An *interesting* video started circulating on Twitter over the weekend. “Financial expert” Suze Orman is here to explain how money works. Let’s take a moment to soak up some of this expertise.
Assuming you have a handful of neurons in your skull that are more-or-less connected, you probably picked up on some holes in ol’ Suze’s advice. Within the first 25 second we learn that spending $1–3 a day comes out to “about $100 a month”. To evaluate this claim, I’m going to employ a highly technical bit of expertise, known as “basic arithmetic”.
- John buys a coffee every day.
- Each coffee costs between $1–3.
- How much does John spend on coffee every month?
Well, if we assume that the average amount John spends on coffee each day is $2, and there are 30 days in a month, John spends $60 on coffee. $60 is not “about” $100. If we assume by “$1 to $3 a day” she actually meant “$3 a day” we get to $93 dollars in a 31-day month, which is “about” $100. Still, she didn’t say “three dollars a day”, she said “one to three dollars a day”. Suze is doing some sketchy rounding.
While that is the most obviously idiotic part of the video, it is not the only idiotic part. Suze then explains that our $100 a month would turn into A MILLION DOLLARS after a mere forty years. All you need to do is invest your coffee cash in a Roth IRA at a 12% annual interest rate. Those of you who are not “financial experts” like Suze might not catch this, but a 12% annual interest rate is absurd. According to Nerdwallet, the best annual percentage yield available on a Roth IRA is 3.40% (at the time of publication). Maybe in Suze’s world of “financial expertise” I could access 12% rates, but for most of us this is not realistic.
Now, let’s pretend that we did get 12% annual interest (which we can’t) saved $100 a month (which we aren’t) that inflation doesn’t exist (which it does) and that and we didn’t need to pay any fees (which we will), how much are we actually going to have? This comes out to $920,509.70 after forty years. This is “about” one million dollars, (though Suze doesn’t actually say “about” when talking about our grand prize after a life without Starbucks, Dunkin’ Donuts, or McCafe).
This MILLION DOLLAR figure falls apart entirely once we stop using these fairytale numbers. With a 3.50% annual interest we are looking at $101,460.33 after 40 years. That’s right, Suze the finance whiz is off by about an order of magnitude.
Clearly Suze is fast-and-loose with her numbers, and had a bit too much expertise to drink over lunch. Still, how the fuck did this get made? The numbers are not just wrong, they are obviously wrong. Did no one at CNBC have a calculator? Or common sense? Surely there is someone who is editing this stuff?
Ah, that is where you are wrong. You see, you are assuming this is an accident. CNBC is actually pioneering a new approach to promoting their content. To understand, you need to know the history. Let’s go all the way back to more innocent times. Let’s go back to December 2018.
On December 21, 2018, CNBC released a seminal article titled “The budget breakdown of a 25-year-old who makes $100,000 a year and is excellent with money”. Rolls right off the tongue. As you might guess, it explains how one 25-year-old spends his money. The most infamous feature of the story was the following pie graph:
I. Have. Questions.
- Can someone please explain to me where to get a $40 cell phone plan, or a $20 internet plan?
- Spending $2,775 dollars per month means he is spending $33,300 per year, which is 1/3 of his total income for some odd reason. Where exactly is the other $66,700 going?
- Is “Donations” a euphemism for “Narcotics”?
The Twitter-sphere picked up on the story, to put it mildly.
Eighteen thousand comments. Almost one and a half thousand retweets. That is a piss-ton of engagement. Sure, most of the comments are wannabe socialists trying to be clever with cliché reaction gifs (myself included), but this tweet clearly got attention.
There are a few elements of these two stories that overlap. First, they are shaky with the facts. How does anyone say “$40 cell phone plan” with a straight face? In the article, they explains that the subject of the story is part of a family plan, and that “his part of the bill” comes out to $40 a month. I’m going to translate this to “his parent’s cover part of his cellphone bill”. NEWS FLASH: cell phone plans are more affordable when your parents pay for them.
The second commonality is how sharable they are. In the case of the 25-year-old unicorn, the majority of the story is covered with one infographic. In the case of the decaffeinated millionaire, we have an 85 second video. This type of content is custom made to fit into a tweet.
