As long-time financial counselors at our company Money Coach Group, and in our retirement/FIRE (financial independence retire early) planning and financial advisory company Emancipare, my wife and I looked forward to the new Netflix documentary Get Smart with Money, which debuted this week.
In this blog post, we’ll provide our real-life perspective on the case studies presented. The quick summary is that this information, and the motivation presented by the case studies, are badly needed today. Almost every household could benefit from watching this show. However, we did spot some problems, and potentially poor advice…
As a disclaimer, we understand editors can be brutal in cutting important content in order to keep the show at a certain length. It’s entirely possible that the counselors did say the things that we wish they’d said! But, even if so, the audience of millions won’t hear those important points and may, in turn, make bad financial decisions. That’s why we’re writing this important blog post. And, it’s not sour grapes :-) The show, as we stated, is incredibly valuable and overall the counselors provided some incredibly good advice and guidance.
That said, we feel the show picked some prominent names in the personal finance social media/entertainment space to act as their counselors in the case studies. The show synopsis refers to them as financial advisers, which in the literal sense refers to people who are registered and licensed as financial/investment advisors and planners in their state and maybe at the federal (SEC) level (as we are at Emancipare). We saw no evidence that any are actually advisers in that sense, so it was a bit misleading in our opinion. It didn’t appear that any are actually practicing down-in-the trenches financial counselors, FIRE/retirement planners, or coaches, as we are. There’s a big difference between being an accredited financial counselor, doing that work day in and day out with real people, and being a social media influencer or book author with an inspiring life story from many years ago.
These folks know what worked for their specific case (and sometimes leave out convenient details such as inheritances that helped them along the way). They make their money blogging (advertising and affiliate income, hawking credit cards [amazingly!]), selling books, and through paid appearances at conferences and shows like this. Nothing against that, but it’s not the real world. They are influencers, authors, and educators, but we could find no evidence that they’re professional, accredited practitioners who work with clients on a daily basis. When you’re working with a coach, check their credentials and reviews, as there are no certifications required for one to call themselves a ‘coach.’
Let’s take the case studies one by one, and provide our real-world perspective as an AFCPE ® Accredited Financial Counselor ®.(Bill), Investment Advisor Representative and FIRE/retirement planner (Bill), and Ramsey Solutions Master Financial Coaches (Bill and Lori).
Teez Tabor (subject) and Ro$$ Mac (counselor). Teez was drafted into the NFL out of college and came into immediate money. The show runs down how he quickly spent it down, then became injured and without a paycheck. He’s got a wife and young child. Ro$$ advises him to start consistently investing money (dollar-cost averaging) into S&P 500 and NASDAQ funds on E*TRADE.
While being in the market is critical for long-term financial success, we were practically screaming for Ro$$ to advise Teez to prioritize a bigger savings account for his emergency fund, perhaps adding a short-term/aggregate bond fund to his portfolio for other spendable assets that might not be as volatile, and to begin cross-training into a lifelong job skill for when the football days end (which of course could be quite sudden).
Bill’s Notes: As a registered investment advisor, I questioned the advice to put money into both the S&P 500 and NASDAQ indexes, as there’s quite a bit of overlap there. The vast majority of company shares in the NASDAQ 100 are also in the S&P 500. Teez later says he bought Apple and Facebook shares, which Ro$$ seemed to applaud. Both companies are already in the S&P 500 and NASDAQ, so he already owned shares of those companies. It also incurs the risks of investing in individual companies. I’m a bigger fan of diversity, using a total US stock market ETF rather than an S&P 500 index fund. The latter is the 500 biggest companies publicly traded in the US, whereas a total US market fund will include all those great medium and small growth stocks in the middle and smaller end of the spectrum. I also wondered about using E*TRADE rather than going directly to Fidelity, Vanguard, or Ally Invest which have lower fee structures.
Lori’s Notes: Teez realizes quite early that he had overspent his initial huge check on houses, jewelry, and other items. That can be fixed by downsizing and selling some of the expensive items online. Perhaps his wife could begin a business of her own, taking advantage of their name and fame to sell related items, autographed memorabilia, cameo videos, or something completely unrelated to his career but more geared toward her own hobbies and interests, so that she has her own identity.
