Archive for April, 2009
Barbaric Book Review: The Wealthy Barber
Posted by enrique s in Book & Product Reviews, Debt, Frugality, Money on April 29th, 2009
The Wealthy Barber by David Chilton was first published in 1991. It’s a basic financial guide, told in a narrative style, about three young people who seek financial advice from the town barber. Yes, you read that correctly, a barber.
The story follows a young teacher as he learns, along with his sister and a friend, the basics of saving, investing, wills, insurance, real estate, retirement, mortgages, and income tax. The lessons are given in one month increments, as the students visit the barber for haircuts. The culmination of their learning is that each one has started on the path of financial independence.
Chapter 1: The Financial Illiterate
The author admits that he failed a basic financial planning test from a magazine, and intends to seek his father’s advice.
Chapter 2: A Surprising Referral
His father recommends that he visit Roy at the barbershop for better advice than he can provide.
Chapter 3: The Wealthy Barber
The three friends visit Roy, the Wealthy Barber. They receive an introduction as to what awaits them.
Chapter 4: The Ten Percent Solution
Roy advises to pay yourself first, before you can spend it. Invest 10% of your income for long-term growth, in an equity mutual fund. The fund should be global, invested across many different industries. Use dollar cost averaging to mitigate risk. Don’t overlook the magic of compound interest.
Chapter 5: Will, Life Insurance, and Responsibility
The students are shown the problems of dying without a will, as the state will distribute your estate according to strict laws. Roy recommends seeing a good lawyer for the details on wills, living wills, revocable living trusts, and naming an executor. Wills should be kept up to date, and include a net worth statement to ensure that no assets are missed.
Roy insists on having adequate insurance coverage. Maintain the proper amount of life insurance for loved ones. Insurance is basically financial protection for your dependents, or income replacement insurance. Carry enough to offset inflation, and don’t forget future lump sum obligations such as college tuition. He recommends buying term insurance rather than whole life, and investing the difference in the premium cost. Make sure the insurance is renewable and convertible, and opt for non-participating insurance.
Chapter 6: Planning for Retirement
Roy tells the students not to count on Social Security to be anything more than a safety net, but to ask for a Personal Earnings and Benefit Estimate Statement. They should also consider rising medical costs, dependent parents, and inflation.
Pensions are becoming rarer, with inflation indexing rarer still. He recommends IRAs, but is split in regards to investing in mutual funds versus CDs. He recommends that whatever they choose, they should start investing now.
He cites the example of twins, at age 22, who take different investment paths: one twin invests $2,000 each year for 6 years and stops; the other doesn’t start until the 7th year, and invests $2,000/year for 37 years. At age 65, both would have the same amount:$1.2 million.
Roy also explains Keogh, SEP, 401K and 403(b) plans.
Chapter 7: Home, Sweet Home
Roy enlightens his students with his insights on home ownership:
- The reason most homeowners say that their house is the best investment they’ve ever made is because it’s usually the only investment they’ve ever made.
- Paying rent is not always throwing your money away.
- There are many tax-related benefits to owning a home, such as writing off property tax and mortgage interest, and the one-time capital gains exclusion.
- The interest saved by shortening the length of your mortgage.
He also cautions about the housing bubble, an eerie prediction from 1991 that applies to the 21st century:
“Over the last several years, a few factors have combined to cause the prices of houses in many areas to skyrocket…higher disposable income is being spent on housing…the baby-boom generation…is fueling an increase in the demand for housing. And…people are no longer averse to borrowing heavily…The consumer-debt rate is alarming.”
When he’s called a doom and gloom prophet, he responds:
“As long as they can service the debt, there is no problem. But two things can happen that can lead to an inability to carry that debt. One: rising interest rates…Everyone…is in debt up to their eyeballs…the mountain of debt will someday lead to higher interest rates…the second…Economic woes: layoffs, shutdowns, lower incomes…You remember how a recession works.”
Chapter 8: Saving Savvy
Roy gives some lessons on saving, such as:
- A dollar saved is two dollars earned - while a two-dollar raise often nets just over a dollar in disposable income, a two-dollar savings nets you…two dollars.
- Credit cards are antithetical to well-managed finances - credit cards are a destructive force that allow you to spend money too easily.
- Save up before purchasing an item - you’ll get more satisfaction from a purchase by knowing the discipline and sacrifice that went into saving for it.
Chapter 9: Insights into Investment and Income Tax
Roy talks about the courage to buy when others are selling. He again warns about the coming housing bubble:
“The halcyon days of guaranteed easy money in real estate are coming to an end.”
He also states that successful investors have an eye for value, and that you should do some research before making any investment decision. Roy also restates the tax-deferred benefits of retirement plans, mortgage interest, and property tax.
Chapter 10: Graduation
Roy addresses the need for emergency funds, but recommends only a few thousand dollars as a cushion. His reasoning is that most of your catastrophes are covered by insurance or a line of credit at your bank, reasoning obviously developed before the current credit squeeze.
College education can be funded by U.S. Savings Bonds, prepaid tuition plans, or an equity mutual fund for the long run. He also identifies grandparents as a source of college tuition.
He reiterates the importance of health and disability insurance, as one in four people have a chance of being disabled for a one-year period.
