Book Review: The 10 Commandments of Money

Financial writer Liz Weston’s new book, The 10 Commandments of Money, is jam-packed with research and advice that’s written in a friendly, conversational tone.

Some writers talk about finance in a way that comes off as either overly simplistic or overly complex.

Not Liz. She’s the rare writer who remains engaging and approachable, even when talking about insurance.

(By the way, her book convinced me to talk to my parents about their long-term care coverage. … Did you know a semi-private nursing home costs more than $72,000 a year? Yikes!)

In her book, she compares “Old-School” rules, “Bubble Economy” rules and “New Rules.” For example:

Old-School Rule: Pay off the mortgage as quickly as possible.
Bubble Economy Rule: Buy as much house as you can. Keep trading up!
New Rule: Buy less house than you can afford. Pay for remodels with cash. Don’t move too often.

Old-School Rule: College degrees aren’t necessary to get ahead.
Bubble Economy Rule: Borrow as much as you can. Your education is worth it.
New Rule: Get at least a 2-year or 4-year degree but pursue it at a reasonable price.

Old-School Rule: Save for a rainy day.
Bubble Economy Rule: Borrow to the max!
New Rule: Be prepared with both cash reserves and quick access to credit.

Old-School Rule: The husband is in charge of money.
Bubble Economy Rule: Don’t worry about money as long as it keeps coming in.
New Rule: Both spouses should agree on big-picture goals, though one spouse might oversee day-to-day management.

Liz writes an easy-to-grasp, written-for-the-average-person book that’s dense with information. Her book is rooted in statistics and facts, which form the basis for her well-reasoned advice.

Her book isn’t centered on either frugality or investing, although it touches on those topics. Her book is all-around, general personal money management, and it has equal appeal to both the penny-pincher and the investor trying to protect his assets.

Should I Read It?

This Book is For You If: You want a sensible, comprehensive primer on personal money management.

This Book is NOT For You If: You want to delve into one particular niche topic like stock investing, debt, college savings, etc., or if you want to read a narrative storyline.

Check out more reviews of The 10 Commandments of Money.

Check out a complete list of my finance book and movie reviews.

Book Review: Wrecked by Jeff Goins

Wrecked by Jeff Goins

I recently read Wrecked, the new release published by an incredibly popular and articulate blogger named Jeff Goins.

Wrecked is different from most books I read: it’s not about money, travel, business or real estate. It’s about broader, less tangible concepts: life, compassion and pushing outside your comfort zone.

Getting “wrecked,” in Jeff’s words, means pushing yourself so far outside the boundaries of comfort that your sheltered worldview is permanently shaken. His book tells stories of people who have become “wrecked” visiting developing nations or spending time in homeless encampments.

“Inside was an encampment of six souls and all their possessions,” he says, describing his foray into a hidden valley deep under the bowels of Nashville. “Cans, bottles and mud-caked clothes littered the camp … I took a step and heard the crinkle of plastic bags and garbage underfoot, and I knew I was out of my element.”

That’s exactly what this book is about: forcing yourself to burst out of your element.

And that’s a crucial lesson.

Afford Anything is devoted to helping our tribe lead a more kick-awesome life. And to truly live your dreams, you MUST break free from your comfort zone.

Sometimes, you’ll need to quit your job — because deep down, in your gut, you know that it’s the right thing to do.

Sometimes, you’ll move to another country, where you don’t speak a word of the language. Or you’ll move to another city, where you don’t know a soul.

Sometimes, you’ll decide to change majors, or break off a terrible relationship, or pursue some career that everyone else calls a pie-in-the-sky dream.

At those moments, you’ll need courage.

And courage is like a muscle: The more you “Get Wrecked,” the more you’ll be able to flex your wrecking-ball muscles again.

Should I Read It?

Jeff’s book has sailed to the top of the charts – within a week of its release, it hit bestseller lists on both the Amazon and Barnes & Noble websites. It holds positive reviews from big-name bloggers and writers like Chris Guillebeau, Michael Hyatt and Carrie Wilkerson.

In other words: I’m not the only person who thinks this book is awesome.

Now, I should take a moment to let you know: This is a Christian book. Decide for yourself whether or not you want to read it. (I personally feel comfortable reading all types of books: secular, Jewish, Christian, Buddhist, etc. — but I know that not everyone feels the same way.)

Unsure of whether or not you’ll like the book? Read Jeff’s blog, Goins, Writer. That should give you an idea of whether or not your like his writing and themes. (That’s how I discovered this book.)

