Why Does Dave Ramsey Want To Stop You From Saving Money?

If the most popular personal finance personality in the United States had a chance to save Americans billions of dollars a year, would he? Apparently not.

On Monday, Dave Ramsey came out against a rule being reviewed by the Obama administration that would require financial advisors to act in the best interest of their clients who are saving for retirement. The fiduciary rule, as it is known, was proposed last year and would apply to 401(K)s and Individual Retirement Accounts (IRAs). 

Ramsey -- a personal finance guru who has written six New York Times bestsellers and has a talk-radio show that draws over 8 million listeners, behind only Rush Limbaugh and Sean Hannity -- said in a tweet that the rule would keep a wide swath of the population from getting personal investing advice. 

This Obama rule will kill the Middle Class and below ability to access personal advice. https://t.co/Eym2Jq5CUP

— Dave Ramsey (@DaveRamsey) February 22, 2016

Current law allows financial advisors to work on commission when they advise savers about retirement accounts. Advisors are also allowed to earn money from mutual fund companies for steering clients to specific funds, even if those funds are not in the client’s best interest.

Such conflicted advice costs retirement savers $17 billion a year in poor investment performance and unnecessary fees, according to a White House estimate. Financial research firm Morningstar puts the cost to retirement savers slightly higher, at $19 billion.

The finance industry has continually argued that the fiduciary rule would restrict access to information from advisors and raise costs for customers. But it's important to remember that the only advice the rule would restrict is potentially conflicted advice. In addition, the advisor of a commission account has an incentive to push the client to buy and sell often, which often drives up the cost for the saver -- the fiduciary rule would restrict advisors from telling clients to buy just to generate commissions.

So why is Dave Ramsey, who preaches a financial code based on cost-cutting and ethical behavior, standing up for a business model that costs Americans billions of dollars a year? 

It might be because he makes money steering his listeners and readers to a network of financial advisors, called endorsed local providers, who can work on commission, said Helaine Olen, a personal finance author who writes an advice column for Slate.

“Ramsey’s entire business model is that he claims you can get 12 percent returns in the market, and he has a network of endorsed local providers who pay him for referrals,” Olen told The Huffington Post. 

Since Ramsey doesn’t disclose his company’s financial details, it’s hard to know exactly how much money is at stake for him, but Olen thinks the fiduciary rule might take a toll on Ramsey's referral business, and it certainly will not be good for endorsed providers who work on commission. 

Ramsey's office did not respond to requests for comment.

While Olen notes that “not everyone who works on commission is doing something with bad intent,” the current system has created a "standard where everybody is on their own and people have to figure out if they are getting advice that is in their best interest. And that’s sort of absurd, right?”

In the past, Ramsey has used his syndicated advice column to tell followers to quit jobs that require them to sell financial products they don’t believe in. A reader once asked if she should keep a part-time job that required her to push credit cards on customers. (Ramsey abhors debt and the questioner shared that view.) 

Ramsey’s advice: Quit, “for the sake of your own integrity.”

CORRECTION: An earlier version of this story incorrectly said Ramsey's radio show airs weekly. It airs five days a week.

What Bill Gates Got Wrong About Green Energy

Bill Gates on Tuesday called for "new inventions" in energy storage to make generating power from solar and wind more economical.

In a blog post accompanying his annual letter, the Microsoft founder said storing energy in lithium-ion batteries for use when the sun has set or the air is still costs triple the average kilowatt-hour of electricity in the United States.

"This is why we need new inventions that improve our ability to store energy cheaply and efficiently," Gates wrote. "Getting them will make it even easier for solar and wind to be a big part of our zero-carbon future." 

He explained:

This figure is based on the capital cost of a lithium-ion battery amortized over the useful life of the battery. For example, a battery that costs $150 per kilowatt-hour of capacity with a life cycle of 500 charges would, over its lifetime, cost $150 / 500, or $0.30 per kilowatt-hour.

So if a consumer tried to store enough electricity in this lithium-ion battery to run her house, she would be paying at least $0.30 per kilowatt-hour for the battery.

According to the EIA, the average price of electricity for consumers in the United States is around $0.10 per kilowatt-hour. The European Union, where prices average 20 cents per kilowatt-hour, and India, where they range from 2 to 15 cents, would see similarly dramatic increases.

The problem is twofold. The way electricity is priced in the United States provides poor incentives for storing excess solar and wind energy, and batteries are expensive. 

Electricity is more expensive during the day, when solar panels generate energy, and cheaper at night. Utility companies will buy consumers' excess solar generated during peak hours and recirculate it into the power grid, then sell it back at a cheaper night rate, when solar panels aren’t producing energy.