The chapter ends with the three students receiving diplomas.
Rating: 4 out of 5 barber poles
See links to more book reviews on the Barbarian Approved page.
Follow me on Twitter: CorpBarbarian
Print This Post
|
|
|
|
|
 |
Related Posts -
Your Weight is Costing You Money U.S. News & World Report shows us that our bodies are costing us more than ever. This equates to a "Unhealthiness Tax", based on our poor eating and exercise habits. I know taxes have increased on my Rocky Patels, and organic food isn't exactly cheap. It's enough to make me...... -
20 Blogs That Have Inspired Me h.koppdelaney I signed up for Darren Rowse's 31 Days to Build a Better Blog challenge, and today's assignment was to create a list post. Darren's site, Problogger, has provided me with great information that has helped me launch this blog. I decided to make a list of all of...... - Barbaric Links: Debt Edition I read a lot of good posts this week regarding debt. Here are some of my favorite posts on this topic: Kevin at No Debt Plan shares his frustrating lunch encounter; Credit Card Watch prepares to save money with 0% APR credit cards; FiveCentNickel hears ironic debt advice on his......
Related Websites - Renting a House Smart Move For Newlyweds I know a guy who just got married and has already started the obligatory house-hunt exercise with his new bride. He asked me about the timing of buying a house in the context of overall market conditions and I asked him if he was financially prepared for homeownership. "Not really,......
- Fair Tax? I must admit, this only recently came to my attention. The fair tax (not to be confused with the "flat tax") is a system that does away with income taxes completely, instead it taxes consumption at a 30% rate. Lower income households are "pre-bated" their projected sales taxes, so in......
-
When Applying for a Mortgage don't Forget to Calculate your Debt to Income Ratio A buddy of mine is attempting to buy his first home, and learned a very valuable lesson that no one learns about until they attempt to buy their first house. It is a lesson that most people do not think until their mortgage broker tells them the bad news.  I bet......
Low Budget
Circumstance has forced my hand,
To be a cut price person in a low budget land
- from Low Budget, by The Kinks, circa 1979
They say the more things change, the more they stay the same. I remember when that song came out; we were embroiled in controversy with a Middle Eastern country, faced with odd-and-even days of gasoline rationing and a stagnated economy. People were embracing Hamburger Helper, and the government was exerting its influence in the private sector.
Times are hard but we’ll all survive,
I just got to learn to economize
I started my adult life in the mid-1980s, and with the freedom came responsibility. I needed a way to track my expenses, and with my accounting background, I set up my first budget. It was a primitive affair, in an old journal with lots of columns. Eventually, I graduated to a computer-based spreadsheet.
Low budget sure keeps me on my toes,
I count every penny and I watch where it goes
I’ve used a weekly budget in an Excel spreadsheet since 1996, the year that I learned Excel. Prior to that, it was in Lotus 1-2-3. It’s just a simple tabulation, which lists my expenses by week. I created it initially to avoid overdraft fees on my checking account. Back when I started working, I had to watch my weekly cash flow. Some things haven’t changed much. I still watch it weekly, but just to stay on top of it.
Each year has it’s own tab, making it easy to compare expenses year-to-year. To add a year, I just copy the current year’s worksheet. I can do a pro-forma projection of next year’s expenses by factoring them off of this year’s actual expenses.
You can download a copy of the Excel file by clicking this link: Weekly Budget.xls
The file contains two tabs; a sample with some of the expenses filled in, and a blank tab for 2009.
I hope you find it helpful. Here are some budget-related links:
Kevin at No Debt Plan talks about free cash flow and your debt,
PaidTwice asks what’s in your emergency fund?
2million is managing his big ticket item spending
Jaimie at Bargaineering wonders if you need an adult allowance.
Follow me on Twitter: CorpBarbarian
Print This Post
|
|
|
|
|
|
|
Related Posts -
Pay Cash or Put it on the Plastic? Photo by Andres Rueda Whew! Now that Christmas is over, so is Christmas spending. Unlike most personal finance bloggers, we don't stick to a strict budget. We try to estimate our gift expenses based on the prior year, and factor it up by the amount of people we have...... -
Holiday Traditions Photo by *Sally M* We all have our favorite holiday traditions. I'll be celebrating one of them tonight, as my family will gather for the traditional Italian-American fish-themed Christmas Eve dinner. But, I've got several hours to kill before I gorge myself on bacalla and lunguine with clam sauce,...... - Corporate Barbarian Links: Backbreaking Work Edition There's nothing like a little hard physical labor to make me appreciate my desk job. I spent much of last weekend resetting the concrete pavers around my pool. Let's just say that my back ain't what it used to be. It gives me a new appreciation for what bricklayers put......
Related Websites - Saving (more) at the grocery store With gas prices now around $1.50/gallon in our area, most people should have a few extra dollars in their monthly budget. If you are careful, you can take advantage of the extra money and apply it to your debt and make some real progress in achieving your goal of becoming......
- How to prepare for a layoff Sometimes you just see the writing on the wall. Rumors are flying, reasonable budget requests are denied, and there are mysterious visitors to your company along with rah rah rah reassurance meetings. These are all signs that the company you work for might be in trouble, and a company in......
