Atlas Shrugged: The Mocking

Wednesday, November 18, 2009

The Morality Of Thrift

As part of her continuing effort to shift blame onto individuals for our present financial difficulties, Megan McArdle writes about financial self-help guru Dave Ramsey.

Ramsey offers some investment advice (much of which would have struck horror in my business-school professors), but for most of his followers, the main attraction is a simple program: give 10 percent of your income to charity, save 15 percent for retirement, build up a sizable emergency stash and a college fund for your kids, and above all, stop borrowing money. Ramsey devotees pay cash for everything they can. They are allowed only one exception to the no-more-debt rule: a 15-year fixed-rate mortgage. He is so serious about shunning debt that his Web site takes only debit cards; try to pay with a Capital One Visa, and the system rejects the card, then tut-tuts at you. These simple, austere, unbreakable rules are, as Ramsey likes to say, “the advice that God and Grandma gave you.”

Most things sound a lot crazier from the outside, and so once I’d decided to write about the friendly, slightly bombastic man on the television screen, I thought I should try his program, as outlined in his book The Total Money Makeover. At the beginning of August, I had dutifully sat down with Peter, my fiancĂ©, to draft a budget. Once we’d given every dollar a name (as the book puts it), I drove to the bank and withdrew 1,800 of them. Huddled over the wheel to hide this stupendous wad of cash from prying eyes, I doled out the money among various envelopes for groceries, parking, entertainment, clothing, and so on, as recommended by Ramsey—and, funnily enough, by my grandmother, who invented a nearly identical system to manage my grandfather’s meager earnings from delivering groceries during the Great Depression.

And P. Suderman's contribution was...? It's hard to calculate McArdle's Money Morality Level without knowing if she's budgeting for one or two. It's either $450 a week or $225, for food, clothing and entertainment. That's not too bad for a professional, but is still a lot of money. Surely she could have a cheaper car, take the subway, or carpool? As for food, we know she is not too proud to shop at a big box store, believes in making sandwiches for work and has cut down on dining out, so how much could two busy professionals spend on food?

Sticking to a budget had its humiliations.

It’s also hard to spend cash, because so many people look at you funny when you try. The very first day, I spent almost 20 minutes trying to check out in the “better dresses” section of a department store. The saleslady stared at the hundred-dollar bill in her palm as if I’d just handed her an eel. After a series of plaintive looks at my obviously card-free wallet, she started stabbing at the cash-register keyboard with a sort of bleak despair. To my immense surprise and relief—and clearly, also to hers—the cash drawer eventually opened.

According to conservatives, every store clerk in the US is a drama queen, quivering with emotion under the stern yet commonsense gaze of sturdy, competent conservatives. Yet McArdle handed the clerk paper money anyway, demonstrating her moral resolve and social courage, as the clerk managed to gird her loins, conquer her despair, and hand brave, brave McArdle her change and receipt.

Obviously stylish clothing is very important to McArdle*, but why can't she give up "better" dresses for Commonsense Conservative dresses? Does she think she's "better" than everyone else? Maybe, as her commenters might say, she is overspending on clothing in a futile attempt to regain her lost youth because she has a younger mate.

Several paragraphs follow in which McArdle confesses her greed and ideology gave her permission to spend beyond her means and she graduated a hundred grand in debt. More paragraphs tell us that debt can be bad, and people sometimes spend too much. McArdle tells us Ramsey has nothing but scorn for people like her, and that facts back up his teachings that expensive schools don't necessarily translate into higher earnings. McArdle, who reveals that she is still paying her student loans at the age of 37 but hopes to pay them off in a few years, rejects Ramsey's conclusion.

But there is also evidence to the contrary; and what nice upper-middle-class family is willing to, well, gamble with their child’s financial future?

And that evidence would be where...? Based on...? By...?

McArdle rejects one more aspect of Ramsey's program; its evangelism.

Though I did take the audio CD of Ramsey’s personal witness being handed out free at the exit, I’m afraid that Jesus and I aren’t really any better acquainted than we were before. Nonetheless, Ramsey has made a convert out of a secular journalist with one of the pricey M.B.A.s he likes to poke fun at. I have never felt as serenely in control of my finances as I have during these months of knowing that every single dollar is where it is supposed to be: either in the bank, or on a well-chaperoned date with our envelope organizer. The process has been surprisingly painless but, even more surprisingly, pleasant.

So, except for mortgaging her 20s and 30s for a useless education, not following his advice to hand your life over to Jesus (and probably the tithing advice as well), and using credit cards, McArdle finds Ramsey's philosophy to be very useful. It might even eliminate some of her competition.

