Thanks for the excellent article.

Dan

Interesting choice of words… Please read my comment again. Food and shelter are necessities because you will die without them. You will not die without transportation. It is something you choose to spend money for to make your life more convenient (i.e. an investment).

INVEST: (1) to put money to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value. (2) to use money, as in accumulating something

Larry Winget Says:
April 11th, 2008 at 1:09 pm

Well at least people are seeing the commercials! None of us are suggesting that you immediately run out and buy a Hyundai or any other car. I know I am not. My point in doing the commercial is that IF you need a car at least buy one that has cash back and zero percent financing. And it is a reminder that a good car doesn’t always come with a high price tag. All of the “gurus” agreed on those points. By the way – it was a pleasure hanging with the others. Good guys.

All the best – good blog!

Larry Winget

This is aimed at the people the car industry has convinced that they should spend at least 26K on a car because that’s avg and you don’t want to considered “below avg” by your neighbors.

It is also aimed at people who tend to want blow the money they saved on a purchase, rather than investing it.

Actually the pitch went beyond the commercial. On the Hyundai website the three gurus sat down and went more indepth on various financial topics. The site is down now since the promotion is officially over. But that was a nice touch. It is a timely ad since our economy is so scary and record number of Americans are in debt.

I cannot help but put in my two cents regarding used vs new cars: the difference is small if the far more important advice of choosing a moderate priced, high MPG reliable car, and then keeping the car until it rots is followed. Advice #2 is related to the above, and is never to buy the first year of a model’s multi-year production run. Advice #3 is to perform the simple maintenance yourself: Filters, drain and replace fluid changes, sparkplugs, and belt checks.

‘96 Subaru bought new
‘04 Toyota Prius bought new
Next new car around 2015.

Disclosure : I’ve never seen, heard or heard of, the Hyundai ads featuring personal finance writers, or have had them described to me by another, nor have I ever read any of their writings. All I know so far about them is what I’ve read on this thread.

I’m going to answer your concerns paragraph by paragraph respectively.

1. Yes, I’m comparing “Larry Winget in a Hyundai commercial” (having never seen it) to Mozillo plundering Countrywide (nor this either but I’ve read about it) in the sense that if I see management in the small company I work for (for example) cashing in their stocks while telling employees to hang on to theirs, I would call the event an Enron. Mozilo built Countrywide. He should be rewarded for his efforts (though I seriously disagree with many of their loan offerings) but not this way — selling stock when you know the company’s going down is wrong. Legally, could he have done it? I really don’t know but guess that he must have thought he had enough of a legal leg to stand to dump shares then. Should he have done it? Absolutely not and this is where personal integrity comes in. Writers who’d previously preached against buying new should have the personal integrity to decline doing the ad. What I fear you’re doing here is picking up on the MAGNITUDE of the items compared while completely ignoring the PERSONAL INTEGRITY issue. Both the writers doing the ads and Mozila’s sale were wrong; both actions might very well be legal but unconscionable.

2. Yes, various people including financial advisors suggest buying new; I’ve no problem with this. In fact, my comment #45 said “It’s OK for the writers to do the ads as long as they are behaving consistently with the financial doctrines they preach. If they’ve never preached against buying new cars, they can do the ad.” and my last 3 vehicles were bought new so I understand the reasons for buying new. You’re trying to turn this into a “choice” issue which is utter nonsense. The real issue is PERSONAL INTEGRITY which you seem to be evading. Here’s another example: I used to work at a small high-tech company many years ago (long since out of business) and there was very little paperwork; I was never asked to sign a non-disclosure agreement (nda). After I left that company, it was expected of me not to reveal proprietary information (pi3.14…) to our then or potential competitors. If a competitor offered me a job based on my revealing pi, should I have done it? What if my family was starving; should I do it then? I was luckily never faced with this dilemma but I know that I would never have done or will do it and expect my family to back me up no matter what happens. Legally, had I revealed pi, there was probably nothing the company could have done to me but we all know it wouldn’t have been the right thing to do. It is not a choice issue; it’s a mixture of personal integrity and loyalty which is very hard to describe. If you don’t see this, I can’t help you to see this anymore.