- Improve Budget System With Second Checking Account My wife and I have been struggling to adhere to our budget over the last few months. A number of personal crises have conspired to make sticking to each budget line item a tall order. I've been on the lookout for a less cumbersome budget process, while improving automation and......
SuperSlow Weight Lifting
Sitting at a computer for most of the day, I’m constantly fighting to keep my weight at a reasonable level. At the beginning of February, I started my yearly ritual of shedding the holiday pounds. I threw myself into the Metabolic Diet, and started lifting weights in the morning. I was making a dent in my weight loss, dropping 20 pounds in two months. I also increased my bench press and deadlift by 25 pounds, and I felt like I had made real progress.
Then, disaster struck: I hurt my wrist at the end of March. I tried resting it, which showed no improvement. So, I cranked it up, and started lifting again. Another mistake. I laid off the weights for a couple more weeks, but stuck to my diet. Then, I reached back for something from my past: the SuperSlow Method.
Originally developed as a rehabilitation protocol, the SuperSlow principle seeks to take velocity out of the exercise. Weights are lifted for a count of ten seconds, and lowered at the same count. The goal is to keep the muscle under tension for 100 seconds. This is accomplished in five repetitions, or reps. The weight used is one half of your one rep maximum.
For example, if my one rep max for the bench press is 250 pounds, I’d load only 125 pounds onto the bar. I’d unrack the barbell, and lower the weight for 10 seconds. Once I’d reach the bottom of the lift, at the count of ten, I would push the bar up for another count of ten. I’d repeat the sequence four more times, counting to 100 in the process. The slow speed gives you excellent control over your form, and minimizes any potential for injury.
I can happily report that I’m back to lifting weights again. Even though I’m using only half of the amount that I’d normally lift, I can tell that I’m making progress, all without taxing my wrist too much. It still hurts occasionally, but not to the degree that I can’t lift weights. I’d recommend trying SuperSlow, if not for rehab, then for a change of pace to your exercise regimen.
If you’re interested, check out these links:
SuperSlow website: SuperSlow Zone
Metabolic Diet website: MD+
Follow me on Twitter: CorpBarbarian
Print This Post
|
|
|
|
|
|
|
Related Posts - Goal Status: February in Review Another month bites the dust, so it's time for a goal update: 1. Drop 50 pounds After losing 14 pounds in January, my weight loss tailed off in February. I still lost 6 pounds, bringing my total to 20. Only 30 more to go. I'll blow this one away! 2.......
- Your Weight is Costing You Money U.S. News & World Report shows us that our bodies are costing us more than ever. This equates to a "Unhealthiness Tax", based on our poor eating and exercise habits. I know taxes have increased on my Rocky Patels, and organic food isn't exactly cheap. It's enough to make me......
-
I Don't Have Time for This! Photo by fdecomite "I don't have time for this!" That was a favorite line of one of my bosses. Whenever he felt overwhelmed by problems or demands, he would recite his tagline. I always wondered how he had the time to leave work early for a golf game, but......
Related Websites - Book Review: The Dorm Room Diet: The 8-Step Program for Creating a Healthy Lifestyle Plan That Really Works By Daphne Oz While everyone talks about the Freshman 15 and acknowledges that it is a problem, not many books have been written on the subject. Enter Daphne Oz, the daughter of the famous cardiologist, popularized on Oprah. Oz has some great advice to share for those looking to either beat the Freshman......
-
Benefits of Weight Lifting for Women Many people ask questions about weight lifting for women, because they are not sure about whether or not it is the right course of action for a woman that is looking to lose weight or to get healthy. Many people think that weight lifting for women is the same as...... -
Free Weights Vs. Machines /caption] Whether you are brand-new to strength training or you are trying to find a better solution, one of the most common questions is whether or not free weights are better than machines. While this can largely depend on your own personal preference as well as the results do you......
Barbaric Book Review: Die Broke by Stephen M. Pollan, Part 4
Posted by enrique s in Book & Product Reviews, Retirement on April 23rd, 2009
This is Part 4 of my review of Die Broke. You can read the first three parts of this series by clicking on the following links:
Die Broke, Part 1 - Quit Today
Die Broke, Part 3 - Don’t Retire
Step 4: Die Broke
Two Cornell University economists, Robert Avery and Michael Rendall, predicted that Baby Boomers would be the recipients of a $10 trillion transfer of wealth. While this looks good on paper, the authors dispute this claim, citing a number of factors. They believe that relying on this inheritance is bad for both your relationship with your parents, and for society in general.
Inheritance Obsession
Financial advisers have morphed into “inheritance counselors”. This wouldn’t be so bad, but it leads you to count your chickens before they’re hatched. Not only are you not guaranteed a large inheritance, but you’re not entitled to it, either. The obsession with inheritance , a bad relic of the past, is bad for society.
Inheritance isn’t an entitlement
The Reagan tax cuts of the 1980’s allowed couples to pass on $1.2 million of their estates tax free. By then, the contractual nature of inheritance shifted from taking care of a tangible asset, such as a farm, to intangible assets, like T Bills.
Pot of gold may be empty
By the time Baby Boomers realize any inheritance, it could be decimated by gifts made by their parents to charity or family. At the time of writing, about 25% of college tuition prepayments were made by grandparents. Studies show that rather than decrease, spending patterns rise. Rising health care costs may lead to a “million-dollar death”.
