Personal Finance

Changing Your Opinion

I read a couple of interesting articles recently over at the Simple Dollar – the first article was about a recent car purchase, a pretty good analysis of why they ended up buying the car they did.  This post had a lot of comments that were critical of the fact that he bought the car using financing even though he had the cash.  Many of the commenters took him to task because he had said so many times in the past that you should only buy something if you can pay cash (and can afford it).  The second post was talking about money management from a risk perspective and addressed a lot of the comments from the first post.

The interesting thing I got out of these posts and the comments was that many bloggers (not just the Simple Dollar) often take on an authoritative tone and hand out pearls of wisdom as though they are the 10 commandments.  One common situation is someone who has a lot of debt and then realizes they need to start cutting their expenses and paying off the debt.  All of a sudden they become experts in the field and start doing ‘top 10 [incredibly obvious] ways to save money on groceries’ or whatever.  I used debt reduction blogs as an example but this is common with all types of blogs.

One of the keys to being an expert is to sound confident that you know what you are doing.  As Mr. Cheap pointed out so well in a post called “absolutes” – you can’t be an expert if you are wishy washy on what you are saying.  You have to be firm that your idea or method is not just the best way, it’s the only way and any other possibility will end up in disaster.  Unfortunately very few things are all that clear cut – this is why “rules of thumb” are often quite useless – they just don’t apply that well to most scenarios.

In the case of the Simple Dollar – the author has used the blog to journal his own financial life from being heavily in debt to his current status of being very successful financially.  A large part of his financial success has been to sticking closely to “rules” like only pay cash for items which is a pretty good rule to follow if your number one goal is to pay off debt.  Now however, he’s come to the point where the rules that apply when heavily in debt, no longer apply to the same degree to someone who is doing well financially.

It was interesting to read some of the comments from readers who felt “betrayed” that Trent would go against his own advice from the past.  I think that he made a good financial decision that makes sense for him and his family – it’s the “betrayed” readers that need to look at who they put up on a pedestal and why.  At the same time if a blogger decides to put themselves up on a pedestal then they should make sure it’s not a high one – you don’t want to have big fall to the ground.

One could make the same argument about the recent Derek Foster uproar when it became public knowledge that he sold all his “hold forever” dividend stocks.  While I still question his move to cash, I also would have to question anyone who reads one investment book and plans their entire investment strategy around it without doing any other research.

10 replies on “Changing Your Opinion”

I think this “blowhard” problem rarely happens with true experts. Usually it only happens with wannabes who have some website to push or some self-published book they desperately want to sell. A few people even seem to think that the best way to be seen as an expert is to tear down the existing experts but it never seems to work for them. I’ve seen one guy go from website to website because people get tired of this and ban him and he seems to think the solution is to do it even more on the next website.

I think I agree with your principle that perspective does change over the years which might cause you to change your decisions. I think what people are annoyed is that principles tend to not change. Trent has come across as a staunch principle man over the years to his credit, and then just quickly retreated from a pretty big one.

With The Simple Dollar I think his mistake was made long before he whipped out his spreadsheets . He keeps saying that he has the cash to buy a new car, but he doesn’t. He isn’t willing to spend his ’emergency fund’, which means he doesn’t actually have the cash. I say he should have bought a used car with cash that he could afford.

I say this from experience too, since I have been at his exact same spot at least twice in last 4 years. Mathematically, I am not saying my choices worked out way better than a financing option, but psychologically, risk wise, and life wise it was the best decision IMO.

Money bloggers and their readers are a pretty histrionic bunch, even by blogging standards. I think all the “betrayed” people are kind of insecure or new to the magical world of financial planning and are reacting to the topic being something so personal – hang on, you agreed two years ago that MY way of splitting expenses with my spouse/giving my kid pocket money/planning my career/feeding my family was correct, and now you disagree?!? How dare you! This gets more stirred up at TSD because for whatever reason he doesn’t engage in the comments section.

Having said that, I love long winded I AM NOW UNSUBSCRIBING comments because my inner twelve year old finds the drama very entertaining.

Rob – thanks.

Mr. Cheap – thanks.

TStrump – very true.

Linda – you’re such a tease – whomever could you be talking about? (p.s. I got a good laugh from your comment).

Happy Rock – That’s true about the “principles” – but maybe personal finance isn’t the best arena for firm principles? Most issues aren’t all that black and white.

His explanation wasn’t very good – he mentioned that he might have to replace his truck as well this year which is why he didn’t want to use cash for the car. This sounds to me like he had enough cash for one new vehicle but not two.

If he is going to stick to his principle of only paying cash then maybe he should have bought an older (ie 5 years old) car and the same when it comes time to replace the truck.

Guinness – good comment – even if you did make me look up the word “histrionics”. 🙂

Thanks for the link. Everyone has a right to change their mind and do what is right for their personal situation. I don’t think we can fault DF for selling out but I do think it is unseemly to say X doesn’t work well anymore and keep selling a book that recommends X. (For the record, I would think now would be a great time to do X — X being investing in stocks for dividends).

I think a lot of money blog readers, myself included are looking for validation. I want to read that the way that I think is sensible is indeed the best way. Another thing that we don’t reward people who change their minds, even when it’s more sensible to do so. Finally even money bloggers like to retain a certain element of privacy – I assume that everyone writes the truth, but not necessarily truth in all the details, because that’s not usually important, but it can mean that readers are missing the bigger picture.

My inner 12 year old also loves those comments.

This kind of reminds me of some of the debates I had with friends during the political campaigns of 2008. To my mind, if someone is incapable of changing their mind, then that’s a bad sign.
When bad things happen and situations change, you need to have someone with a flexible mind that can adjust to new data.

Plus it’s fun!

I love, love, LOVED this post. I think bloggers have in some respects become internet rock stars with crazy subscribing stalkers. My inner 12 year old also loves reading the comments from people who have developed such a vested interest in the stories that they’re reading they seem to think they’re opinions should have been taken into consideration in the blogger’s daily life.

This is definitely making me rethink some of the tone in what I post. I think oftentimes I put out “authoritative” posts attempting to explain, or maybe even justify, why I’m doing the things that I do. Probably isn’t necessary to do, but then again, if I didn’t, what would I write about. No matter; no one’s vested enough in me to be disappointed yet. 🙂

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