Why I hate “new, unique” money tips

Today I'm going to rant.

I get a lot of requests from reporters who want quotes for their stories about personal finance. That's fine. I'm happy to help when possible. What bugs me, though, is that nearly every single reporter pitches her story with the same caveat: “I need tips about saving, but I don't want the same old stuff. I need new, unique ways to save money.”

sigh

“New, unique ways to save money” have become the bane of my existence. I loathe these requests. Why? Because the basics of personal finance never change. They haven't changed in thousands of years, and they're not going to change for thousands more. Fundamentally, all you need to know about managing your money is this: Spend less than you earn.

That's it. If you spend less than you earn, you'll do fine. Everything else is details. Those details are important, I know, but most of them are common sense and widely known.

Reporters don't want to hear that the best ways to save money are to cut cable television (and other monthly expenses), start a vegetable garden, clip coupons or buy a used car. No no no. These ideas aren't good enough. So, you end up with articles that claim they'll save readers $5,000 a year — but only if you can get rid of your hot tub or ditch your pet ostrich or give up the vacation home on the lake. In other words, by constantly striving for new, unique ways to save money, reporters make their articles mostly useless.

Instead, I think reporters should have the guts to promote the basics. Why? Because they work.

The Basics of Personal Finance

We've covered this a zillion times before — including a four-part series in April during which I described my core financial framework — but let's do a quick review.

Smart personal finance can be reduced to one simple equation:

[WEALTH] = [WHAT YOU EARN] – [WHAT YOU SPEND]

If you spend more than you earn, you have a negative cash flow. You're losing wealth and in danger of going into debt. (Or, if you're already in debt, you're digging the hole deeper.) If you spend less than you earn, you have a positive cash flow, which will let you climb out of debt and build wealth.

So, basic personal finance comprises three essential skills:

  • Earning — Your ability to bring in money. This skill requires resourcefulness and a willingness to work.
  • Spending — Your ability to live frugally and spend wisely. This skill generally requires sacrifice and the ability to prioritize.
  • Investing — Your ability to produce a surplus and to make that surplus grow. This skill takes patience and research.

Spend less than you earn — invest the difference. That's all you need to know. The rest is developing the mindset and skills to make these things happen.

Missing the point

Last Tuesday, I did yet another interview with a reporter who was looking for new, unique approaches to personal finance. Her e-mail said she needed finance tips for new college grads. “I don't need the obvious stuff, like ‘save money, spend less',” she wrote. “I'd like to tell readers something they don't already know.”

When I spoke with her, the truth was even worse. She was looking for advice on things recent graduates should buy. “When you're out of college, you don't have much of an income, and you may not have a job. If that's the case, what should someone spend money on?” she asked. I was dumbfounded. I offered some lame answers — it's okay to spend on a wardrobe (if your job requires it) or further education — but in the end, I gave up.

“To be honest,” I said, “I think it's dangerous to do a story like this. In essence, you're giving young people permission to spend, perhaps through the use of credit cards, even if they don't have the money. That's the road to debt.”

Note: I don't mean to pick on this one reporter. She's just fresh in my mind. Her requests and approach are very, very typical of most other reporters I've talked with.

Nothing new under the sun

This is what happens when you're constantly trying to find new and unique ways to save money. You start by chasing narrow niche topics (“The pitfalls of insurance if you carshare”, “How to save on silk underwear”, “How the BAH helps military members afford a home“) and eventually you're writing nonsense like “10 things every college graduate should buy”.

I reject the relentless push for new, unique money tips. They're few and far between. Besides, there are millions of people who can profit from hearing the old advice. For many, the old advice is new advice. And even those who've heard it many times before can benefit from hearing it again.

If you want to write a story about personal finance and you're worried that readers will be bored because you're covering the same topics everyone else has covered for the past hundred years, the solution isn't to look for new, unique ideas. The solution is to find new, unique ways to convey the timeless information that works. Find real-life examples (like the GRS reader stories). Explore government statistics. Find a new angle into the story (psychological? religious? political?). But don't turn your back on the basics just because they seem tired and worn out.

The basics are the basics for a reason. And until everyone grasps the concept, the fundamental formula of personal finance needs to be trumpeted from the rooftops: To build wealth, you have to spend less than you earn. It's not new. It's not unique. It's simply the truth.

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Anonymous
Anonymous
9 years ago

Your response is unhelpfully simplistic. “Spend less than you earn” implies, for example, that one should never take on a mortgage. It ignores the challenge of saving for retirement, which is a major expense for most people. If you would argue that certain kinds of leveraged debt might be acceptable, then it follows that leveraged strategies that increase wealth or buffer losses might be a wiser financial strategy than simply counting immediate inflows and outflows–you’re missing out on the whole dimension of how to save for the future. This dimension is NOT trivial or simple, and it’s a huge component… Read more »

J.D. Roth
J.D. Roth
9 years ago
Reply to  Anonymous

You’re right, of course, that sometimes — as in the case of a mortgage — personal finance can be more nuanced. But when a reporter calls to do a story on “how a family can save money during times of rising fuel prices” or “how to save at the grocery store” or “what a college graduate should buy”, that reporter isn’t looking for ways people can leverage themselves into gasoline or oatmeal. These articles aren’t intended to offer advanced, complex approaches such as the one you describe. The reporters aren’t doing stories about investing throughout your entire life. They’re doing… Read more »

Spider-mike
Spider-mike
9 years ago
Reply to  J.D. Roth

J.D., I’m not even sure its worth responding to this person. It seems whoever it is hasn’t really read or explored your blog. Your points are valid and the type of trash financial advice you reference is common since people struggle to put out content. I read a similar article around leverage based investing for young people a while back, which essentially references that the young should borrow to invest heavily in stocks and other high risk instruments so that when they are older they have little to no exposure to risk. Unfortunately, that isn’t a one type fits all… Read more »

Anonymous
Anonymous
9 years ago
Reply to  Spider-mike

Spider-mike, I’ve actually been reading this blog for several years.

