Sunday, January 19, 2014

My Sunday Feeling

Friday it will be my privilege to return to Catholic High School down the road from me to spend the day with the Econ classes.  I generally go twice each semester. Last year the State of Arkansas began requiring Juniors to have a semester of economics.  I think that's a real good idea for any of a number of reasons.  
Nobody taught me anything about money until my Uncle Howard took me aside after my father died and impressed upon me the value of setting aside money. And while I know virtually nothing about classical economic theory, I know what I have seen as a bankruptcy lawyer.  I saw my portfolio take a hit during the housing bubble.  And I have heard it all out on the swing on my front porch.  

Besides, while I may not know much about econ, I know more than those boys do.  And I have a hell of a lot of fun spending time with them.  

The teacher there is flipping the game plan.  Generally, I lead off with what has come to be known as the "hellfire and damnation" personal finance speech.  Then I come back later and we talk about buying and maintaining a home.  This year we will start off with real estate.  I guess he's got bankers and realtors lined up and he wants the kids to at least be conversant with the concepts before they show up.

Strictly as a matter of coincidence, my church will be hosting classes taught by Dave Ramsey's Financial Peace University.  The classes will begin in February but the introductory talk will be tonight.  

In case you don't know Dave Ramsey, he is a popular Christian financial counselor and lecturer who, last time I looked, had a syndicated radio call-in show.  I first ran across him after the housing bubble burst.  He was on ABC's "Good Morning America" dispensing advice to strapped people trapped in houses which were "upside-down" on the mortgage.  

Anyway, Financial Peace University claims on its website to offer "A biblically based curriculum that teaches people how to handle money God's ways."  As I have written before, Ramsey is not peddling snake oil.  And he and I share many of the same approaches to real estate and insurance, for example. I agree with him that money is an emotional topic and that poor choices can ruin relationships.  I can line up 3 or 4 people off the top of my head that can attest to that.  

What I don't believe is that there is a biblical approach to personal fiance.  Not for one minute.  The Good Book also doesn't say anything about science either. But that's another lecture.

Anyway, my Bible makes copious reference to the evils of avarice and greed.  There is that.  But virtually nobody had "investment strategies" in those days.  Unless you consider thou the money changers at the temple.  And Jesus ran them off.   

Why does this matter? Because it implies that any other approach to the subject other than Ramsey's basic "debt-bad, savings good" approach to the issue is not of God.  Further, no "system" will work unless a person has the will to make it work.  As a fellow bankruptcy attorney once told me, the reasons so many Chapter Thirteen cases get dismissed is because "if they couldn't manage their finances outside of bankruptcy, they're not going to be able to do it inside of bankruptcy either." No "system" works if you don't stick with it.

Ramsey also "endorses" financial products.  This strikes me as unprofessional.  But then again, he's not a professional.  Which brings me to my next point.

 There is a difference between taking a class and sitting down with a real financial planner, who is licensed and insured, who will inspect your financial life, misdeeds and all, and render advice concerning the "big picture." Again, we must concede that there is nothing more useless than advice that is unheeded.

Here's my "system" that I share with the boys at Catholic.  When I left the government I rolled my IRA over to a man named Ray who is my financial advisor. Although he is devoutly religious this has not bled over to my business plan.  He has licenses and diplomas from real regulatory authorities and schools and stuff.  We meet twice a year to discuss how things are going.  And things are going well.  Indeed,I do not much think about it.  I pretty much pretend it doesn't exist which I can do so long as we are making money.  And that's OK.  I tell the kids that if you don't know how to invest-and I don't-hire a professional to do it for you. It is money well spent.

I have no debt other than my mortgage.  I have other money put away where I can't possibly touch it.  I tell the boys that I cannot be trusted with a wet match. Knowing yourself can be a good thing when it comes to personal finance.  I know myself enough to know that I don't need to be too liquid.  

I plan to go to the church tonight.  Not that I need to take the course although I concede that it probably wouldn't hurt me any.  But I'm curious about the presentation.  

No, Dave Ramsey isn't a crook or a charlatan and undoubtedly he has helped folks.  He's not selling snake oil.  But neither has he gone broke being Dave Ramsey.  

And his "system" is no more reliable or magical than any other just because it is allegedly favored by the big Certified Financial Planner in the sky.  No plan works unless you stick with it.  None.

And that latter consideration tends to get missed by a lot of folks whether they are diplomates of Financial Peace University or not.  


Terry Diggs said...

I'd love to hear the "hellfire and damnation" speech. And I plan to steal your "wet match" comment.

tmfw said...

Terry-It was in the Arkansas Democrat-Gazette @ October if memory serves.