Whenever I rail against journalistic innumeracy, which
I tend to point out that journalists are normally creative arts-graduate types,
who frequently have very little grasp of numbers. In turn, this means that they’re
at risk of being taken advantage of by people claiming to perform wonderful
"demystification" services for them.
Today I came across one of the most egregious such quacks, in the form of Galia
Gichon of Down To Earth Finance.
Ms Gichon is teaching a MediaBistro course
next week, where, for a mere $65, she will dispense advice on how to "get
a grip on debt" and other such staples of the personal-finance pages. Judging
by her Q&A
on MediaBistro today, however, you’d be better off spending that $65 on getting
blotto in the nearest bar. Certainly, any halfways-decent personal
finance book will be much cheaper and much more useful.
Here’s the advice that Gichon thinks is particularly germane to New York freelance
journalists:
1) Hire a Bookkeeper. As a freelancer, this is one of the most important
financial decisions you can make. You will save so much time and be able to
focus on getting more business.
WHAT??!! This is completely insane. Bookkeepers, at their best, save you time
and cost you money. Freelancers, in general, have lots of time and very little
money. Saving time is not top of the list of most freelancers’ priorities. Spending
money on a bookkeeper, I think it’s fair to say, is right at the bottom. What
would a freelance journalist do with a bookkeeper, anyway? Give her
a pile of receipts and ask her to add them up in the hope that they might count
as a business expense? Get her to add up this year’s invoices so she can see
just how little money she’s actually made?
Bookkeepers are necessary for small businesses which have relatively high gross
income and relatively high expenses. Freelance journalists have relatively low
incomes, and nigh-on zero business expenses. Unless you need a bookkeeper to
pay your phone bill, hiring a bookkeeper is a complete waste of money. .
2) Make Your Savings Automatic. Set up an automatic savings account into
a money market account or mutual fund. Most freelancers are not saving enough
of their income. Get it out of your checking account and into a place where
it is harder to touch it – without having to think about it!
Automatic. What a good idea. Every two weeks, when I get paid, I can just take
$150 and put it into my money market account. By the end of the year, I’ll have
saved almost $4,000! Except, oh, hang on a minute, I’m a freelancer.
I don’t get paid every two weeks. In fact, I can go a couple of months
without any income at all.
Automatic savings make no sense in the context of a freelance lifestyle.
They’re predicated on a steady income – which is the one thing a freelancer,
pretty much by definition, doesn’t have.
3) Clean Up Your Old 401(k). Chances are many of you have a lingering 401(k)
from previous jobs. Consolidate them and roll them over into a rollover IRA
at a discount brokerage firm (i.e. Fidelity, Schwab, Vanguard, T. Rowe Price).
Streamline your investments!
More ways to spend money! First spend $65 on Gichon’s course, then spend more
money on hiring a bookkeeper, and now spend more time and money still, tranferring
your investments from one place to another. This involves selling all the securities
you own (you’ll get charged for that), moving them elsewhere, and then buying
a whole bunch more securities, which might even be the exact same securities
you owned in the first place. You’ll get charged for that, too. If you buy mutual
funds, there might well be up-front fees as well. And this is all in the aid
of… streamlining your investments. But streamlined investments don’t return
any more money than non-streamlined investments. Plus, are Fidelity and T Rowe
Price any more "discount" than any other brokerage firm? I really
don’t get this at all. It seems like a very laborious way to make yourself feel
that you’re doing something, when in fact you’re not achieving anything.
4) Deal With Your Debt. Many freelancers use credit cards as a way of managing
cash flow. While this sounds like a great idea, many of you find yourself with
that "revolving" balance that doesn’t seem to go away. When you have
a month with extra income, put that extra away and then use it for those drier
months. Also, STOP using your credit cards and focus on paying your balance
down.
I’m no fan of credit cards,
that’s for sure. So this isn’t completely atrocious advice. But it offers precious
little in the way of specifics: if I’m a freelancer with a revolving balance
on my credit card, and I have extra income one month, should I "put that
extra away" or should I "focus on paying my balance down"? (Answer:
the second. It’s always better to pay down debt than to save. But Gichon doesn’t
make that nearly clear enough.)
5) Shop Around For Health Insurance. Today, freelancers have many more
options for health insurance than they used to. Check out Mediabistro’s resources
or EHealthinsurance.
Well, there’s a nice plug for MediaBistro. But I’m pretty sure that most freelance
journalists either don’t have health insurance, or they have the cheapest insurance
they could find. I doubt that many are overpaying for it.
6) Do a Check-up on Your Expenses. Are you still using that fancy-shmancy
gym? What about those magazine subscriptions that are lying around? How about
those extra cable channels that you never watch? A 6-month check-up on your
expenses can clean up your checkbook and find an extra few hundred dollars every
month.
Again, doesn’t this seem a little tone-deaf when aimed at freelance journalists?
How many hand-to-mouth freelancers do you know who belong to a "fancy-shmancy
gym"? I’m sure that if there are any, they are most certainly "still
using" it. And magazine subscriptions – for one thing they’re rather
necessary for journalists; for another, you can’t just cancel them and save
money. No one subscribes to magazines every month. I’m all in favour of cutting
down on expenses: in New York, it’s astonishing how much money can be spent
on food, drink and cabs. But these examples, are, frankly, lame. Don’t tell
journalists to consume less media, tell them to buy fewer shoes!
7) Don’t Be in Denial. Many freelancers claim that they can’t deal with
their finances. Well, the successful freelancers have learned how! It’s not
that hard, but you do have to be proactive. Take a class, read a book and hire
a fee-only financial advisor. A little financial knowledge goes a long long
way.
It’s not hard to deal with your finances: take a class (which costs money),
read a book (which costs money), and hire a fee-only financial advisor (which
costs money). Why do I get the feeling that this Gichon woman doubles as a fee-only
financial advisor? Most freelance journalists have negligible savings, and if
you have negligible savings, your need for any kind of financial advisor is
slim to zero.
Frankly, I’m not surprised that Gichon sees lots of people who can’t think
straight about money: you’d have to be pretty financially stupid to fall for
this claptrap and pay for her services in the first place. But if Gichon’s a
quack and a huckster, that’s all in a grand old American tradition. What I really
can’t understand is why MediaBistro is lapping it all up. Don’t they have a
former financial analyst as editor-in-chief?
Shame on them.