Advice to younger family members

[uncledrz]

I know that this topic has been gone over in threads before, but I'm asking for advice on a specific question. The follow up article to the Millionaire Next Door got me thinking that maybe this Forum will have some good advice.

The next generation (kids, nieces, nephews, cousins, etc) in my family (say 20's and 30's) falls into three groups.
All work hard and have jobs. First group avoids debt, lives within its income. Second group takes on debt to produce income such as business debt, real estate investment, advanced degree education. Those two groups seem in control.

Third group are the spenders who take on consumption debt and spend without control. Some are still hanging on, others are in real trouble.

I know the idea of whether or not to sit down and talk with the spenders has been the subject of prior threads, but do not recall a thread where an actual plan has been discussed. What I'm talking about is a book or tapes or CD's where a step by step program about money, control, budgeting, inflow and outflow is presented. Simple and easy to understand would of course be the best.

I think some are at the point where the would listen, but without a specific step by step guide, they would not know how to get on the path.

Any ideas?

 

[renferme]

You don't say if the 3rd group would be receptive to "coaching".
Some are, some are not.
Some just have to learn the hard way - most of the coaching that I did to my kids when they grew up didn't work; they had to undergo the pain of bad decisions -
school of hard knocks, so to speak.

 

[CCdaCE]

Dave Ramsey might be the ticket.

Good luck.

-CC

 

[Leonidas]

Dave Ramsey might be the ticket.

Good luck.

Ramsey does propose some common sense ideas (save more - get a second job - stop borrowing money you can't pay back, etc.), but that's about as far as I would take his advice.

But, when I read this...

Some just have to learn the hard way - most of the coaching that I did to my kids when they grew up didn't work; they had to undergo the pain of bad decisions -
school of hard knocks, so to speak.

...I was reminded of one of his favorite lines - about how financial losses from dumb decisions is what he calls, paying the "stupid tax".

Some people can learn the lessons taught by the mistakes of others, some have to learn it on their own, and the really dumb ones just keep paying the "stupid tax" over and over again.

I think some are at the point where the would listen, but without a specific step by step guide, they would not know how to get on the path.

Any ideas?

I agree with bennevis in wondering if your relatives that need this advice, the ones you say are in "real trouble", would benefit from a gift of a book or CDs. Are they really ready, or do you just see how deep a hole they have sunk themselves into and think that a smart person would be ready. Maybe they first need a "dutch uncle" to tell them how stupid their financial decisions are before they are ready to learn. The first step in not paying "stupid tax" is to know you're being stupid in the first place. (Hey, I just looked at your screen name....TIO - maybe it's a sign!). I've read a lot of books that try and explain getting to financial freedom, but you could boil them all down to a simple set of instructions:

Don't spend more than you make.
Make a budget and spend your money accordingly.
Quit borrowing money to finance your lifestyle.

 

[Outtahere]

Some just have to learn the hard way - most of the coaching that I did to my kids when they grew up didn't work; they had to undergo the pain of bad decisions -
school of hard knocks, so to speak.

My dad calls that " paying for an education".

 

[CCdaCE]

Yep, Leonidas, I'm sidestepping the issue of "whether they'll listen" or "if they want help" or "whether they'll follow Dave's advice", etc. I consider Dave Ramsey an attempt to crack thru the shell of "stupidity" or paying the "stupid tax" or whatever phrase you wanna name it.

I don't consider Ramsey as being very sage advice for advanced thinkers. It's just basic life support to get someone in debt, turned around.

-CC

 

[Leonidas]

Yep, Leonidas, I'm sidestepping the issue of "whether they'll listen" or "if they want help" or "whether they'll follow Dave's advice", etc. I consider Dave Ramsey an attempt to crack thru the shell of "stupidity" or paying the "stupid tax" or whatever phrase you wanna name it.

I don't consider Ramsey as being very sage advice for advanced thinkers. It's just basic life support to get someone in debt, turned around.

-CC

I agree completely - I like Dave Ramsey because most of the advice he doles out is perfectly suited for his audience (and a lot of people that should be listening). I paid a lot of "stupid tax" in my life and learned lessons the hard way, so I'm not sure if I would have benefited from what he has to say - but I certainly agree with his core program. When I drove my older kid to and from school, I often had either Ramsey or Clark Howard's show playing on the radio in the afternoons just because it gave us good opportunities to discuss financial decision making. By the time he started driving himself to school he knew the details of a long litany of stupid things that can be done to get oneself into a financial disaster. Now, as to how well he will apply that knowledge when he goes out into the real world.....