Patrimony is problematic
Inheritance is an inefficient way to pass on wealth, due to high estate taxes and family fights over the assets. Parents struggle to maintain an estate, usually at the expense of living a full life. Choosing a quality of death over a quality of life is soul killing - children must wait for someone to die in order to collect. Studies show that receivers of inheritances have an erosion of their work ethic. Inheritance is also bad for society, as the rich get richer.
Dying broke means living well
The old idea of inheritance was fine for a time when jobs were secure, real estate values climbed, credit cards were wonderful tools, and retirement was an idyllic reward. Those days are gone. Instead, assets should be treated as resources that:
- Can help your family now
- Allow you to enjoy your wealth with them while you’re alive
- Shouldn’t outlive you
- Should be prioritized to improve the way you live, not the way you die
A Program for Dying Broke
- Insure your streams of income - maintain term life insurance until you can cover potential losses through savings, and get a good disability insurance policy as early as you can
- Take your own pulse - maintain good major medical coverage, and look into long-term care insurance
- Take out some longevity insurance - annuities pay a predetermined income for the rest of your life, and although they may be irrevocable, you may be able to tap the principal at a reduced income
- Get paid to live in your house - reverse mortgages pay you as long as you live in the house, and the bank settles the loan at the time of your death
- Get a charity to pay you - charities offer products similar to annuities and reverse mortgages, and you get a tax deduction in the process. You may also get to attend a testimonial dinner in your honor!
- Start giving it away - there’s no limit to non-cash gifts, and the IRS allows a tax free gift of $10 thousand each year per person. If you apply it to your estate tax exclusion, you get the tax benefit, not your estate. Payments to educational or medical organizations are also tax exempt.
- Take out a whole death policy - get a small whole life policy to pay for your funeral and clean up your debts. This method is more efficient than prepaying for funerals. Spend every last penny that you’ve got.
Dying broke means:
- Abandoning impossible searches (secure, well-paying, fulfilling jobs)
- Forsaking counterproductive financial practices (going into debt and failing to save)
- Eliminating arbitrary deadlines (retirement at age 65)
- Giving up dreams of immortality (building and passing along estates)
- Dying broke is a more efficient use of your money.
My take on the Die Broke Plan:
- Done and done. I believe strongly in having insurance.
- No surprise here, either.
- I’ve got to do some reading up on annuities. I’ve got time though, as I’m still in my forties.
- Boy, this one’s going to be a hard sell, both to me and my family. I’m not quite sold on reverse mortgages. I’m still trying to poke holes in this one. I’ll probably revisit this topic in a future post.
- This might work. Again, I have to do more reading on the subject. More fodder for a future post.
- I believe in doing this. I can think of two cases in my own family that were on opposite ends of the spectrum, miserly and generous. I intend to help my loved ones while I can see them enjoy it, rather than have them slug it out in probate court.
- My mom did this with a term policy, but the proceeds weren’t enough to cover all of the expenses. Make sure the insurance is adequate.
Follow me on Twitter: CorpBarbarian
Print This Post
|
|
|
|
|
|
|
Related Posts -
Getting Rich in America Book Review and Summary, Part 3 This is Part 3 of my review and chapter summary of Getting Rich in America: 8 Simple Rules for Building a Fortune and a Satisfying Life by Dwight R. Lee and Richard B. McKenzie. You can read the first two parts of this review by clicking the following links: Getting...... -
Un-Broke on ABC Over at Consumerist, there's a video of Seth Green that will appear in the ABC show Un-Broke on Friday night. It's a take-off on MTV's Cribs, and shows Green as he takes us on a tour of his frugal crib. Here's the link at Funny or Die: Un-Broke: The Seth...... - The Week that Everything Broke I've had a rough week. Not because the transmission went on my car. Not because my computer was on the shelf for a few days while we worked out some spyware issues. It wasn't that my son broke a bracket on his braces, or that our whiz-bang forecasting system at......
Related Websites -
Long Term Care Insurance may be State Income Tax Deductibility I learned something yesterday that I figured I would share with my readers. Not sure how many of readers actually own Long Term Care Insurance but I learned something about yet another positive about it. Before getting into what I learned and want to share, a quick definition of long...... - Life Insurance and Retirement Before we bring you our normal first of the month article, please enjoy this five minute presentation that was aired earlier this year on MSNBC: And now, our regular installment... Life Insurance and Retirement Once you retire, will you have any need for life insurance? The answer to that question......
- Buying Life Insurance on a Child's Life Warning this post might be considered too morbid for some people. I had an interesting conversation the other week with one of the financial planners in my office that got me thinking. There was a client who was in the midst of buying life insurance on a young child (about......
Barbaric Links: Debt Edition
I read a lot of good posts this week regarding debt. Here are some of my favorite posts on this topic:
Kevin at No Debt Plan shares his frustrating lunch encounter;
Credit Card Watch prepares to save money with 0% APR credit cards;
FiveCentNickel hears ironic debt advice on his car radio;
Miserly Bastard at Yet Another Blog About Money thinks higher education is overrated;
Mr. Tough Money Love sheds light on a foolish financial blunder;
Follow me on Twitter: CorpBarbarian
Print This Post
|
|
|
|
|
|
|
Related Posts - 20 Blogs That Have Inspired Me h.koppdelaney I signed up for Darren Rowse's 31 Days to Build a Better Blog challenge, and today's assignment was to create a list post. Darren's site, Problogger, has provided me with great information that has helped me launch this blog. I decided to make a list of all of......
