On a near-daily basis, I read Moneyville.ca, the personal finance arm of the Toronto Star. I like the website’s content, but recently my enjoyment has waned. Why?
- I used to regularly see the work of my favourite Moneyville writer (actually, my favourite Toronto Star journalist) Ellen Roseman. Her work has become a scarcity.
- The website pumps the housing market in Canada with a ridiculous amount of zeal. Sure, I don’t expect them to say the sky is falling, but balanced coverage would be appreciated. Fore example, this weekend’s article “Why the bidding war frenzy may be ending“, beyond its headline is blindly pro-bubble. Its reasons for why housing prices will surely remain buoyant include, “Interest rates remain at historic lows” (OK, what happens when they go up?), “Based on New York prices in general, the GTA is still a bargain.” (Canadians joke that Torontonians delusionally think they’re comparable to NYC, but this author actually makes a direct comparison between the Big Apple and the Crab Apple), and “Economists have been predicting doom and gloom in the GTA for the past twelve years. It still hasn’t happened.” (Such weasely language wouldn’t get past a Wikipedia editor — how does it end up in The Star?? Which economists? If you want to talk economics, let’s look at the numbers. Why is a drop impossible now, when price:income, debt:income, price:rent ratios and others are all at insane, unsustainable, never-before-seen high levels?). I get it. The banks, Realtors, and government are all huge Moneyville advertisers. He who pays the piper calls the tune.
- This is the biggie for why I’m bearish on Moneyville: the financial advice of two columnists in particular (Madhavi Acharya-Tom Yew and Krystal Yee) has devolved into disreputable junk.
I know, #3 is a pretty strong statement. But it’s true, and I’m not going to mince words. Here’s some examples of their seditiously money-stupid posts:
- Madhavi is (or was, per below) in tens of thousands of dollars of consumer debt. I can’t say with absolute certainty that it was the result of foolish spending or poor money management. But the fact is, she’s blown thousands of dollars frivolously. For example, she spent $850 on a mover when I moved a much further distance (and did only marginally more work than her, since she packed everything) for under $300. Oh yeah, and she moved 5 kilometers while I moved over a hundred clicks.
- Krystal blew $275 on a purse but justifies it as costing only $0.25 a day, using the same logic that makes Rent-to-Own furniture seem cheap. I’m not saying people can’t splurge. But she’s wallowing in debt at age 30 (yeah, a mortgage on an overpriced, maintenance fee-heavy townhouse counts as debt) and on a mid-life-crisis-esque romp in Euro-Utopia (presumably only second to her paradise home province of BC). She is a serial splurger. And she doesn’t even calculate the implicit interest cost in the article (what happened to empirical validity?? ARGH).
- To celebrate the fastening of a half million dollar mortgage around her neck, Madhavi decided to blow $4,400 on furniture and roll $3,800 of that into consumer debt. She’s confident that, after digging herself into yet more debt, she’ll suddenly have the discipline and additional cash flow to pay off this $3,800 in debt in just 18 months (before it balloons into a loan with a 20% interest rate). Sadly, she didn’t recognize that the $100 administration fee on the “no interest” loan was really interest in disguise. Nor did she recognize that, with cash in hand, she could have driven a much harder bargain at the furniture store. Oh, and that’s besides the fact that if she really needed the furniture, she should have bought used. She also adds: “We were glad that we choose this option when our dryer suddenly stopped working a few days after we bought the furniture.” Sounds like it’s back to Leon’s for Madhavi!
- Madhavi delivered her opus (or perhaps requiem) as a personal finance author: “Why 10% down on a $560,000 house was a good idea“. The author purchased an extremely expensive home in Scarborough (not the nice “end” of Toronto), taking on over $12,000 in additional CMHC fees. She only put 10% down, using the equity cashed out from her condo to pay off part of her consumer debts. The use of a lower-interest debt mortgage to pay off consumer debts is not, in itself, a bad choice. It is the chorus of bad choices that led up to it, and the future bad choices that are likely to occur (it’s par for the course). The scary question is – if she needed to use the cash from her condo to pay debts, and she has little else in the way of assets – what has she and her husband accomplished, money-wise, during their lives? They’re in their 30s – when does debt disappear and asset accumulation begin? When they’re 68 and their mortgage is paid-off? They’ve now got a house that, when all fixed expenses are tallied, costs at least $3200 a month. It’s my understanding that, as a couple, they don’t make an awful lot and a single job loss could result in significant financial challenges. Now they’re debt indentured for the next 30 years – assuming they don’t start cashing out equity (as they did before, and continued to do most recently with the furniture) to fuel their overspending.