You’re right that the strategy I referenced isn’t appropriate for everyone.

The argument that this strategy can’t be trusted because it has only worked in the past doesn’t hold water. That the future might be different is a problem for every piece of financial advice, popular or not; the tapered leveraging approach at least outperforms other strategies based on what we’ve seen and reasonable simulations of what the future might look like.

Could you let me know what parts of my original post seemed contradictory to you?

BB
BB
9 years ago
Reply to  Spider-mike

Like Anonymous, I too have been a reader for several years, and I find some of the advice to be unrealistic for someone with children, elderly parental obligations, or otherwise may have commitments. I live in a valley- if I don’t subscribe to cable, I have no TV reception. None. Nada. My cable TV is bundled with my landline and internet service. The advice to give up cable TV is really too simplistic for people in many geographical locations- and it is not a key to riches. We give up eating out- maybe 4 times a year we go out,… Read more »

Anon
Anon
9 years ago
Reply to  Spider-mike

uhh, BB… I don’t have cable, live in a rural valley, and have no TV reception. I’m survivin’. In fact, I would even say thriving.

Kent @ The Financial Philosopher
Kent @ The Financial Philosopher
9 years ago
Reply to  J.D. Roth

J.D. Your statement that the basics of personal finance “haven’t changed in thousands of years” is absolutely true because human behavior hasn’t changed in thousands of years (or more). For this reason I enjoy (and learn more from) the behavioral and philosophical sides of money. To speak to a large audience one must speak in abstract terms. However it is up to the individual to transform the abstract (i.e. the generalities and basics) into the concrete (i.e. the personal). “All truly wise thoughts have been thought already thousands of times; but to make them truly ours, we must think them… Read more »

Anonymous
Anonymous
9 years ago
Reply to  J.D. Roth

Hi, JD. I agree that there’s nothing new to say to the family trying to save money on groceries. I don’t envy any reporter trying to put a new spin on that, and it sounds like a difficult situation for you too. I’m suggesting that there might be something new to say to the college graduate. How much we save v. spend now is a perennially complex problem, and it seems close to the heart of personal finance. For example, saving is my single largest “expense,” so I’m interested in doing it right and saving as much money on it… Read more »

Andy
Andy
9 years ago
Reply to  Anonymous

I got a new, unique way to save money. If a person has to pay to read the article of the reporter, don’t. Come here instead.

Jan
Jan
9 years ago
Reply to  Anonymous

You missed the point of the post Mr Anon. No matter what happens after- spending less then you make is the bottom line. I don’t care what you do with the money after- if you don’t KNOW the bottom line, you will never be wealthy. Sounds like this “new theory” is just a build on how to target the savings. If you do not have the savings to target- the theory is dead. The rest of the theory does not seem to be anything different than what I have been reading here for many years. I read an article in… Read more »

Clint
Clint
9 years ago
Reply to  Jan

And by the way, beware of anyone promoting options trading as investing. It’s not. It’s outright gambling with a much greater risk of losing your entire investment (bet). The return potential is very exciting, but it is gambling and there are more losers than winners (just like gambling)

Suzanne
Suzanne
9 years ago
Reply to  Clint

There is legitimate case for options, but only for very sophisticated investors that use complicated strategies(most individuals wouldn’t qualify). Again, not for the average investor.

babysteps
babysteps
9 years ago
Reply to  Clint

15 yrs ago I worked for a Wall Street VIP for several yrs (by VIP, I mean this person was on the cover of “Fortune” among other accolades). My boss had made a lot of $ trading oil options while in biz school, but by the time we worked together (10 yrs later) said would *never* have done it if really understood the risks. Still says that today. My opinion – it’s your money, “play” options if you want, but options are the sort of thing where your potential loss is more than 100% of your initial capital outlay (heh!… Read more »

Anonymous
Anonymous
9 years ago
Reply to  Clint

There are high-risk, stupid ways to trade options, and there are ways to trade that effectively lower risk (i.e., hedge). This fact is unassailable if you do the math or run the simulations. I’m not referencing the stupid kind.

For example, your potential losses do not have to exceed your inputs. With a deep-in-the-money LEAP (call option), the worst that happens is that you do not exercise the option you paid for. You can’t lose more than you invest, but you still gain more exposure to market moves. This is actually the strategy they recommend.

Anonymous
Anonymous
9 years ago
Reply to  Jan

You’re right that “spending less than you earn” is the bottom line. The question is the time scale. What sort of debt and risk should I take on now to decrease my chance of spending more than I earn in the long run? This is not an easy or straightforward problem.

I’m a Ms(/Dr)Anon.

Anonymous
Anonymous
9 years ago
Reply to  Jan

Jan, I don’t think I missed the point. I agree that the bottom line is to spend less than you earn. The question is the time scale– “How much risk and debt should I take on now to make sure I spend less than I earn in the long run while living as well as I can?” Answering this question is not easy or straightforward. For example, many of us are investing some fraction of our savings in index funds, which means we’re taking on some risk in the hope that we have a higher probability of being able to… Read more »

Mike Piper
Mike Piper
9 years ago
Reply to  Anonymous

Anyone considering implementing Ayres and Nalebuff’s advice would do well to read this story first: http://www.bogleheads.org/forum/viewtopic.php?t=5934

It’s one of those things that theoretically makes a lot of sense, but that can go horribly wrong when actually implemented in real life.