This Book Is For You If: You want to read stories of people who pushed themselves into uncomfortable situations. You want those stories to be interspersed with thoughts about purpose, helping others, and other related concepts. You like the idea of reading a religious book.

This Book Is NOT For You If: You want to read a how-to / instruction book. You want pure narrative storytelling from start to finish. You prefer books that don’t discuss God.

Check out more reviews of Wrecked: When a Broken World Slams into Your Comfortable Life

Thanks to Andrea_44 for today’s photo.

The Trust, by Norb Vonnegut – Book Review

I’ve stumbled upon a new genre: “financial thrillers.”

Like all thrillers, this genre tells stories of murder, bribery, drug cartels and international scandal. But the hero is a stockbroker.

Book Review - The Trust by Norb Vonnegut

Yes, a Wall Street stockbroker. Sound like an unlikely hero? Meet Grove O’Rourke.

Grove O’Rourke, the hero of The Trust by Norb Vonnegut, is yanked into an international scandal after one of his wealthy clients mysteriously dies onboard his yacht alone at night.

The client’s last will and testament asks O’Rourke to become a trustee to the family’s $150 million foundation. The clients’ wife and daughter are the only two other trustees; O’Rourke holds the tiebreaking vote.

O’Rourke’s first act as trustee is to – against his better judgment – acquiesce to a Catholic priest who beseeches him wire $25 million to the Philippines on behalf of a children’s charity.

O’Rourke launches his due diligence after wiring the funds. His discoveries terrify him. He may have aided an international crime ring.

“Five to 10,” he tells the client’s wife at one point.

“Percent?” she asks.

“Years,” he replies.

Turns out, the federal penitentiary is the least of his worries. O’Rourke asks too many questions to the wrong people. He finds himself entangled in the same web of treachery, scandal and lies that led to his former client’s murder … and may lead to his own demise …

Norb Vonnegut, an ex-Morgan Stanley broker with a Harvard MBA, penned the first financial thriller that found its way across my desk.

The book is gripping. The New York Times calls Vonnegut a “seriously underappreciated author,” and I agree wholeheartedly.

His attention to detail is uncanny. Listen to this page-one description of O’Rourke crouching under his desk, nose near the commercial-grade carpet below:

“At this level, I could smell the trace odors from chemicals. Cleaning solvents had washed out the steel-blue fibers but not the soy sauce.”

I read it the first half of this book on a flight. I felt disappointed when the plane landed; I wanted to board the return flight so I could finish the book. Like any good thriller, it became more twisted, with more surprise revelations, near the end. When I turned the final page, I thought: I want more stories from this author.

Fortunately, he’s written two other financial thrillers. Trust me, I’ll be reading those.

This Book is For You IF: You want to escape into fiction, you like mystery, crime and intrigue, and you find the Wall Street backdrop fascinating.

This Book is NOT For You If: You want to stick to reading non-fiction books that impart knowledge, and/or you have zero interest in tales of sleuthing and murder.

Read more reviews of The Trust by Norb Vonnegut.

Check out a complete list of finance book and movie reviews here.

Book Review: The Retirement Maze

The Retirement Maze

I retired at age 24. Kinda.

I voluntarily choose not to work for two-and-a-half years, from age 24 to 26, while I traveled the globe.

This was a two-year mini-retirement, something I sprinkle throughout my life.

But during those two-and-a-half years globetrotting, I experienced something unexpected: boredom.

The first few months were like a honeymoon, brimming with excitement and euphoria. After that, I grew restless.

I’d stand at the base of an ancient temple in Burma and think, “Now what?” I’d fly to a pristine beach in Indonesia and think, “Is this all there is?”

My physical self would sit on a tropical beach in Malaysia while my mind daydreamed about the contributions I’d make when I rejoined society: I’d launch a website! I’d write a book! I’d start a company!

I’m not complaining; I loved those two years and I’d travel again in a heartbeat. But finding purpose and direction OUTSIDE of a traditional career or childrearing requires incredible mental strength.

So I was immediately intrigued when I saw this book teaser, promoting a new book called The Retirement Maze:

“If you were to ask our opinion about retirement, the answer might surprise you: ‘Be careful what you ask for.’ Retirement is a full-time job: it demands constant attention and a great deal of effort to do it well. If you’re not up to the challenge, stay at work.”

“I know exactly what they mean,” I thought. “I have to read this book.”

“I Am Nobody.”

One of the book’s authors, Rob Pascale, thought he loved to paint. He imagined devoting his retirement years to art.

But after he retired, he discovered he didn’t enjoy painting as much as he thought. Painting had been a distraction from work-related pressures. Without those pressures, his interest in art waned.