On the other hand, Americans aren’t going to fix our national financial problems until a lot more people decide to drop out of the “normal” competition to see who can borrow the most money in order to bid on a fixed number of homes in affluent school districts and places at selective colleges. You don’t need to be a Christian to look for a better way. Even an unbeliever knew enough to listen up when he saw the bright light on the road to Damascus.

Why did McArdle ignore Ramsey's advice on using credit cards? That's another story.

*h/t Nutella on Toast


Anonymous said...

The hundred dollar bill story? I think she's trying to be funny.

I use cash for just about everything and I haven't ever had the "issues" she writes about.

She's really not a good writer. D'you suppose she realizes this?

Clever Pseudonym said...

No. She makes it painfully clear that she believes herself to be wittier, smarter, and just better than most people in general.

I call BS on the hundred dollar bill story as well. In all of my life, I have never had a clerk or cashier give that reaction when I paid cash, not even with $100 bill.

satch said... clerks are to Megan what cabbies are to Thomas Friedman; literary devices used to help her make a point she seems unable to make any other way. Hundred dollar bills? PFFFT! We'll know Megan has finally gone Galt when she hands her proverbial store clerk a solid gold dollar.

Susan of Texas said...

I use cash often as well and never have a problem. Nobody sighs, faints, or has a panic attack.

I love all her exceptions. She's never felt more in control of her expenses, yet won't follow half of Ramsey's advice.

Dillon said...

Megan's grocery budget might be higher than normal these days if she is still shopping at Whole Foods in order to piss off Liberals.

Or perhaps not. "Pissing Off Liberals" might be a separate line item in the McSuderman budget, right next to "Teabagging Expenditures".

Anonymous said...

It's entirely possible the clerk was nervous about accepting a hundred-dollar bill, on the odd chance it was counterfeit.

I dunno. The woman is a moron.

Susan of Texas said...

Yes, my grocery store uses them all the time and I've bought them at Office Depot.

Larkspur said...

I almost always pay cash and nobody minds. The times I've worked retail, the only concerns about a $100 bill were (a) verify it with the marking pen, (b) don't let the customer distract you while you get the change (it's an old scam you can get caught by with 20s and 50s, too), and (c) try not to look irritated when making change cleans out the till (because it's a small business) and somebody has to run to the bank afterward.

MMcA's tales about wedding woes are what I find especially interesting. A wedding ceremony is optional. She whines that she and her boyfriend are far too busy to go traipsing around nearby venues to compare prices. She complains that one commenter doesn't understand what it's like for a woman to plan a wedding, and yammers about how you have to meet with all these different vendors, and analyze all these implications, and it's just endless work work work. It's optional work work work.

Feh. If you don't want to go into debt about your wedding, don't. I attended a wedding once; the couple was very frugal out of plain necessity. It took place in the yard of a friend, and dinner was pot-luck. The bride's mother gave her $100 to buy a pretty dress. Everybody had fun.

Megan has this assumption of a benchmark or threshold of what's minimally acceptable that only serves to reveal her sense of entitlement. It's not like having a baby. When you have a baby, there's basic stuff you need, like access to a hospital, pre-natal care, etc. When you get married, all you need is to be heterosexual and able to cough up the filing fee.

Kathy said...

Meg interpreted the Clerk's boredom and tired feet to be unhappiness at being paid in cash.

And how did it take Twenty Minutes to buy the dress? Paying cash is quicker, one reason I like to use it.

Fake anecdote, badly written, and overflowing with contempt for sales clerks. Typical ArgleBargle.

Anonymous said...

You also don't have to shop around like she is. Friends who are getting married in DC in April were able to pinpoint a church and reception hall almost immediately. Either she's setting her expectations too high, or she likes to whine.

Well, both.

Clever Pseudonym said...

The whining would be insufferable enough if it were on some personal vanity blog, but on the pages of the Atlantic? I don't even understand how it is tolerated by any sensible editor. It would be one thing if Megan were a good writer, capable of turning the subject into something of an amusing farce, but she's completely incompetent at her job.

Though it is mildly humorous to see a woman who really just wants the rock, the dress, and the day to feel like a princess putting on the facade that she's only enduring the difficulties for her family and loved ones. Like Larkspur already noted, this isn't something she must do.

Euripides said...

I like the way she sails on past the revelation that her teachers would have been horrified by perfectly normal everyday finanvial actions taken by poor people.

This new program seems like a kind of role-play in which the well off pretend to be poor.

The hilarious fact that people with a limited budget sit down and work out how this months money is going to be spent is perfectly normal, yet someone with the best education money can buy finds it an almost exotic ritual, shows what her economics education didn't even consider, i.e how normal people function economically.