Kris
Kris
9 years ago
Reply to  Mike Piper

Thanks for posting the link Mike – horribly wrong is an understatement!

Anonymous
Anonymous
9 years ago
Reply to  Mike Piper

No, Mike. Ayres and Nalebuff discuss this case extensively in their book–it’s an econ PhD student who specifically did NOT follow their strategy. He didn’t rebalance (he actually increased his imbalance), he was exceedingly overleveraged, and he wasn’t diversified. The guy is now writing a book about his experiences, and he acknowledges that what he did is nothing like what Ayres & Nalebuff propose.

Anonymous
Anonymous
9 years ago
Reply to  Mike Piper

Mike, this is actually the well-known story of an econ PhD student who did not follow Ayres’ and Nalebuff’s advice. He was exceedingly overleveraged, rebalanced incorrectly (i.e., increased his exposure at the wrong times), and was not diversified. The guy is writing his own book about it–he acknowledges that he was inspired by Ayres & Nalebuff, but what he did is not consistent with their theory at all. They discuss his case extensively in their book.

(Sorry if this gets posted twice.)

Paul
Paul
9 years ago

Heh, it’s the same when it comes to a lot of things. the other classic example is if your calorie intake is less than your calorie use over the medium to long term you will lose weight. Everything else is details. They are important details (just as the tax code is an important detail when managing your money), but if you can’t get the fundamentals right you don’t stand a chance, no matter what diet you try. I think it’s a natural response, we like to replace or dress up things that are *hard* like spending less, with things that… Read more »

Katie
Katie
9 years ago
Reply to  Paul

You’re right, of course spend (or eat) less than you make (or expend) is a key to success. But JD, I see where the reporter is coming from. I graduated in 2009, and unless your parents and family have instilled some good money sense in you, the post-college years are REALLY, REALLY difficult, especially with the economy in its current shape. I think the reporter was asking more about how grads should prioritize their spending – and if she was not, I think you could always spin it that way 😀 Important: having nice looking clothes if you need them… Read more »

Leah
Leah
9 years ago
Reply to  Katie

What would also help new grads, I think, is knowing how much they need to make. There’s two perspectives here: help grads be honest about their spending (ie how often do they go out? how much do they spend on beer each month?) and helping them be realistic about how much they can spend on what they make. I’ve always lived frugally, and I was shocked to hear a colleague say that his son needed to make a minimum of $35k straight out of college to meet his “necessities.” This did not include retirement, and I’m not sure if it… Read more »

Amber
Amber
9 years ago
Reply to  Leah

Leah I have to say I think your colleague is spot-on with the 35K estimate. That was the min. number I had WITH a roommate and NO CAR. I did put 3% of that towards retirement, and since then have increased salary and contributions dramatically, but that first year or two were incredibly tough in a big city on 35K. We still had tons of fun, and yes, spent money on going out sometimes, and splurged on a $60 christmas tree (the cheapest we could get without a car!) It all depends on your location, but the majority of jobs… Read more »

PawPrint
PawPrint
9 years ago
Reply to  Paul

I lost 100 lbs. about 5 years ago, and people were always asking me how I did it. They didn’t like my “eat less, exercise more” answer. What they wanted was the silver bullet that would let them lose weight without having to do anything. People want the financial silver bullet, too, so that they don’t have to live frugally or work harder or do the things that we need to do to ensure that we have the money we’d like to have (or need).

SF_UK
SF_UK
9 years ago

Good on you for sticking to your guns, but your blog does show that there’s more to it than just understanding the equations. I was recently talking to a co-worker, and the discussion turned to money management. She commented that, although she wasn’t getting into debt, she was struggling to find money at the end of the month to save, and asked what I did. Because of GRS, I was able to outline the pros and cons of a whole range of methods, not just the one that works for me, which is probably not suited for her.

Nicole
Nicole
9 years ago

Ah, reporters. Sometimes I’ll get great ones and sometimes they don’t quote me or worse, misquote me, because the truth I’m telling them doesn’t fit their agenda. I do think there’s still plenty of personal finance information under the sun that hasn’t been fully explored by GRS, not in the niche category but in the third stage of personal finance realm. But that kind of stuff doesn’t fit well in a “10 things with cute pictures” column… they tend to be more the provenance of long columns by Walter Updegrave (or sometimes women’s magazines, if we’re talking about things involving… Read more »

Elizabeth
Elizabeth
9 years ago

I whole-heartedly agree! I think anyone who writes about money faces these challenges whether they work for a newspaper or magazine or if they’re a blogger. I’ve stopped reading some PF blogs because they try to use the tactics discussed in their article. The ones I follow now don’t try to mislead readers with sensational titles. They deliver solid content instead. Some of it’s new to me and some of it is a good reminder!

Mike Piper
Mike Piper
9 years ago

Oh man. Big thumbs-up here. The same thing happens in investing–people are always looking for something new and exciting. “New” and “exciting” are almost never good qualities in an investment.

Adam P
Adam P
9 years ago

Hey JD, Since the basics never change, the challenge would be to present those basics in a new, interesting, or modern way. Point out modern methods to enforce the basics like: -automatic deductions to retirement from paycheques -automatic withdrawals to high interest savings -free online automated budgeting tools (Mint) -creating email or text alerts when a spending trigger is hit on your credit card or bank account -online communities like this one which didn’t exist 10 years ago to help provide support and information for those trying to live within their means If the basics don’t change, the reporters have… Read more »

Jennifer
Jennifer
9 years ago

I agree that the basic formula is simple, but it’s very abstract. What I love about this site are the stories (especially reader stories) about how people have actually implemented “spend less than you earn” in their own lives. Reading about how people have made changes, both small and drastic, to address their particular circumstances inspires me to reevaluate how I manage and spend my money and consider whether their choices would work in my situation.