Therefore, there's little incentive for people to use solar-storage batteries that hang onto energy during the day if they could be selling it at peak prices to the utility companies and buying it back later on the cheap.

That remains a problem in most states.

But Gates is wrong to harp on the high costs of energy storage technology, according to Matt Roberts, executive director of the trade group Energy Storage Association.

"There's sort of this perception that costs need to come down for something to happen," Roberts told The Huffington Post by phone on Tuesday. "This cost focus is a bit of a red herring. What we need to see out there is more value focus."

For businesses, the long-term benefits are clear. The historic climate accord reached in Paris last year provides a framework for building a low-carbon economy, and it signals to companies that renewable energy will be a smart investment right now, even if the tangible benefits won't show for another few years. 

The costs of storing energy are likely to decrease by 50 percent in the next five years, according to Roberts. That makes sense. Electric automaker Tesla, which released two storage batteries last year, is building a $5 billion manufacturing plant in Nevada called the Gigafactory, which at its peak is projected to produce more lithium-ion batteries in a day than were produced in the entire world in 2013. 

Roberts said Gates would better serve the renewable energy movement by highlighting the positive outlook for energy storage instead of noting obstacles that are already in decline. 

"Those costs are still coming down," he said. "But the big thing that unlocks this is value." 

Here's A Devious Way To Get Workers To Exercise

Corporate wellness programs seem like a no-brainer in theory. In order to get employees to exercise more, companies can just pay them to reach a certain number of steps walked or calories burned. Right?

Not quite, suggests a new study by researchers at the University of Pennsylvania. Rather than rewarding employees with cash or perks for achieving a fitness goal, employers might consider first giving out money and then gradually taking it away from those who fail to reach their goals. 

The idea of losing money for not exercising may help motivate workers, according to the study, published earlier this week in the Annals of Internal Medicine.

“We know that people are irrational, and that they respond more to loss than gains,” Mitesh Patel, one of the researchers, told HuffPost. “People want to avoid the feeling of losing something they feel they already have. That can be very motivating."                                                              

The researchers enlisted a group of 281 slightly overweight adults and instructed them to walk 7,000 steps a day. One group of participants was paid $1.40 each day they hit the goal; another was entered into a lottery to win $5 or $50 if they completed the 7,000 steps; a third group received $42 at the beginning of the month, with $1.40 deducted each day the goal was not achieved. A control group received only feedback on their exercise and no money.

The monetary incentives were offered for 13 weeks. During that time, the group whose money could be taken away actually performed better than the others -- which surprised the researchers. They also didn't expect to see such similar results between the people who got paid to exercise and the ones who didn't get paid at all. 

Participants in the penalization group hit the 7,000 steps on 45 percent of the days. Those who had the possibility of a reward achieved it just 35 percent of the time, and those in the lottery group did so 36 percent of the time. The people who only got feedback hit the goal on 30 percent of the days.

As an interesting note, the participants in the loss incentive group never actually earned the $42 upfront. The researchers paid everyone with a check at the end of the month. The money used during the study was all deducted from an imaginary account, proving that just the psychological fear of losing money is pretty strong. 

The researchers hope that the data will help companies develop more effective ways of getting their employees to exercise. Standard wellness programs usually take the reward approach, like offering to supplement gym memberships or giving prizes for reaching weight or blood pressure goals. But if penalizing employees makes them a little more eager to work out, why not try that?

“If we’re going to use incentives, we should think about how it’s designed and incorporate behavioral economics,” Patel said.

Nearly half of U.S. companies have adopted wellness programs, many of which hinge on outcome-based goals like losing weight or decreasing cholesterol levels. Their actual effectiveness is contested: Some studies argue that they don’t significantly improve health.

Not to mention, when employers start emphasizing the need for workers to take better care of themselves, some worry that the burden of the health care costs get shifted onto those who are less healthy and that the programs will violate employee privacy. In 2014, CVS was sued by one of its employees for allegedly making her disclose her weight and sexual activity under a health screening program or pay $600 a year if she declined.

And while incentivizing workers to get healthy has good intentions, the fundamental message that a company conveys should be that it’s encouraging a culture of healthy behavior. No one wants to be overworked, stressed and, on top of all that, penalized for not having taken enough steps in one day. That’s pretty discouraging -- and won’t solve problems either.

Even Conservatives Think The U.S. Is Failing On Day Care Support

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Child care is expensive. It's not just "drinking a latte every day" expensive, but "the landlord just doubled the rent" expensive.

