# The Billfold Book Club Discusses Helaine Olen’s ‘Pound Foolish’

I want to start the discussion of Helaine Olen’s Pound Foolish: Exposing the Dark Side of the Personal Finance Industry with a true story.

When I finally got a job that paid over \$50,000 a year, I started doing all the right things.

I paid off all my debts — both the medical debt I owed on an unexpected foot surgery and some non-student-loan educational debt. I contributed to my 403(b) and took the full company match. I started a Roth IRA and made the maximum yearly contribution. I got a “high-interest” ING checking/savings account which — I just checked — was paying 1.5 percent interest that year.

In order to further this financial prudency, I did all the other stuff too — I got the slow cooker and started packing it with lentils, I walked instead of taking taxis, I continued my long-standing love affair with the public library.

And then I started doing the math. As I wrote in a now-defunct blog on April 18, 2009:

If five years of working earns me enough savings to live on for one year, then how many years will I need to work to be able to have enough savings for retirement?

Never mind the variables or inflation or 401(k)s or anything like that. Let’s even ignore things like getting married, having children, buying a house, traveling, major medical expenses, etc. Let’s just look at the basic math.

5=1. 10=2. 20=4. And even after working for the next 40 years (which would make me 67 years old) I’d only have enough money saved for 8 years of retirement.

Again, we’ll leave the variables out (and the response “but people usually spend less money per year when retired,” which I will balance out with “yeah, but stuff is going to cost more in forty years”).

What does one do when looking at an equation like this? Try to invest? Try to save more? I can’t be the first person who’s stared down the end of this equation.

Helaine Olen’s Pound Foolish also stares this question in the face, and doesn’t quite come up with an answer.

You Can’t Buy Financial Success From Financial Experts

A good chunk of Olen’s book breaks down the financial advice by the self-appointed experts: one chapter each for Dave Ramsey, Suze Orman, and Robert Kiyosaki. Why are these experts so financially successful? Because they get the rest of us to pay them money to learn basic financial principles as well as a fair chunk of dubious advice.

The advice is sometimes large-scale dubious, along the lines of Rich Dad Poor Dad seminar leaders who give attendees scripts to use so they can call their credit card companies, get their credit limits raised to \$100,000, and use those funds to invest both in real estate and to pay for their seat in the next level of the Rich Dad Poor Dad seminar system — a course which costs a whopping \$12,000 or more.

Sometimes the advice is simply small-scale dubious, like Dave Ramsey’s famous Snowball Method of debt reduction. (Olen notes that mathematically, paying off your smallest debt first is not always the wisest financial choice, especially when bigger debts have higher interest rates.)

Okay, fine. The “financial experts” are handing out a bit of snake oil along with their advice. Are there other ways to be financially successful? And why do so many of us have trouble managing our finances?

Individual Choices in an Uncontrollable System

Olen argues that the reason so many of us “can’t save enough” or find ourselves in debt or worry about how we’re going to pay for our retirement is because we’re trying to make small, individual choices within an uncontrollable financial system.

For example: in the early 1980s, the national savings rate was 10 percent. In 2013, it is three percent. Did an entire country of people become irresponsible spendthrifts? Or is there some other reason why we aren’t saving — say, for example, the fact that (to quote Olen) “the cost of raising children increased a stunning 40 percent over the course of the first decade of the twenty-first century.” Or that interest rates dropped to the point where 1.5 percent was seen as “high-interest.” Or, shall we say, the recession.

It’s clear — and Olen does the math to prove it — that we aren’t in financial trouble because we’re drinking too many lattes or buying too many smartphones. We’re in financial trouble because the equations don’t work in our favor.

(This includes, by the way, the 401(k), which is the most frightening chapter in the book. I mean, if you’re a child of the ’80s or ’90s you grow up learning that 401(k) and 403(b) accounts are the safe and conservative retirement funding choice. To learn that they’re essentially an untested and unproven experiment makes me really, really nervous about my retirement savings.)

We’re trying to be good by saving pennies and following other people’s financial advice, when we can lose everything we’ve saved in an instant due to illness, unemployment, stock market fluctuations, and countless other factors.

Or, maybe, we’re “bad.” We’re the people who run up our credit cards buying useless consumer items, the “those people” who are the target of holier-than-thou internet commenters. It doesn’t matter. Whether you’re “good” or “bad,” it’s financial drops in a bucket, pennies in a storm.

So now I’m turning the discussion over to you. Do you agree with Helaine Olen? Are personal finance experts peddling snake oil, or has she misjudged them? What role should the personal finance industry play when offering financial advice to consumers? And is there a solution to the equation we spend much of our lives staring down: how to spend, how to save, and how to make sure there’s enough for tomorrow?