The Big Problem with Money Courses

Many financial “gurus” are in the seminar, coaching, and classwork business. They come up with course materials and attempt to sell them at a very high price to individuals who are scared for their financial future.

Some of these coaching programs are reputable ones. Many of them are not. Almost every week, I receive an email or a note from someone telling me about how these courses have made their life worse. Here’s one such story, from Ann (with specific references edited out, because I’m not interested in a specific libel war):

I take responsibility for the mistake I made in signing up for the coaching program, after expressing interest in [his] programs on his website. I was vulnerable after the death of my mother and wanted some guidance in dealing with a small inheritance.

The more I engaged with the various people at [that organization], the more I felt I’d been completely scammed. Overpriced, simplistic e-courses, coaching that is nothing but more sales pitches, shady business practices … you name it.

In the end, at least it woke me up and I took back some power by insisting that they give me my money back. I did eventually get most of it back, though still feel ripped off. These guys employ the worst business practices I’ve ever seen in my life. Refusing to respond to phone calls. No refunds after 3 days after enrolling, when how could you possibly know the program would be like at that point? Any reputable business is happy to keep their customers happy. Talking to these guys was surreal.

Through this experience, I lost every ounce of respect I had for [that person]. It truly was simply a scam. [...]

Like I said, I know it was my responsibility that I made the mistake of getting into the stupid program. It’s just horrible to see how these people prey on vulnerable types. They literally refused to provide me with a breakdown of the costs for the program components. What they were pro-rating me broke down to something truly outrageous like several hundred dollars an hour for coaching. A total scam.

For anyone who fell for the sales pitch, go after your money! I stood up to them and it did work. It also helped that I disputed the charges to them on my credit card, based on the fact that I didn’t receive the product I was sold. This did work.

This happens with an uncomfortably large number of personal finance courses out there. I have heard many, many horror stories that match Ann’s or worse, including people who have dumped (literally) tens of thousands of dollars into coaching and classwork only to find themselves worse off than they were before.

What’s the reason for this? Quite simply, such programs are sold as having all of the answers you need – but they don’t provide answers that you don’t already have. The material that makes up almost all of these seminar and coursework programs is information that you can gather on your own on the internet or from your local library. They’re just packaged together well.

The biggest thing that such courses provide that you can’t always find elsewhere is cheerleading. They take ideas that are already out there – like spending less than you earn, avoiding debt, and so on – and couple them with a strong “you can do it” attitude. Many of them also include some one-on-one coaching.

For some people, that’s really helpful. For many people, though, that same coaching benefit is available on blogs like The Simple Dollar for free My twice-weekly mailbag, for example, is the equivalent of someone standing up at a seminar, telling their problem, and having the people in the room talk about it.

My simple advice is this: never, ever invest in a course or a coaching system where it’s not absolutely clear in writing what you will gain from that course or coaching system. Make sure that you’re actually gaining something far beyond what you already have access to for free (or minimal cost) via sites like The Simple Dollar or the books at your local library.

If you want additional help or are interested in camaraderie, try to find a money buddy in your life or see if there are any personal finance groups at your local library or your local community center.

The route to personal finance success is not found by dropping hundreds or thousands of dollars on classes and coaches. It’s found from a desire for change inside of you and a willingness to step up to the plate and make changes in your own life. Spending thousands won’t give you that, and the exact things you need to do to actually make financial success happen can be found for free or very low cost elsewhere. That money spent on coursework is money that could be better used putting your financial life together.

Yes, there are good courses out there that help people, just as there are some sharks in the water. Even with the good courses, though, there’s a lot of expense for the coaching and coursework and, at the same time, a lot of opportunity to do it yourself.

Telling you this is literally costing me thousands of dollars. I’ve been asked to be an “affiliate” for many such courses, where I get paid a chunk of the money earned in order to convince people to take such courses, and I’ve even sat in on a few and read the materials from several of them. I won’t do it for one simple reason – I don’t talk about things on here that I myself wouldn’t use. And, to put it simply, I never have and will not use money courses until I’ve exhausted every resource available online or at my local library.

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  1. Jeremy says:

    I would like to mention that not all classes and seminars are a scam. Some, such as Dave Ramsey’s Financial Peace University, I feel are very beneficial. This particular one can be found quite often at $100 “on sale” and once you’ve purchased the membership kit you can re-attend any class sessions for life. Yes, all of the information in the class can be found via his books (and similar information from other authors as well) for free at the library. However what I found when my wife and I took the classes, it forced us to spend the time to learn and discuss the issues and plans together. I can learn from a book, however my wife struggles with this, and a class is much more helpful to her. This alone made it well worth the price for us. We were both able to absorb the material together.

    I’ve had questions that are not covered in the classes, and have called and they’ve been more than happy to answer my questions. When I originally purchased my membership kit, I accidentally used my old address (I had just moved) and they were extremely helpful in getting it corrected after it had already shipped out.

