A lot of young professionals hear this line all the time: “If you pay your dues, you will be rewarded by the company in the future.” Sometimes “paying your dues” refers to working your ass off for a few years, being a high performer, then getting rewarded with greater opportunities. That’s the good kind of “paying your dues.” The “paying your dues” I’m going to rail against today is the one where you basically work the grind, day in and day out, until you’ve been with a company long enough to be entrusted with more responsibility. That’s promotion based on tenure, not based on merit. That type of “paying your dues” is crap and here’s why you want to get out now.

As an aside, I always thought of my 20’s as the years where I was going to work myself as hard as possible in order to get as far ahead as possible, i.e. promotion based on merit. Then, in my 30’s and beyond, I could slow down at work and focus on my family and personal life (that mostly means kids). So, being stuck in a ‘promotion based on tenure’ company just wasn’t going to work for me in my 20’s, but was probably going to be ideal for my 30’s and beyond. There’s nothing wrong with coasting along, you aren’t any better or worse than those hard-charging workaholics, but you just have to get in the right place for it.

Anyway, here’s why you have to quickly identify where you’re at and why promotion by tenure is a joke.

Your Job Isn’t Prison

You know where else you get rewarded for biding your time, treading water, and not making waves trying to get ahead? Prison. Life is about setting your goals and taking the steps you need to in order to achieve them. Where in the Guidebook of Life does it say “pay your dues and wait for someone to give you your prize?” If you said “nowhere,” then you’re right, that’s not in the Guidebook of Life. Prison rewards good behavior and good behavior is keeping your mouth shut.

Work Hard, Get Rewarded

If you want to get ahead based on your merits and your ability, you need to find a place that will reward you for that. If the company you work for only offers opportunities based on time served, it’s best to identify that quickly and get out. There are plenty of companies that will reward you based on your performance, as many as those that will reward you based on tenure, so find the ones that match up with what you’re looking for. If you don’t, you’ll burn yourself out for nothing. You won’t even last long enough to be rewarded for just being a warm body!

You Won’t Be There Long Enough

If you’re a young professional, the probability you’ll be with any one company for more than ten years is remote. Five years, especially in this era, is difficult. At my first employer, I can count a dozen people who started with me who lasted fewer than three years (I was one of them). If you count the whole young professional/rotational program group, plus or minus a year in start time, that list, as of a year and a half ago, was around a hundred employees. A hundred new hires between 2002-2004 (I started in 2003), left the company. That’s not anything special, that’s just how things are. When hard work isn’t rewarded, hard workers find ways to reward themselves.

Opportunities Abound!

Chances are, within 3-5 years at any one company, you’ll want to put yourself out there on the market to see if you’re still being paid a fair rate. At that time, if your performance and ability are such that you can command a higher salary, you probably will be put into greater leadership positions. If your current company hasn’t already offered you those opportunities and you’re in one of your promotion by tenure companies, you can’t get them to match another offer and give you a promotion. Here’s why.

If you are at a company with a culture of promotion based on tenure, how will it be viewed by others if you are promoted above them and they’ve been there longer? I think you know where I’m going. If you’re a strong performer and that’s rewarded in the company, then people will recognize your performance and listen to what you have to say, even if they’ve been there longer.

Life Is Short

Life is too short to be wasting it “paying your dues.” Paying your dues is what someone says when they’re doing something they don’t like doing. Think about that one.

Over a year ago I had the crazy idea of trying to justify the other side of every “common sense” or “mainstream” personal finance idea I could think of. The list below is in reverse chronological order, meaning the very first Devil’s Advocate post is listed at the bottom and it tackled one of the cornerstones of our personal finance belief system. Rent Forever, Don’t Buy A Home is a post that I think defined the Devil’s Advocate series and one that still garners comments to this day, nearly a year later. (There have been 161 comments, the latest was April 9th!)

Some of the Devil’s Advocate posts have gone against ideas that aren’t as mainstream and against answers that aren’t necessarily clear cut, such as Don’t Have Kids (which is based on a lot of factors, only one of which is finances), but I’ve had a great time writing them all.

I have a few good ideas in store for future articles but I wanted to do a little roundup, in part for myself to see all the topics we’ve covered, so that you could join in the rock throwing against mainstream ideas.

