Wednesday, September 21, 2016

The Facebook Challenge


For some reason, it’s taboo in our society to talk about how much money you have. I do understand the desire for privacy and safety, but I don’t fully understand the reluctance to discuss finances. While I wouldn’t want to tell people “I’ve got $100,000 in small bills hidden under my mattress and, by the way, I’m going out of town next week,” I don’t see the harm in saying “I’ve got $100,000 saved in my brokerage account for retirement.”

This taboo against talking about money just causes problems. If you can’t discuss finances with others, how do you learn? You can't. How do you know what you are doing wrong and what you are doing right? You don’t. So our society continues on with most people living paycheck to paycheck, barely making ends meet, just one small disaster away from financial collapse.

Forty six percent of Americans can not handle a $400 emergency expense. Almost half of all Americans! That’s a recipe for disaster. You WILL face an emergency expense at some point. Life happens. You have to be prepared for it.

Americans don’t like talking about money, but they sure love to curate their life. (That's a fancy way of saying they love showing off.) Facebook is filled with pictures of the new car your friend bought, or the new house your sister bought. Your friend from eighth grade just posted a picture of the $200 sneakers he bought his seven year old son. Who's that standing in front of the Great Pyramid Of Giza? Oh, it’s your old roommate from college who was always late with his half of the rent!

Add to this the relentless messaging from advertisers that tell you that you must spend money in order to be happy and you can see why people are living paycheck to paycheck. The forces urging you to keep up with the Joneses are everywhere.

No one on Facebook posts a picture of the $5,700 credit card bill they got in the mail yesterday. No one posts photos of the depressingly small balance in their 401(k) or their kid’s college saving account. Social media lets us present ourselves to our friends as we wish to be seen – successful, happy, and well-off. We share photos of the $300 meal we had for our special night out but we don’t post a photo of the actual bill. We share the fun times. We don’t share the times life sucks.

All those carefully selected images give us a skewed view of how life really is and that results in a yuge amount of peer pressure to try to live that fantasy life. We can’t help but think that if we aren’t living in a similar fashion, we must be doing something wrong.

Stop it.

Let’s harness that peer pressure for something good. Let’s take away the stigma of talking about money or being in debt. Let’s discuss our finances amongst our friends and learn from each other. Let’s all help each other improve our financial lives.

I’m going to issue you all a challenge:

Post your net worth on Facebook.

Did you just wet your pants? Maybe a little? Sure you did. Here:

Too little, too late

This is a scary thought. Display your crappy financial situation for everyone to see? WTF! No way!

I admit, I had the same thoughts when I first contemplated posting my net worth on this blog. Ultimately, I decide to face my fears and go through with it anyway. For me, the issue wasn’t so much shame – after all, our net worth is pretty high and we’re definitely in better financial shape than the majority of Americans. My battle was against the stigma of talking about finances. If our net worth was really low, or even negative, in addition to fighting that stigma, I would have also had to face the additional fear of being embarrassed. Those two fears are probably too much for some people to overcome.

Let’s change that. We’ve all screwed up. We’ve all done stupid things and have gotten in over our heads. Tell your friends about it. Post your net worth.

We need some rules, though, so here's some suggestions:

Be smart in what you share. Don’t share personally identifiable information. Don’t post your social security number or your credit card number. Remember Facebook may share your address and phone number with friends if you’ve allowed it to, so don’t list “$10,000 cash under the sofa cushions in the living room” on your net worth statement unless you want your house broken into.

No judging. Posting financial details is scary. You're exposing a vulnerability and that requires a huge leap of faith that those you are sharing with won't abuse it. We’re here to help fix problems, not critique lifestyles.

Be helpful, not hurtful. Everyone’s situation is different. Everyone has different priorities. There’s more than one way to do things. You'd do well to keep in mind Star Trek’s philosophy of IDIC: Infinite diversity in infinite combinations.

Look forward, not back. What’s done is done. Let’s concentrate on how to improve things, not how messed up things were in the past.

Offer constructive advice or encouragement. Build up, don’t tear down. Specific steps to take going forward are more useful than theoretical ideas.

No jealousy or panhandling allowed. Don’t ask people in a better financial situation than you for loans or handouts. It puts the person you are asking in an awkward position and increases the odds of hurt feelings if you don't get the reply you want. You are the captain of your destiny. Accept that responsibility. When you finally reach your goal, you’ll appreciate the accomplishment that much more for achieving it all on your own. Ask for advice, not money.