His life took on a sense of drifting, without purpose or direction. He started feeling bored, anxious and, ironically, stressed.

“At some point, I had to come to terms with the fact that I am nobody,” he said. “Whatever I accomplished before had no relevance to my life going forward.”

Sweating the Small Stuff

When Anne, an education administrator, was busy balancing work and family, she didn’t have time to let the “small stuff” bother her. Her brain was jam-packed with schedules, emails, conference calls, and memos.

Once she retired, though, she had plenty of mental space to wallow in minor irritations.

“The smallest issue could become a major tragedy – like a broken fingernail … I had no time for the small issues when I was working; now, unstructured time allows you to waste time on insignificant issues.”

She also found herself squandering time more:

“The five-minute breakfast that I used to eat became the two-hour coffee break. I was up at 7:00, but by the time I looked at the clock, it was 10:30. How could that be? Time flies when you’re not doing anything.

As Anne learned firsthand, retirement can lead to boredom, irritation, and inefficiency.

Data, I Want Data

Still not convinced that retirement can be psychologically troublesome? Consider these facts reported in the book:

* Only 47 percent of retirees achieved the retirement goals they set at the start of their retirement. The majority, 53 percent, did not.

Retirement Maze - Book Review

* Non-retirees spend about 30 hours per month with friends. Retirees spend an average of only 17 hours per month with friends.

* A 2009 study found that retirees who move to a scenic area with warmer climate reported less happiness than expected. Retirees who moved to areas with greater access to medical care reported higher happiness levels. Maybe practicality wins the day?

* If you MUST retire, it may be better to wait until you’re older. Among people who retire between the ages of 45 to 59, only 37 percent report feeling satisfied with retirement six years into it. In contrast, 57 percent of those who retired in their 60’s or later say they’re satisfied.

* Twenty-nine percent of people who retired between age 45 to 59 take antidepressants, and roughly half of those (44 percent) started taking antidepressants after their retirement. Only 17 percent of people who retired in their 60’s or later take antidepressants.

Should I Read It

Most people – especially those who read Afford Anything — know they need to financially prepare for retirement (or for their mid-career mini-retirement).

But that’s only one piece of the puzzle. Retirement demands tremendous mental, emotional and spiritual preparation.

This book helps readers grapple with the psychological factors that can disrupt your retirement (or your mini-retirement). The first two sections explain the mental/emotional risks and dangers. The final section offers pointers on how to steel your mind for it.

The book also discusses how stay-at-home spouses cope with the retiree being home all day. (Hint: not well.)

This Book Is For You If: You’re interested in an academic and research-driven analysis of the psychological and emotional factors surrounding retirement.

This Book Is NOT For You If: You want to focus on the financial-planning aspects of retirement.

Important note: This book is written in academic-speak. The authors, for instance, say “subjective well-being” instead of saying “happiness.” ONLY read this book if you can jive with that.

Check out more reviews of The Retirement Maze: What You Should Know Before and After You Retire.

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Book Review: What the Dog Saw

Check out a complete list of my book and movie reviews here.

What the Dog Saw by Malcolm Gladwell

I’ll read any book that Malcolm Gladwell writes. His first three books, The Tipping Point, Blink and Outliers, were pure genius – bundled with insight and quirkiness, wrapped into engaging narrative.

This week I read his latest book, What the Dog Saw: And Other Adventures. (I say “latest,” although it was actually released in 2009.) What the Dog Saw isn’t a “book” at all, but rather a collection of his articles published in the New Yorker magazine. It’s a collection of short stories, with no central narrative arc.

In classic Gladwell form, each chapter uses an obscure topic to shed light on a broader problem. He explains why recruiting public school teachers is similar to recruiting NFL quarterbacks. He describes the fierce competition among ketchup brands. He discusses hair dye, serial killers, and Citizen Kane.

His book is divided into three parts. The first section’s stories are character-driven. In this section, Gladwell doesn’t simply write stories about Wall Street hedge fund managers; he writes about the life of Nassim Taleb, the fund manager whose investing ideas are courageous in a way few could understand.

He tells Taleb’s story with such color, such care, you feel as though you’re at the scene. Take this passage, for instance:

“When the (restaurant) check came, it was given to a man who worked in risk management at a big Wall Street bank, and he stared at it for a long time, with a slight mixture of perplexity and amusement, as if he could not remember what it was like to deal with a mathematical problem of such banality.”

The second section deals with ideas, theories and new perspectives on old problems. He devotes a chapter to exploring the different forms of failure among high performers. Some choke. Some panic. What’s the difference? It’s more than semantics. Gladwell explains.

