A Bankruptcy Lawyer Answers the Question: “Should I Listen to Financial Gurus?”

Listening to certain financial Gurus has inspired me to write a six-part blog series dealing with issues that they sometimes touch upon. Each month, over the next six months, I will post a blog article about a topic that is sometimes discussed by financial Gurus. Each article will address the issues from my perspective, that of a practicing lawyer, not a nationally syndicated Guru. This blog post is the first of the six-part series.

A ‘guru’ is described as a guide, mentor, expert, or master. A ‘financial guru’ is a person that is held out to be a guide or mentor in areas of financial expertise. There are numerous financial Gurus producing books, radio shows, pod casts, and television shows offering instruction on how to handle your money. They claim expertise in debt management, estate planning, investing, and best consumer practices. But do they really know what they are talking about, and should you listen to them? The short answer is yes, most people could benefit by listening to one or more financial Gurus.

It has been reported that 56% of Americans do not have enough money in savings to cover a $1,000.00 unexpected emergency. Also, it has been reported that 40% of Americans don’t have enough in savings to cover a $400.00 emergency. Other reports show that over half of all Americans have not saved enough for retirement. It’s not hard to conclude that, at least to some degree, Americans are not being properly educated on budgeting, finance, and investing.

I’m not discounting other economic forces contributing to these startling statistics, just asserting that part of the problem may be the lack of any meaningful financial education. Which may be why there is room in the market for so many financial Gurus. Financial Gurus package information and present it to their audiences in an educational and entertaining way. There are a wide range of financial Gurus, some speak to folks at a very basic level, others speak to more sophisticated investors.

Some of these financial Gurus may not even have degrees or certifications in the subject matter on which they are speaking; they are more akin to entertainers than experts. So, you may ask, “if they are just entertainers, then why should I listen to them?” Many of them have personal experience to draw from and professional staffs to help them prepare their shows, in short, they do their homework. The advice they give is sometimes very generic and may or may not apply to your particular situation.

The Guru’s knowledge often is limited to the state in which he or she lives. For example, some financial Gurus are always pushing their audience to get a Revocable Living Trust, which is very important to have in some States and some situations. However, each State has very different probate laws and what is necessary in one State is not necessary in another.

But they speak as if their advice applies to almost everyone, when, in fact, it does not. Other Gurus may speak about Medicaid planning, but Medicaid rules vary widely from State to State. What may be perfectly acceptable in one State could be disastrous in another State. For this reason, the Guru’s advice may tend to be vague or overly generalized.

Some financial Gurus preach against the evils of debt, and in many cases they are correct. It is almost always a bad idea to finance furniture, appliances, electronics, jewelry, vacations, entertainment, or dinning out. Also, there are people that have proven that they are not good at managing credit cards, and those people should stay away from them. Most consumer debt does not generate a profit for the borrower and causes him to pay too much for the financed item in the way of excessive interest charges.

However, this does not mean that all debt is bad. If you use debt to purchase an income producing property, then it may be considered good debt. However, you must know what you are doing or your “income producing property” may become a huge nightmare. I do not recommend people go into debt to start a business in a field in which they have no experience. There is a huge difference between quitting your job as a mechanic and borrowing money to start a restaurant and a sophisticated businessman taking out a loan to open his 14th restaurant. Just because you like drinking beer doesn’t mean you have the skill set to operate a brewery. The bottom line is that some debt is good, and some debt is bad. Debt is a tool, if used properly it can make you rich, if used improperly it can force you into bankruptcy.

Financial Gurus are a great source of general information. I strongly recommend that you find one or more and follow them. The information and advice they give is generally correct and should be used as a starting point to begin your research. Remember that they are speaking in very general terms and from their personal experiences in the State in which they live. The trick is realizing who is their target audience and determining if you are really part of that demographic.

The Gurus are not there to give you personalized investment or legal advice with regards to your unique situation. They are there to sell advertising, services, products, and entertain their audiences. Listen to them, then do your own research outside of their sphere of influence or online ecosystem. Just because something works for one of their callers does not mean it will work for you. I listen to the financial Gurus and sometimes they come up with something I haven’t previously considered. But I always confirm the new information from multiple independent sources before acting on it.

After doing your own research, if you still think it’s a good idea, then contact a local professional. Just because something works in Texas or New York doesn’t mean it works in Virginia. A local professional will get to know your personal situation and help you tailor a plan that is unique to your needs. You have heard the saying, “the devil is in the details.” That is almost always the case when it comes to dealing with finances, investing, budgeting, and debt.

I can’t tell you how many times I have heard a person say, “I wish I had talked to you before I did that.” Normally the “that” that got them into trouble started with them relying on overly generalized information that they obtained from the internet.

When it comes to managing debt, filing bankruptcy, estate planning, or drafting a Last Will and Testament, enjoy the Guru’s entertaining programing, laugh at his jokes and anecdotal stories, but do yourself a favor and hire a local professional that will craft a plan especially for you, based on your exact situation.

The lawyers at John W. Lee, PC will meet with you, discuss your unique situation, and help you craft a plan to achieve your financial goals, whether it be budgeting, bankruptcy, estate planning, or debt management. We are not investment advisors so we will not assist you with buying or selling stocks, bonds, annuities, life insurance, or other financial products.

However, if you already have those types of financial assets, we can review your contracts and help you understand them and how they may enhance your overall estate plan. Unlike the financial Guru, our advice will be specially tailored to meet your exact situation and circumstances under Virginia law. For some matters we offer a free consultation, however, if you would like an in depth ‘financial strategy session’ an attorney will review your documents, budget, and debts and help you come up with a uniquely tailored plan to achieve your goals.