1. Don’t Invest in the Stock Market
2. Cancel Unused Credit Cards
3. It’s Okay To Ignore Your Problems
4. Ignore Personal Finance Experts
5. Don’t Have Kids
6. Buy More House Than You Need
7. Don’t Move From Job To Job
8. Get A Store-Branded Credit Card
9. You Don’t Need College to Succeed
10. Four Reasons You Should Get A PayDay Loan
11. Don’t Get Married
12. Buy That Home Warranty
13. Adjustable Rate Mortgages Are Awesome!
14. Pay Cash for Everything
15. Don’t Budget to the Penny
16. Invest In Your Company
17. Say No To Credit Card 0% Balance Transfer Arbitrage
18. Why Roth IRAs Are Bad
19. Lease A Car, Don’t Buy It
20. Don’t Just Buy Index Funds
21. Don’t Optimize Payroll Deductions
22. Rent Forever, Don’t Buy A Home
23. Don’t Rollover Your 401(k) - Missed this one!

Have a great weekend!

Today’s Devil’s Advocate post is going to hit at the very heart of the financial sector. The stock market is one of the cornerstones of the American economy and one that has brought riches, big and small, to many an investors. However, many fail to realize that it’s a zero sum game. For every one of those rags to riches stories about a kid who took $1,000 and turned it into a million, there are many many more stories about a single mother of four losing it all (yes, I’ve chosen extreme examples for both). So all those awesome stories you hear, that’s only half of the equation!

Now that you’re aware of the stock market sob stories (no one really likes to talk about those), there are plenty of other reasons why the stock market is probably not the place for you to seek your riches. The dot com boom gave birth to many a day trader and the dot com bust ended the lives of many a day trader. So, here’s why you shouldn’t invest in the stock market.

Historical Returns are Meaningless

The Roman Empire had hundreds of years of prosperity prior to it’s decline and eventual fall in 476 AD, you think shareholders knew? (excuse the surprise mixed up metaphor) While diversification often helps prevent this sort of calamity, there’s is never any way for someone to guarantee events into the future. Stock market pundits can claim that the S&P 500 has historically return low double digits and that your money is well placed in those areas, they never seem to be able to predict when the stock market will take a bloodbath on a Black [insert weekday here]. If they could, they’d be in the basement of Lehman or Goldman Sachs (Goldman may actually have psychics working for them, they did make a fortune by betting against subprime).

All the models n the world also couldn’t have predicted external forces acting on the stock market. Could you have predicted 9/11? (though if you were to look at the futures trading leading up to 9/11, you would’ve felt as though someone knew what was coming)

You’re Investing Emotion, Not Fundamentals

Let’s depart from the scare tactics and talk about more grounded reasons you should avoid the market. Check out Under Armour’s stock (UA), it’s fallen nearly 18% in three months. See that massive chasm in mid-January? At that time, half the value of the stock had evaporated over the course of the trailing 90 days and the only attributable “news” was that the founder was selling a lot of shares back in November. Corporate insider selling can be a telling sign but fifty percent over three months? That’s emotion. (Subsequent downgrades didn’t help the matter) Oh, and since that chasm, 36% increase (a Q4 income report that beat estimates did help). That’s emotion.

Focus On Something Else

Let’s be honest, you can’t pore over financial statements and do any true due diligence. In fact, you probably don’t have the time or the inclination to even read the analyst reports and the charts they produce. You might flip through them to get a feel, you might try to force yourself to read them to assure yourself you’re making the right decision, and you might even get streaming real time stock quotes to get a sense of the action and feel the “pulse” of the market. Ultimately, given a choice, 99% of people would rather be doing something else. Would you rather play golf or read a balance sheet? Would you rather go to the Bahamas or listen to a shareholder’s conference call? How about going to a spa and getting massage… or listening to a CEO blow smoke? Unless you’re being paid a salary, commission, or the promise of a fat bonus, you don’t really want to be doing that. Since you don’t want to be doing that, it also means you are ill equipped to invest in stocks because without that information you’re basically gambling. At least casinos comp you when you lose big.

Retirement Funds Make Retirement Managers Rich

So you contribute to your 401(k), that’s wonderful. Your employer gives you a contribution match, that’s also wonderful. The bloody retirement fund manager takes out 1.5% in fees each year just to manage your funds. If you had your way you probably would put it in an index fund at Vanguard or Fidelity (fees are in the point-teens, that is they are all less than 0.2%) but you don’t get that option in your retirement fund. The reason you don’t is because 401(k)’s and your mutual fund options are a racket. That’s right! Why don’t 401(k) plans offer one of the best ways to invest? Because there’s no money in it for them. When you contribute $10,000, they get to take out $100 each year. Think of when you’re balances are in the hundreds of thousands? That’s a couple thousand in fees each year just to “manage” it. This is made even more ludicrous when you realize most mutual funds don’t beat their benchmarks. (If your company’s 401(k) lets you contribute to an index fund, that’s incredible and you are lucky - take advantage of it.)