-
Best of Money Carnival #26 Photo by ishrona Welcome to the 26th edition of the Best of Money Carnival! This was my first-ever hosting experience, and I was blown away by all of the quality submissions. It was extremely tough whittling the list down to just 10; I could have easily picked twice that...... -
![[22.365] sphere-itize me, captain](http://www.corporatebarbarian.com/wp-content/uploads/2009/09/2550349404-150x150.jpg "[22.365] sphere-itize me, captain")
Pay Off Debt or Save Money? Photo by db*photography A recent Yahoo! Finance article weighed the benefits of paying off debt versus putting your money into savings. You can read the original article by clicking on the following link: Should You Pay Debt Before Saving? Clearly, there is no one-size-fits-all answer to the question. The......
Related Websites - Roundup for week of 4 August 2007: A&W Root Beer Edition Here are some great articles from blogs I check out:Blueprint for Financial Prosperity doesn't trust anyone either.Consumerism Commentary would take this penny for his thoughts.Five Cent Nickel wonders if online banking has come of age.Free Money Finance speaks on Rule 240.All Financial Matters discussed the eminently quotable Ben Stein.The Simple......
- Best Investment for 2009: Use your Emergency Fund to pay off your debt Just by writing this title, I already know that people won’t agree with this strategy. How can you tell people to get rid of their emergency fund while we are in one of the most important recessions ever? So please, keep reading until the end of the post, I......
- RCDL Weekly Roundup - Be Prepared to Get Stuffed Thanks for joining us here at RCDL for another weekly roundup. Hope your Thanksgiving dinners are full of good food, great friends, and lots of laughs. Some new categories are with us this week and some old ones. Easy to find and browse for your weekend reading pleasure. Retirement My......
Barbaric Book Review: Die Broke by Stephen M. Pollan, Part 3
Posted by enrique s in Book & Product Reviews on April 22nd, 2009
This is Part 3 of my review of Die Broke. You can read parts 1 and 2 by clicking on the following links:
Die Broke, Part 1 - Quit Today
Step 3: Don’t Retire
Don’t retire? I thought we should be planning for retirement from the time we start working. In Die Broke, retirement as we know it is portrayed as a fairly new concept, which has worked properly for one generation only.
Social Engineering?
The authors argue that retirement is a form of social engineering that was a byproduct of the Industrial Revolution. At the end of the 19th century, the demand for jobs shifted from rural to industrial, and older workers were encouraged to “make room” for their younger replacements. Pensions were bestowed upon workers aged 60 or better in an effort to increase efficiency. The New Deal created Social Security, where the benefits would be paid for by taxing the younger replacements. This tax wasn’t as great a burden as it is today, as the average life span was 63, and the retirement age was 65. This led to:
Enabling
Parents of Baby Boomers benefited from a real estate boom, as their children drove up home prices in a scarce market. Their living expenses were covered by pensions and Social Security, and their health care was covered by Medicare and Medigap policies. Everything fell into place, as evidenced by:
The Impossible Dream (for Baby Boomers at least)
The parents of Baby Boomers had retirement income from the following sources:
- Government assistance: 42%
- Personal wealth: 20%
- Pensions: 20%
- Current wages: 15%
- Other sources: 3%
What Boomers Can Expect
- Government Assistance - Boomers will get a lot less money, and receive it later
- Personal Wealth - Boomers will see a 34% income increase over their career, while their parents experience 524% growth
- Pension Income - The shift from pensions to 401K plans, where less than half of those eligible participate
- Wages - Boomers will have to work longer, and live on less
- Other Sources - Inheritance? Don’t count on it, as longevity increased health care costs may decimate any expected inheritance
A Fiction Built on Four Lies
- Age 65 is old - People are living longer, more healthy lives
- Leisure is more fulfilling than work - It’s nice to have a reason to get up each day
- Older people need to make room - With the workforce decreasing, the need for productive workers increases
- Younger worker = better worker - Older white-collar workers make fewer mistakes, have fewer absences, and an eye for efficiency
My Take
I’m years away from retirement, and I enjoy going to work. This may change as I get older, but I find that I need somewhere to go each Monday. Given the economic future that the authors have laid out for me, I may take a non-traditional retirement, and work part-time or even full-time. The advice is to move the finish line from age 65 to death, which allows for a greater period of investment in equities. The authors also advise us to keep an emergency fund, and have adequate health and disability insurance.
Part 4 of this review will cover the fourth and final step, called Die Broke.
Follow me on Twitter: CorpBarbarian
Print This Post
|
|
|
|
|
|
|
Related Posts - Barbaric Book Review: The Wealthy Barber The Wealthy Barber by David Chilton was first published in 1991. It's a basic financial guide, told in a narrative style, about three young people who seek financial advice from the town barber. Yes, you read that correctly, a barber. The story follows a young teacher as he learns, along......
