If it's Finances, You're an Idiot

It started with the banking industry, if you ask me. They've always thought we were stupid, or we wouldn't be investing in CDs when we could go for something even slightly more risky like T-Bills. Discover card kicked this off back in the 1980s with promises of "money back!"

Yes. They will send you free money for simply buying things on your credit card. Money from the sky! What could be easier than that? Obviously this free money must come from somewhere. Let's see. Where could that money come from?

This money-for-nothing idea was such a hit that the banking industry went wild with it. Free checking! Free checks! Meanwhile they were sticking it to us by charging to view our checks online, use the ATM -- even talk to a real person. But hey -- there's free stuff, so we've got to come out ahead, right?

The credit card industry is horrible about this. Ever see the Capitial One commercials? Cap One -- great company founded here in Virginia, great campus, smart people. But they are making money selling credit cards like lottery tickets. Their commercials have these wonderful barbarian themes -- they are very funny and entertaining. So who is paying for all of these commercials? Do you know that Capital One does not report your monthly payments back to the credit bureau? What that means is that if you make regular payments to Capital One, nobody knows about it. They sell credit cards to people with poor credit, charge a lot of interest to cover their risk and advertising, and then they KEEP your credit poor by not reporting your payment history. That way, you are always their customer. Kind of like being a financial serf, eh?

That brings me to one of my favorites -- free financing. This is an idea that is so ludicrous that only the truly idiotic people in the world can fall for it. If you think you are getting free financing, get up from your computer, right now, and go find somebody to manage you money for you. Nothing in life is free, including money. How many furniture, yard accessory, and car commercials mention free financing! A lot. I think the premise is that if you don't have enough money to buy a car or furniture outright, then perhaps they can get you to buy something you can barely afford by lying to you about it.

There is no such thing as free financing. If you have use of the money for a year or two, somebody is having to pay for that. Once again, who could that person be? I wonder.

The car guys for decades have played this game of "funny money" -- you can take any kind of money situation and spin it around so much a simple-minded person is left dizzy. Car costs an extra $10K? Well heck if you go for ten year financing instead of three, it's actually CHEAPER to get the more expensive car! And did we say we'll throw in free financing for the first two years?

Here's my advice: If a salesperson looks you in the eye and says "Free financing" either slap them or walk away.

The insurance company wants in on some of this action. Look at Geico. Just like Capital Oine, they have great commercials with the cute little lizard. They're even doing kind of a post-modern thing where the lizard makes fun of commercials. The latest commercials have old has-been celebrities playing funny man next to real customers recommending the product. But what, exactly, are they selling?

Progressive, another insurance company, gives you quotes for a bunch of other companies online. This is obviously because they've done the math and would rather have you on their page than anywhere else. Even if they are a little higher, they get credit for showing you other companies' rates, and they can always sell you on something other than rate once your reading their sales material. But Geico? Fuggitaboutit. I don't see rates, I don't see industry ratings. All I see is a stupid CGI lizard trying to entertain me into having happy feelings about Geico.

We had a wreck once. A Geico customer rear-ended us and totaled our car. We were lucky to be alive. Geico refused to pay, and we had to get a lawyer to get them to write a check. It wasn't because our case was complicated or any of that -- the lawyer explained that it was easier for companies like Geico to refuse to pay ANY claim. Because 5-10 percent of people would just take "no" for an answer and that way Geico could save a lot of money. It's a really old insurance racket, been going on for years. If I could catch that little lizard, we'd have him for dinner.

So how about rates? Quality of insurance? Progressive asks on one of its commercials, "where are the rates for the other guys?" Geico strikes back, I kid you not, by saying something like, "you can only get quotes for Geico from the Geico website. That's because we are exclusive. You have to be special to be a Geico customer"

Idiots. They think we are idiots.

I get calls from stock brokers every now and then. (I stopped taking calls on one of my lines because of this). They are always trying to sell me on some venture. Perhaps "stock broker" is too nice a term.

Yep. If it's about money, and it's on TV, you can bet your bitty that they are about to insult your intelligence. It can be a fun game figuring out where. There are some real, valid reasons for this behavior -- money, far from what you've been told -- is not a key element in most purchases. Emotion is. People reason with emotion and then rationalize to fit their decisions into logic. Some folks can deal with this, mainly because they have stronger emotions associated with things like looking like an idiot. But some folks are just kind of floating along. To them, a lizard, a bunch of barbarians, or a free service sounds like something fun. Why ask questions?

Why indeed.