Devil’s Advocate First Five Recap and Requests
In the beginning of the year I started a series of posts called the Devil’s Advocate posts where I argued the other side of common personal finance advice in order to gain a new perspective on many issues most of us have considered “settled.” I wanted to recap a little about the first five I’ve written and then open it up for suggestions and thoughts towards the future as to what you’d like to see. (Actually there are six, I failed to mark Lease A Car, Don’t Buy It as a DA post so it didn’t appear when I looked!)
Rent Forever, Don’t Buy A Home was the first post and tackled probably one of the biggest issues out there, whether to rent or buy a home. The post was very hotly debated, as evidenced by the sixty comments, and certainly set the tone for the Devil’s Advocate series.
Don’t Optimize Payroll Deductions was a more softball type article in which I argued that you shouldn’t go and optimize your exemptions in order to reduce how much you would receive as a tax rebate next year.
Don’t Just Buy Index Funds took on the powerhouses of the investing world that have long since advised that index funds were the cheapest, most effective way for the average investor. This was only an investing primer since my next topic would be very very interesting.
Why Roth IRAs Are Bad was not as debated as one would’ve anticipated, I argued something I knew I’d have a hard time arguing - Roth IRAs are terrible! Actually, it was very difficult to argue that Roth IRAs weren’t good but it was easy to argue that Roth IRA weren’t good in a vacuum. With 21 comments, it was the second most frequently commented Devil’s Advocate post.
Say No To Credit Card 0% Balance Transfer Arbitrage took on a topic that has been touched on by many personal finance bloggers, taking advantage of 0% balance transfer offers in order to earn a little extra interest from online savings accounts. There are risks, for sure, and I wanted to outline them to warn any potential arbitragers out there.
Lease A Car, Don’t Buy It, the forgotten post, featured another doozy of an idea - that you should lease cars instead of buying them (used or new). The logic behind this one is more compelling that you would imagine because you only pay for what you use and return what you don’t. It’s a good reason to lease, but it doesn’t hold up when you consider the rate of depreciation is generally steep in the beginning and shallow near the end of a car’s life and that shallow part can extend for many many years if you maintain the car.
The Future of the Devil’s Advocate Series…
First off, what posts would you like to see? I know there has been requests by some for something related to 401k and 403b (any sort of tax-deferred retirement plan) and that one is on its way, but what about other topics? Anyone have a common sense advice that you think is indisputable on a qualitative basis? I’d love to hear it. Thanks!
17 responses to “Devil’s Advocate First Five Recap and Requests”
Nick responds:
Posted: March 6th, 2007 at 2:19 pm
It might be interesting to discuss why not having a budget is better than having one (live in the now, having a budget is restrictive, making good decisions is better than fitting into a pre-determined mold).
You could also write about why diversification is not a good idea (missed opportunity to hit the BIG one, transaction costs, much more difficult to stay organized).
Finally, while not necessarily a “devil’s advocate post” because the line is not as clearly drawn but still very weighted to one side, you could argue that saving for your children’s education is more important than saving for retirement (if your children are educated, they’ll take care of you, the expense of not being able to afford the best college for your children outweighs your potential hardship during your retirement).
FMF responds:
Posted: March 6th, 2007 at 5:14 pm
How about:
1. Why you shouldn’t worry about your career and try to maximize your earnings.
2. Why college is a bad deal.
3. Why you should not save for college.
4. Why you don’t need an emergency fund.
5. Why it’s a good idea to hold a lot of credit card debt.
Personally, I’d LOVE to see you argue in favor of these “losers.”
jim says in reply:
Posted: March 6th, 2007 at 6:12 pm
Hmmmm…. those look tricky…
LivingAlmostLarge responds:
Posted: March 6th, 2007 at 6:37 pm
Don’t need and EF, instead invest all the money. Also why it’s better to not ever pay off the house but keep Refinancing to put more money into the market if rates are low and you keep getting 6%.
