Journalists are a dime a dozen

I know this blog is supposed to be about real estate investing. But sometimes I find something in print that drives me crazy. If you want to read an extremely poorly written article by a paid journalist, then go read this article at MSNBC. Then I'll explain why it's a shame that man pulls a paycheck.

Done reading? OK.

Let's look at this man's "findings" and discuss. First of all let's take a look at the purpose of the article. He's trying to compare costs and savings between single people and married couples. Sounds like a noble goal. But that's where he went wrong.

"We looked at the monthly expenses of three New York City households..."

Are you serious? He's comparing THREE people? Since when does three data points (only one per set) give you any sort of reasonable conclusion? I could do the same thing to make married people look good by comparing myself to Bill Gates. He's married.

Seriously though, the real crime in this article is that he makes a lot of conclusions from this extremely poor starting point. Like my college math teachers taught me "You can have the best proof in the world, but if your assumptions are wrong then it's just a waste of time." But let's continue to analyze his "findings".

"For example, only 9.3 percent of the couples' $14,200 monthly gross income goes for rent, compared with 23 percent of the single person's $7,500 monthly pay"

Remember that we're only comparing 1 married couple to 1 single person. We can look at this numbers really quick and determine that the single person pays $1725 a month for rent while the married couple pays $1320. Why is that? Does the single guy work in a pricier part of town? Does he have a 3 bedroom suite? Does the author really believe that, based on his "evidence", he can conclude that married people pay less rent (not spend a smaller percentage of their income but actually pay less rent) than singles? Do any of you actually believe that? Because his "facts" do.

"The married couple also gets some relief on both federal and Social Security taxes, thanks to the slightly lower tax rates associated with joint filing. They pay out a combined 29 percent of their salaries, compared with the 35 percent the single person pays"

According to this table from the IRS that is completely false. According to the IRS table, both of them would end up paying an effective income tax rate of about 21.7% (the married couple pays very slightly higher). Social Security taxes are a direct 6.2% on the first $90,000 regardless of whether or not you are married (unless you are self-employed).

Marriage can actually cost more during tax season if both partners work. If you look at the table I linked to above, if my fiance and I each make $120,000 a year (I wish) then we are each in the 28% tax bracket. If we get married and file jointly for $240,000 a year, we are well into the 33% tax bracket. Costing quite a bit more come tax day.

"Married couples tend to start saving for retirement early on, while singles generally wait until their 40s. So while wedding bells usually lead to a smoother path to retirement, they produce a more expensive month-to-month life — and they mean less free cash in your pocket."

There's actually two problems here. First the author claims that married couples tend to save more for retirement. Is this based on his highly scientific study of three households? Because he doesn't quote any other sources. If so, then this statement is blatantly misleading you.

But let's assume that he actually did some real research and found this out. He tries to convince us that because married people save more early on they have a more expensive month-to-month life? Since when does saving money lead to more expenses? His final conclusion "less free cash in your pocket" is correct, but just because the money you saved is inaccessble until you are 65 doesn't mean your life is more expensive. Your month-to-month expenses aren't directly affected. It's pure bull-crap.

"While there are plenty of renting couples and home-owning singles, married people account for 77 percent of all homeowners, according to the Center for Politics."

Finally a statistic with an credible source. To bad it's a worthless statistic. 77% of all homeowners are married seems to indicate that married people are more likely to buy a home. But that's what makes this so tricky, and very misleading.

What if I told you that 5% of all homeowners were plumbers? It would seem like not very many plumbers buy homes. But then what if I mentioned that only 1% of all adults were plumbers? Now we can actually take a look and realize that plumbers are far more likely to buy a house than any other adult.

"Add it all up, and Chestnut's married clients shell out practically all of their monthly income on living expenses, scraping to save anything beyond a retirement plan contribution. The single earner, by contrast, socks away more than $300 per month, nearly 5 percent of his or her pay."

Once again we are back to our three families, who can prove nothing on their own. But why stop with one error when you can print two? Not only is the data behind the statistic bad, but the statistic itself is misused. The single earner saves 5% of his income a month while the married couples can only save for retirement. What if the married couples putting 30% of their income into retirement funds? Who's the better saver now? Of course it couldalsos be that the married couple is saving very little, but their marriedneighborss (not included in this huge study) save a considerable amount.

"Once children enter the picture, married couples are really in financial trouble ... The total cost of camps, day care, books, toys and after-school programs? Try $4,000 a month."

Does anyone actually believe that this is normal? I mean at this point the article gets ridiculous.

In any case I think I've proved my point. Just because you read it in print doesn't mean the person who wrote it has a decent head on his/her shoulders. This article is a perfect example of what happens when some nitwit gets his hands on a very small set of data and decides that he can make broad conclusions from it.

and he gets paid to write... I ought to apply to be an author at MSNBC...

Think I'm wrong? Post your comments. If someone can somehow prove that this article is anything other than a embarrassment of journalism, I'll make a full retraction.


Anonymous said...

You're right, sometimes people who write articles for websites can just get out of control and write bad stuff. It happens a lot on blogs, but when it happens at a major news site like NBC it's really a shame.

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