There are plenty of reasons why the stock market is a Bad Idea, I’ve only shared a handful with you. This concludes this edition of the Devil’s Advocate.

It’s a widely believed fact that your credit score can be improved if you keep your unused credit cards (rather than cancel them). By keeping these cards, you are increasing the average age of your lines of credit, increasing the total amount of credit, and decreasing your credit utilization - all good things when it comes to computing your score. So, why do I always advocate canceling unused cards? I advocate that because I believe it is the safest thing for you to do and is better than keeping unused cards for the credit score benefit.

Security Breaches

GE Money USA, a branch of GE that manages the in-store credit card programs of many retailers, recently reported that one of the nine back-up tapes put into storage at Iron Mountain had gone missing. After a search of the facility, they were unable to locate the missing tape. What was on it? It is supposed to contain the personal details of approximately 650,000 people. Think you are safe because you have nothing to do with GE Money USA? Unfortunately, you’re probably wrong because GE Money USA handles retailer credit cards for over 230 retailers, one of which is the ubiquitous JC Penney company. But look on the bright side, you might be getting free credit monitoring for a year! In all seriousness, while the actual probability you will be affected by data breaches such as this one will be relatively low, wouldn’t you be kicking yourself for keeping around an unused JC Penney card when you could’ve canceled it?

Promotional Offers

If you have a card and the credit card company starts offering hot new promotions for it, then you won’t be eligible for these new offers since you’ve already own the card. So, I’ve signed up for a lot of cards because they offered free promotions (I compiled a list of credit cards that offer $100 gift cards after you first purchase) and then didn’t use them much after the promotion (mostly because cards with better cashback came along), so why not cancel them so you can take advantage of newer promotions? There is generally a period after which the card no longer considers you a customer, usually six months, but after that you are like every other Joe (or Janet) on the street.

Please don’t read this to mean that I think someone should apply for the card for the promotional offer, cancel, then repeat. I’m not advocating that, in fact I think it’s stupid. The frequent applications for credit will destroy your credit score. I just mean to say you want to keep flexible, especially if you aren’t even using the card.

Out of Sight, Out of Mind

If you never use the credit card and never receive a bill, would you check your account for fraudulent activity? I’d say there’s a 99.9% chance you wouldn’t because you wouldn’t think to. You never used it so how could someone else have gotten access to it? However, it’s entirely possible that someone got access to your card and began using it without your knowledge. When thieves steal card information, it’s not uncommon for them to wait a few months before using it. Why do they wait? It’s harder to pinpoint when the loss occurred if it happened months prior to actual fraudulent activity.

Keeps Things Organized

You can’t lose a card if you cancel it! Let’s say you put all of your unused cards into your desk drawer. Six months later, someone breaks into your home and steals all of your cards (or just one, it’s actually worse if they only take one!), how can you possibly remember which cards to cancel? (you would know if you had a personal finance user’s guide!) Let’s say no one steals it but one of them expires and they send you a new one, only to have it intercepted at the mail box by an enterprising identity thief. Let’s say no one does anything bad and you have the card in your desk without incident, what’s the benefit? You have some extra clutter sitting around, extremely expensive clutter if it gets into the wrong hands.

May Not Actually Help Score

One of the main points behind keeping a card is that it improves your average credit line age but that may not be true. If you cancel a recently issued card, it could be possible that the new card is negatively affecting your credit line age metric. While it’s difficult to calculate and probably a waste of time, the credit score boost you are trying to get with the unused card may not be as good as you thought it was.

Ultimately, I think that keeping unused cards lying around is a recipe for disaster. I cancel cards that I don’t use, what do you do?

I must confess that for the past month our budget has flown out the window. I have not even done the math to see the damage yet. I’m avoiding it because I know it will be ugly.

I read that off A Penny Closer today and it’s something we see quite often - ignoring your problems. Now, you might jump to your feet and scream “ignoring your problems won’t make them go away!” or something else equally petulant, but before you do that I want you to hear me out. I think there are very good reasons to ignore your problems and that is the subject of this edition of Devil’s Advocate.