-
Scotts EZ Seed Progress Update, Week Two It's been only 2 weeks since I reseeded part of my front lawn with Scotts EZ Seed, and I've got positive results to report: the grass is growing in well. See for yourself: It's still early in the game, and Scotts calls for 30 days until full results are achieved,...... -
5 Things to Know About Social Security Photo by alan(ator) Yahoo! Finance recently published a guide to the five most common questions about Social Security benefits. You can read the original article by clicking on the following link: What You Need to Know About Social Security Given all of the doubt that the entitlement program will......
Related Websites -
Book Review & Giveaway: 'Get Motivated!' By Tamara Lowe. This giveaway has ended.It's time for another book review and giveaway, and for those of you seeking a little motivation, this one might be for you. Get Motivated! by Tamara Lowe claims to be able to help you Overcome any obstacle, Achieve any goal, and Accelerate your success - and...... - Book Review: The Automatic Millionaire by David Bach OK, The Automatic Millionaire has been out for close to two years now and there is already a workbook companion for the original book. I like this book. Many others do too. Bach explains the methods in extremely simple terms and includes several calls to action to encourage readers......
- Essence of Perfume by Roja Dove Book Review This is a perfume book review for the book known as Essence of Perfume, which was written by Roja Dove. The Essence of Perfume was printed by Black Dog Publishing in London in 2008. It is a hardcover book that features 271 unique pages. The winter holidays are approaching quickly,......
Barbaric Book Review: Die Broke by Stephen M. Pollan, Part 2
Posted by enrique s in Book & Product Reviews, Frugality, Money on April 21st, 2009
This is Part 2 of my review of Die Broke. You can read Part 1 by following this link: Barbaric Book Review: Die Broke by Stephen M. Pollan
Step 2: Pay Cash
The authors feel that there are three things that will keep you trapped: an unwillingness to change, and your ATM and credit cards. These cards represent instant gratification, making it too easy to spend your money. In order to achieve the goals laid out in the book, you should make spending difficult and uncomfortable.
The argument is that ATM and credit cards take the pain out of spending. You don’t focus on the amount spent if you’re not counting out the cash. Online banking and automatic payments distance you even more from bill paying, and you may be charged for the convenience.
The authors offer a few suggestions for Saving and Spending in the Twenty-First Century:
- Melt Your Plastic - Remove all credit cards from your wallet, and replace them with a charge card for emergencies. Consolidate your debt on a low interest credit card, and put the card away.
- Bank with People - Remove the ATM card from your wallet also, and go to the bank once a week for cash. Withdraw the cash by writing yourself a check. Don’t spend any more than you’ve withdrawn.
- Practice Cognitive Spending - Keep track of where every dollar is spent on an index card, then categorize your expenses each week. This will get you to think about how you spend your money.
- Buy Your Second Home First - The real estate boom was an anomaly traceable to the baby boom generation driving up the prices for a limited number of homes. Don’t practice serial home ownership, but save for your dream home.
- Avoid “Everest” Buying - Don’t buy something “because it’s there.” Buy things only when you need them, not when you want them.
- Ignore the New - Don’t buy the latest gadget, but wait forsomething that answers a true need.
- Repair Before You Replace - Retailers profit more on new things than repairing old things, so focus on repairing what you have.
- Pay Yourself First - Put away what you can in your 401K, and do it automatically.
My Take:
- For people that have no self-control, this is the best advice. However, if you’re responsible, you can use credit cards to your advantage, such as rewards or zero-interest arbitrage, provided you pay off the balance each month.
- I’m disciplined enough that I don’t abuse my ATM card. I stick to my weekly budget. I rarely go to the bank.
- I track most large expenses, but our walking-around money doesn’t get analyzed. As long as we stay under our weekly allowance I’m happy.
- Well, we’re living in our first home, and probably will for the near future. We bought the home in part for the tax advantages, and have added on to it over time, paying cash for the improvements. We’ve also paid off our mortgage.
- I use a cooling-off period to counteract impulse buys. Can’t argue with that one.
- Or that one, either.
- I repair rather than replace if it makes sense. I’m not upgrading an old computer if I can buy a new one for the same price as the repair.
- We do this. The key is to automate it. Pretend you didn’t get that raise, and put that away, too.
In Part 3 of my review of Die Broke, we’ll examine the third step, called Don’t Retire.
Follow me on Twitter: CorpBarbarian
|
|
|
|
|
|
|
Related Posts -
Wal-Mart Check-Cashing Scheme I saw a TV commercial recently that portrayed a young couple, seemingly with dual incomes, raving about their ability to cash their paychecks at Wal-Mart. This was wrong on so many levels. My first thought was: Don't they have a bank account? My second thought was: If they do...... -
Dexter's Code for the Non-Sociopathic I'm a big fan of Dexter, the Showtime series about a serial killer. While he is a sociopath, Dexter does have a set of "commandments" set down by his adoptive father, Harry. The Code of Harry dictates who Dexter can kill, and keeps his urges under control: The Code...... -
Credit Card Interest: The Terminator Photo by southtyrolean "Listen, and understand. That terminator is out there. It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead." - Kyle Reese, from The Terminator Just replace "terminator"......