A report recently released from the right-leaning American Enterprise Institute looks at how child care assistance in the United States serves parents who work odd hours and who who are likely to be considered low-income. It turns out that the system fails those parents more than most.

The report finds that "the existing government child care assistance program needs to offer more variety in type of child care, as well as more flexibility for nonstandard schedule workers, especially when the child is older than age one." Toddlers, the study finds, are even less likely than infants to be enrolled in day care when parents are working odd hours. 

Just how much does child care cost families? Here's an excerpt from the report:

According to data from the US Census Bureau, average weekly child care costs for families with a child under 5 were $179 in 2011, or $9,236 annually (Laughlin, 2013). Even among families in poverty, child care expenses averaged almost $100 per week in 2011 (for those who had expenses), or $5,160 annually, accounting for 30 percent of their household budget (Laughlin, 2013).

According to the U.S. Census Bureau, families in poverty spend four times more for child care, as a percentage of their income, than the average American family. For some of those poor families, that's because they aren't getting any help, even when they qualify. 

There is a government subsidy for child care, for which anyone is eligible if he or she has a kid under 13 (or 19 in certain cases) and qualifies as low income. However, in order to use the subsidy, the child has to be enrolled in a center that accepts government benefits. Most of those day care centers have standard hours and are open from the early morning to mid-evening. (Here is a sample of available centers that take government benefits in Brooklyn.) Day care just isn't an option if a low-income parent has a retail or food-service job that schedules him or her for a shift ending after 6 p.m., or if that job has irregular schedules and makes changes on short notice. 

The way the benefit works, states get grant money from the federal government through the Child Care and Development Fund (CCDF), and then portion it out to various providers. Formal providers are more likely to get funding than more informal, flexible arrangements -- say, a neighbor or other family member takes care of a few children while their parents are at work.

The moderately good news is that the government knows this is a blindspot. A memo from Nov. 6 published on the Department of Health and Human Services' website specifically discusses the need for more robust funding for family child care, both for assistance and training.

Of course, a memo doesn't much help those parents who need help today.

These People Got Way Too Aggressive On Black Friday

If it's worth waking up for at 3 a.m., it's apparently also worth waking up for at 3 a.m. and then punching someone in the face. 

Welcome to Black Friday, the annual tradition where bargain-crazed shoppers gather at big box stores and reenact scenes from Lord of the Flies.

At a Walmart in El Paso, Texas, bystander Adolfo E. Arzaga captured a chaotic scene as a scrum of shoppers scuffled over discounted flat-screen TVs:

In Springfield, Virginia, a college student waiting in line at a Best Buy told Fox 5 that he was attacked by a woman who tried to save a spot at the front of the line by leaving a chair there, then returning hours later.

“She was angry, and I was telling her, ‘No, you’re not getting in the front of the line. I’ve been here since 12 [p.m.],'” the student, Ahmad Shukrey told the outlet. “And she proceeds to attack me with the chair, pushing into my friend, knocking me over and twisting my ankle.”'

Steven Boone, another man in line, told the station the woman "refused to calm down" and ended up getting arrested.

Lady cut Blk Fri line @BestBuy, assaults cust & police, gets arrested. Officer very professional. @fairfaxpolice pic.twitter.com/fag1pcPTU2

— Al Luna (@AlLunajr) November 26, 2015

Not to be outdone, shoppers at the Alexandria Mall in Alexandria, Louisiana, were treated to the sound of gunfire Thursday night after a fight in the mall parking lot escalated, reports the Town Talk. One person was injured.

Police said afterward that the "dispute [appeared] unrelated to shopping or mall operations."

Real estate search site Estately crunched the numbers last week and came up with the top 10 states most likely to see fights over Black Friday deals. Be careful out there, discount shoppers.

Map of which states are most likely to have #BlackFriday sale fights https://t.co/OmY6z9Z1Zu pic.twitter.com/YaQRk0SGrx

— Estately (@estately) November 23, 2015

Also on HuffPost:

The Case For A Meat Tax

A lot of the talk around fighting climate change is focused on big business and the auto industry. But what about meat? 

The livestock sector generates nearly 15 percent of the world's greenhouse gas emissions, according to a 2013 report by the United Nations Food and Agriculture Organization. That footprint is roughly equivalent to the one created by cars, planes, trains and boats combined: Transportation produces around 14 percent of global emissions.

Though public awareness of the environmental effects of meat and dairy consumption is relatively lower, a new report suggests that people are willing to adopt financial incentives, like a meat tax, that would encourage them to shift their diets away from those items.