    I think it is like any subject, there are good and bad apples all over the place. I just hate to see the assumption made that all of the apples are bad just because a few bad ones have been discovered.

  2. David says:

    I second Dave Ramsey’s FPU. It’s not going to make you rich. But it will show you common sense ways to invest and save money, buy and sell real estate, shop for mortgages, shop for insurance, all the common things you need to do with money. And it drives home the point that there are no get rich quick schemes and that if you work hard, live within your means, and save at least 15% of your income (once you’re out of debt) you can and will retire a millionaire.

  3. Leah W. says:

    If only retiring a millionaire could get you by…

  4. I admire your integrity Trent. Sounds like the moral of the story might be that the more it costs the less it’s worth.

  5. Greg says:

    If you don’t have a lot of money, they make you pay for overpriced money management courses. If you do have some money, they give you an expensive course for free under the condition that you buy investment products from them. This happened once to me, and I lost the money I invested.

  6. “Sounds like the moral of the story might be that the more it costs the less it’s worth.”

    Yes, that’s why I use a tricycle to get around town instead of a Lexus, and sleep in a 99¢ cardboard box instead of a house. I also use a fresh law school graduate for all my legal advice instead of hiring an experienced attorney.

    I’m sorry, are we only talking about finance courses?

  7. shweta says:

    yes, so many peoples are having all money courses. especially the high cources {like management and engeeniring post graduates etc…….} we can also call as money courses. some students have so much knowledge but they cant use properly because they are not having money to complit all nessecities.
    one poor student to reach his goal he pass through many problems…..

  8. Roberta says:

    I was in the bank less than a week ago, and at the teller window next to me was a nicely dressed young man, talking to the teller in an extremely animated way, so I began listening to their exchange. The upshot was that a financial program to which he had given his account number was still taking money from his account even though he had cancelled his membership in this “university” (not Ramsey’s, but that of another and more famous public figure in the finance world). The kid was frantic. I felt so bad for him and yet related to him at the same time. Before I found books like David Allen’s GTD, David Ramsey’s Financial Peace, and the Simple Dollar (thank you, Trent, I was also frantic. Now I feel more in control of everything and am on the road that will lead to peace for me. I wish the same for the young man I saw in the bank last week.

  9. Holly says:

    Yes, I was scammed way back in 1996 before everyone had cell phones. I went to a seminar where they sold you a kit of calling cards for $600. Whenever you sold one, you received a percent of the sale (can you say pyramid scheme?). Of course about one year later, nobody used public phones anymore…

    That wasn’t the worst part. The worst part was that I was sold ‘coaching’ to help me get my ‘new business’ off the ground — for $5000! Never mind that I put it on a credit card. The guy would never call me on time and the whole thing was a scam. I felt like a complete fool.

    This program would not refund your money after 3 days. Too bad I didn’t know that I had rights under my cc agreement to dispute the charges. My husband still brings it up from time to time to make me wince.

  10. Another Dave says:

    On a similar yet smaller scale, I flicked on the TV this weekend and it happened to be on an Infomercial for some “financial” guy selling a book @$25… that gave you the “secrets” to finding Free $. Which was totally idiotic to me becuase you can find alot of that info online. And many of the examples he gave weren’t much more than $30 anyway!
    And for reference, you can get the Core Info of FPU free if you look around and ask. It was a big help for me, since I just needed the info , not the coaching. Try a local church they may have a copy.

  11. Another Dave says:

    @ GREG… perhaps it should.. “Sounds like the moral of the story might be that the cost does not always determin the worth.”

  12. Wink says:

    If they were that bad and you want to warn others let’s name names

  13. Holly says:

    @ #10, Wink:

    Yes, it would be a good thing to warn others…it would have been nice to have someone to shed light on what I was getting myself into (we didn’t yet have the internet in our home back in 1996).

    I know my story isn’t about financial courses, but the company was supposed to provide a coach to help me w/a business plan…it was so stupid…the guy would say, “Okay, the next time I call you I want you to look in the phone book and write down the names of 100 businesses to sell your calling cards to.” He would have me waiting by the phone for my session and he would call an hour late (or not at all). Eventually, he just stopped calling because he could hear the anger in my voice, which was growing w/each ‘conference call’. There was no company name or address on the original paperwork…just a P.O. Box number. The company preyed on the people who bought the calling card kit SCAM. They were like a tag team, I guess (bait and switch).

    I wish I could remember the name of the scam artists…I didn’t think I had any recourse since I signed a contract that stated “No refunds after 3 days of signing this contract.”

  14. reulte says:

    Holly – Tell your husband that you’ve gotten over it and so should he.

