In 2004, I met personal finance expert Suze Orman—who’s convinced that all we need to do to become millionaires is to quit coffee—after she gave a lecture at the fashion company where I was interning. I was an unpaid legal intern who’d chosen that internship for its free breakfast and lunch. Since I was well on my way to racking up a not-very-unusual law-school debt of $220,000, I sidled up to her afterward to ask her if she had any tips on how to deal with my mountain of soon-to-be-owed money, since she hadn’t mentioned student debt in her speech.
Instead of the sage life-saving advice I was sure she would offer on how to manage an amount of student debt the size of a home mortgage, she quickly brushed me aside with a breezily uttered “Student debt doesn’t count because it doesn’t affect your credit rating.” I was left to wonder if she was right. Maybe there was a glorious world that I just couldn’t see in which the implications of taking on that much debt could be boiled down to whether it affected a three-digit number that would theoretically let me buy a house sometime after I paid it all off, which was scheduled to happen only slightly before Santa becomes real.
This past weekend, CNBC reminded us of Orman’s distaste for coffee: “If you waste money on coffee, it’s like ‘peeing one million down the drain.’” Man, personal finance experts do love shaming people for buying coffee. And avocado toast. If only we’d just stop paying for haircuts—as USA Today recently recommended—the dollars we’d save would also destroy our crushing student debt and sink the effects of years of wage stagnation, income inequality, and deunionization with it, allowing us to buy those houses we’re too broke to buy right now five minutes before we kick the bucket. And we’d also end up with completely professional, hacked-off-ourselves hair.
Orman claimed in the CNBC video that if someone invests $100 each month in a Roth IRA for 40 years, they’d end up with a million dollars. First of all, this assumes that you have 40 years left to live. Second, she assumes a 12 percent rate of return on our often volatile stock market, when pretty much everyone else quotes a historical rate between 7 and 10 percent, which would tack at least a decade onto that estimate. It requires you to know what a Roth IRA is, which 67 percent of Americans don’t. Most people who make regular contributions to a Roth IRA have a financial adviser, but financial advisers tend not to want to help the middle class because they don’t have enough assets, let alone the 58 percent of Americans who are living paycheck to paycheck.
Let’s face it. The personal finance industry is a scam for those of us who aren’t already loaded. It’s not that saving money is bad; it’s that, for some reason, we have an entire field of experts who are supposed to be taken seriously when they claim that every single American can get rich. Personal finance is the prosperity gospel of cable news, happy to claim that you’ll end up with all the money if you listen to its experts, take their advice, buy their book. Not buying coffee won’t magically get you a house. Not buying avocado toast isn’t a retirement plan.
We, as a country, aren’t that into retirement plans anyway. Seniors, just like millennials, are getting buried under student debt. The country is on track to exhaust Social Security before millennials are entitled to it. And Congress is batting around the SECURE Act, a cheekily named effort to allow the half of all Americans who are eligible for employer-offered 401(k) plans to potentially lose those retirement funds when their employer, under this act, becomes legally able to offer sketchy annuities as part of those plans. The Act would also cut off employees’ right to sue in case any sketchy annuity plan providers go bankrupt.
The SECURE Act is Congress giving in to the personal finance industry. We supposedly get to control our retirement—although our employers can offer us retirement plans based on financial instruments that might take away our retirement funds in a way we can’t control. We’re supposed to end up with millions, or at least hundreds of thousands of dollars, according to all those personal finance commercials that talk about “your number,” the mysterious amount of savings that will let you retire comfortably. And if retiring comfortably or buying that house or paying off those big debts doesn’t happen for you, like it’s not going to happen for the majority of us, well, it’s your fault that you didn’t get rich like you were supposed to. Have you ever thought about not buying coffee?
Kashana Cauley is a television writer and a contributing opinion writer for The New York Times, and her writing has also appeared in The Atlantic, Esquire, The New Yorker, Pitchfork, and Rolling Stone. You can find her on Twitter @kashanacauley.