Miller responds:
Posted: March 6th, 2007 at 10:19 pm
Jim, here’s a good one. I’m biting off FMF here (sorry…) but how about instead of “not going to college” you cold explore the trade off between getting a masters (fine… OR an MBA!) before working versus getting one while working. I think me and you might have an opinion or two on this one. Hell, we’re both going to have both versions under our belts soon enough…
John R responds:
Posted: March 7th, 2007 at 12:38 am
I definately vote for the no EF article. I’d argue that you can manage risks without one. I currely have a liquidity ratio of 0.25 (as opposed to the 3-9 thatfinancial planners would suggest)
Debt Hater responds:
Posted: March 7th, 2007 at 12:42 am
I vote for a no budget DA post and no EMF post. I’d love to see the flip side of those topics!
Scott responds:
Posted: March 7th, 2007 at 7:16 am
I think it would be cool to see something on the tradeoff between community college and traditional 4-year colleges for education and how the savings work out in the long run and short run.
And maybe something arguing why you should (or should not?) pay off ‘low-interest debt’ - debt that has an interest rate below the current online savings rate. For example, argue that I should pay off my car now even though I only pay 4% interest on the loan and can get 5% interest on my money at Emigrant. Or the opposite, whichever one is the devil - I don’t know.
No emergency fund would be nice to see as well. It may already cover it, but something that explains why you should ’splurge’ now and not save, particularly on certain big ticket items. Get that 1080p HD television!
plonkee responds:
Posted: March 7th, 2007 at 9:37 am
Why you should have whole life insurance (not term).
Why you should have life insurance on your children.
Why you shouldn’t invest in the stock market.
Why you should only have a savings account at your local bank.
Why having lots of children will save you money.
Why you shouldn’t donate money to charity.
Foobarista responds:
Posted: March 7th, 2007 at 8:10 pm
My fave: you should aggressively pay down your mortgage. This is where you get a very interesting “head versus gut” argument and a discussion between the finance-centric types and the zero-debt fanatics. Only bad thing: it’s been talked to death elsewhere.
The college one is interesting in that there _are_ many people who shouldn’t go to college, and would be better off, financially and otherwise, in the skilled trades. Would you rather be button-pushing clerk after getting a degree in trans-slobovian studies or an HVAC tech making $90K/year?
Why you should buy extended warranty insurance on electronics and appliances.
Why you should buy “house warranty” insurance (look, my neighbor got their furnace fixed for “free”)
Why you don’t need medical insurance - after all, there’s always the county free clinic…
Rob Carlson responds:
Posted: March 8th, 2007 at 12:06 pm
Lease a new car, don’t buy a used car that’ll just break quicker.
Eat out regularly, save money on dish washing.
Always charge your groceries.
jim says in reply:
Posted: March 8th, 2007 at 1:31 pm
Rob - I knew I wrote a lease vs. buy article, thanks for suggesting it so I could dig it out!
Ben responds:
Posted: March 10th, 2007 at 1:44 am
Why you should invest all of your money in your employer’s stock.
Money Smart Life » Personal Finance Week in Review responds:
Posted: March 10th, 2007 at 10:52 am
[...] does a summary of his Devil’s Advocate series to date and asks readers for more [...]
ISPF responds:
Posted: March 10th, 2007 at 10:59 pm
[...] Then, of course there is the Devil’s Advocate Series by Jim @ The Blueprint for Financial Prosperity. I love looking at an issue from as many different angles as I possibly can (and confusing the crap out of myself
). And, I enjoy argument against conventional wisdom. So, I find this series of posts by Jim to be just awesome. So far Jim has argued against buying a house, optimizing payroll deductions, Index funds & Roth IRA’s, 0% BT arbitrage and buying a car (in favor of leasing it!). I don’t know if Jim plans to continue posting in this series, but I sure hope he does. Either ways, check out the archives for some great posts! [...]
mbhunter responds:
Posted: March 11th, 2007 at 3:55 am
The “college is a bad deal” one is interesting. I’m not so sure this one is the clear-cut “loser” that FMF makes it out to be. It’s usually a good deal, but not always.
How about “Do the opposite of what Money magazine tells you to do?”
» 2nd Set of Devil’s Advocate Posts on Blueprint for Financial Prosperity responds:
Posted: June 28th, 2007 at 9:30 am
[...] posted a recap after the first six Devil’s Advocate posts so it only seems appropriate I post a recap now that we’ve added eight more to the set, in [...]