  15. GayleRN says:

    Investment courses are some of the worst offenders. They can cost thousands of dollars and be extremely difficult to execute what they are teaching. As usual, anything that purports to give you the secrets of becoming wealthy is indeed making someone wealthy, it just isn’t you.

    So far the best investment education I have found has been a number of books, one DVD course for $99 and one live seminar for $29. So far cost has had no correlation with value.

  16. Kevin says:

    My own experience with one “investment club” in particular could be a blog post on its own. To put it as succinctly as possible, in 2006, my wife and I joined a “wealth building club.” The membership fee was $4,000. The first thing they advised was for us to refinance our mortgage to take out $80,000 in equity and invest it in a land-banking program that would double our money in 5 years. It’s now 4 years later, and the latest I’ve heard is that the land banking program is optimistically hoping we’ll break even (that is, get back our original $80,000, with no profit). However, in refinancing our mortgage, we did incur penalties, CMHC insurance (Canadian PMI), and fees totaling over $12,000.

    Next, they advised us to participate in a charitable donation tax scheme where we donated $11,000 and received tax receipts for $40,000. I know, I know, but they assured us this was a legal loophole that rich people used. Of course, it turned out to be bogus, we got audited, and paid $3,000 in penalties and back interest to the government (on top of the loss of our original $11,000 donation). Like I said, this was back in 2006, and I was a lot less savvy with money.

    Total loss: $30,000.

  17. Problem #1 is that they cost money. Isn’t that going to put you further in debt?

    Problem #2 is that unless you’re a complete idiot, I doubt there are any pearls of wisdom there that you can’t either figure out for yourself or find on the internet.

  18. Good point in your post, Trent. The very best courses should empower you and show you ways to put the suggestions into place in your own life.

    Ones that promise “all the answers” are teaching you that someone else holds the key to your experience (and in this case, wealth). That’s not true at all.

    I find it’s a good idea to look for courses and teachers who are interested in your growth and knowledge – not just on making their next buck.

  19. David says:

    re #3 Leah

    I will have no mortgage and no debt. I can easily pull off 5% a year from a million and not touch the principal. That’s 4166 a month mostly tax free from Roth IRAs, even if SS isn’t here. It’s very close to the current average household income, but without the debt.

    If you’re going to carry mortgages and debt into retirement, well…good luck with that.

  20. Kevin says:

    @David:

    How are you pulling 5% off without touching the principal? Where can you currently earn 5% on your money, risk-free? Don’t say “banks” or “CD’s,” give me a real, verifiable example. Name a bank from whom I can buy a 5% CD *today*.

    They don’t exist. You cannot currently take 5% off of your money without touching the principal. There is no possible way to earn 5% risk-free today.

    What will you do when inflation starts eroding your spending power?

  21. I just talked with someone recently who signed up for a $99 coaching program only to get off the phone an hour later and have $12,000 charged to her credit card for their “ultimate coaching program”.

    The $99 initial fee was just to get their foot in the door and after that the hard sales pitch kicked in!!

    Be careful of these!

  22. Kris says:

    The problem with most of these courses is that the “system” isn’t really a system, it’s just the process used by the person selling it. A true system will work for anyone. But a personal process may or may not work for someone else. Assuming the process was even used…

    I remember the old Charles Given’s products. They sounded good, but years later it was revealed that the guy made his fortune selling the products, NOT doing what he taught. Sad.

  23. David says:

    @Kevin
    That sounds like a “sky is falling” mentality. Realistic for this quarter, yes, but not necessarily over the long haul in decent growth stock / index mutual funds. The stock market has averaged about 9% annually since it’s inception including the last couple of dog years. I don’t invest for 2 years or 4 years. I didn’t get out when it tanked awhile back, I continued to invest and had a nice ride back up. I’m not arguing, I’m just betting that the same thing will continue to happen, over time. And sure some years it might not make 9% or even 5% but some years it’ll make 20%. I’m content with betting that 5% is a realistic expectation over the long term. And again, I think the point is to have no debt in retirement and you won’t need that much, esp if LTC insurance is in place. And if I do have to “touch the principle” some years, so be it. If there’s a million in there I won’t get tweaked about it.

  24. David says:

    @Kevin – you asked for an example, here’s kind of what I’m thinking – it is simplistic I admit. But that’s OK IF you believe, as I do, that in general the best and brightest companies making up the stock market over time will continue to flourish. Here’s a mutual fund from Fidelity – YAFFX – that has made an average of 12.01% every year for the last ten years. I have a mix of different stock mutual funds, and that’s it. No single stocks, no CDs, no bonds. Yes some years I’ll be sweating it out but again – no debt first and foremost. No leveraging the house to invest and no get rich quick schemes. I’m on a 20 year plan.

  25. Dash says:

    I completely agree. Between reading the Simple Dollar and going to the library I have learned so much over the past several years and can really see that in action by having clearer goals, knowing what we value <- this makes it very easy to see how any purchase/time spent is worthwhile or not.