Karen
Karen
9 years ago
Reply to  Jennifer

That’s what I like about this site too – reading about how others do it. Gives me the feeling that I’m not alone, and am trying to do it with others 🙂

Katie
Katie
9 years ago

Though if by “unique,” they mean “don’t just tell readers to cut out their daily latte,” I can get on board with that. I could go the rest of my life without hearing that hackneyed tip again!

Diane
Diane
9 years ago
Reply to  Katie

Katie
I agree that tip is over-used. However, I can not tell you how many times this tip is discussed in my office with clients.

Mostly, they don’t understand how small sums of money can add up to anything. But anyone who follows this blog and watches their expenses understands that small changes can and do add up.

Andrea
Andrea
9 years ago
Reply to  Katie

It seems that way, right? But I am amazed at the lines at Starbucks. I used to go to Starbucks 2x a day when I worked. Right after I retired, I still went sometimes and now almost never- because the idea of spending 3.95 for some coffee with steamed milk seems crazy to me(and I have an excellent retirement). I think the best tip(and so many people- not here, of course- won’t follow it) is to write down everything you spend for a month. I have friends(old like me) who still say I don’t know where my money goes(Really!!)but say… Read more »

Beth
Beth
9 years ago

Why is everyone demonizing reporters? Sorry, but I’ve found that many bloggers aren’t much different. I’ve read lots of good and not-so-good content on blogs, magazines, newspapers, etc. A lot people who are “reporters” (in that they work for a magazine or newspaper) also blog. Don’t get too hung up in the labels, folks.

I think the message of this post is a good one though. Stick to sound advice and don’t make false promises that disappoint your readers.

Nicole
Nicole
9 years ago
Reply to  Beth

Aren’t bloggers also a kind of reporter?

Anything that is ruled by sound-bites cannot give a full picture, no matter what method of sound-bites they’re producing. And the picture they do give is often not accurate. Reporters are ruled by trying to digest complicated ideas into short pieces, and unless the reporter is Atul Gawande, that often leads to predictable problems.

Elizabeth
Elizabeth
9 years ago
Reply to  Nicole

Aren’t bloggers also digesting information their readers? I’ve read countless posts where bloggers have picked up on an article in paper or magazine and summarized it with a few of their own comments. Also, many blog posts I’ve read have been well-researched articles — the only difference is they’re appearing on a blog instead of a magazine column. There’s so much overlap that I don’t really understand the need for all these labels except to say one group is better than another — and I don’t buy that. Many writers work in a variety of genres, and you’re always going… Read more »

No Debt MBA
No Debt MBA
9 years ago

I think answering reader questions solves this quest for new information and fresh ideas without devolving into nonsense. Reader questions allow the article to get very specific and to look at information in a different way while applying basic principles and staying relevant to the real world. Unfortunately, Kiplinger and the like can’t simply republish their old articles because readers would become bored and would stop paying for their material. So in some ways the quest for new and fresh is completely consumer driven and the reporters are just trying to meet market demands. So let’s place some blame on… Read more »

Ky
Ky
9 years ago

It’s not about finding a new, unique way to save money – it’s about getting their readers to spend money. Since frugal is the new black, they’re not asking for ways to SAVE, they’re asking for ways to spend, frugally. As most of the US economy is based on consumer spending, it would behoove the media to advocate a new, unique way of spending money (thus improving the economy – in a sick, twisted sort of way). As many readers as you and other PF bloggers have, the majority of the US population still strongly believes (or blindly follows) the… Read more »

Adam
Adam
9 years ago

You’re correct that the basics never change. The problem/challenge is for these principles to be taught much earlier to young children. It’s ridiculous that they are not taught often and well in the schools.

El Nerdo
El Nerdo
9 years ago

Ha, I love to read a good rant, and I really enjoyed this one. The problem with magazines is that most of them are part and parcel of consumer culture. It’s buy, buy, buy, buy, buy, buy, buy. “Articles” are usually little more than covert infomercials. If magazines couldn’t tell you that you need to buy more things in order to make your life complete, 99% of them would cease to exist tomorrow. If you think about it though, they are not really asking you for “new and unique” approaches– they are asking you for a written infomercial on X… Read more »

Ali
Ali
9 years ago
Reply to  El Nerdo

I’m thinking of the magazine, Real Simple, where every article is about things that you should buy to simplify your life. Seems like a joke, but it’s not. The content of that magazine defies its title.

Anon
Anon
9 years ago
Reply to  Ali

HA I agree completely! that magazine has always driven me totally nuts! what a joke.

Johanna
Johanna
9 years ago

I’m not sure I agree that there’s nothing new under the sun. Sure, the fundamentals are always the same, but it seems like every month or two there’s some new marketing gimmick, sales pitch, or sneaky piece of fine print that companies come up with. Personal finance reporters/writers/bloggers can play a big role in educating the public about stuff like that. For example, it’s because of personal finance writers that I knew that credit-card companies used to apply payments to the lowest-interest balance first, and that I know know that they’re not allowed to do that anymore. I would love… Read more »

Katie
Katie
9 years ago
Reply to  Johanna

thanks for addressing the actual audience the reporter was trying to reach 🙂

Amber
Amber
9 years ago
Reply to  Katie

I agree! For the longest time I have been Too Busy To Cook. Anything and everything I wanted in the grocery store was OK because it will save me TIME. Well now I am really trying to embrace my kitchen because I see how much bigger my grocery bill is than I want it to be. It is really, really difficult if you weren’t taught how to plan meals, and also cooking for one is tough to not have the ingredients spoil or you get sick of eating the same thing.

