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That subreddit (at least the US one) is pretty terrible. I think there's some active shilling for credit card companies going on there. They also give a lot of

That subreddit (at least the US one) is pretty terrible. I think there's some active shilling for credit card companies going on there. They also give a lot of objectively terrible advice when it comes to transportation, mortgages, and student loans. The number of participants, and the source of those participants (reddit main), pretty much guarantees that the advice there can't/won't be high-quality, and will only get worse over time.

froindt 9y ago
When people ask what they should do with their money, I direct them to the /r/personalfinance flowchart. [1] It does a great job of getting people on the right track. Beyond that, I suggest lurking on /r/financialindependence. That community had grown very fast in recent years, but is far from as mainstream as /r/personalfinance. [1] https://m.imgur.com/CcEVQAV https://m.imgur.com/CcEVQAV (image seems to be compressed to hell and back on mobile)
Veelox 9y ago
Im curious, what objectively terrible advice have you seen? I want to make sure I didn't pick some up without knowing it.
- twblalock 9y ago
  I think the bottom line is that most of the contributors to that subreddit are young and don't have much life experience, so they parrot the same one-size-fits-all financial advice. An example is telling everyone, no matter their circumstances, to always buy used cars and learn how to fix them themselves. They give this advice to rich doctors as well as poor single mothers. It also seems that many of the contributors have had bad experiences with debt, and now treat it as something to be avoided like a cancer. Debt is a useful tool for people who understand money. I remember a thread characterized by total incomprehension in most of the comments when someone said he would rather take a low-interest loan to buy a car than sell some of his stock and pay cash, because selling the stock would have triggered capital gains taxes far greater than the interest he would have paid on the car loan. It's also very common in that subreddit to recommend that people who are in debt should basically live like monks for years, when living in a modest amount of comfort would only prolong repayment by a few months. Giving up your $14.99 monthly Netflix account is not going to make a big dent in your student loans over time -- over a 10-year repayment, that savings will add up to less than $2k. But the commenters there will pile on you if you point that out. The thing that annoys me the most is the way people who have succeeded in tackling their debts are criticized for having high incomes, as though having a high income was something that just happened to them because of luck, rather than being a result of hard work and skill development.
- throwaway0255 9y ago
  Generally speaking, as a whole they're not militant enough in their opposition to consumer debt, and there isn't enough of an emphasis on frugality. You'll find highly upvoted submissions there encouraging people to go into debt for a vehicle, for example. They'll justify it saying the interest rate is 3% which is less than the average return of the S&P 500. The problem with that argument is that the financing was also used as a justification to buy a more expensive vehicle, which is a rapidly depreciating asset. Vehicles are a massive drain on wealth. They're a cost center to be minimized as much as possible, but in that subreddit they're treated like a game where you do numbers on financing to get into the nicest car you can. That isn't personal finance, it's financial debauchery. Some examples: https://www.reddit.com/r/personalfinance/comments/521p56/best_advice_my_dad_has_ever_given_to_me_1_if_you/ https://www.reddit.com/r/personalfinance/comments/521p56/bes... ^ 13.8k net upvotes encouraging people to take on 3 years of auto loan debt. Brilliant. https://www.reddit.com/r/personalfinance/comments/63eukr/paying_off_auto_loan_as_fast_as_possible_vs/ https://www.reddit.com/r/personalfinance/comments/63eukr/pay... ^ Here the subreddit encourages a couple who doesn't even have enough for a down payment on a house, to go into debt and make minimum payments on an 18k car. Brilliant. https://www.reddit.com/r/personalfinance/comments/6wkiv6/how_to_determine_if_you_can_really_afford_that_car/ https://www.reddit.com/r/personalfinance/comments/6wkiv6/how... ^ Here the subreddit basically reveals that almost everyone in that subreddit is in auto loan debt, feels good about being in auto loan debt, and they all pat each other on the back and encourage each other to keep being in auto loan debt. Cars depreciate in value by about 20% annually. It's on average the worst-performing financial asset that people own. To go into debt so you can get as much of your wealth into the -20%/yr asset is just about the stupidest thing I can imagine. It's right up there with payday loans on the stupid scale. So that's one example. What the subreddit does with credit cards is spend a lot of time arguing and doing math over cash back percentages and point rewards systems. If you spend $1000/month on credit cards, the difference between 1% rewards and 2% rewards is $10/month. It doesn't fucking matter. What actually matters about credit cards is that people have a strong tendency to overspend when they use credit cards. They also have a strong tendency to incur annual fees and interest and penalties. If you're disciplined enough to use credit cards without letting them effect your spending and without ever incurring any fees or carrying a balance, then go ahead and use one if you want. If you can't, then cut them up and use cash or a debit card. The rewards points don't matter and neither does the interest rate.