- Not to be topped, Krystal rolled over $5,000 worth of CMHC fees into her mortgage because she only put 10% down on her house. Why? She had a $17,500 car loan. (Let me guess: she bought a brand new, overpriced import. Has anybody in BC ever considered buying domestic? Or are they too busy fawning over how wonderful their soggy province is?) Her car loan was financed at 0%. So she essentially rolled $17,500 worth of debt into her mortgage, to take on $5,000 in CMHC fees and to turn a 0% debt into a 3% or 4% or 5% mortgage. And Moneyville clearly used Krystal’s article as an attempt to quell the detractors who were challenging Madhavi’s original article. RAGEQUIT.
That’s all the examples for today, but I assure you that there are many others. The money decisions of these authors aren’t defensible. If you’re a post-modernist fool who thinks “Not everybody wants to make the same personal finance decisions as you Joe” then you are money-stupid. This is not about people thinking WWJWD (What Would Joe Wood Do?), it’s about using a modicum of common sense. The happenstance choices exhibited in the above articles are based on gut “feelings” at best and never use hard facts or empirical analysis. I can imagine these writers getting confirmation that their decisions are wise from commissioned “professionals” like mortgage brokers. Confident their stupidity will pass as reasonable journalism, they insert their misinformation into public discourse. Of course, their work is implicitly predicated on the expertise that you’d assume The Star would require its writers to have. Then, as soon as there’s any legitimate criticism of their tomfoolery, the authors and certain White Knight commenters argue the articles are impervious to correction because they’re just ‘personal stories’ or some other nonsense. Frankly, these ridiculous pieces should be retracted, with apologies from The Star. If their choices aren’t money-stupid, the only more logical explanation is that these two PerFi quacks are financial masochists who have branched into financial sadism.
People make poor choices all of the time. People can, and should, learn from their mistakes. It’s even better to learn from the mistakes of others before making them yourself. Money management mea culpas are thus extremely helpful. I’ve thankfully never experienced the crushing burden of debt. Because I watched Til Debt Do Us Part when I was in highschool, I understood the emotionally devastating impact of debt without needing to incur it. But these Moneyville articles pitch stupidity as wisdom.
Krystal and Madhavi: Canadians are already stupid enough with their money – they don’t need terrible advice to boot. Both of you are entitled to your own opinions, but you are not entitled to your own facts. If you are depicting past mistakes to help readers, then admit that your decisions were foolish. If you are, on the other hand, writing advice columns as seems to be the case, then you should attach a disclaimer. Editorial or not, the mere presentation of such irrefutably bad money management as a responsible way of life is egregiously disrespectful to readers insofar as it is potentially harmful. Your advice is incorrect, irrational, and potentially destructive. Please stop giving it.
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After note:
Since I was drafting an article about personal finance journalism, I checked the Financial Post’s headlines on Sunday. Want to see the main page feature?
Sigh. Maybe Moneyville isn’t so bad after all…
Oh Joe, you old (young) grump!
I read some of the articles you cited after reading your previous comments about these authors; obviously, I have not been reading all of their output, so I may have missed some of their background info. Honestly, it’s sometimes hard to assess just how “money-stupid” these authors’ choices are because I don’t know (and they don’t disclose) everything else going on in their lives. On the face of it, you could say I have certainly made some of the same mistakes – like pay much (much!) less than 20% down on my mortgage, or pay much (much!) more than $275 on a purse. On the other hand, I’ve also never had consumer or any other kind of debt (apart from the mortgage) and our family’s combined net worth is in the 6 figures. My husband and I are in our early 30s; obviously, there are days when I feel we could have done better, but I think that, overall, we’ve done a decent job. I wouldn’t say we’re money stupid … even though some of our decisions, judged on their own and out of context, might qualify as such. With that said, I don’t think our decisions should ever be used by others as a financial blueprint – even if they were in the exact same financial situation, because that still doesn’t account for individual psychology, among other things.
I also think you should consider one thing: for a lot of people in my/our generation, the real working life starts much later because people (for better or worse) tend to be in school longer than before. I started my “real” career at 25, my husband at 29. I was lucky to have had an opportunity to save a bit of money while in school, but that is not always an option for everyone, for a variety of reasons. So, for us, our 30s are the first real period of asset accumulation – and that doesn’t even account for the occasional gap that comes from having a child (or children). Having kids comes with hidden costs that go beyond the out-of-pocket ones, especially in cases where the mother is the higher earner (which is becoming more common than before).
