I’m getting real tired of the typical financial advice out there. It seems that everyone is a personal finance expert these days. Everywhere you turn, people are giving financial advice. My friend, who is employed at a student loan call center, is even giving people financial advice on what to do with their student loans. The fact is, there is no shortage of people who want to throw in their two cents on this stuff.
It all sounds like a bunch of gibberish to me:
- Open a Roth IRA
- Set up an automatic transfer of $50 every month
- Open a high interest savings account
- Contribute to your 401k even though you’re broke
- Buy a safe and reliable car at 0% interest or get more for your trade in at the dealership
- Clip coupons
- Shop with Groupon to score deals
- Check the weekly flyers to save big
- Save 15% on your car insurance
Blah, blah, BLAH. It’s all garbage. In case you don’t know this yet, there’s one way to win financially. That’s to LIVE BELOW YOUR MEANS. Hello, people. Spend less than you make. This does not require “financial experts”. This is simple stuff.
I’d like to focus in on a couple things that really get on my nerves with this stuff. With the exception of very few people I know, I seem to be the only one NOT contributing to a “retirement” account.
I’m Not Sold on “Retirement Accounts”
It’s apparently “law among everyone” that you need to open a Roth IRA, Traditional IRA, 401k, 403b, etc. I’m not sold. I don’t own one and don’t plan to open one anytime soon. First of all, I think it’s great that the government gives you tax incentives to save for retirement. After all, if people save more for retirement, they will rely on the government less when they reach old age. That’s a good thing long term for the government, tax payers and the economy in general.
But the question I must ask is: Why 59 and a half? Who decided that a person should be “able” to retire at 59 and a half years old? That seems like the age at which people aren’t really able to work anymore. It seems like the government is saying that once you’re 60 or so, you aren’t able to provide a ton of value anymore for the country and therefore, you’re allowed to stop working. In other words, the government has said that unless you are 59 and a half years old, we don’t want you to stop working, because it’s not good for the economy.
So all, with that ridiculous age limit placed on all this, it looks to me like the government just wants us all to work until we can’t anymore. And to make sure we work until at least 60, they are tricking us into playing this whole game. Well folks, I’m not playing this game.
This all comes down to what retirement means. There is a new definition of retirement, which Mr. Money Mustache has redefined to be this:
“”“Retired” means you no longer have to work for money, and you are aware of this fact. You can then proceed to do whatever you want, as long as you do it consciously and of your own accord. If you meet this condition, and you feel retired, congratulations, you are.”
I’m with MMM. Retired does not mean after 59 and a half. Therefore, these “retirement” accounts are bogus for those of us not conforming to the typical “work until you’re 65 rat race”, if you ask me. Sure, there are “tax advantages” of using these accounts even if you’re retiring early, but I’m not participating as it comes at a great cost in flexibility. Sure, you can pull out your contributions at anytime. Sure, you could use this account to fund your late retirement years only. I know, I know, I should be using these accounts “or so the experts say”. Before you all blast me in the comments about how I’m an idiot for not using these accounts, here is my disclaimer on it: I KNOW…I could save money on taxes by using them, but I value my freedom more. If that makes me an idiot, fine. I’m okay with that. I’m boycotting them based on principle, not because of the math.
Based on principle? Yes, they are set up to keep people working until 59 and a half. They are set up to influence people’s behavior. I’m not participating. I don’t care to go through all the red tape of “leveraging” the system to come out ahead. I’m not playing in the system. No thanks.
My assets will be mine to use (and spend if I see fit) whenever I feel like it. Period. Does that freedom cost me more? Yes, it does, but I want the freedom and am willing to pay the price for it. In conclusion, I’m not using these accounts and am not planning to anytime soon.
I Don’t Believe Buying a House is the Answer Either
I’ve ranted about this before too, but I’m not planning to buy a home anytime soon. I just don’t see it as an investment, but instead I see it as an expense. I got blasted a while back on my post about reasons to not buy a home, even if you can afford it. The fact is, those who have bought homes get really upset when I suggest that it’s not ALWAYS a good idea. Oh well, the truth is, it isn’t always a good idea.
But yet, almost everyone I know, given the income, the down payment and the ability to get the financing, would run to the nearest bank and buy a home as soon as they could, if they don’t already own one. I believe the push to buy a home is as big as the push to open a Roth IRA (or other retirement accounts).
This is what passes for financial advice these days. According to all the geniuses out there, there are two rules and two rules only for “personal financial planning”:
- Open a retirement account, or multiple, ASAP and start contributing x% to it.
- Buy a home
The way to win financially is to stop your damn spending. It’s not to use these “genius” tactics above. There is way too much garbage advice passing for common sense going around these days. I’m not participating in it. If people think I’m nuts because of it, so be it.
Lastly, I Googled around for something, ANYTHING, out there on reasons to NOT use a retirement account, and I couldn’t find a single thing. Why is it that exactly zero people out there question this whole thing where the government decides when we should retire and how we should save our money? I’m in awe of it all.