Show respect. For each other and for each other’s choices.

Use Facebook’s privacy settings. If you don’t want to entire world to know your net worth just yet, change the settings on your post so that only your friends can see it. Or friends and friends of friends. Whatever.

How do you get started?

If you don’t know how to calculate your net worth, it’s not hard. Add up the value of all your stuff – house, car, bank accounts, 401(k), etc. For simplicity, don’t include small stuff like your stereo. If it’s worth less than $500, ignore it. These are your assets.

Add up all of your outstanding bills – mortgage, credit card balances, student loans, etc. Include everything you owe money on. These are your liabilities.

Your net worth equals your assets minus your liabilities. Figuring out all these numbers might take a little bit of work, but then, anything worthwhile usually takes a little bit of work. (Mint.com is a great site that does this calculation automatically for you after a one time step of setting up everything. I use it and recommend it.)

You want your net worth to be a positive number. You also want it to be as big as possible. In fact, that is your goal – to increase this number every month.

Post your number to Facebook. You can post just a number or you can post your breakdown of assets versus liabilities. Whatever you want. But post something.

This does two things:

  1. By posting this on a regular basis, you become accountable for it. You’ve now got people watching your progress, so you’re more likely to succeed. This is the concept behind Weight Watchers. This is peer pressure for the common good.
  2. You can see others aren’t so different from you. Everyone fucks up. Everyone can make it better. Life is not always vacations and $200 sneakers. Life is sometimes delaying gratification so you can retire a bit earlier and not have to work until you are 75 years old.
I’ve thrown down the gauntlet. Let’s stop the silence and shame of financial illiteracy. Are you with me?






P.S. I can’t say this idea was all mine. I first read about it from Kurt at MyMoneyCounselor and I’m sure others before him have suggested the same.

25 comments:

  1. I did wet myself, but it happens all the time.

    Wow! I don't know about that!!! I'm not ready for it!! One reason is, my parents don't even know I have this blog and that I own several properties. Also, my co-workers don't know my financial situation. It's unusual for someone in the military.

    I can't wait to see who is willing to do this!!!

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    1. My husbands military as well! Heading to your blog now.

      I cant post my net worth to my family or friends either. It's not that I'm ashamed but I don't want to be viewed as others emergency fund.

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    2. That's one reason why I listed some rules, one of which is don't ask for money.

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  2. The issue comes when you are in a better place financially that your "friends" and now that they know you financial situation, they know that you can "foot the bill", "let them borrow" or "give better presents". It's all you perogative but now that they know you "can", they WILL ask and assume.

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    1. This fear is what prevents people from sharing. The solution is to either get new friends or politely explain that you are unwilling to give them money, but you give them advice to help them get their finances in order. Simply not sharing your info does nothing to help anyone. The point of sharing is to initiate a conversation and start educating people. Some of those initial conversations will, most likely, be uncomfortable.

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    2. I see your side and I agree, education is the purpose. However, the typical person who sees someone "better off" financially than they are, does not seek education but is more likely to seek pity and handouts. They will ignore any education you provide because they only care for the "short" term. How to prosper now? So many think of today than to think of tomorrow.

      You can compare it to the old adage, I can give you a fish and you can eat today or I can teach you to fish and you can eat for a lifetime.

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  3. Wow you're really.not kidding about the stigma. I'm pretty sure everyones reaction was "I can't do that!!" I'm seriously considering it but just like everyone else have 5,000 stigma voices in my head telling me why I shouldn't. I've always loved the idea of being able to freely tallk about money because its something I've become passionate about and would seriously love to hear people in better off situations how to improve.

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  4. None of my friends have the same love for Personal Finance as I do. Every time I initiate a convo on that topic, they look at me like deer in headlights :/ Shaun Stuart: How should I go about getting "new friends" who would like to discuss finances with me?

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  5. It sounds like your friends aren't interested simply because they are scared. They might be in a really bad financial situation. You can try asking them what they fear and try to help them. Maybe drop hints that you are willing to share your knowledge. If that doesn't work and you want to find other friends to talk about finances with, try goolging for local investor clubs in your area. Maybe there is a blogger who lives in your area.

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  6. Mr dumpling hit it on the head. And not just friends. Family. This is not a fear, this reality. I agree with the needing to change the culture around building savings and preparing for the future, lbym, ect. But posting net worth would the STUPIDEST thing i could do. I already have to deal with you need to buy a new car. Ect. And you cant walk away from your boss and all if your family, great idea but it would naive and foolish. And i am not saying it could go badly. I am certain it will

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    1. I suppose it depends on your friends and family. I've been doing this every month for the past 6 months and not a single person has asked me for money.