I do understand your frustration with articles like these being put forward as “advice” or anything other than personal anecdotes – which, frankly, are there to be judged. Which is why I could not be a PerFi blogger … it’s hard enough when people critique what I wear
You are a professional in a field that requires a ton of schooling, articling, etc. It’s entirely justifiable that your “startup” period would take longer and your life course is shifted a couple of years. The persons in question are, to my knowledge, a graphic designer and a journalist. These fields take knowledge/skills/experience but if a high school graduate intelligently went about acquiring the necessary educations/internships, he or she could certainly be competent enough to begin work in these fields within 4 years. You clearly didn’t languish and inexcusably waste 7 years after highschool and you haven’t languished/inexscusably wasted the 7 years since law school. You’ve also started a family and you’re on a decent personal finance trajectory — you’re vastly more qualified to offer personal finance than either of these two persons.
As for advice — whenever you’ve made “money mistakes” (though you’re not in consumer debt nor have you hopelessly mortgaged yourself and fled to Europe, so it’s really not a fair comparison), you haven’t taken to the internet to share the story and you particularly haven’t said “this is good money advice.” The first sentence on Moneyville’s “Who We Are” page is “Moneyville.ca is Canada’s newest and most comprehensive Web site for plain speaking personal financial advice.” If that’s no longer what they plan to offer in their articles, they owe it to the public to go to some modicum of effort to convey the editorial shift. Fox News pulls the same kind of crap in regard to its biased right wing narrative (and MSNBC ditto but opposite), and people fall over themselves to label it as journalistic dishonesty.
I’m sure that I could nitpick other articles or writers (god knows I drink energy drinks, and I’ve incorrectly used the word “discrete” when I meant to say correct “discreet”, as commenters have pointed out). But the fact is that I don’t really care about minor indiscretions. In personal finance, there is a HUGE amount of “greyspace” that allows for individual choices, beliefs, systems, preferences, etc. The writings of these two authors have gotten to the point that it’s flat-out unacceptable because it’s wrong and dangerous. It’s bad journalism or writing and the editor needs to deal with it. You’d be a much better personal finance writer than either of them and probably better than me.
The stupidity of the Financial Post has piqued my interest. Do you have a link to the article in question so I can give the author some of your Common Cents?
http://business.financialpost.com/2012/06/02/quit-saving-and-start-spending/
I enjoy hearing the word “piqued”.
That is why you should be reading Castro’s/Cuba’s International paper…. at least in it his comments are clearly marked editorial/commentary these days!
lol nice. I prefer KCNA, the official news outlet of the Democratic People’s Republic of Korea.
I mostly just read Moneyville for amusement’s sake
I don’t see any new articles from Madhavi in while – I wonder why?
The price range that I’m looking at on condos is $275,000 to $400,000, but I’m going to put 20% or a bit more down, my monthly housing cost of HOA dues + mortgage payment + property taxes/12 is under 20% of my gross income, and I have a plan to pay the mortgage off in 5 years. I’ve also seen the property values tank over the last few years, so we’ll see what ends up happening.
I think the most I’ve spent on a purse is maybe 50 EUR or $75? I forget. I think my previous one was a present in maybe 2006, so I bought a new one when it wore out in 2010 while I was in Europe. Then again, I feel like it’s better to spend $275 on a purse that you use every day than on a hiking backpack or something that you use once a week for 4-6 months of the year.
Who can afford a house that costs them $3200 per month?! That is insane. There is no way I would even be comfortable with that at my income. No wonder they haven’t been putting much money into RRSPs since their eldest was born…
I also don’t think you should buy a one bedroom house/condo/townhouse unless you are prepared to sell it within the next 5 years, you can and will rent it out if necessary, or you are in your 70s and widowed. I remember reading that the home owner’s association for Krystal’s townhouse doesn’t actually allow you to rent them out.
See, the fact that you did that rational analysis (it takes a few lines of text, and it’s just common sense) makes your decisions so superior and better informed than the decisions of the two authors in question.
Re: the purse: I actually think people should buy things they enjoy. I realize that people have different preferences from me. For example, I own an XBox 360 and a 51″ flatscreen; some people much prefer shoes or books or travel or whatever, and that’s fine. I love capitalism for the variety and quantity of goods/services it delivers. BUT I don’t think people who are mired in consumer debt or own an overpriced townhouse (subsequently fleeing real life to live in Europe) should buy ridiculously expensive items. Further, the headline that her purse only cost her 25 cents a day is ludicrous. It’s definitely the same logic used by rent-to-own stores. It’s straight-up destructive advice. Thanks for giving me the chance to clarify it. In your specific situation, you SHOULD buy a $275 purse if you like them and it gives you sufficient enjoyment to justify the purchase.