 

[FinanceDude]

I agree completely - I like Dave Ramsey because most of the advice he doles out is perfectly suited for his audience (and a lot of people that should be listening). I paid a lot of "stupid tax" in my life and learned lessons the hard way, so I'm not sure if I would have benefited from what he has to say - but I certainly agree with his core program. When I drove my older kid to and from school, I often had either Ramsey or Clark Howard's show playing on the radio in the afternoons just because it gave us good opportunities to discuss financial decision making. By the time he started driving himself to school he knew the details of a long litany of stupid things that can be done to get oneself into a financial disaster. Now, as to how well he will apply that knowledge when he goes out into the real world.....

Clark Howard?? That dude doesn;t know smack about financial stuff..............

 

[Nords]

Clark Howard?? That dude doesn;t know smack about financial stuff..............

Clark Howard's a good financial advisor like Jim Cramer's a good stockpicker.

And I mean that in a positive way.

 

[Leonidas]

Clark Howard?? That dude doesn;t know smack about financial stuff..............

We disagree. Neither Ramsey or Clark are very good with advanced financial stuff (I discount much of what both say about investing), but that's not what we're talking about here. We're talking about people who don't get the basic financial concept of how not to dig yourself into a financial pit by making stoopid decisions. Ramsey deals with the real basic stuff (save, LBYM, budget, etc) and Howard does some of that and some more advanced things like how to not get ripped off making basic buying decisions (buying a car, long distance service, car insurance/repairs, selecting/using a credit card, etc.). Howard is especially good in picking apart the various scams that companies use to con people into making some really dumb decisions.

Clark Howard's a good financial advisor like Jim Cramer's a good stockpicker.

And I mean that in a positive way.

Cramer gives me a headache.

Modified to add:

I understand what nords and financedudeand are saying, and agree (to an extent) with both. For the type of investor that comes to this forum, both Howard and Ramsey are way off base for anything to do with investing. Ramsey in particular has some ideas about how to invest $$ that are dumb as hell. But his basic message is "you can't make $35,000 a year and have a $70,000 a year lifestyle". And from listening to his show, there are a lot of people who don't understand that until they owe Mastercard $60,000 (and can't make the minimum monthly payments and still eat). Howard doesn't deal with much investing as most of his show is dedicated to revealing the truth behind deceptive advertising and ripoff "deals" that people fall for every day.

 

[CCdaCE]

Nobody's arguing he's a rockstar.

It's like watching Judge Judy to learn law.

Leonidas was just sayin' it's a good way to avoid the tuition of the school of hard knocks.

... or put another way, an interesting way to learn from the callers, how easy it is for some people to win the Darwin Award financially.

-CC

 

[FinanceDude]

Nobody's arguing he's a rockstar.

It's like watching Judge Judy to learn law.

Leonidas was just sayin' it's a good way to avoid the tuition of the school of hard knocks.

... or put another way, an interesting way to learn from the callers, how easy it is for some people to win the Darwin Award financially.

-CC

How true...........

 

[Nords]

Imagine if we all collected 0.005% of the annual Darwin Financial Awards and the Stupid Tax.

Why, the federal budget would balance itself overnight and the deficit would be a faint memory before 2010...

 

[larry]

I truly believe that Ramsey's listeners are a major slice of America and like most on this board have said, they just don't get it. I've finally come to a decision to not offer any advice to family and friends unless asked.

I was always trying to get them to understand how they COULD invest on their own but DW felt I was too zealous in my efforts. (At least I got her convinced). Now that DD is wed and on her own I hope my example to her pays off.

 

[rs0460a]

Any ideas?

Let them know about this forum. If they are interested, they will learn. If not, so be it ...

- Ron

 

[Nords]

Let them know about this forum.

I can see it now... "Dad? Is that YOU?!? <delete><delete><delete>"

 

[samclem]

I must have been listening to Clark Howard at different times than some of the folks here. I'd agree wth Leonidas on Clark Howard--he does a good job on the expenditure side of things. He helps folks avoid getting ripped off when they buy things, and he has also given some good basic advice about budgeting. He is a LBYM-type according to his on-air coments, and often contrstst his own (skinflint) purchasing decisions.with those of his thirty-something staff at the radio show. Investing isn't the focus of his show, though I have heard him stress the benefits of low-cost MFs.

But, I wouldn't say Clark Howard is a comprehensive source of info on how to get your finances in order. It's hard to package that type of info in a way that will attract and the typical listener (and thereby sell ad revenue). I'm not surprised that this type of show isn't on te air. IIR, Dave Ramsey puts a Christian spin on things, so that gives him a niche. While I think he gives some bad advice, it's probably true that the most financially clueless , might do a lot better following his advice versus staying on their present course.