Nicole
Nicole
9 years ago
Reply to  Amber

If you’re cooking for 1-3 people, we totally recommend Help! My apartment has a kitchen!. For 3-5 people, Faster! I’m starving! both by Kevin and Nancy Mills. Totally life changing for the busy person.

http://nicoleandmaggie.wordpress.com/2010/11/14/quick-weeknight-meals-we-like/

Andrea
Andrea
8 years ago
Reply to  Amber

I’d recommend the Betty Crocker Bridal Edition cookbook- lots of yummy basic recipes in there.

I like the Fanny Farmer cookbook too but it’s more advanced. They go through vegetable by vegetable and have 3-4 recipes for each one. I can always find a healthy recipe I want to try.

Justin @ MoneyIsTheRoot
Justin @ MoneyIsTheRoot
9 years ago

I’ve been seeing this trend on many different personal finance blogs. I dont mind new and fresh ideas, but it really depends on the aspect of personal finance that you are discussing. There might be a new budgeting tool to write about, but there isnt a new method for budgeting overall! Like you said, spend less than you earn, and the rest are merely details.

Katy @ The Non-Consumer Advocate
Katy @ The Non-Consumer Advocate
9 years ago

It’s akin to the predatory dieting industry. “Eat less and exercise more” does not sell much of anything, so there’s always a NEW! or JUST DISCOVERED! method to entice consumers.

But “burn more calories than you take in?” It’s always going to take a back seat to the vinegar and cayenne diet, or whatever bizarro fad people can think up.

Katy Wolk-Stanley
“Use it up, wear it out, make it do or do without”

Michael
Michael
9 years ago

On the other hand, vinegar and cayenne could be the start of a deliciously hot marinade for some pork chops.

Justin
Justin
9 years ago

I maybe broke but I’m never giving up my pet ostrich!

Mike Holman
Mike Holman
9 years ago
Reply to  Justin

Worst case scenario – you can always eat it. 😉

Tyler Karaszewski
Tyler Karaszewski
9 years ago
Reply to  Mike Holman

I know a place that will butcher it for you, but you could save money by doing it yourself!

Amber
Amber
9 years ago

Just like Mark Zuckerberg!

Sue
Sue
9 years ago
Reply to  Justin

I’ve had ostrich and emu; both can be delicious, but a little dry… A student of mine whose family were ranchers used to barter music lessons for meat and eggs – talk about a frugal win-win scenario!

phoenix
phoenix
9 years ago

While I understand your frustration, I also understand the reporters’ point of view. Everybody already KNOWS the basics, but the iossue is applying it. How does one get a reader in the first place if the information is stuff the reader already knows? The reader won’t read the article if he knows the info already; the publisher won’t publish an article that won’t get read. The reason I come on this site daily is because I want MORE info–not stuff I’ve already read before. On a related note, I have actually been questioning the advice on buying a used car.… Read more »

Mike Holman
Mike Holman
9 years ago
Reply to  Nicole

Nicole, that’s a very interesting article.

OT – I’ve never believed the huge discount that cars driven off the lot supposedly have. Although it makes sense if they are lemons.

Nicole
Nicole
9 years ago
Reply to  Mike Holman

It isn’t that the car you drive off is necessarily a lemon, but that someone who wants to sell a new car right after buying it probably had a lemon. Then people with lemons hold onto them longer, meaning people with peaches they want to sell hold on to theirs longer etc. Of course, in general even without the adverse selection downward spiral argument above, you’re going to get what you pay for in a free market. The only way you’ll be able to get a bargain is in cases where people are buying used cars heuristically like phoenix is… Read more »

Jasmine
Jasmine
9 years ago
Reply to  phoenix

I agree. Used vehicles aren’t always the best way to go. Years ago my husband was looking for a good used pick-up truck. We couldn’t believe how much used pick-ups were going for. We wound up buying a new pick-up and have been very happy with it. I personally prefer new versus used but then I drive my cars for years. My current car is 7 years old and it is still going strong.

Susie
Susie
9 years ago
Reply to  Jasmine

I bought my van 4 years old and have been driving it for 10. We got our Camry five years old and have been driving it for 15. You don’t need a new car to drive it long, but it helps to have a top-notch mechanic!

Amber
Amber
9 years ago
Reply to  phoenix

Yes, used car prices are at a shockingly high level when compared with new. Dealers are scrambling for used stock. Basically it is the same as you would pay for a new car.

Debbie M
Debbie M
9 years ago

One problem is that what’s new for one person is old news for another person. Or it’s very specific. Everyone loves hearing new tips that they can actually use. For example, I recently found a cheaper brand of milk advertising that it comes from cows that are not given growth hormones. And I have some new ideas to try in making homemade popcorn just as quick and yummy to me as microwave popcorn (add the salt with the oil so it automatically gets mixed in and use popcorn salt so the salt crystals don’t just sit there at the bottom… Read more »

bon
bon
9 years ago

I think this really just points to a dearth of creative PF journalists.

It is interesting to consider the different forums for PF bloggers vs. journalists. Bloggers really thrive by crafting a voice and a narrative – journalists (as I understand it) are pretty much discouraged from such an approach.