Jumping in just to say that (a) I am relieved to hear that you are, in fact, human and have a weakness for some form of consumer goods; and (b) you wouldn’t disqualify me from your readership for owning expensive purses. Yep, I used the plural. And, nope, I won’t tell you how much they cost
Joe you are so judgy and mean.
Why are you hating on Krystal’s purse? I am not going to tell you how much money my sunglasses cost…
You know what, you really love to criticize everyone but really, you’ve never had debt. And not all of us want to be frugal grouches like yourself =\ I’ll pay movers! Heck I’m still considering hiring a housecleaner! I need a maid, I’m so fabulously rich
I am judgy and mean. But you are preachy and self-righteous!
As for real arguments: I’m not criticizing these authors as human beings, I am criticizing their foolish choices to publish their idiocy, because they proffer it as sound advice. Encouraging people to do stupid, destructive things is much more mean/rude in my books.
Mormon Jesus, Joe spending money is NOT stupid. Krystal gets enough flak without you hating on her. Buying one purse is not a moral crime!
I own a $475 purse. It’s amazing. I bought it when I paid no attention to money whatsoever and I probably wouldn’t make the same purchase again (at least, not until I’m debt free) but it really is a beautiful thing..
I approved your comment, but edited “Jesus” to read “Mormon Jesus”. I didn’t want to unintentionally offend anybody.
Eating Five Guys bacon cheeseburgers is not inherently stupid. Some people, like myself, thoroughly enjoy it each fortnight. Some others don’t. That’s a point of taste, and a person’s choice is fairly neutral.
If, however, I eat enough Five Guys bacon cheeseburgers to interfere with my health, that is, in fact, stupid. Also, if my justification for eating burgers is that I want cows to die, then my reasoning is stupid. If I advise people to eat 27 Five Guys bacon cheeseburgers a week on a healthfood website, then I am giving junk (food) advice and I’m inviting justified criticism from the website’s readers. Further, if I state an absurd justification for my poor choice, then my advice is not only stupid and my reasoning ill-founded, but I’ve also completely and publicly failed as a writer.
In short, you should eat 27 Five Guys bacon cheeseburgers a week, because I want cows to die.
Also, Mormon Jesus.
These are probably the best responses to comments I have ever seen. I feel like they deserve a column all their own. Great job here Joe. I completely agree with your analysis of the above situations by the way.
Also great point in mentioning “grey area” and the fact that this is way outside the purview of the great area. Keep posting great content!
I don’t own a house so I can’t comment on that. Purses however are another story. I have never bought a purse for over $40 and even gift purses have never been of double that. I think they look great and are of decent quality. I can’t ever see purchasing one near the $100 mark. It just seems unreasonable to me. You can absolutely spend too much on things like that in my opinion.
:S I hope they were prescription sunglasses Bridget! If not please don’t tell us how much! lol Though I agree on the house cleaner thing. Personally I just hate cleaning too much and think it is worth the money to have someone do it for me.
I don’t see what is wrong with saving money if you can. We certainly don’t need a how-to for spending. lol
bahahaha they were not prescription and no worries, after this post I’ll never tell!
They look great though. Really great. I hope I can get mistakened for Lauren Conrad somewhere.
I don’t know. I’d say we should lighten up a bit on Krystal et al. I think spending money is fine sometimes – and to be honest, the purse isn’t that bad. She’ll use it for a long time, I’m sure, whereas I have at LEAST that amount in purses in my closet that I never use so.. I don’t know. I think we all have our vices and judging others can be a bit of a trap.
I’m kind of confused as to when our conformist education system brainwashed us sheeple into thinking that criticism of an argument is judgment of a person, but the process seems to be complete. It’s a pretty lame, post-modern, laissez-faire argument that eliminates the possibility for constructive discourse. “You’re judging me about judging her” — I mean come on, you don’t need Philosophy 101 under your belt to recognize a circular argument.
