Who’s Right? Who’s Wrong?

Recently, I heard some pretty strong (but valid) criticism of The Simple Dollar (that applies to most personal finance blogs out there):

You are a guy in your [thirties] who lists no credentials except the fact that you made it through a “complete financial meltdown” a few years ago. You have no professional training and don’t even mention where you went to college.

I don’t claim to be a guru, but I have had sufficient education to know that financial expertise is not something that can be learned through experience and introspection. Intuition in this area can be very misleading.

[…] People should not make financial decisions based on what their neighbor says, on the spoutings of someone on a website, or on what your gut is telling you. Seek out a qualified professional and get a second opinion.

This is just a blunt restatement of criticism that I hear on a daily basis. I hear time and time again that I’m not a financial expert, that what I write is of dubious benefit, and that I should just shut my mouth and let the “experts” do the talking.

So, let’s go through this step by step.

First of all, I’m not a financial guru, nor do I claim to be. All I can do is share my experiences and what I’ve learned along the way. I spend a lot of time educating myself on financial topics (see those weekly extremely detailed book reviews? I’ve been doing those every week for three years), trying new things, and asking questions. More importantly, I try to apply as much as I can to my life to see whether it actually works or not.

I choose to share all of that on The Simple Dollar and, more importantly, I include with it a lot of details of my own life. That’s an important distinction from the work of most financial “gurus” who offer up advice. Why? All advice comes from a perspective of some kind. Different people have different individual risk tolerances. They have different life experiences that have led them to different values.

The end result is that most financial “gurus” offer at least somewhat differing advice from one another. One easy example that comes to mind is the differing perspectives that Dave Ramsey and Suze Orman and David Bach have on repaying a list of debts. Ramsey advocates paying off the one with the smallest balance first. Bach recommends paying off the one with the highest interest rate first. Orman suggests a hybrid plan, where you focus on the highest interest rate debt but make more than the minimum payment on the other debts.

Who’s right? Who’s wrong? It’s not that simple. All three of the plans have advantages and disadvantages. Ramsey’s plan has the psychological benefit of a quick success – it’s easiest to eliminate your lowest balance debt. Orman’s plan also has a psychological perk – you’re making up ground against all of your debts. Bach’s plan is the best one from a pure mathematical perspective – over the long haul, it wins, but you may have to wait a long time to feel the success of removing a debt.

Ramsey and Bach and Orman came to these conclusions because of their life experiences, their own research and investigation, their own risk tolerance, and so on.

You can find many, many differences between financial “experts” along these lines. Most of the time, the differences are more a matter of perspective than a matter of fact. But here’s the catch – different solutions often work better for different people. Dave Ramsey’s solutions might work best for some of you. Suze Orman might give the right advice for others.

The catch is that you can’t know which one is “right” for you or “wrong” for you at first glance.

What’s the solution, then? Get your personal finance information from multiple viewpoints. Try to find answers that work well for you and follow them. Most importantly, don’t simply follow the advice of the first person you read.

So why do I write? I try to synthesize as many different viewpoints as I can find, figure out how they fit in my life, and share that experience with you. That’s the same package you’ll get from any personal finance blogger who is passionate about their audience and aren’t just trying to sell stuff.

Perhaps you gain value from that – if you’re a regular reader, you probably do gain some value from that.

That doesn’t mean, however, that The Simple Dollar is any sort of substitute for doing your own legwork and finding your own answers. Take my viewpoint as one of many – with mine, you might not have the value of a degree in finance, but you do know where I’m coming from in terms of background, life experiences, and perspective.

Good blogs bring something to the table that can’t be brought with a book and a television show – a synthesis of ideas, an interaction with readers, and a perspective that is nuanced and clear. After all, there are almost 3,000 articles at The Simple Dollar now, and readers who have been following over the long haul have a very strong, detailed picture of who I am and where I’m coming from. That’s an aspect no “guru” can give you from an infomercial.

Oh, and by the way, I went to Iowa State University.

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