    So to re-iterate, use the library it's free and at most places you can request books online so only time spent is to pick it up when you receive an email that it's ready.

  26. MattJ says:

    David,

    The problem with the plan as you describe it is that you’re pulling money out of that fund to live on… The fund you mention, YAFFX, (is that really the fund you mean?) dropped 50% between the beginning of 2008 and the middle of 2009. When the market tanks and you’re living off your investments, you will be forced to sell low and you may find that you eat large chunks of your principal, especially if the market tanks early.

    When you’re living off of your money, you no longer have a 20-year horizon.

  27. David says:

    It’s not one of the funds I’m currently invested in but yes, that’s the one I mean. Not bad for 5 minutes of research.

    I’m not trying to convince or argue with you or anyone else. But c’mon, ALL funds were down during that time. It was be the worst time to pull out and put into cash in recent history but I know people who did. And if you or anyone else got nervous and did that, I’m sorry. But don’t knock my plan because of what “most” people did or what the news reported. Yes, if I were retired, I would have been withdrawing money during that down time to live on. But my goodness, look what the fund did after that! Roared way, WAY up. Like most funds did, including the ones I AM invested in. So I continued to buy all through the tanking via dollar cost averaging. Markets ebb and flow. I’m 45 and I only hope I can have the same stomach for the down markets at 65 as I do now, because I believe they will come back or, as this fund has done, do even better.

    Again…if you have a paid-for house with no debt….if you want to go lean during a down year and not withdraw as much to live on, it’s ok…

    Just my .02. It will be interesting to see what my outlook is then. My parents moved all their money into a Prudential annuity that paid them a small set amount every month for the rest of their lives. All they saw was the “guaranteed amount”. Pru kept the balance at their death, of course. Once I figured out what they had I didn’t have the heart to tell them it might be an ill-advised move. (sold to them by the insurance guy of course).

  28. I am actually working on an eCourse / coaching program. I’ve released about half the lessons so far (63 lessons to date) and can tell you – hand on heart – that there is a LOT of new info in there: Pay Yourself Twice; Zero Dollar Emergency Fund; Cash Cascade (to replace Debt Snowflake and Avalanche); and, so on …

    The reason why most others simply copy what’s already out there is because these ‘gurus’ didn’t make their money UNTIL they started selling courses ;)

  29. Rebecca says:

    A lot of people do better learning in a face-to-face environment than online (though I guess the people who got this far down in the comments aren’t those people) If you know someone considering one of these high dollar programs, suggest to them they look at their local college/university and see what kind of community education programs they offer. My local university does personal finance courses a few times a year, which range from free to around $70 and cover everything from budgeting to investing.

  30. Matt says:

    @david, the other big issue you are missing is inflation, being a millionaire is only meaningful if you can live off $50,000 a year in the future. With the inflation bomb I think I will be looking at for _my_ retirement I am planning on needing at least $150,000 a year with no debts just to maintain standard of living. That cool million wont last very long if you are drawing it down by 15%, additionally as others have said, you may have to sell low in retirement, further eroding your principal, and by the way, do you plan on leaving anything when your gone? And what happens as medicine advances in the future and death ages continue to rise? Dying slowly in a hospital gets very expensive very quickly. The point originally made was having a million dollars is a useless benchmark for being ready for retirement.

  31. Georgia says:

    Hey guys – I only have $75k in my 503b. Is that good enough to retire on? Been retired for 5 years now, withdrawn – $15,5k – bal. down around $2.2k. Of course, I only use it for extras like fixing up my mortgage free home or traveling later on. Only getting 2% on it now, but that is best for me. I never put any of mine in the stock market. Might have been more, might not.

  32. David says:

    @Matt, the point is (and I think it’s in Trent’s Money Rules posts) – start now and aim at something. The cool mil is a figure to aim at and reads better than $1,503,889. Aim at something, make it a goal, START NOW, keep it simple, and you’ll probably wind up with more than you need.

  33. AnnJo says:

    If you’re debt free, reasonably frugal, own your own home and retire at 65, you could live OK on $1,000,000 as long as your rate of return, whatever it was, at least matched inflation. You could withdraw $40,000 a year for 25 years. If you got Social Security too, you’d be quite comfortable. If you make it to 90 and run out, there’s the option of reverse mortgage or home sale.

    It’s the matching inflation part that’s likely to be a challenge. The last time we had economic policies philosophically like today’s we ended up with huge inflation over 4 years (1977-1981). If you’d started off at Jimmy Carter’s swearing in with $1,000,000, by the time he left office you’d need over $1,500,000 to maintain the same standard of living. And he didn’t have the huge overshadow of public sector unions driving much of today’s spending on the state and federal levels.

    There’s no risk-free way to safeguard against that.

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