froindt 9y ago

When people ask what they should do with their money, I direct them to the /r/personalfinance flowchart. [1] It does a great job of getting people on the right track. Beyond that, I suggest lurking on /r/financialindependence. That community had grown very fast in recent years, but is far from as mainstream as /r/personalfinance. [1] https://m.imgur.com/CcEVQAV https://m.imgur.com/CcEVQAV (image seems to be compressed to hell and back on mobile)

Veelox 9y ago

Im curious, what objectively terrible advice have you seen? I want to make sure I didn't pick some up without knowing it.

twblalock 9y ago
I think the bottom line is that most of the contributors to that subreddit are young and don't have much life experience, so they parrot the same one-size-fits-all financial advice. An example is telling everyone, no matter their circumstances, to always buy used cars and learn how to fix them themselves. They give this advice to rich doctors as well as poor single mothers. It also seems that many of the contributors have had bad experiences with debt, and now treat it as something to be avoided like a cancer. Debt is a useful tool for people who understand money. I remember a thread characterized by total incomprehension in most of the comments when someone said he would rather take a low-interest loan to buy a car than sell some of his stock and pay cash, because selling the stock would have triggered capital gains taxes far greater than the interest he would have paid on the car loan. It's also very common in that subreddit to recommend that people who are in debt should basically live like monks for years, when living in a modest amount of comfort would only prolong repayment by a few months. Giving up your $14.99 monthly Netflix account is not going to make a big dent in your student loans over time -- over a 10-year repayment, that savings will add up to less than $2k. But the commenters there will pile on you if you point that out. The thing that annoys me the most is the way people who have succeeded in tackling their debts are criticized for having high incomes, as though having a high income was something that just happened to them because of luck, rather than being a result of hard work and skill development.
throwaway0255 9y ago
Generally speaking, as a whole they're not militant enough in their opposition to consumer debt, and there isn't enough of an emphasis on frugality. You'll find highly upvoted submissions there encouraging people to go into debt for a vehicle, for example. They'll justify it saying the interest rate is 3% which is less than the average return of the S&P 500. The problem with that argument is that the financing was also used as a justification to buy a more expensive vehicle, which is a rapidly depreciating asset. Vehicles are a massive drain on wealth. They're a cost center to be minimized as much as possible, but in that subreddit they're treated like a game where you do numbers on financing to get into the nicest car you can. That isn't personal finance, it's financial debauchery. Some examples: https://www.reddit.com/r/personalfinance/comments/521p56/best_advice_my_dad_has_ever_given_to_me_1_if_you/ https://www.reddit.com/r/personalfinance/comments/521p56/bes... ^ 13.8k net upvotes encouraging people to take on 3 years of auto loan debt. Brilliant. https://www.reddit.com/r/personalfinance/comments/63eukr/paying_off_auto_loan_as_fast_as_possible_vs/ https://www.reddit.com/r/personalfinance/comments/63eukr/pay... ^ Here the subreddit encourages a couple who doesn't even have enough for a down payment on a house, to go into debt and make minimum payments on an 18k car. Brilliant. https://www.reddit.com/r/personalfinance/comments/6wkiv6/how_to_determine_if_you_can_really_afford_that_car/ https://www.reddit.com/r/personalfinance/comments/6wkiv6/how... ^ Here the subreddit basically reveals that almost everyone in that subreddit is in auto loan debt, feels good about being in auto loan debt, and they all pat each other on the back and encourage each other to keep being in auto loan debt. Cars depreciate in value by about 20% annually. It's on average the worst-performing financial asset that people own. To go into debt so you can get as much of your wealth into the -20%/yr asset is just about the stupidest thing I can imagine. It's right up there with payday loans on the stupid scale. So that's one example. What the subreddit does with credit cards is spend a lot of time arguing and doing math over cash back percentages and point rewards systems. If you spend $1000/month on credit cards, the difference between 1% rewards and 2% rewards is $10/month. It doesn't fucking matter. What actually matters about credit cards is that people have a strong tendency to overspend when they use credit cards. They also have a strong tendency to incur annual fees and interest and penalties. If you're disciplined enough to use credit cards without letting them effect your spending and without ever incurring any fees or carrying a balance, then go ahead and use one if you want. If you can't, then cut them up and use cash or a debit card. The rewards points don't matter and neither does the interest rate.