Now, fortunately for Melissa, she has done one thing right - she has found a reasonable explanation for her busted budget and she has a reason for ignoring it. The reason for her budget being busted is because she recently moved. While the ideal situation would’ve been to budget for the move, recognize that you’d be eating out more and slipping, but let’s be honest with ourselves… we rarely plan in that manner. However, just because the budget is busted doesn’t mean you should panic. In fact, in this particular case, ignoring it wasn’t a bad idea because moving is stressful and there are a lot of other issues you have to deal with, the least of which is whether you overspent a few dollars this month on dinner. It was important she ignored the budget problem for a little while in order to focus on other issues and it’s equally important that she set a timeline to resolving the problem.

So, let me outline the reasons why I think you can ignore your problems temporarily.

You Only Have So Much Energy

You know how people tell you to make a list, prioritize, and then work from the highest priorities first? Well, this reason is the motivation for that strategy. You only have 24 hours in a day and you have however many problems you have. In all likelihood, you cannot solve them all so you are forced to ignore (or at least mitigate) some of them in order to solve the higher priority issues. In Melissa’s case, it was more important that she focus on the move and less important for her to focus on cutting coupons, cooking regularly, and all the other things she mentioned in her post. In fact, to focus on coupon cutting while dealing with something as financially more impactful, such as moving, would be a mistake (think: penny-wise pound-foolish type thinking).

Prioritization Enables You To Ignore Problems!

If you properly prioritize all of you action items, it enables you to intelligently “ignore” some of the items you’re in charge of. By identifying which tasks or issues or problems are more important, you can be sure that you are ignoring the items than you can ignore and focusing on the ones that require immediate attention. While we often don’t make a list (and we don’t check it twice), having even a mental picture of priorities is enough to help you make decisions.

Allow Yourself Time To Regroup

A budget is a budget is a budget right? It is, unless you’re stressed out about moving all of your life’s possessions into another home. A budget is simple, unless you’re selling your house and conducting the largest business transaction of your life. A budget is really easy to do, unless you’re dealing with one of the more stressful events in your life. Everything is harder when you add on stress and mistakes are made when people are stressed out. Messing up your budget because you ate out a little more often than usual is something you can correct in the next week or month. Messing up your budget and then making a manageable situation worse because you’re stressed out… that might be a little trickier. So, allowing your self time to regroup, the proverbial “count to ten” mantra, may mean you have to set one on the back burner for a while and that’s OK.

Time Heals All Wounds

This is not related to Melissa’s budget busting issue but if you ever have any emotional difficulties with someone, you’ll find that ignoring it for a little while will mellow out feelings. I’m ten years away from high school, with the reunion coming up in ten months, and I can’t recall one ill feeling I have towards any of my high school classmates. While I find it difficult to believe I didn’t have a problem with any of the four hundred classmates, the fact is I can’t recall a single thing - so that has to speak to this point, right?

Ultimately, the point is you can ignore your problems but only temporarily. Melissa’ problem is relatively simple: it’s a budget and she didn’t accidentally spend thousands and thousands of dollars on a whim. However, the crucial part is that she’s now taking steps to resolve it. So, if you ever feel overwhelmed or under-prepared to tackle a problem, consider sitting it on the sidelines for a couple days (unless it’s due in a couple days!).

What do Suze Orman, Robert Kiyosaki, David Bach, and every other personal finance expert out there have in common? They don’t know you but they know exactly what’s wrong with you and how to fix it. Suze Orman thinks you’re a moron, that you need tough love, and that those 0% financing offers from Ford are awesome. Robert Kiyosaki says that you suck like his poor dad (who isn’t real), you should aspire to be like his rich dad (who also isn’t real), and that you should buy one of his books. David Bach thinks, without the indignation that comes with a Suze orman, that you should get out of your own way and make things automatic. I think you should ignore personal finance experts… all of them.

You might think this is a self-serving Devil’s Advocate post - and it is, because personal finance bloggers aren’t experts. Then again, bloggers don’t treat you like crap and tell you how you need a wake-up call (that’s Suze), bloggers just write about themselves and invite you to check out how normal and bad at personal finance we are. Experts? Heh, totally different animal… here’s why you should ignore them.

