While not all of the advice should be discarded is it really worth paying for the same ideology that Madoff investors all their money? Probably not. And should CNN really be promoting it now? You can answer that for yourself. Well, they are, in an article titled Putting your financial house in order illustrates how Madoff ideology can make you rich. Lets take a look -
So before you can build your future, you have to make sure you're not weighed down by the past. You've got to get out of debt, because you need all your resources focused on going forward.
Not all debt is bad, however. Most homeowners, for example, have a mortgage. A mortgage means you can live in your house even though the bank, and not you, owns part of it.
A mortgage gives you tax benefits as well. And a mortgage gives you the luxury of not having to pay for your house all at once; so you can take the money you would have had to pay and invest it for a higher rate of return than the rate of interest you're paying on your mortgage.
Say your mortgage costs you $600 a month. Take another $50 a month and save it. That's $600 a year.
If you invested that $600 over 30 years, the life of the typical mortgage, at an annual compound rate of 10 percent, you'd have $113,966.27. At the same time, you'd be living in the house and, most likely, watching its value grow over time. So, it's pretty clear that a mortgage is a good kind of debt to have, as long as you can comfortably afford the payments.
Notice how the 10% is portrayed as a sure thing. From $600 to $113,966.27 with that magical compounding 10% interest that Madoff followers fell for.
Delivering 20 percent every year for 30 years would have been too hard to believe (and pay out) while 5 percent would have sent most people searching for more elsewhere. Returning 10 to 12 percent year after year was a stroke of genius: it was within the realm of possibility, if just barely.
Within the realm of possibility - but barely. But Velshi and CNN are advising people to find Madoff type of investments rather than paying off a property. See if you did get that 5% or less it definitely would be wise to pay off a mortgage at the rate of 5.5%, 7.5% or more.
The good advice from the article - the creative and innovative idea to "pay off your credit card debt now."
So we have decided to give CNN and Velshi our first honorary Madoff award for promoting ideologies that screw people out of their own money. Because with Madoff magic we can all turn $600 into $113, 966.27 all while paying off our mortgages! Yeah!