3. On “choice” and “value call”, see paragraphs 2 and 4 respectively. “Found money” is nonsense as it applies to the k$3 “saved” from buying a new k$20 car for k$17. The k$3 is NOT found money in the sense that saving 30 cents off a $1 can of peaches when it goes on sale for 70 cents isn’t either. I’ve never heard of any personal finance writer/blogger telling grocery-sale shoppers to send all the “saved” money to pay off their credit cards. What counts is the ACTUAL money leaving your pocket — the k$17 for the car and the 70 cents for the peaches. What if the car had been sticker-priced at k$25 and the can of peaches at $2? Should you now send the k$8 “saved” on the car and the $1.30 “saved” on the peaches towards your credit card debt? Yippee — even more found money! It’s voodoo money, not found money.

4. I heartily agree with “Most of personal finance IS a series of value calls. There are very few absolutes…” but this isn’t about the variability of personal finance advice — it’s about the INCONSISTENT SUDDEN CHANGE from previous writings. In particular, advice they’ve been giving their readers BEFORE they got wind of the ad deal and that’s why several commenters cried “SELL-OUT” — it was the INCONSISTENT SUDDEN CHANGE. “Value call” is nonsense. Sure, I understand their “value call” — they get to make lots of money by doing the ad. I do not expect nor want you to accuse writers who HAVE previously advised people to buy new of selling out — please read my comment #45 “It’s OK for the writers to do the ads as long as they are behaving consistently with the financial doctrines they preach. If they’ve never preached against buying new cars, they can do the ad.”. You’ve either not read my comment #45 very clearly or are deliberately confusing the issue. I make a very clear distinction between writers who HAVE and HAVE NOT previously advised to buy new; those who have — go ahead and do the ad, those who have not shouldn’t — it reeks of conflict of interest. How can I possibly make this any clearer?

5. I agree that payday lending is vicious and absolutely unconscionable but again, you’re focusing on MAGNITUDE instead of PERSONAL INTEGRITY; see paragraph 1.

Trent, we don’t know each other but your words really scare me sometimes.

The “financial gurus” in these ads should be ashamed of themselves.

My big concern is the disconnect between the author’s writings and the intent of the commercial. I threw Dave Ramsey out as an example because he advises against buying new cars for all but the wealthiest people, and describes rebates as a return of some of the money that was overpaid. That’s an unambiguous stand against what Hyundai is trying to persuade the viewer to do.
On the other hand, if Joe Schmoe had a finance book encouraging everyone to live for the moment, buy new cars and worry about the future later, I wouldn’t fault him for appearing in the commercial (but I wouldn recommend his advice to anyone either..)

Also, isn’t this fundamentally an issue of the “if I spend more, then I save more” paradox?

Yes, it is. Unless you have a telecommute job, or work within walking or biking distance of where you live, you will have to pay transportation costs. MOST people do not live within walking/biking distance of where they work! Look at all the traffic between suburbia and downtown areas in every single large metro area in the United States for proof of that.

Even people who use public transit have to pay something for transportation. I know, I’m one of them. I paid $100 for my monthly bus pass yesterday.

You have no argument that transportation is not a necessity. It is VERY rare in our society that people choose to live close to where they work. Because guess what? In most cases, if you work downtown, in order to live downtown, you’re cost of living will increase because the real estate costs more.

Look, they made the choice to appear in that commercial in the hopes to sell more books. Is it a choice I would have made? No. But I *can* understand why they chose to do so – there are a lot of reasons – some financial advisors even advocate buying new cars.

The only thing that comes out of Winget’s mouth in that commercial is that you should use found money to pay off credit card debt, and that’s something I agree with. Do I think he should have been in the ad? Probably not. But he’s making a value call there, and I can understand his choice in making it.

Most of personal finance IS a series of value calls. There are very few absolutes – the reason that there can be near-infinite discourse about personal finance is because it’s based on values. Buying late model used over new is something I feel strongly about, but it is a value call – I’m underemphasizing some values of buying new in making that call. Because it is such a value call, and because there are personal finance writers out there who advise people to buy new, I have a hard time accusing them of selling out.

The only time you’d see me going down such a road is when a writer is encouraging people to do something that’s flagrantly wrong – something that violates basic tenets of personal finance, like payday loans.