This one from the NY Times Modern Love column is a doozy: When Bliss is a Mutual Fund
MY husband of 12 years, Pat, was supporting our little family of three with a series of acting and temp jobs that barely covered expenses or simply didn’t, which meant we were relying on credit cards. This was in 2003, when running oneself deeply into debt was fashionable and even considered by some (not us) to be downright patriotic.
The absurdity of meeting with a financial adviser when we had no extra income to invest, or even save, was not lost on me. But the adviser, Mark, had called us. We were among 10 names on a list given to him by a friend who had used his services. In other words, we were hot leads.
Ok, this couple has just told the entry-level, ink-still-drying-on-his-certificate financial adviser that they have over $150,000 in debt between the two of them. He asks if they've checked their credit score, and says they might be pleasantly surprised by it if they've kept up with their payments:
“Oh, we do,” Pat said proudly. “We keep up with the payments.”
Pat was answering all the questions because I didn’t have a clue how much we owed on the credit cards. Pat had been the sole bill-payer for the last four years, and I had found that I was a much calmer person when I didn’t look at bills or bank statements. All I knew was that Pat had recently switched to Quicken and loved the pie charts.
“The first thing you should do is find out your credit score,” Mark said.
“Doesn’t it cost money to find out?” Pat said.
“Generally. But it’s a good thing to know.”
“I figured I’d find out when I needed to. When we have some money.”
Nice job, Mr. Financial Adviser. I guess you didn't hear credit scores can be obtained for free?
Whittling away at that debt didn't seem to be the kind of advice this guy wanted to give. Despite the fact that they rarely have a penny left after paying their bills, the husband actually gets all gung-ho about putting $50 a month into investments:“Let’s move on,” Mark said. “What are your assets?”
“Pat has a coin collection, and we have a couple of antiques,” I said. This was something Pat and I had actually thought about. Occasionally, we spent an evening walking around our apartment, glasses of wine in hand, adding up how much we thought we could get for everything.
“I was talking more about a savings account: stocks, bonds. What’s your income?”
“Our income varies,” Pat said. “Right now, Brett isn’t making anything, and I make anywhere from $2,000 a month, as a stand-in, to $1,200 a month on unemployment. So far, the stand-in work is holding. Sometimes I get a commercial. In January I made $15,000 on a Six Flags spot. It’s up and down.”
Mark scribbled. “Savings?”
“No savings.”
“And no stocks and bonds, I’m guessing.”
“Right.”
“Well, here’s something I can tell you about saving,” Mark said. He proceeded to tell us what stocks and bonds were. What C.D.’s were. And what mutual funds were.
“Got it,” Pat said. “So mutual funds are what we want, right?”
“I think so,” Mark said.
I interrupted, “Shouldn’t we be sure that we can get the money back out?”
“What I’m thinking,” Mark said, “is that you wouldn’t be taking the money out until retirement.”
“Retirement?” I asked.
“Sure. Right now you’re going to have nothing when you retire. What will you live on? Have you thought about that?”
The truth was we hadn’t. I mean, what would we be retiring from? Artsy people, without real jobs, don’t retire. They keep on doing their artsy thing until they die, preferably in the midst of doing their said artsy thing.
This whole story was just frightening on so many levels. Read it and weep.
9 comments:
You can get a credit report for free, but you do have to pay for a credit score, which is what the financial adviser was asking about.
In any case, it is pretty scary what this person was recommending for this couple.
What Tina said. There is no place where you can get your credit SCORE for free. The link you gave only lets you view your credit REPORTS.
Right, I should have said "report," and in the case of this couple, the free report would probably have told them all they need to know!
Actually you can get free credit scores at http://www.creditkarma.com. I'm not sure how accurate they are, but mine seems to be fairly correct. NetBanker.com said, "Credit Karma: This San Francisco-based startup, with backing from Prosper's Chris Larsen, is delivering an actual credit score computed by TransUnion, one of the three major U.S. credit bureaus. It does not precisely match the commonly used FICO score from Fair Isaac. And the scale is different, with a top score of 900 instead of 850."
Also, this story takes place in 2003, before FACTA had been enacted, so the couple in the story probably *couldn't* have gotten even a credit report for free, at the time.
12 years ago I started with $50 a month. With my next raise increased it to $75 and so on to as high as $3,000 a month.
I'd rather see them start small then never start at all. Though I'd advise them to pay down debt first, make more money (odd jobs, etc), NOT invest in the high cost mutual funds they were being "sold", etc.
I ran into cases like these often in the 300 or so Money Makeover pieces I've done for the Kansas City Star. One of my favorites is a musician who perked up when we asked if he had any CDs. But he was talking about the musical kind (his collection was impressive) not the financial kind (not so much.) I think he's doing well by now though.
Ugh. I was going to comment on the inanity of the couple but now I'll just ask this: What is the account balance now in 2009? Did they stick to the $50 contribution or not?
Look, the woman was writing the column about herself and her husband and she was clearly playing up their idiocy for laughs/commissions. Her book is titled, "Mommies Who Drink," for heaven's sake. She gets paid to send up her own life and shock people with her and her husband's supposed carelessness. I'm betting that they're not quite as stupid as she paints it, but the breathtaking artsy ignorance makes a better *story*. And she writes and sells *stories* for a living.
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