing advice and one of the classic “rules of thumb” is that your investments should be “diversified.” It’s hard to argue against the advice that you shouldn’t have all of your investing eggs in one basket because it’s usually sound advice. It breaks down when you start wondering which baskets you should be putting your eggs in! Should you put it in five baskets? Evenly? More in one or the other? That’s when the experts say you should follow something like the 120 Minus Your Age rule. That rule stats that you should subtract your age from 120 and put that percentage of your investments in stocks. Put the rest in bonds.

In essence, it’s saying that stocks are risky and bonds are safe. Bonds are usually safer than stocks because they aren’t subjected to the same price fluctuations, in part because the market for bonds isn’t as large or as liquid as stocks. It’s still pretty big but it’s not like stocks. You don’t have people talking about bonds as often as they talk about stocks because bonds are, well, kind of boring. They aren’t, however, 100% safe.

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 Devil's Advocate 
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Why I Don’t Use Coupons

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This is a Devil's Advocate post.

couponsThere’s been a lot written about how coupons can be used as tools to save money. Indeed, the show Extreme Couponing highlighted how some of the most vigilant of couponers could save hundreds of dollars — or more — on shopping trips.

Even if you aren’t going to extremes with your couponing, it can seem like a good idea to many to clip a few coupons a week. I, however, am not one to use coupons. I’ve tried at various times to get into coupon clipping, including printing out coupons online, but it’s just never caught on with me. Coupons have never been worth the time for me — and here’s why:

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 Devil's Advocate 
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Rent Your Furniture

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This is a Devil's Advocate post.

Here’s a topic you don’t see being covered every day – renting furniture. Renting furniture is often regarded as a bad idea, and for most situations I have to agree, it’s not a good idea. There are, however, some instances where renting isn’t as bad as you think.

The biggest strike against renting furniture is that it’s expensive. After doing some quick research online at Cort (it gave me the DC rates), you can rent a nice queen bedroom set for under $200 a month. A comparable bedroom set from a department store would be around $2,000. So you’re paying a significant premium when it comes to renting furniture. I don’t think anyone would dispute that the biggest strike against renting furniture is cost.

So why would I advocate renting furniture? Sometimes the situation requires it.

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 Devil's Advocate 
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Is it Time to Leave the Rich Alone?

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This is a Devil's Advocate post.

Because of the Occupy Movement, people are focused on the rich, or the 1% as they are now known. CNN reported that in order to get in to the exclusive 1% you have to make a minimum of $343,927 each year.

I figured it would be much higher and I thought of the article that appeared in my hometown newspaper that told the story of a city bus driver who was making $98,000. There are truck drivers and rig operators in North Dakota who are transporting oil for salaries starting at $100,000 with an almost endless amount of overtime and apparently those jobs are still plentiful. They can’t find enough workers to fill these jobs! Some of these sometimes called “roughnecks” are almost half way to the 1% club after bonuses.

Did you know that the 1% earned 17% of the nation’s income and paid 37% of all income tax in the United States, according to CNN? CNBC, in a recent on air report, said that in reality only 3% of the 1% club is actually in the financial industry, by the way.
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 Devil's Advocate 
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Don’t Invest in Index Funds

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This is a Devil's Advocate post.

We all know that the best way to take advantage of the tendency of the stock market to gain over time is to invest in index funds, right? It makes sense: You get a share of everything on the index, so as the index rises over time, you see increases in your own holdings. Plus, investing in index funds reduces the need to do tons of research — no worries about stock picking and seeing your choices fail miserably. Unfortunately, investing in index funds may not be your best option. When you really think about it, index funds might not be the way to go at all.

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 Devil's Advocate 
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Don’t Save for Retirement

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This is a Devil's Advocate post.

It’s been a while but the Devil’s Advocate posts have returned and they’re going to return in a very big way – I’m going to argue why you shouldn’t save for retirement. If there are a few tenets in personal finances, saving for retirement is up there with having an emergency fund and spending within your means. Between compounding interest and the tax benefits of retirement saving, putting something away for the future is almost a no brainer.

Almost. :)

In this post, I’ll argue why you shouldn’t save for retirement. That’s right. You should not put money into your 401(k), your Roth IRA, or any of the other alphabet soup account names.

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 Devil's Advocate 
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Buy A Brand New Car

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This is a Devil's Advocate post.

One of the longest held tenets of buying a car is that you shouldn’t buy a brand new car. As I once gracefully put it, “Buy used and let some other sucker pay the new car premium.”

The tenet is true, buying a good used car will save you money over buying a brand new car. There are, however, plenty of reasons why buying new might make more sense.

In this latest installment of the Devil’s Advocate series, where I argue the other side of classic personal finance advice, I’ll look at the reasons why buying a brand new car might not be so bad after all.

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