Monthly Archives: January 2015

Celebrity Endorsements For Financial Companies Coming Under Fire

This is one of the most gratifying blogs I’ve ever written. I’m going to write about something that really irritates me…and should irritate you too.

Credit & Financial Experts and Credit & Financial Celebrities…what’s the difference?
That’s an easy question to answer. All you need to do is look at examples of each and what makes them unique.
Celebrities are very different. They get paid, and paid extraordinarily well, to give advice on how to save money, get out of debt or get better credit. Each of them sells products ranging from a few bucks to several hundred dollars. Books, books and more books. And, some of them have no background in the field where they are mistakenly considered experts.

It always amazes me how wealthy someone can get by repackaging and selling the same old same old.
For example, how many books have you read that tell you to invest monthly in an interest bearing account and after about 50 years of compounding at 8% you’ll be a millionaire. I think there are two dozen books written about that very simple strategy, but people keep buying them (and writing them). That’s the influence of celebrity.
To get certain of these celebrities to speak at a trade show or a corporate event you’re shelling out tens of thousands of dollars for an hour of so of their time. That’s the influence of celebrity.
I would love to get these folks in a room (disconnected from their army of copywriters and researchers) and quiz them on the really advanced strategies behind credit and finances. That, of course, would never happen. I’d have better luck getting Barry Bonds to submit to a drug test. Those are the different rules reserved for celebrities.
Should there be a line between true credit and financial experts and the so called credit and financial celebrities? And where should that line be drawn and how should it be determined?

Isn’t it fair for you, the folks who buy their stuff, to know if they really are an expert or are simply a talking head that looks good on television or a book cover? How would we know?

Well, here’s what I would consider to be an easy way to determine the pretenders from the real deal. Watch what they’ll put their name on as part of an endorsement deal. That’s the best way to separate the experts from the celebrities.

You’ll probably never see me on QVC selling stuff and you”l probably never see me with a weekly show on some cable network. But, that’s ok with me. I recognize and accept that, right now, nobody knows who the heck I am and that ain’t good for sales.

Here are what I consider to be some pretty egregious examples of celebs gone wild with dollarmania.
Some time ago one of our unnamed celebs endorsed a program with a national automaker’s finance division. The name of the program is being withheld but if you’re interested then respond to this blog and I’ll let you know who they are.

The gist of the program was to convince you that you should finance a new car with them and, in the process, guarantee yourself the same low interest rate on a second new car made by the same car maker some time down the road. Ring a bell?

The problem is that anyone who knows anything about building wealth knows that buying a new car is possibly the worst financial move you can make. I won’t even call it an investment because it isn’t.
A new car loses a significant amount of its value the minute you sign the paperwork and drive it home. You’ll never recover this loss. Consumers have come to accept this as an unfortunate byproduct of buying a new car.
Ok, so you’ve made this mistake once…now you’re being convinced that you should do it again and essentially double the damage.

That’s the difference between being an expert and a celebrity. They can be paid to give you bad advice because their motivation isn’t parallel with what’s best for you.

Here’s what an expert will tell you to do…

Never, ever buy a new car. Buy an affordable and reliable used car after it’s a couple years old. That way it has already lost the lion’s share of it’s initial value (on someone else’s watch) and it may still be under warranty. And, if it’s not under warranty then hopefully the previous owner has already corrected anything that was wrong with it when it was.

Now that you own this car, drive it until the wheels drop off. Then think about another car.
Buying a car is a necessary evil…you might as well reduce your losses as much as possible.

That’s the difference between being an expert and a celebrity. I don’t care about how cool you look in your car. I don’t care that your car has a leather interior. I just care that you can get from A to B safely and economically. And, that you sock away the savings into an IRA or a bond or something that appreciates over time.
Here’s another one that you might be familiar with…

There are some celebs that try to convince you that you should never have any credit cards. Sounds great doesn’t it? You’ll never ever be in credit card debt.

Wow, now I like that idea. Anything wrong with it?

There’s tons wrong with it.

I think that is a horrible idea. I know a fairly well known celeb personally and whenever I go on the radio with him we always argue this point. He says “no cards.” I say “yes cards, but with responsible use.”
Whenever we go to break he always says the same thing to me “John, you don’t know my audience. They do not have the self control to be able to manage a credit card wisely. I have to tell them to avoid all credit cards because they can’t control themselves.”

Wow, what a great concept. Assume all of your listeners are idiots and cannot act like a responsible adult with a
credit card.

Meanwhile the folks who are really taking your advice to heart are unable to buy stuff online, rent a car efficiently and carry around gobs of cash when they go out to dinner or holiday shopping. What a great alternative.

That’s the difference between being a celebrity and an expert. They’ll say whatever it takes to sell stuff and keep their impressive ratings. Us experts will tell it like it is…without worrying about selling our souls to the highest bidder.

Setting Goals In 2015 For Finances Will Help Alleviate Stress and Mistakes

Can you think of just one day in the last 2 weeks that you did not worry about money, think about finances, make a purchase, check your credit and bank balances or stress over retirement? If you cannot you are not alone, I too am guilty as charged. When we stress over our finances we being merely human tend to get drained over it and begin to slip on our good financial habits. These slips can range from splurging out on an expensive dinner or buying something you’ve been wanting for awhile or putting off paying that credit card bill. These “fixes” we use when stressed out over money ultimately hurt our wallets and bank accounts and make matters worse. When we are financially stressed out it is easy to make excuses to allow us to make poor choices when it comes to our finances, and simply put sometimes it does feel good, but that feeling is fleeting it only lasts a moment then we are faced with the poor choices repercussions afterwards.

Did you know that besides hurting our finances that there is now evidence that supports the theory that worrying about finances can slow down your cognitive functions? A study by American Association for the Advancement of Science’s “Science” journal points to just that. It showed that those in the study lost the equivalent of 13 IQ points and had the same exact effects of a person who had suffered from a sleepless night.

There are things you can do to ease that financial stress. You need to counter all the financial stress in your life in productive ways versus counter productive and financially destructive ways. These methods below have worked for myself and others and you too can make use of them starting today. Think of the advice below as more than simply advice but new ways of living to help you achieve financial success and freedom from stress, it’s a way of life more than a collection of simple tips.

One thing you can do starting this week is to make one day a week a no spend day. No eating out, no cup of java from the local coffee shop. While many expenses are necessary we often just spend way to much. Taking one day a week to avoid spending at all will teach us resolve and cut down on our spending. Having one day a week not having to look at your budget or bank balance is also liberating and helps us to avoid financial stress.

The second thing you can start doing right now is to start paying off your bills right away. Bills have a habit of piling up. Interest gets tacked on. Late fees if we pay late, plus the entire time more bills pile up adding to our debt and before we know it we are staring at a pile of debt. Waiting until the bills due date can also put you at risk of being late on the bill and having your credit dinged. Pay your monthly bills or set up auto pay for as many bills as you can. Budget them in so that when the bills hit they get paid the same day if at all possible.

The last thing to do is to quit looking at debt balances every day. Your debts will not go down by looking at them, instead all you are going to do is to add worry about the debt or debts. Make a plan to pay the debt down. If you can come up with a plan to make extra money to pay down those debts but do not stare at the balances you owe every day. If you have a good budget in place and work on paying down that debt it will fade away in due time.

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