Poking Fun at Bad Advice From a Millionaire

Dr. Google is full of financial advice.

How to get rich quick.

How to get rich slow.

How to be a millionaire before you turn 30.

Vet Financial Summit’s BFF Ramit Sethi, author of the best-seller and must-read “I Will Teach You to be Rich” book recently poked fun at such advice.

It’s too good not to share – because it’s truly bad advice.

Here is the premise.

In a Time article titled “Millionaire (advice) to millennials,” an Australian property tycoon, whose name we will not share to protect the guilty, explains: “stop buying avocado toast if you want to buy a home.”

That article led Ramit to write a hilarious diatribe explaining why this is terrible advice.

Let’s go over the multiple issues with the recommendations.

“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” explains our millionaire.

The thing is, there is absolutely nothing wrong with buying avocado toast. Granted, it’s much cheaper at home – and incredibly easy to make.

But there is nothing wrong with going out with your friends and having a great time at a delicious restaurant.

Similarly, we do agree that home-brewed coffee is immensely cheaper, but there is nothing wrong with getting cappuccino at your favorite coffee shop.

Let’s do some simple math.

According to Zillow, as of this writing, the median home value is $356,026 in the United States.

A 20% down payment means saving up $71,205, or not eating 3,747 $19 avocado toasts.

Assuming you’re really addicted and you eat one a day, that means you will only need to wait 10 years before you have enough for a down payment. Easy right?

Now, since we know you’re not a complete junkie, and eating just one avocado toast per week is more likely, you would need to save up over a mere 72 years before you have enough to afford a home loan.

Now, if you hate avocados and love $4 coffee, and you do buy one cup per day, you will easily have built up your down payment after not drinking 17,800 cups over 48 years!

Does that make any sense to you?

The brilliant advice by our millionaire friend continues:

• No taxis
• No dinners out
• No nights out
• Cut back on one subscription service
• No lunches out
• No overseas travel
• No weekends away
• No bottled water

At the Vet Financial Summit, we don’t want you to live like a monk or a nun. We want you to enjoy life now, not in 48 or 72 years.

Instead of living like a pauper, you may want to borrow from a brilliant concept Ramit calls “money dials.”

You can “dial down” expense categories you don’t care for, such as designer clothes, expensive binoculars, sports cars…

This allows you to “dial up” things you truly enjoy, including exotic vacations, weekend getaways, meals with friends, and yes, bottled water, avocado toasts and cups of Arabica.

Our Australian millionaire also doesn’t insist much on the fact that he made his first investment thanks to a tiny $34,000 loan from his grandfather.

Again, instead of hoping for an improbable white knight in shining armor, Ramit would rather encourage you to increase your income.

Last but not least, Ramit debunks the myth that you must buy a house in order to be successful.

The median home value may be $356,026, but in some areas, you can’t buy a decent starter home for less than a million – or two.

Your monthly mortgage would be enough to drain your savings and a big chunk of your paycheck (quick math: a million dollar loan at 6% means a $6,000 monthly mortgage).

Now, all of the advice in the article(s) is not bad. It’s true that collectively, Americans spend too much on frivolous things. Most don’t have a budget. Most have no clue where their money goes.

So where is the truth? What should you do?

The truth is likely somewhere in the middle, and the “dials” concept can help you find your own Truth.

• Do have a budget, or at least an objective idea of how you’re spending your money.
• Do build up your professional skills and become indispensable, rather than a commodity. And then maximize your income – ethically of course – so you can enjoy the finer things in life.
• Do fund your savings account, your emergency fund and your retirement account.
• Do educate yourself on personal and practice finance.
• Do learn how to manage your time as efficiently as possible. Yes, time is money.
• Do weigh the pros and cons of owning vs. renting a home based on the local economy, not some obsolete, invisible, senseless rules.
• Do cut down on useless expenses: do you really need 6 different streaming apps? Do you truly need 4 music apps? Do you even read the subscriptions you receive? Do you need the ambient temperature to be 50F in the Summer or 80F in the Winter? Do you need to buy lunch every day? Could a homemade sandwich made in 1 minute possibly be healthier and cheaper than greasy gas station fast-food? Dial those down.
• Do have fun with your friends. Go out for a nice dinner. Enjoy a Chai Tea Latte or an Apple Crisp Oat Milk Macchiato. Order an appetizer. Escape for a weekend. Go on a lavish vacation. Enjoy life!

As long as you can afford your hobbies, your choices and your passions, there is nothing wrong with playing hard after working hard.

Phil Zeltzman, DVM, DACVS, CVJ, Fear Free Certified