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  7. How long does it take for someone to decide you have wronged them and seeks legal redress now they know you 'have the means' I don't see it as a stigma to not talk about net worth, just prudent.

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    1. Again, I did suggest posting it only to your friends. Yes, they may decide to sue you. If that happens, you just found out something about their character and motivations, didn't you? Probably better you found that out sooner rather than later and cut off your relationship with them now. If it's a frivolous lawsuit, they will lose and have to pay attorney's fees. If it's a valid lawsuit, well, that's why you have insurance. See my post on umbrella insurance: http://roadtoatesla.blogspot.com/2015/05/protect-your-hard-work.html

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    2. Alas, I would question rigor of the facebook privacy settings to keep the information contained, versus not trusting my friends - I speak with them quite freely about money. I question your bottom line below. I am quite happy to largely have my net worth known to my family and close friends and have them know my goals - again, prudent, not afraid.

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  8. Many of the comments saying this is a crazy idea boil down to one thing: Fear. Fear of being asked for money, fear of being sued. Are you going to live your life in fear? Suppose you are worried about friends asking you for money, so you decide to keep your net worth private. What happens later? What happens when you have enough wealth accumulated to retire early or to buy that new house or take that luxury cruise? Guess what? Those people you think will hit you up for money are going to notice your lifestyle. They may not have your net worth figure, but they will sure put two and two together and figure out you have money. If you have the type of friends who are going to hit you up for money, they are going to do it no matter what. As for someone suing you, that is always a possibility, no matter what your net worth is. You buy insurance to protect yourself.

    This was the whole point of this exercise. People feel scared talking about money. People don’t know how to save or invest or manage it. If someone asks you for money, look at that as an opportunity to help that person. You may hurt some feelings refusing to give away money and it may be an uncomfortable conversation, but explain that you were in their same situation once. You managed to turn it around and are willing to help them do the same. But it takes effort on their part, not a handout on yours.

    Bottom line – this comes down to fear. Are you going to live your life in fear or are you going to be proud of your financial prowess? Do you want to help others or hide in a corner? It’s your choice.

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  9. Too touchy of a topic. I really don't want to publicly announce my net worth. I enjoy living with stealth wealth.

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  10. Good way to stir up the pot. :-) I see where you are coming from, and I've considered whether or not to share, but I haven't. I've shared with only 3 people: my retired mother and two close friends (one a millionaire, one nearly flat broke). What good can come of sharing an actual number to a wider audience (even of friends)? If you want to help others, couldn't that simply be done with a statement like: "To all my FB friends, family and acquaintances: I've done well over the years in saving money and investing. I'm expect to retire at an early age, despite getting divorced 4 years ago and losing half of my(our) net worth. In fact, in just 4 short years, I've already recovered all of that lost net worth, even while paying alimony and child support. If any of you would like some advice on how to save money and/or invest, I'd be more than happy to help."

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    1. That would be another good way to start the conversation!

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  11. No way! I was hesitant enough to put it out there online, and I'm anonymous. I decided to put it in a guest post, so it would be on my site. http://www.investmentzen.com/blog/i-have-every-dollar-ive-earned-in-my-ten-year-career/

    There's no chance I would put it on my personal facebook, though. I'm far too humble in real life.

    Best,
    -Physician on FIRE

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    1. I'm with PoF on this. Because I blog under my name, I don't feel comfortable broadcasting that information to the world. If I was saddled in debt, though, I would probably have less hesitations.

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  12. Others would likely see it as bragging.

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  13. Thanks Shaun for noting that I'm promoting the same idea on Money Counselor. Perhaps we should work together to "viralize" the challenge!

    I'm a bit taken aback by the intensity and diversity of the objections to the challenge I see in the comments on your piece. I see the idea as nothing more than converting the natural but usually financially self-destructive urge many people evidently feel to compete with the Joneses (usually through conspicuous consumption) into something constructive: let's all compete to have the healthiest balance sheet! The neighbor's new BMW and granite countertops might not impress so much if we also knew they also carried $25,000 in high-interest credit card debt! ;)

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    1. I agree. I wonder if doesn't seem like such a big deal to us because we are bloggers and used to sharing this information publicly already...

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  14. I.... can't... I wouldn't be embarrassed if it was revealed, but.... There are only 3-4 people who know my net worth, my wife, my financial advisor and me.

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