Donna Freedman
Donna Freedman
9 years ago
Reply to  bon

“It is interesting to consider the different forums for PF bloggers vs. journalists. Bloggers really thrive by crafting a voice and a narrative — journalists (as I understand it) are pretty much discouraged from such an approach.” Depends on where you work. I spent 17 years at the Anchorage Daily News in Anchorage, Alaska, where voice/narrative are not discouraged. Certain writers had a style/voice so recognizable that you could tell who it was without having seen the byline. Example: I wrote an uncredited piece for the company newsletter. A co-worker came up to me and said, “You wrote this, didn’t… Read more »

Eugene Yiga
Eugene Yiga
9 years ago

This is the same as Trent from The Simple Dollar writes about in his book Everything You Ever Really Needed to Know About Personal Finance: “In the end, this is the fundamental rule of personal finance: spend less than you earn. It’s the one point that comes up time and time again in almost every personal finance book you read or talk that you hear. Why? Because it’s true.” People who keep chasing fads are the ones who suffer the most. But I guess magazines have to keep things lively to keep getting sold. It’s the same reason there’s always… Read more »

Debt Payer
Debt Payer
9 years ago

In some ways only broad advice can be given because so much of personal finance is dependent upon subtle details. If you know how much money my wife and I earn you may think we should be able to “take that vacation this year.” If you see our student loan debt, the analysis is different. “You shouldn’t take that vacation…perhaps you shouldn’t even go to the movies!” Any thoughtful personal finance blogger, from the titans like J.D., down to me, has worried about this issue. Am I just recycling the same old? Shouldn’t I be writing about something “new”. This… Read more »

Justin
Justin
9 years ago

So basically it sounds like reporters are looking for the magic bullet of personal finance, right?

Take this pill every day and your bank accounts will explode in growth!

After all that’s what sells for weight loss, or business opportunities, despite that fact that everyone knows there is no “magic bullet”.

For weight loss, it’s a healthy diet+exercise+sleep.

For a business, it’s action+a profitable system.

For personal finance, it’s spend less than you earn+invest+pay down debt.

Simple. Not necessarily easy, but simple.

mike
mike
9 years ago

One of my favorite blogs used to be Early Retirement Extreme. But now its author rarely posts. Why? Precisely as you stated, everything that needs to be said has been said.

But I still read PF blogs. And I enjoy them. Often now I’m able to skim through a post, but sometimes I get a unique take and it’s fun to read.

Continually reading PF blogs is like keeping up on my allergy shots.

partgypsy
partgypsy
9 years ago

I think that’s why alot of finance articles are written about specific stocks and mutual funds because the information is always changing, always new. The main principals of personal finances work whether you are in a bull market or bear market. It may be the same things your grandmother did. I do think the angle of journalists are to create “new” content, or at least content that catches people’s eyes and seems new to them. Secondly the other purpose is not just to inform, but inspire. One can say to eat more healthy food, or reuse and reduce, but reading… Read more »

Elizabeth
Elizabeth
9 years ago
Reply to  partgypsy

I love your point about “inform and inspire” — I think that’s what writers and educators should aim to do.

AndrewL
AndrewL
9 years ago

Spend less than you earn is extremely simple, but achieving it is rather difficult. how many people actually add up a month’s worth of bills, then generate a histrogram to see if it is changing over time? It’s quite possible that a family can start off 1 year spending less than they earn, and without any change in behavior, end up spending more than they earn the next year and they have no idea how that happened. I think some better advice would you write down all your monthly re-occuring bills (mortgage payments, eletric bill, gas bill, telephone bill, etc… Read more »

Tyler Karaszewski
Tyler Karaszewski
9 years ago
Reply to  AndrewL

The complexity you’re implying here is artificial. I spend less than I earn without creating monthly expense histograms. It’s simple:

Take the first $50 from each paycheck and put it in savings. Don’t spend any money that you don’t have on hand (and don’t touch the savings account). Done. You are now spending less than you earn by at least $50 per paycheck.

Whether you can execute it is a different story, but it’s not logistically complex. It requires no spreadsheets.

KM
KM
9 years ago
Reply to  AndrewL

…um, so you’re saying that a new college graduate would find it “too hard” to add up their monthly bills and figure out where they’ll end up at the end of the year?

Dude, drug dealers who never went to college can do that!

If the math is too hard for you to do so you can’t watch out for your finances, you might as well call yourself incompetant and make yourself a ward of the state.

Katie
Katie
9 years ago
Reply to  KM

Hey, common, in all fairness to recent grads, most have not lived on their own. Yes, they know the rent and the cable. The utilities? May be a mystery. Food budget? They may never have fed themselves! Car payment (yeah, yeah I know you’re going to say they shouldn’t have financed the car, but really, many grads won’t have the cash for a car, even a beater, especially if their circumstances are tough) – sure, but what about insurance and gas (which seems to get more expensive by the minute)? I’ve been living on my own for a little while… Read more »

Tyler Karaszewski
Tyler Karaszewski
9 years ago

This is a bit of an alternate take on the same thing J.D. said, and it’s not going to satisfy any reporters, but I kind of think of it as an interesting abstraction away from money: What you have = what you’ve made – what you’ve used. In this sense, ‘made’ doesn’t necessarily mean ‘earned’, it can just as easily mean ‘built’. I think ‘wealth’ is a bit of an abstract concept for many people, but ‘what you have’ is more concrete, and this takes into account things you have that you didn’t actually buy. For example, say you have… Read more »

Mike Holman
Mike Holman
9 years ago

This is exactly how I used to monitor my spending –

http://www.moneysmartsblog.com/cash-flow-measurement/

Now my budget has enough excess that I don’t really have to monitor anymore.

