In 2004, I met personal finance expert Suze Orman, who believes that all we need to do to become millionaires is stop Coffee– after having given a conference in the fashion company where I was doing an internship. I was an unpaid legal intern who chose this internship for its free breakfast and lunch. As I was about to rack up a not-so-unusual debt of $220,000 in law school, I then snuck up on her to ask if she had any advice on how to handle my mountain of future -owed money, since she hadn’t mentioned student debt in her speech.
Instead of the vital sage advice, I was sure she would offer on how to handle an amount of student debt the size of a home loan, she quickly dismissed me, casually telling me, “Student debt doesn’t matter because it doesn’t affect your credit rating.” I wondered if she was right. Maybe there was a glorious world that I just couldn’t see in which the implications of taking on so much debt could be boiled down to whether it affected a three-digit number that would theoretically allow me to buy a house some time after paying everything. off, which was supposed to happen shortly before Santa Claus becomes real.
Last weekend, CNBC reminded us of Orman’s distaste for coffee: “If you waste money on coffee, it’s like ‘peeing a million down the drain’.” Coffee. And avocado toast. If only we would stop paying for haircuts-like USA today recently recommended – the dollars we would save would also destroy our crushing student debt and absorb the effects of years of salary stagnationIncome inequalityand deunionization with him, allowing us to buy those homes we’re too broke to buy right now five minutes before we get started. And we would also end up with completely professional hair, cut by ourselves.
Orman claimed in the CNBC video that if someone invested $100 a month in a Roth IRA for 40 years, they would end up with a million dollars. First of all, it assumes you have 40 years left to live. Second, it assumes a 12% rate of return in our often volatile stock market, when almost everyone is quoting a historical rate between seven and 10 percentwhich would fit at least one decade on this estimate. It requires you to know what a Roth IRA is, which 67 percent Americans don’t. Most people who contribute regularly to a Roth IRA have a financial situation to advisebut financial advisers tend not to want to help the middle class because they do not do have enough assets, not to mention the 58 percent of Americans who live paycheck to paycheck.
Let’s face it. The personal finance industry is a scam for those of us who aren’t already loaded. It’s not that saving money is bad; is that, for some reason, we have a whole group of experts who are supposed to be taken seriously when they claim that every American can get rich. Personal finance is the prosperity gospel of cable news, happy to claim that you’ll end up with all the money if you listen to their experts, take their advice, buy their book. Not buying coffee won’t magically get you a home. Not buying avocado toast is not a retirement plan.