Finally, and perhaps most importantly, the content is designed to trigger millennials. Hearing about a 25-year-old that is magically making a hundred grand, has no student debt, and manages to give away over $7,000 a year to charity is sure to piss off millennials. The only thing that could piss them off more is a lecture about how much money they waste on coffee from someone who looks like their mom. There is some effort to smooth down the edges so these are not obvious attempts at trolling, there is just enough moralizing bullshit to frustrate thousands of people into quote retweeting the story with some sarcastic #HotTake.
It may seem thin to connect these two stories, and infer some dishonest motivation of CNBC. How is this a new approach to promoting content? Well, let’s take a look at a couple more examples. Do you remember the couple making $500,000 a year that felt average? If not, take a look at “Here’s a budget breakdown of a couple that makes $500,000 a year and still feels average” from March, 2019.
Let’s run the tests.
- Does this obviously misrepresent the state of affairs? Defining the $7,300 as the “left over” after putting $32,000 in 401ks, and spending $18,000 on three (THREE!!) vacations a year seems extremely loose.
- Is this extremely shareable? The entire story is a budget table.
- Does it trigger millennials? Reading that a family with a BMW, a Land Cruiser, and $1,500,000 home “feels average” is pretty rage-inducing.
Another fluke? Hmmm, not sure. How about we take a look at “This simple tipping trick could save you over $400 a year”. Here we get the revolutionary financial insight that if you tip less you save money. That’s right, a personal finance article that is functionally advocating that waiters and waitresses should be paid less.
How does this article stack up?
- Misrepresentation? It is straight-up scummy to frame “tip less” as a life hack.
- Share-ability? The video runs 2:07, which is perfect for embedding into Twitter.
- Does this annoy millennials? According to Data USA the mean age of waiters and waitresses is 29.9, so smack dab in the middle of the millennial demographic. This bozo is arguing that you or your friends deserve a pay cut.
It is hard to look at these articles as an honest mistake at this point. They do the same shit over-and-over again. Every time one of these bangers come out Twitter erupts into hysterics, and everyone rushes to see who can pull off the most epic quote-retweet takedown. The comments section scolds the journalists, accusing them of being incompetent or out-of-touch. If this “punishment” were actually an issue, you would think these journalists would try to make some effort to not repeat these mistakes.
Trolling for Tweets
So why is this happening? CNBC is supposed to be a serious media organization, but they keep on writing these personal financial columns that give shitty advice, and leads to the entirety of Twitter dunking on them for days. Ad buyers care about clicks and views, not quality or credibility, and these articles certainly draw clicks and views. Looking through the @CNBC timeline the average video gets between 10–100K views, with a few picking up 300–400K. Suze the “financial expert” brought in a whopping 1.4 million as of writing this. What about that douchebag who spent 2 minutes explaining how paying tipping is bad? Almost 4 million views. Their average tweet gets maybe a couple dozen likes, comments, or retweets, but each of the stories mentioned above generated thousands of engagements. Twitter pile-ons may look like a bad time, but they are actually great for business!
It is hard to tell if this formula was concocted on purpose or stumbled upon by accident. Was the 25 year old making $100,000 a year just a terrible article that happened to take off? Or was the plan always to turn CNBC’s financial advice into the Onion without the punch lines? I honestly can’t tell, but it doesn’t matter now, as these guys seem to have cracked the code on engagement.
While I admit that it is funny to watch all of Twitter hyperventilate as everyone climbs over one another to write the most stinging “Well, actually…” tweet, this form of journalism is harmful on the whole. Surely there is something better CNBC can do with its resources! Not only that, when moralizing self-help bullshit looks like a news website it erodes faith in the actual institution of the media. While news agencies from CNN to the Wall Street Journal do versions of this shtick when they host deliberately “provocative” articles from right-wing knuckleheads, CNBC’s personal finance page has innovated. They have found a way to turn banal personal finance journalism into a shit show! The best way to stop this crap from showing up in your timeline is to stop taking the bait. It seems like people are starting to figure this out, as each of these bouts of Twitter outrage subsides more quickly than the last, but many seem to fall for it every time. While you might feel clever retweeting with some snarky dunk, that is exactly what “they” want you to do. Just ignore it.