Jan in MN
Jan in MN
9 years ago

Nice, Tyler – hadn’t thought of it quite this way before.

shorty j
shorty j
9 years ago

amen to this. It reminds me of a conversation I had with one of my good friends in college; we were discussing different types of diets (Adkins vs. low fat vs. whatever) and he says, in his southern drawl, “I’m on the Eat Less [F]-ing Food diet. I eat less [f]-in’ food, I lose weight.” 😛

Elizabeth
Elizabeth
9 years ago
Reply to  shorty j

I like Michael Pollan’s “Eat food, not too much, mostly plants.” 🙂 Quantity and quality make the difference 😉

notpollyanna
notpollyanna
9 years ago

This is something that has annoyed me. The fact that it all comes down to spend less than you earn means that the only choice for me is the long slog. I don’t make a lot of money, I live with my parents, and I have a huge pile of student loan debt. All the tips on saving money tend to be useless to me. Cut cable! (I don’t pay for it and I never will.) Cut down your cell phone bill! ($2.50 a month is the lowest I could find and still buys me more minutes than I really… Read more »

Betsy
Betsy
9 years ago
Reply to  notpollyanna

Yeah, same here. After two decades of “not buying anything” I finally was told by a perceptive friend “You can’t frugal your way to wealth. You need to increase income, not just cut costs.”

Well, duh. But it changed my plan (for much the better).

Jonathan
Jonathan
9 years ago
Reply to  notpollyanna

Don’t ignore that there are two components to the equation. Sure it’s written “spend less than you earn,” but it could just as well be written “earn more than you spend.” Does that change your outlook any?

“The fact that it all comes down to spend less than you earn means that the only choice for me is the long slog.” – Were you under the impression that if you spent MORE than you earned you could get rich more quickly?

notpollyanna
notpollyanna
9 years ago
Reply to  Jonathan

Oh, no, that isn’t it at all. I have no illusions about magical math making me wealthy, more of “this situation looks so bleak and discouraging, and the fact that I haven’t found any magic bullet means that my situation really is bleak, there is no silver lining I have managed to overlook.”

Oh and earning more, believe me, I’m looking

Will @ HackingTheBank.com
Will @ HackingTheBank.com
9 years ago

It’s funny how easy it is to think that, because we constantly read or see articles preaching the same basics, that the world already knows these things. In my line of work everyone is college-educated and finished with at least a 3.5 or so. Basically, these people aren’t dumb. However, when it comes to personal finances, many still don’t realize the power of compounding or practice the basics of spending less than they earn.

Nicole
Nicole
9 years ago

Actually… I’m willing to bet that quite a few readers of personal finance blogs don’t really understand the power of compounding (or exactly what compounding is). It’s a really difficult concept and for a large portion of the population the minute you either bring out spreadsheets or equations, eyes glaze over. Add to that, the examples often have ridiculous rates of gain (10%, 12%) as if they’re guaranteed, that it doesn’t seem worth it for many folks to try to understand the post with more realistic numbers added. Heck, I was at a conference last year among economists who study… Read more »

Tyler Karaszewski
Tyler Karaszewski
9 years ago

“Hacking the Bank” <– that would be a new and unique way to make money.

Barbara
Barbara
9 years ago

I agree with your stance on this, J.D., and I have a “rant” of my own. Sometimes reporters take the solid advice that many of us have lived for years and try to package it as “new.”

Case in point: when the recession hit, they would sell tips like clipping coupons or examining the cable bill and making cuts as “new.” If this is something you already do, it has the effect of making you feel like you are doing all you can do and you can’t save through other tips and means.

Marsha
Marsha
9 years ago
Reply to  Barbara

Yes–I dislike how “frugal” is the new thing, when some of us have been living this lifestyle for a long time. I want to sing the old country song with new words, “I was frugal when frugal wasn’t cool.”

Dana
Dana
9 years ago

I saw the article (link below) this reporter wrote, and while much of it was OK advice, I didn’t like the title, and I really took issue with the very first item: eat lunch out with your coworkers. In my and my husband’s budgets, this turned out to be a huge money pit, and accounted for WAY more than the supposed $200 a month in extra spending. It won’t hurt your career to brown bag it.

http://www.syracuse.com/news/index.ssf/2011/05/what_every_new_college_graduat.html

J.D. Roth
J.D. Roth
9 years ago
Reply to  Dana

Nice. The article turned out better than I thought it would. The advice seems sound, actually. Based on the interview, I was really scared it would be giving kids permission to buy cars, laptops, and more…

Katie
Katie
9 years ago
Reply to  Dana

But the writer specifically says you shouldn’t do it every day; you should do it when it will have a noticeable networking effect (and I think this is true – never going out to lunch with anyone can be a problem in some jobs.)

Julia
Julia
9 years ago
Reply to  Dana

Yeah, I’m not the hugest fan of the “go out and buy two new suits” advice, either. Sure you have to look nice at your new job, but a lot of companies require no more than business casual, which you can acquire at Ross/TJMaxx. Even in the more professional work environments, no one expects the new young hire to be showing up in a tailor-made outfit. I would say it’s more important to get a feel for the company & how people really dress day-to-day before running out and making any new purchases of “investment” clothing. I have 2 suits… Read more »

Barbara
Barbara
9 years ago

Perhaps the kind of information they seek is how to use frugal hacks? In that case, I have gotten many from Donna Freeman. I was recently paid to have my oil changed and get a new air filter (got those things free plus $50 cash) for mystery shopping at the service station. I also got $20 worth of free dry cleaning by doing the same. Coupon tricks have included buying a single item, getting the rebate/register rewards and paying those forward to score more deals. While frugal hacks haven’t made me rich, I feel a little less broke and they… Read more »

Nicole
Nicole
9 years ago
Reply to  Barbara

That’s why Donna Freedman is awesome. 🙂

Amber
Amber
9 years ago
Reply to  Barbara

I get free sushi from mystery shopping =)

Suzanne
Suzanne
9 years ago

I agree with this post! For several years I have been reading every article I see on personal finance. In the beginning, the tips were helpful because they were new to me. Now I don’t read them anymore because it’s always the same concept. But it wouldn’t matter if they used a new twist (like don’t pay for boarding school!), it’s still the same basic information. The journalists just need to realize that some readers are in the right place in their lives to digest that information, and some aren’t. They’re not going to find some new magic formula that… Read more »

retirebyforty
retirebyforty
9 years ago

Spend less than you earn is the bottom line of personal finance. It’s boring, but it’s true. If you can’t spend less than you earn then you will never be wealthy.

krantcents
krantcents
9 years ago

This why there are thousands of diet books. If you eat less calories than you burn, you lose weight! Simple, right? Everyone wants the magic pill, the easy answer. Success requires hard work or at least effort toward the guiding principle of living on less than you earn. There are lots of books on various financial aspects, but that is the guiding principle. The reporters want the newest thing, the item that will make their article more interesting.

kaytea
kaytea
9 years ago

YAY! This is why GRS is one of my favorite sites!