Kim and John (subject), Pete Adeny (Mr. Money Moustache, counselor) Kim and John are a high earning young couple and great candidates for this FIRE scenario. FIRE is the Financial Independence Retire Early movement that is based on the idea of doing one or both of those things in order to enjoy life before getting old and/or never having to go to a job that you hate. John has lost his engineer job during covid and has been a stay-at-home dad since, taking care of the household responsibilities while Kim is the breadwinner as a psychotherapist. Like most couples enjoying a good income, they don’t have visibility into their spending and are leveraging credit cards, spending a lot of money. It’s easy to get sucked into the points, miles, and cash rebate traps. Studies show it causes much higher levels of spending and tips the scales when you’re not sure you really need something – a constant theme in all these cases.
Pete educates them on FIRE and they get excited about the idea. FIRE principles include living on half your income, having no debt, and investing wisely and strategically for this goal. Asset location is critical, as it doesn’t do much good if you retire at 45 with all your money in traditional retirement accounts that can’t be accessed without penalty until age 59 ½ (with a few exceptions). This includes a trip to Costco (our favorite!) to learn how to buy in bulk and thus cut spending. We’d add to leave the kids at home with one spouse for extra savings!
Kim and John later decided to sell their home and downsize, a tactic that we’ve used ourselves during the huge seller’s market in 2021 and early 2022. Reaping that high equity can put rocket fuel on plans to pay down debt and get investments in place. We noticed they were using a Realtor though, and we advocate purchasing an MLS listing instead to save huge amounts of money on commissions. We detail this in our book Show and Sell (currently being updated for 2023). They then decided to take a five-week vacation to Costa Rica! To us, this was just a reversion to the behaviors that keep people from financial success, the need to have things before earning them. In fact, the spending they anticipated for Pete in early retirement was $9,000 per month, well above typical FIRE spending. Pete commented on this, and we agree. It seemed that they hadn’t fully embraced the concept. But – life is about happiness, not money. If the trip is budgeted for and incorporated into their plan to get where they want to be when they want to be there, bon voyage.
Bill’s Notes: Emphasis was put on the “FIRE date” metric, which is obtained when you have twenty-five times your anticipated yearly expenses invested, meaning you are then free to FIRE away. As a FIRE/retirement planner, using very high-level guidance like this one, or the related 4% rule, is dangerous. Everyone’s situation is different, and these principles are based on some economic guidelines that may not hold true (as we’ve seen by the many upside-down things we’ve seen during and since covid). We prefer to do a precise analysis using a tool like Pralana Gold, which is far more detailed and specific to each individual case.
Lori’s Notes: Employers are making huge concessions to get people back to work. John could likely get something that he could do from home and work around his schedule with the kids. Hopefully this is the plan for when the kids go to school, but there’s no reason to not consider it now, and perhaps give his wife a break from her over-work and time with the kids, which she seems to crave. She seems to be simply agreeing to work harder and longer for them to meet their goals. John could also do any number of lucrative side hustles or a small business from home, especially given his engineering skills. The situation seems very unbalanced and Kim seemed tired and unhappy during most of their clips.They talk a lot about being able to retire early, perhaps in 21 years (!), but it seems he’s already retired.
Lindsey (subject), Paula Pant (counselor) Lindsey is a very artistic young lady who went to school to learn graphic design, but didn’t finish. She was working two jobs in the service industry, serving at a beer garden and bartending. She expressed a strong desire for health care and wanted to be able to afford to return to therapy for depression and anxiety. She was drowning in credit card payments and student loans.
Paula did a great job doing exactly what we do – find income sources that match one’s hobbies and interests. Set up some immediate cash streams (we call them money faucets) and some longer term ones with small business potential. Paula suggested going to parks and sketching dogs for people, then giving them the sketch with her phone number as a business card for dog walking. We would have said to set up an easel and ask to sketch the pets for $10-$20, with some nice samples prominently displayed, and also pitch the dog walking, children’s portraits, portraits of the dog parents. You may need permits for that sort of thing, but that’s what setting up side hustles and small businesses is all about.
Lindsey later scores a nice gig for $3,500 doing a mural project for a small business. That’s getting into the area where she should establish her small business, as Paula advises. We’d add at that point to leverage the wonderful, free resources at SCORE and small business development centers/incubators all around the country. They showed her smoking, that would be a good habit to attack to save money and be healthier, but obviously hard for someone facing her challenges.