Researchers at Chatham House, a London-based policy institute, surveyed people across 12 countries and focus groups in Brazil, China, the United Kingdom and the United States, and found that many would welcome a food charge if it helped alleviate high emissions levels -- though concerns about costs and alternatives to meat remain.

The report cautions that consumer knowledge alone won't be enough to cut back on these emissions. The push will have to come from government policy and business coalitions, including retailers and producers in the food supply chain.

"You only see the impact on consumer behavior when you put additional incentives," said Antony Froggatt, a senior research fellow at the institute who co-authored the study. A meat tax, in addition to helping curb emissions, could also benefit people's health and generate tax revenue.

Less visibility might explain why people are more attuned to the environmental impact of their cars, for example, than their meals. Refilling a gas tank over a lifetime reinforces the connection between a driver and gas pollutants, while most people's initial reaction to emissions resulting from food is centered on packaging, not the consumption itself, Froggatt said.

Participants in focus groups reported limited access to meat alternatives, which also tend be more expensive. "There's concern about prices and the impact on poorer people," Froggatt said. Unless alternatives are easily available, something like a meat tax would be "detrimental," he added.

The researchers say that stores and schools could lead the way in raising awareness of these foods. Offering fruit and vegetables at the front of a supermarket, for example, could significantly boost shoppers' likelihood of selecting something other than meat or dairy. The government could also provide subsidies for plant-based foods to support low-income households.

With the COP21 climate talks set to begin in Paris next week, many expect the participating countries to reach a global agreement about curbing carbon emissions. Some of the world's biggest polluters, including the U.S. and India, have already made reduction commitments for 2020.

But a deal on meat consumption is unlikely to be on the table. As of last month, only 21 of the national proposals include commitments to reducing livestock emissions.

"This is very low on the policy agenda," Froggatt said. "But part of the discussion will be what do we do next, and how do we increase our ambition. We hope diet is given greater consideration. Attention placed on the food sector is overdue."

The Case For A Meat Tax

A lot of the talk around fighting climate change is focused on big business and the auto industry. But what about meat? 

The livestock sector generates nearly 15 percent of the world's greenhouse gas emissions, according to a 2013 report by the United Nations Food and Agriculture Organization. That footprint is roughly equivalent to the one created by cars, planes, trains and boats combined: Transportation produces around 14 percent of global emissions.

Though public awareness of the environmental effects of meat and dairy consumption is relatively lower, a new report suggests that people are willing to adopt financial incentives, like a meat tax, that would encourage them to shift their diets away from those items.

Researchers at Chatham House, a London-based policy institute, surveyed people across 12 countries and focus groups in Brazil, China, the United Kingdom and the United States, and found that many would welcome a food charge if it helped alleviate high emissions levels -- though concerns about costs and alternatives to meat remain.

The report cautions that consumer knowledge alone won't be enough to cut back on these emissions. The push will have to come from government policy and business coalitions, including retailers and producers in the food supply chain.

"You only see the impact on consumer behavior when you put additional incentives," said Antony Froggatt, a senior research fellow at the institute who co-authored the study. A meat tax, in addition to helping curb emissions, could also benefit people's health and generate tax revenue.

Less visibility might explain why people are more attuned to the environmental impact of their cars, for example, than their meals. Refilling a gas tank over a lifetime reinforces the connection between a driver and gas pollutants, while most people's initial reaction to emissions resulting from food is centered on packaging, not the consumption itself, Froggatt said.

Participants in focus groups reported limited access to meat alternatives, which also tend be more expensive. "There's concern about prices and the impact on poorer people," Froggatt said. Unless alternatives are easily available, something like a meat tax would be "detrimental," he added.

The researchers say that stores and schools could lead the way in raising awareness of these foods. Offering fruit and vegetables at the front of a supermarket, for example, could significantly boost shoppers' likelihood of selecting something other than meat or dairy. The government could also provide subsidies for plant-based foods to support low-income households.

With the COP21 climate talks set to begin in Paris next week, many expect the participating countries to reach a global agreement about curbing carbon emissions. Some of the world's biggest polluters, including the U.S. and India, have already made reduction commitments for 2020.

But a deal on meat consumption is unlikely to be on the table. As of last month, only 21 of the national proposals include commitments to reducing livestock emissions.

"This is very low on the policy agenda," Froggatt said. "But part of the discussion will be what do we do next, and how do we increase our ambition. We hope diet is given greater consideration. Attention placed on the food sector is overdue."