Beards & Money

This is a silly little site about beards and money. I work hard to make you rich and furry!

Unlike the rest of the personal finance blogosphere, there are no ads and there is nothing to sell on this website. Nothing's about to pop up asking for your email, either. I'm an asshole, but I'm not that kind of asshole.

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It has been a while since I’ve posted anything on Beards and Money. Did I die? Maybe the alter ego Dr. Beard did a little, but the real life person behind the persona is still very much alive. Basically, Dr. Beard got disillusioned with the personal finance blogosphere. Personal finance blogs suck. The blog became a job, the rest of the blogs out there really suck, and the boring middle is a boring place to write about. In this post, I’ll tell you what happened to the blog, its future, and what I’m thinking about now-a-days. I’ll also detail how hubris leads us all to tumble from the sky.

Disequilibrium and why you suck at money

You suck at money. I know why and I know how to get your mind right so that you stop sucking at money. Get ready, because this is going to be a loooong post with fancy words for fancy people. We've already talked a bit about cognitive bias. Today, we learn about an entire theory of cognitive development that I will use to explain why you suck at money.

As some of you readers already know, my meat-space job involves science education. I'm kind of a big deal, too. I'm keynoting a big workshop on the subject in a few weeks and I'll be schmoozing at the residence of an American ambassador to a European country because of this gig.

When it comes to everyday people learning complicated new stuff, I know a little bit about what I'm talking about. Or, I can at least con some pretty smart people into thinking I do.

This may mean nothing to you if you're looking for a little money talk. However, stay with me. I'm about to drop the name of a dead psychologist that pioneered the field of human cognitive development, and I'm going to relate his breakthrough work to your money.

It will also be an excellent opportunity for me to look smart. Hold on a second while I slip into something a little more intellectual ...

You can't see the elbow patches on my sport coat, but I assure you that they are there.

That's better.

Now ... what do fancy-pants words like disequilibirum, schemata, and cognitive theory have to do with your money?


Welcome to Part II of the series I'm calling "Posts that make me look smart." Or, maybe we should call it "Posts that teach you fancy words that can help you look smart at a party." We're going to talk about Epistemological Resources and how a money expert uses them differently from your sucky money self.

Now, imagine yourself dropping the term Epistemological Resources at your next dinner party. Everyone will think you're some kind of brainy-pants. Or a self-important asshole. Either way, they'll think your something.

Previously, we looked at the smart-sounding concept of disequillibrium and how we, as humans, go about the process of learning new, more complicated stuff. In that post, I explained why you suck at money and the cognitive science that points in the direction of how to stop sucking at money.

Today, we'll look at the equally smart sounding idea of epistemological resources and how a money expert cognitively approaches ideas in a way that is fundamentally different from how you approach them.

Specifically, I'm going to tell you about the approaches people take towards what they "know" and the processes people go through to create new knowledge for themselves. We'll do this by looking at the research behind how experts solve problems and how "novices" solve problems.

And, since this is Beards & Money, we'll link these concepts to money and completely disregard the entire "beards" thing. If we're being honest, blogging about beards is hella boring while money is hella exciting.

Lease buy out? An exercise in Epistemic problem framing

I have an important financial decision to make soon, and I thought I would run it by the Beards & Money readers to make sure I'm not thinking stupid. The best way to avoid costly money mistakes is to convince others why before you buy. Basically, I need to figure out whether or not I should exercise the lease buy out for our fancy newer car.

Right now, the Beard family has two cars. A nearly new 2013 sedan with 22,000 miles and an older 2006 station wagony SUV-like sorta thing with 70,000 miles. The newer car is leased with the term expiring in September. The residual is $12,500. The older car is owned outright and is worth about $6,000 on the private market.

We have decided that we are going to become a one-car family, and we have to decide which car needs to go. At first, it seemed easy. Turn in the leased car to the dealer in September and that's that.

But, I'm on a roll with writing about this whole money expert thing. I've written about how the smart folks look at money issues from all kinds of directions, instead of getting stuck on one framing of the situation.

Ty at Get Rich Quick'ish recently discussed one practical application of expanding your problem framings when he questioned the bromide that paying off debt should be job number one.

It's my turn to give you a glimpse of my Ivory Tower secret decoder ring, and show you an honest-to-goodness problem that needs solving. My problem. And how I'm trying to think like a money expert by thinking about all the possible ways to frame the problem.

Should I buy out the lease for $12,500 and sell the older car, or just turn in the leased car and rock the paid-for older car?

Dunning-Kruger: Reading blogs doesn't make you smart

I keep telling you that I'm a dumbass. However, my ability to recognize that I don't know what the hell I'm talking about probably makes me more of an expert than most of the people on the internet. Basically, I know very little about investing money. Chances are, you know very little, too. That doesn't keep us from talking about it as if we did know what in the hell we were doing.

Today, I want to share with you the story of the "smart" student. This is a story about that student you know from one of your past classes that "knew" everything already, loudly trumpeted that "fact," and basically pissed everyone off while demonstrating a complete lack of mastery at every moment.

After this little story, I want to tell you how to be careful out there in the big bloggy world. Because the entire internet is made up of people that were once those students.

As a professional educator, I get to deal with these douche-bags every day. As a professional educator of educators, I also know a little about the psychology of these dudes' thinking. (By the way, they're almost always dudes, at least in the sciences. I don't know why, and that's not our topic. Women are probably just fundamentally smarter and less prone to wildly overestimating their own abilities for some reason.)

So, today we'll look at Dunning-Kruger, or what pop psychologist Venkatesh Rao calls the Tragicomic Exasperation of Expertise. I want to put you on the look-out for thinking you know enough to evaluate a complicated financial play. In fact, once you start feeling dumb again, you know you're on the path to enlightenment! Embrace your dumbness, because you'll avoid doing stupid shit.

I also want to take the opportunity to kick peer-to-peer lending while its down, and hopefully tie the current mess Lending Club finds itself in to the personal finance blog world, Dunning-Kruger, and that annoying kid you knew from high school. Why do personal finance bloggers keep pumping up investing opportunities like Lending Club, Prosper, and PeerStreet when their actual expertise lies in software development and riding bikes?

Buckle up, because it's going to be a wild ride.

BEING BROKE SUCKS: How LAck of access to capital increases stress

It’s been a loooong time since the Beard family has lived “paycheck-to-paycheck.” I’ve pretty much always maintained at least $5k in savings somewhere. There have been times when we faced a big expense that we weren’t quite prepared for, but we always at least had credit to cover those shortfalls. Basically, I’ve always had money or easy access to money, so I’ve never fretted over how to pay for my next meal. Until last week. Last week I faced my first real experience with being broke, and let me tell you: being broke sucks!