Cater To The Masses

This isn’t really their fault, it’s a product of the marketing machine that drives their popularity. On the web, you have folks who talk about themselves and by nature fall into a small niche. You have the family of six, you have the bloggers battling debt (or just finished), you have a fee-only certified financial planner (JLP has never ever written a post selling his services), you have the husband-wife tandem, and you have a whole host of other blogs that fall into one niche or another. None of those sites are trying to be everything, they’re only trying to be themselves and therein lies their popularity. When you graduate, you perhaps find the debt bloggers and the tandem bloggers to be your thing. As you get older, you might find the family of six or the CFP blog more your style. With so many options, you can find one that works for you.

Too General

Since they cater to the masses, usually their advice is too general to be of true value. I’m not saying that bloggers are better in this case, I’m just saying that experts aren’t going to give you the level of advice that you need. I’m also not saying you should run out to a financial planner and pay for advice, I’m recommending that you ignore the big names in the bright lights and read articles written by folks who aren’t so keen on hearing or reading themselves. Read from the perspective that you’re reading valuable information that may not be valuable for you. Don’t read from the perspective that you’re going to do the next thing that comes out of an expert’s mouth. Experts in any field are wrong often enough that listening to them 100% of the time will result in disappointment.

Accessibility

A product of their popularity is the fact that experts simply aren’t accessible. You can certainly try to ask them a question but the reality is that an answer won’t be thought out and personalized. If anything, you might get it read on-air and get a simple 30-second response (or a 5 minute chastizing). Why is accessibility important? It’s not tremendously important but if you have a specific problem and you want to hear an experts opinion, the likelihood of them happening to answer that problem is zero.

Was that a compelling enough argument against experts? Maybe, maybe not, please let me know. Think I was too harsh of Suze Orman? (I don’t think I was as harsh as she generally is) Think David Bach shouldn’t have been lumped in with the experts? Fire away!

Ever hear someone mention that they don’t want to have kids only to hear, invariably, someone ask “why not?” The reason people ask is because having kids is the norm, actively not having kids is not the norm, and so in this DA post I tackle the reasons I think one would decide against having children. I think this particular post falls into the realm of personal opinion and desires, not “good” or “bad” advice, so it’s slightly different from other DA posts.

Kids Are Expensive and Time Consuming!

The number one reason why having kids is a bad idea is that they are expensive and they require a lot of time (time is money!). Given the cost of a hospital stay, which is almost unavoidable, your upcoming kid is already costing you a lot of money and they haven’t even been introduced to the world yet. Afterwards, this little tyke is going to eat a ton, run through clothes like it’s the Running of the Brides at Filene’s Basement’s Bridal Gown Sale, and they’re going to have ridiculously expensive hobbies. That’s before they leave elementary school! As the years go on, they get more and more expensive, culminating in college. College, while not required (see this DA post on why you don’t need college to succeed), is basically the minimum of education demanded by society if you want to make something of yourself (or at least that’s the public perception of what society demands).

Tremendous Responsibility

Once you get the past the money, there is a tremendous amount of responsibility when you’re raising another human being. Not only will they be expensive, but you’ll also feel compelled to spend that money because you want your child to succeed. Marketers will bombard you with advertisements about how your child needs to have the latest learning gadget, or how they need to be in this plan or that plan, or how you can’t buy thing particular product because it’s not as good for you as their product. You’ll have to make these decisions, try to make them independent of cost, and still try to provide what you need for your kid to succeed? It’s like when people say they won’t go to the cheapest person for Lasik even if they’re certified and have done thousands of them, they don’t want something that important to be dependent on price; well, are you going to buy the cheaper cereal or do you not want what your child eats to be dependent on price? What’s more important, your child’s health or your eyes? Do you want to be making those decisions?

Your Life Is On Hold

I can’t imagine having children in my early twenties, but that was the norm many many years ago. Heck, I can’t even imagine having a child now, at the age of 27, when my parents had me. With so many young professionals focused on their careers, it’s very difficult to for someone to put it on hold, if only for a little while. Certainly there are plenty who find it more important to raise a family than it is to generate income but many young professionals want to work, advance in their organizations, and make the big dollars so they can, maybe, relax in their older years. Women are no longer looking to become housewives and I think they shouldn’t have to be compelled to feel that way, just like men don’t often look to becoming stay-at-home dads. So, asking anyone to put their career on hold might be a little unreasonable.

I think those are the main reasons why people wouldn’t want to have kids but to be perfectly honest I don’t know (we want children) for certain because I’ve never broached the subject with anyone. If you’re on the “No kids” side of the argument (or at least “no kids for a few more years”), please do share your thoughts. If you’re on the side, I’d love to hear your opinion about these reasons.