Bill’s Notes: Nothing particular to add, as she’s not in a position to invest or contribute to a 401k, but to keep those in mind as she perhaps gets her small business to the point where she can establish a solo 401k, and maybe budget for some annual Roth IRA contributions given her low income. She’s got to prioritize the debt though, as Paula had her doing. She was making great progress toward the end of the show, and had scored a gig in her dream area of working with clothing/fashion.
Lori’s Notes: I couldn’t understand why nobody was advising her to get health insurance through the Affordable Care Act, which would be heavily subsidized given her income and economic circumstances, perhaps even free through Medicaid. She was shown stashing a lot of cash in a box under her bed, something that makes us very nervous, especially on TV! Get that money into a high-yield savings account, especially now that interest rates are on the rise and savers are being rewarded.
Ariana (subject), Tiffany Aliche (counselor) Ariana is stressed by a lot of debt, to the point of tears. Her partner is working overtime and she’s driving an old car that she’s terrified will break down (spoiler alert: it does). They have two young children. It’s heartbreaking to see scenarios like this, which is why we do what we do. She mentioned getting Whole Foods delivery for groceries, and that’s certainly far more expensive than, say, going to Aldis. She professed a weakness for Target and was shown going into the store and browsing, picking up items and considering them. She also bought one of the biggest nemesis to the progress for someone in her financial condition – Starbucks. We advocate targeted shopping – get in with a list, get the stuff, and get out. Put the blinders on. If compulsion is too much, get the items online and pick them up at the store to save on shipping costs.
Tiffany had Ariana split her paycheck up into five different accounts for different purposes – kind of a modern day version of the old cash envelope system. This approach is pretty messy though. We advocate a different approach, such as using one account at a bank like Ally and using their bucket feature to establish containers for an emergency fund and irregular large expenses (car repairs, vacations, holidays, etc). Do as much on autopilot as possible – set up monthly scheduled transfers into those buckets. Budget simply; have a plan for the coming month and keep track every day while you’re in it to ensure you stay within those boundaries.
Bill’s Notes: Similar to Lindsey, the emphasis here has to be on paying off debt, not investing. But, keep those 401k contributions in mind, at least up to the match, as soon as it’s possible.
Lori’s Notes: Tiffany seemed to be more of an actual financial counselor than the others, and did a great job, especially on the emotional/psychological aspects of personal finance. She should also coach Ariana toward starting a small business from home.
Final Notes: The common denominator here is something we see every day. None of these folks had a clear view of their cash flow and where their money was going every month. They didn’t have a plan – something that’s critical even after debt is paid off. We started Emancipare to build those life/FIRE/retirement plans to keep folks motivated, always having the next milestone to shoot for, whether it was a lake/beach vacation home, next new vehicle (paid for with cash!), wonderful educations/weddings for their kids, or yes, FIRE.
The change in these case study subjects by the end of the show was uplifting! It’s the same rush we get every time we help someone dig out from the emotional stress and baggage of financial burden. It was wonderful to see the newfound confidence and happiness in them, particularly Lindsey and Ariana.
An important point was made early in this show – we’re bombarded with the wrong messages about personal finances constantly on the programs we watch, social media, from friends and family, everywhere. There’s so much noise, and most of the misinformation and propaganda is sponsored by billion-dollar campaigns by the credit card, credit repair, gambling, student loan, mortgage, brokerages, and other bastions of greed and evil.
We need to fight back. By embracing these principles, we can turn the evil on its head – maybe go back to the time of our parents when you could have a good middle class life without going to college, one parent working just 8 to 5. People are sick of being driven into the ground, to their graves, without a sufficient standard of living with no or low pay raises that don’t keep up with inflation, while corporate and executive earnings go through the roof year after year. That’s what FIRE and the quiet quitting phenomenon and resurgence of unions is about – people getting fed up. Fight back! Have a plan, get an honest, ethical financial mentor (like us here at Emancipare!) to guide and educate you.
Lastly, we couldn’t help but wonder how personal finance guru Dave Ramsey felt about not being mentioned in this important personal finance documentary. He’s arguably helped more people than anyone out of financial dire straits with his Baby Steps system and Financial Peace University.
If you’re building for a future and want a definitive roadmap to get there and ethical, inexpensive guidance along the way, come visit us at Emancipare! If you’d like to learn more about Get Smart With Money, you can watch the YouTube trailer here. or watch it on Netflix here.
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