Related Websites - Is it really about how you pay? NCN wrote recently about How to Break the Credit Card Habit, and he said something I thought was really interesting: "I've heard it a thousand times -- 'If I have cash in my pocket, I'll just spend it.' That might be true, if you still have your credit card to......
-
Using Credit Cards to Make More Money When it comes to credit cards, most of us think of them as a way to get things we really want right now. We may not actually "need" these things, but we sure do want them. Whether it's a new couch, a new stereo or even a new wardrobe, we...... -
linklings, countdown now edition This week Bubelah and I have been furiously packing. You never know how much stuff you have until you try to organize it and put it in boxes. Another challenge is trying to decide whether or not to - for example - throw out an old bathroom mat. You'll......
Barbaric Book Review: Die Broke by Stephen M. Pollan, Part 1
Posted by enrique s in Book & Product Reviews, Career, Frugality, Money on April 20th, 2009
In Die Broke, Stephen M. Pollan and Mark Levine propose “a radical, four-part financial plan to restore your confidence, increase your net worth, and afford you the lifestyle of your dreams.” Hey, sign me up! The book, first published in 1997, attempts to poke holes in conventional financial and estate planning. Though published over ten years ago, the material seems rather timely, namely the authors’ assumption that real estate values will be stagnant, and excessive borrowing will lead to financial ruin. Let’s take a look at the four-part plan. We’ll start with the first step, called Quit Today.
Step One: Quit Today
The first step in the Die Broke philosophy is to realize that job security is dead. The authors want us to give up hope of following the outdated Career Ethic that created the loyal, organization man of our parents’ time. We shouldn’t be defined by our jobs, or seek self-fulfillment from our careers. We should separate ourselves from our jobs, to pay more attention to our own bottom lines as we do to our company’s. A job should be used to generate the money necessary for you to pursue your financial goals, and nothing more. The authors call this the Mercantile Ethic, and lay out these principles:
- It’s Just a Job - Forget about a holistic work life, and concentrate on actually having a life.
- Jump Ship - Quit in your head, as the only way to increase job satisfaction and/or income is to get another job. The more job hopping that you do, the more likely you’ll increase income. Always look for a new job.
- Short Term is the Only Term - Long-term benefits like pensions are worthless if you’re fired before becoming fully vested. Focus instead on short-term benefits that will improve your quality of life, such as health insurance, day care, parental leave, telecommuting, flex-time, and even health club memberships.
- Lateral is Better than Vertical - It’s better to take a lateral move that expands your skills than it is to take a position with greater responsibility. There’s probably no increase in pay, just the chance to be a scapegoat. Added skills make it easier to jump ship.
- Will This Be on the Test? - Learn exactly what’s expected of you and do it the best you can. Do your job well, then go home.
- Just Do It - Pay no attention to company politics. Who gets credit doesn’t matter.
- There Are No Dues - There’s no point in paying your dues, as jobs must make economic sense from day one.
- Show Me the Money - The only reward that matters is what you are paid. Everything other than money can come from the rest of your life. Your job is the only part of your life that will bring you money, so you need to maximize that.
My Take:
- Wow, and here I was following Maslow’s Hierarchy of Needs all these years. I’ve always looked for something else besides money from my job, whether it’s friendship, company softball games, golf outings, respect, etc.
- I tend to only look for a new job when I feel that I’ve stopped learning. I treat my job as a kind of paid schooling. Why leave if class isn’t over yet?
- I don’t know about you, but if I have to put in an extra year to become vested in a pension, I’m doing my best to try to stick around.
- I agree with this one, why take a promotion on a promise of greater income, when the company would have to hire someone from outside at the going rate.
- You should always know what your job responsibilities are, and they should be defined by your boss.
- It’s hard to ignore company politics if they affect you directly.
- I think you have to pay some dues when you join a new company. It’s just part of learning the job, and earning people’s respect.
- I guess the bottom line is the bottom line, though I do get more out of my job than just a paycheck.
We’ll take a look at Step 2, Pay Cash, in Part 2 of the Die Broke review.
Follow me on Twitter: CorpBarbarian
Print This Post
|
|
|
|
|
|
|
Related Posts - To Freelance, or Not to Freelance? CNNMoney had an article on the growth of freelance hiring. Freelance professionals now make up 26% of the workforce, up from 19% in 2006. "As the economy contracts, there are not only more people looking for new ways of earning money, there are also more companies looking to make their......
- Barbaric Book Review: Die Broke by Stephen M. Pollan, Part 4 This is Part 4 of my review of Die Broke. You can read the first three parts of this series by clicking on the following links: Die Broke, Part 1 - Quit Today Die Broke, Part 2 - Pay Cash Die Broke, Part 3 - Don't Retire Step 4: Die......
-
Corporate Barbarian Links: Chainsaw Massacre Edition Photo by lancefisher No, that's not me in the picture. But I did take the chainsaw out this week, and cleaned up the look of the website a bit. I got rid of the big, ugly ad in the sidebar, and reduced the amount of categories. Hopefully this will......