Her advice is terrible; her rationale for buying the purse pathetic. I’m not against spending. Buying a $275 purse, if it brings you sufficient joy, is entirely reasonable — for a person without debt, on a good financial course. Calculating that it “only costs 25 cents a day” is ludicrous — buying William Shatner’s $73,000 kidney stone only costs .2 cents a second if I enjoy it for an entire year!1!! — because she uses the cost as a justification for why it’s intelligent, when really she just bought a $275 purse that, based on her own calculation (of how many hours of work her braces took to buy – http://www.moneyville.ca/blog/post/1169097–hours-worked-to-buy-things-can-be-a-surprise), cost her 1/4 of her week’s work. I wouldn’t labour 15 hours for a purse, some others would – but she didn’t break it down like this. She broke it down by an entirely arbitrary daily cost, in much the same manner as rent-to-own places pitch their extremely overpriced TVs. It’s easy to justify any purchase, regardless of how stupid, by playing on the fallibility of the human mind toward certain psychological heuristics.
Oh, I don’t know … the cost-per-wear analysis is not entirely useless. I use it sometimes – not to justify buying something I can’t afford, but to determine whether the thing is worth buying from a maximizing-my-happiness standpoint. A low CPW is a good indication of something I am likely to enjoy (and use) quite a bit – a smart use of my (discretionary spending) money.
I am willing to spend $200 on jeans that I will wear 2-3 times a week for several years, but I’m not willing to spend that much on tops because they just don’t get as much use. I guess that’s really the CPW comparison in a way.
The CPW for dresses is so high when you don’t very dresses much, so I try to not really buy new ones…
I’d say your choice to spend $200 on jeans is predicated on more than just cost-per-use. 1) you probably really like the jeans, brand etc. 2) you don’t have debt, you’ll buy it in cash, you have a very solid/intelligent financial life and 3) there probably isn’t any other way you could spend that particular $200 that would result in more happiness/utility. Even without resorting to the rent-to-own store thinking of cost-per-use, your choice to buy the jeans is very reasonable.
One of my key problems is that it’s used to justify overspending. It’s a process of rationalizing. “Sure I spent $300 on a purse but it costs 25 cents a day.” Well, an $8 Wal-Mart bag would be 0.6 cents a day. It’s a very fluid/subjective measure in most cases and really lines up with the rent-to-own store marketing that has destroyed a lot of financial lives.
When we get down to the really BIG POWER TOOLS of ‘Western Civilization’…. Consumerism is on the list along with protestant work ethic, rule of law… etc…
Its cool to be thrifty but your life choice cannot/should not be adopted by all others… otherwise we’ll be all living in apartments selling each other fuel saving technology and hamburgers. I celebrate your life choices and those who choose to more liberally juice the wheels of our civilization… not that it matters much given the sky is falling in Eu-topia.
lol well no worries. I think the materialist folks who take consumerism to the extreme, use payday loan stores and carry credit card balances probably won’t be reading this website; if they do, I doubt it’ll change their thinking. As I said in my Cdns are Money-Stupid article, I’m convinced that the vast majority of people who read this blog are already money-smart. There’s a self-selection bias; people who want to read personal finance blogs for fun are probably already smart with their money.
*slow clap*
Look! A Moneyville writer who _waited_ to put 20% down! http://www.moneyville.ca/blog/post/1205922–saving-20-down-for-a-house-was-worth-the-wait
(I thought you would enjoy this.)
hahahah yes, to their credit, Moneyville seems to have realized “oops, we are alienating our primary audience”. Besides Krystal Yee’s article about camping this week that encouraged campers to bring their own firewood into parks (I used to work for MNR and can guarantee this is NOT acceptable), they haven’t published any hardcore stupidity this week. Perhaps this is a sign of better writing/editing to come?
Joe, it’s sarcastic loud mouths like YOU (and me) who help the world uncover just how obviously stupid some stuff is, keep up the good grouching…
If you are lucky you’ll be promoted to PROPHET OF DOOM AND GLOOM (like me).
lol thanks a ton BCM, that means a lot. I’d be honoured some day to be known as a grouch (slash entertaining blogger) as epic as you! hahah
On this note, I feel I have to respond Joe. See I was working really hard on becoming the common sense jerk that everyone loved to hate. My article on ‘Til Debt Do Us Part alone got legions of hate comments and mail. If you want compete for the title of controversy king I’m just giving you fair warning that I will not give up easily
lol don’t worry. My chances of becoming the “jaded, drunken Uncle” of the Canadian personal finance world seem just as high.
I’m a little late to the party but wow… Am I ever glad I found this… As a recent grad I’m in debt (under 7K) and I would love to go overseas. But I’m going to wait until my bank account balance is back on the positive side. Good rant Joe.
Being debt-free
>feelsgoodman.jpg