Susan
Susan
9 years ago

The reporter wanted something to grab the readers’ attention and I do think it is possible to phrase the tried and true in new ways, like “Radical Ways to Get Out of Debt and Start Saving.” It’s the basics with a twist to give the reader the idea that this is a new thought on finances. However, I don’t think the old principles can be emphasized enough but the reporter wants to make it sound new and original when really, it’s the same old thing that works really well. It’s not hip but it sure is COOL.

Wearsunscreen
Wearsunscreen
9 years ago

There’s some new financial tips in Proverbs. Send that type of reporter there, they’ll thank you for it…

takaba
takaba
9 years ago

Long time reader, J.D., but as a (young) reporter, I feel the need to put in my two cents. I agree with you that the constant request for “new, exciting” tips can be frustrating, especially to a PF blogger who is writing about the importance of fundamentals every day. And others have mentioned there’s the problem of what’s old news to one person might be completely new to other. I’d also add that some of these reporters are not acting of their own desire to do “new, exciting” tips stories, but under the direction of their editor. I don’t say… Read more »

Alex
Alex
9 years ago

Of course, the foundation is always going to be the same. You summed it up in your “spend less than you earn” statement. Perhaps one thing that is constantly changing though is the technology that we have at our disposal and what we can use to help us manage our personal finances. While the theory doesn’t change much, the tools we can use do so I would definitely talk about those as “new, unique” tips.

Don Kim
Don Kim
9 years ago

I think almost all of human knowledge is a rehash of some basic principles. Some huge game changers would be something like the discovery of gravity. But for something as old as saving money, there will definitely be rehashing. I think what counts is the uniqueness of the perspective or the “fresh” way a person views a common topic. I think you accomplish with this site and is why I like to read it.

Brian
Brian
9 years ago

JD! First time, long time……! Thank you! Your latest post was “right on the money!” I, too, have adhered to more of an Occam’s (Ockham’s) Razor approach to personal finance my entire life. Recently however, I’ve come to realize that I had let too many nuances and “details” slip into my daily approach. I chalked it up to “educating” myself, or looking for ways to improve an already solid structure. I found that more times than not, I was utilizing valuable time reading about financial concepts that I was currently applying, or had no meaning to me whatsoever, rather than… Read more »

plotkin.k
plotkin.k
9 years ago

What needs to be covered is how to set up a household frugally. Once upon a time there were reasonable suggested household inventories. Now the ones I find are way more than someone starting out needs. I used the list in the More With Less Cookbook. Also once you have an inventory the local thrift store is a good place to find pots, pans, dishes, storage stuff. Also a good insulated lunch box is a good start to pack your lunches.

Julia
Julia
9 years ago

The best advice I could come up with: A recent grad should wait until they truly understand how their expenses match up against their after-tax paycheck amount before running out and making any big purchases. Or, if possible, signing a lease. When I graduated I had the hardest time translating my salary offer into real, after-tax dollars. I moved cross-country for a job and had NO idea what my salary would turn into after taxes, 401k, health insurance, etc was taken out. That made it really hard to figure out a budget and what I could afford to take on… Read more »

shorty j
shorty j
9 years ago
Reply to  Julia

agreed wholeheartedly! Probably the best thing I did after getting my first “real job” was moving into a group house, because my rent was a much smaller percentage of my income than it would have been in my own place. This gave me several months to sort out what I really could or couldn’t afford, and get to know the area really well while staying well below my means.

Steph
Steph
9 years ago

To be fair, sometimes those ‘new tips’ articles really do give me new information. As green and frugal as I try to be, sometimes it just doesn’t occur to me until I read it. I just replaced my cotton balls/pads with sewn white t-shirt rags and made cloth napkins. Huge savings? No, but I’m happy with it! But I hear what you’re saying.

Tanya
Tanya
9 years ago

I have to chuckle about “new and unique” ideas. Yesterday I read a blog, allegedly for single adults and small families, to help them budget. One of the tips was “butcher your own meat.” Um, no. Butchering an entire animal (which I don’t know how to do anyway) is way more meat than is practical for any one or two or even three people. I’ll spend $3 to $4 for hamburger as I need it and call it good!

Nina
Nina
9 years ago
Reply to  Tanya

Maybe they were talking about squirrels or bunnies to be butchered…
Sorry, I would rather take the 3 or 4 $ hamburger as well.

Money Reasons
Money Reasons
9 years ago

What kills me is when I see an article just saying the same thing in a different way.

Sometimes I feel like those authors think we all stupid (lol).

Good rant, made me shake my head agreeingly.

Jamie
Jamie
9 years ago

Thank you so much for this article! I’m constantly seeking out new advice on ways to save, ways to earn more, etc, etc. I do the same thing with health and fitness– always looking for new blogs with new exercises and new diets. The truth is, my finances are in great shape and so is my health. In both areas, I’m doing exactly what I’m supposed to be doing, but because these are two areas that *interest* me I just get bored with the same old theories! There is nothing wrong with the theories; the problem is that I (like… Read more »

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