Related Websites -
What is your Credit Card Costing You? Most people do not put enough thought into how much their credit cards are really costing them. Sure, you may think that you are aware of all of the costs associated with credit, but there are also a number of fees and charges that can go completely unnoticed among consumers...... - Sunday Money Roundup - Not So Shiny New Car Edition. As I mentioned earlier this week, we just bought a brand new Subaru Forester...and the shine is already gone. Yes, our new immaculate car got some dirt on it and some footprints inside on the mats. It will never be as clean as the day we brought it home again...so......
-
How to Smell a Money Scam From a Mile Away Multilevel marketing scams and Pyramid schemes are nothing new. However, the speed at which these scams can spread is getting quicker and quicker because of the proliferation of the Internet. When you combine this fact with the state of the economy, it should be no surprise that scam artists are......
Barbaric Update: Switched My Theme to Fusion
I switched the theme to my blog to Fusion. I think it makes it easier to read. What do you think?
Follow me on Twitter: http://twitter.com/CorpBarbarian
Print This Post
|
|
|
|
|
|
|
Related Posts - Barbaric Links: Debt Edition I read a lot of good posts this week regarding debt. Here are some of my favorite posts on this topic: Kevin at No Debt Plan shares his frustrating lunch encounter; Credit Card Watch prepares to save money with 0% APR credit cards; FiveCentNickel hears ironic debt advice on his......
- 20 Blogs That Have Inspired Me h.koppdelaney I signed up for Darren Rowse's 31 Days to Build a Better Blog challenge, and today's assignment was to create a list post. Darren's site, Problogger, has provided me with great information that has helped me launch this blog. I decided to make a list of all of......
- Barbaric Book Review: Die Broke by Stephen M. Pollan, Part 3 This is Part 3 of my review of Die Broke. You can read parts 1 and 2 by clicking on the following links: Die Broke, Part 1 - Quit Today Die Broke, Part 2 - Pay Cash Step 3: Don't Retire Don't retire? I thought we should be planning for retirement......
Related Websites - Three Essential Windows Mobile Applications Suddenly, the mobile phone industry is inundated with operating systems: iPhone OS, Google Android, Palm WebOS, Symbian, Maemo, BlackBerry, Samsung Bada, and of course, Windows Mobile. Microsoft recently released WinMob 6.5, in a sign that the company has not yet called it quits and is willing to fight it out.......
-
The Downsides of Free Blogging Platforms for Corporate Blogging (Blogger, etc... focus on how posts may be deleted forever without warning, lack of professionalism, etc...) In a lot of different instances when it comes to blogging, making use of a free blogging platform can really come in handy. If you are writing a personal blog or a blog that...... - Support my Charity in the Final Four Thanks to your support, my post made it out of the Elite 8 and into the Final Four. This means that my favorite charity - Saddle-up - will receive a donation from Free Money Finance. Now I am going for more but I need your help - again. To vote......
Barbaric Links - The Yankees Win Edition
Ah, the Yankees’ first win at the new stadium, and this barbarian is very happy! Looks like the ghosts found their way across 161st street after all. I hope they can put together two in a row. Here are some worthwhile personal finance links to check out from the past week:
- Blunt Money thinks you should prepare for a dramatic drop in income
- Steve at Brip Blap offers advice on how to have no debt
- Rebekeh begins her journey out of debt at Blogging Away Debt
- Jim at Bargaineering offers this last minute tax tip
- Learn 3 motivation tips to build passive income from Passive Family Income
- Kevin at No Debt Plan talks about the costs associated with waiting for the right job
Have a great weekend!
Print This Post
|
|
|
|
|
|
|
Related Posts -
Corporate Barbarian Links: Boston Massacre Edition Another big Yankees-Red Sox series this weekend, and the Yanks started out in first place this time! What a difference a couple of months makes (This is where all of the Red Sox fans unsubscribe ;-) ). Nothing wrong with a little friendly rivalry. Look, I even included a...... - 20 Blogs That Have Inspired Me h.koppdelaney I signed up for Darren Rowse's 31 Days to Build a Better Blog challenge, and today's assignment was to create a list post. Darren's site, Problogger, has provided me with great information that has helped me launch this blog. I decided to make a list of all of......
-
Corporate Barbarian Links: Corporate Re-Org Edition tcp909 My company is going through yet another reorganization in order to "rightsize" and position itself better in the marketplace. Can layoffs be far behind? Well, I don't worry about layoffs, as I 've alluded to in the past. On a cheerier note, here are some good posts that......
Related Websites -
How to Have Fun While Saving Money I ran across an article on MSN Money called, "Entertainment for when you're broke". I found some of the tips interesting and useful. I wished I knew about the Spamalot prices when we went up to New York City this summer. I wouldn't have minded shelling out $37 for a...... - Money Quote Friday - Bargains You Don't Need Edition. "A bargain is something you can't use at a price you can't resist." - Franklin Jones I love that quote. And I would also add "and cannot use" to it as well. Have a great weekend everyone! Oh, and if you are a subscriber, then you can see the secret......
- Online Marketing Package Of Ecofriendly Webhosting & Two-Tier Affiliate Programs Two months ago, Profit Tree 101 introduced a new service to compliment it's incredible system of helping work at home mums, dads and bloggers to make money online and work frm home social networking, blogging and writing articles for two-tier affiliate programs promoting eco-friendly webhosting, eco-adventure holidays and discounted wholesale......
-
You are currently browsing the archives for April, 2009
