( 18 reviews )
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Posted: Aug 10 2009
This is the book for regular people who worry about money, never seem to be able to get on firm footing (no matter how many frugal tips they utilize), and can't understand how money has become such a huge focus in their lives. It's kinder and gentler than Dave Ramsey. The authors encourage folks to follow a balanced approach: 50% of income for necessities and legal obligations; 20% for savings; and 30% for wants. Unsecured, consumer debts are paid from the 20% savings, so you don't have to shop exclusively at thrift stores and eat Ramen Noodles until your balances are paid. (If 20% of your income just won't pay off your debt over time, the authors also address bankruptcy.) Once consumer debt is gone, and an emergency fund is built, the authors encourage putting 1/4 of that savings toward what I'd call 'big wants'. A summer home, a dream wedding, a fantasy vacation. This is very clever: (a) because you've been putting all that savings toward, well, saving, it's like getting something back, (b) saving becomes fun (c) it presupposes you will wait for the 2nd home, the dream wedding and the vacation until you can pay for them. Retaining 30% for fun accomplishes three goals. One, the worksheets and the amount of money allocated make you own up to the fact that $99/ month, unlimited everything, cell phone service (or cable, or gym membership, or hair care) is not a need, even if it is a monthly expense. Secondly, it makes for a budget folks can actually stay on for more than a few months. Finally, it cuts down on fights within the family; families can decide together if they want high-speed Internet more than they want to eat out. Kind of, here's the spending money, what do we want to spend it on? This is much nicer than "are you out of your mind, we can't afford that!" But keeping obligations and necessities to 50% is the heart and soul of the program. It not only frees up money for saving and for fun, it also ensures that you have a financial plan that can weather life's ups and downs. Imagine if you could get by indefinately if one spouse lost their job just by cutting out cable and other perks. The hard part (for me) was realizing I had over-committed myself in this area. Cutting back took more time than the book seemed to assume, because many of my obligations just had to run their course. This is the only issue I wish the authors had spent more time on. But I was still able to tweak their advice to fit my particular circumstance. There is a lot of other good advice in this book. The information is practical and addresses not only what to do, but how to do it. I only wish I had read this book before I started my very first job. It would be a valuable graduation present, and I plan to give 2 next year.
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Posted: Jun 4 2009
Wealth Odyssey: The Essential Road Map For Your Financial Journey Where Is It You Are Really Trying To Go With Money? All Your Worth is well worth the read. This is how to approach that yucky topic of budgeting, without the pain of senselessly tracking, in detail, everything you spend. Three simple categories sum up what you are trying to do. When you get those dialed in, that is essentially all there is to it. Of course, it is a little more than that; however, they do a good job explaining how to tweak the basic concept to your situation. What makes this work helpful is that you can do away with having to track detail. As they explain, yes pennies add up. Nevertheless, concentrating on the pennies diverts your attention from the dollars. If you don't have an overall strategic focus, then tracking all the detail is pointless to begin with. Once you have things managed on a grander scale, then you can use all the consumer money saving tips, coupons, etc to tweak out the pennies and enhance your finances even further. Trying to do this in the opposite direction, first saving pennies and then working out what to do with them never quite seems to work. The very reason they wrote about trying a different approach. This is a great work in that is approaches how to manage your finances from the big picture down, rather than trying to work up to your total budget by tracking every cent and then being exhausted so as not to finish the most important next step - what is it you're trying to accomplish with all your spending? A complementary work to help you understand how to avoid thinking errors when you deal with your money is Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics by Gary Belsky and Thomas Gilovich My book picks up where All Your Worth leaves off - what are you trying to accomplish with all your spending? More importantly how do you determine and measure what your spending really means to you and how do you sustain it when you are no longer working? What are the risks to your standard of living along the way as you journey through life? How do you know when you've arrived at any destination? All Your Worth is an essential first step, or an important next step if you feel you've fallen off the road, to get to where it is you are trying to go with your money.
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Posted: May 14 2009
Elizabeth Warren and Amelia Warren Tyagi cut through all the tedium with budgets, etc. and get right to the basics of managing your money. This was the easiest evaluation of our finances that we have ever done and the most useful. Yes, there is a worksheet to list all your absolute necessities, but I can assure you that by the time you fill out the form you will be eager to do so. The book is well written, easy to understand and NOT your run of the mill, "how to budget your household finances" book. No matter where you are with your finances, solvent or deep in debt, out of work, retired or raking it in, this book will help your get your personal wealth in order.
