The Dilbert Guide to Personal Finance

July 27th, 2006

Scott Adams, the cartoonist behind the popular Dilbert cartoon, is an excellent manager of his own personal finances. He intended to write a humorous book about personal finance but decided he could never write enough to fill more than a page. According to Adams, everything you need to know about financial planning boils down to these eight principles:

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Entry Filed under: Saving

8 Comments

  • 1. claire  |  July 27th, 2006 at 6:40 pm

    That’s a pretty good summary. It’s so…terse.

    What are the rest of us yammering on and on about if that’s really all there is to it?

  • 2. Russell  |  August 3rd, 2006 at 1:08 am

    Don’t do these things (except for the credit cards) unless you know why you are doing them.

    – Term insurance can actually be more expensive in the long run and it’s not “always” the best option. It depends on the person.

    – A 401k is very difficult to access the money if you need it, and in many cases, if you don’t stay with the job for a certain period of time, you lose all contributions from the employer.

    – if you knew we would have another 1929 stock market crash in 2 years should you or would you still fund your IRA to the maximum?

    – “Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker, and never touch it until retirement.”

    This reminds me of the slothful servant in the parable of the talents.

    okay, so I just disagreed with most of Scott Adams’ points. My point is that none of this makes sense if you don’t invest in your brain first. It’s insanity to take financial advice from those who speak the loudest (usually the media) and those who aren’t actually making any money.

  • 3. Paula  |  August 3rd, 2006 at 12:13 pm

    I don’t look at as “yammering,” I look at it as educating myself and sharing that information with others.

  • 4. Through a Glass Darkly &r&hellip  |  August 14th, 2006 at 11:17 am

    [...] Firevalt offers The Dilbert Guide to Finance. [...]

  • 5. Jason  |  August 14th, 2006 at 8:55 pm

    Eeek? Are you serious, Russell?

    (Ok, disclaimer… I followed a link from a friend’s blog to get here, and don’t know anybody here from Adam… and the reverse is true, I’m sure.)

    – Term insurance: I’d like to see one example where a “whole life” policy makes more financial sense to a person making an income in the 90th percentile of Americans with a family to support. The whole point of term insurance isn’t to have insurance until the day you die when you’re 90… the point of term insurance is to have a “safety blanket” during the 20-30 years you’re building up the wealth you need to really provide for your heirs in your will. If you take the just the money you save on term insurance premiums over whole life and invest that difference wisely in mutual funds over the course of 30-40 years, you’d have enough to never need an insurance policy again.

    Whole life has a horrible return on investment over 50-60 years compared to virtually any other option… as I said, life insurance gives you the safety blanket you need to build real wealth through method that over real returns on investment.

    – The whole point of a 401(k) plan is to save for retirement. Of course you can’t access it now without severe penalties… the money’s not meant for now! The money’s meant for your retirement. It’s also true that with many 401(k) plans, you have to stay in a job for a certain amount of time to be “fully vested” and be able to keep all the employer contributions. Even if you leave before that time, however, you still keep all of your own contributions. It’s not as though your own money is being kept from you during the vesting period. The employer match is simply free money… it’s a silly and unwise decision not to take advantage of it.

    Now, if you want to quibble about what “maximum” means… I don’t think that was the point of the advice. General conventional wisdom says that you should be saving 15% of your net income in retirement accounts… be in 401k, Roth, or whatever. When I think “maximum,” that’s what I’m thinking. Obviously, it would be stupid to put the absolute maximum amount allowed by law into a 401(k) if you’re planning to use it as a savings account. I don’t think that was the intention of the writer, either.

    – If I knew… for a fact… that a 1929 stock market crash was coming at some point in the next 10-20 years, I’d still invest in a good, diversified set of mutual funds. From 1926 to 1996, which includes the crash, Great Depression, and the lean Nixon and Carter years, the average return of the average stock (not even the “good choices” or any good funds) was 10.89%. And if a crash did happen, there’s your chance to invest more when the market is down… because even after the worst crashes in history, the market still rose to record levels afterwards. Fearing a crash like 1929 shows a willingness to worry more about results “today and tomorrow” instead of 30+ years down the road. (And if your horizon isn’t long-term, then you shouldn’t be stock-heavy anyway… and that’s not what the author was talking about.)

    – “This reminds me of the slothful servant in the parable of the talents.” Excuse me? You’re going to have to explain to me how an average yearly return of almost 11% is beign slothful and “burying your talent in the ground.” Slamming all the money you can into wise, diversified investments like mutual funds with long track records of success is one of the most productive things people can do to provide for their future, and a future for their children and their children’s children.

  • 6. Piggy  |  November 9th, 2006 at 1:29 pm

    Regarding credit cards, get a card with zero credit allowance or you will end up paying countless credit card debt for decade or so like my friend does.

  • 7. Russell Page  |  November 20th, 2006 at 9:53 pm

    You’re going to have to explain to me how an average yearly return of almost 11% is beign slothful and “burying your talent in the ground.” Slamming all the money you can into wise, diversified investments like mutual funds with long track records of success is one of the most productive things people can do to provide for their future, and a future for their children and their children’s children.

    Explain? Simple.

    Talents were sums of money. One was give one, one three and five. One did nothing, the other two did something with their money. Putting your money into a mutual fund is not productive, it’s giving it over to someone else. Don’t mistake this for production. Diversity? That’s language for “this is somewhat risky, so we will diversify your money so you can’t lose it all at once.” You’re basically regurgitating the BS marketing you hear from billion dollar investment companies. Did you ever stop to ask yourself if you could keep stewarship over your money and find a way to do better than some supid mutual fund?

    It reminds me of the parable of the talents because you basically bury it in the sense that you just put it away in some hole for 40 years (mutual funds) and hope that the market does well. When you diversify, you just put it it different holes in the ground to up your chances. Hmmm, up your chances sounds like gambling to me.

    This year, I stopped giving my money to some guy (IRA) who just turns it over to a billion dollar investment company and started investing in me first (my mind and my own knowledge) and started putting my money in places I knew were good. My IRA did about 15 percent (which is mutual funds). The results of me keeping stewardship over my money turned into about a 40 percent return.

  • 8. The Dilbert Guide to Pers&hellip  |  October 3rd, 2007 at 3:34 am

    [...] Dilbert Guide to Personal Finance Via FireVault: According to Adams, everything you need to know about financial planning boils down to these eight [...]


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