CezanneThe final section, though, is my favorite. This section also deals with human stories, stories of intelligence and talent and success, but it tells those stories in a way that’s a little less character-driven, a little more blended into lessons we can extrapolate and apply to our lives.

One story, for example, explores the difference between genius that shows early in a person’s career – such as Mozart composing Piano Concerto No. 9 at age 21, or T.S. Eliot penning his epic poem at age 23 — and genius that emerges late in a person’s career, like the genius illustrated by the French artist Paul Cezanne, who didn’t land his first solo exhibition until age 56.

What triggers the difference between early genius and late-blooming genius, Gladwell asks? And what prevents budding geniuses like Cezanne from throwing up their hands in disgust and proclaiming, “Forget it! I’m going into blacksmithing!”?

In the final section, Gladwell suggests a few answers.

Should I Read It?

This Book is For You If: You want entertaining narrative storytelling, with doses of learning. This is edu-tainment at it’s finest.

This Book is NOT For You If: You want straight-up information, facts, knowledge or how-to. This book is storytelling first, learning second.

Check out more reviews of What the Dog Saw: And Other Adventures by Malcolm Gladwell, or read any of his other books (I’ve read and loved all three): The Tipping Point, Blink and Outliers.

Thanks to Walkadog and Cea for today’s photos.

Book Review: How Rich People Think

Check out a complete list of book and movie reviews here.

How Rich People Think

I became interested in Steve Siebold’s new book, How Rich People Think, as soon as I heard its name. Books about what to DO to become wealthy are commonplace, but books about how to THINK about wealth are both rare and critically important.

Perhaps that’s why some of the best books about wealth ever written – like Think and Grow Rich and The Richest Man in Babylon – center around how rich people think, not the nitty-gritty of what they do.

Siebold’s book is structured as 100 short chapters, each about two pages long, which makes it easy to read in small bites. You don’t need to read it in a linear fashion; feel free to skip around.

So how do rich people think? Here are some of Siebold’s examples:

The middle class sees money through the eyes of emotion. The world class sees money through the eyes of logic.

“Most people never accumulate much money due to a series of self-limiting beliefs … fueled by negative emotion.”

The middle class plays it safe. The world class takes calculated risks.

“One group stays awake worrying about losing what they have, while the other can’t sleep because they’re dreaming of what’s possible.”

The middle class believes building wealth is a solitary effort. The world class believes it’s a team effort.

“The average person … (is) paid for the result of their individual effort … The rich see themselves as team leaders.”

The middle class believes ambition is a sin. The world class believes ambition is a virtue.

“Remove the profit motive from the equation, and you take away the incentive for world-class thinkers to direct their mental energy towards (solving) major challenges in society … the average person knows this, but labeling the rich as sinners … absolves them from having to make the effort to become wealthy.”

The middle class believes they must choose between a great family life or being rich. The world class knows you can have it all.

“Figure out how to be more efficient with your time, so you have plenty to spend.”

The middle class sets their financial expectations low so they’re never disappointed. The world class sets their financial expectations high so they’re always excited.

“No one would ever strike it rich and live their dreams without huge expectations. Ancient wisdom says you get what you expect.”

Should I Read It?

Afford Anything readers already know these ideas. You know that aspiring to be wealthy is a virtue. You know that you should set huge expectations, and reach for them again and again, until you get them. If you didn’t know that, you wouldn’t be reading this site.

But unless you’re very fortunate, you’ll encounter people daily who question those beliefs. People will tell you that you’re crazy for doing what you do, for taking the calculated risks that you take, and for holding the values that you have.

This book, in my opinion, can serve as reminder during those tough times. It can help you stick to your ideals when the people around you question or criticize your decisions and goals.

This Book is For You If: You want a big-picture reminder about developing a wealthy worldview.
This Book is NOT For You If: You’re looking for specific, how-to instructions about executing a course of action (e.g., “How to start a business” or “How to invest in real estate.”)

Check out more reviews of How Rich People Think here.

The 5 Lessons a Millionaire Taught Me

blog 119 copy

The 5 Lessons a Millionaire Taught MeWhen Richard Evans was a little boy, his father fell down a stairwell, shattering the bones in both of his legs. The injury left his dad unable to work for a year, forcing Richard’s parents to sell their home and squeeze their family of 10 – two adults, eight children — into a three-bedroom rental.

Richard vowed to become wealthy during that tough year. He wanted to give his children the financial security that he never had.

He didn’t know it at the time, but he had just taken the first of five steps towards wealth. The first step is the simple act of choosing to be wealthy. Believe it’s possible; commit to making it happen.

Evans’ book, The Five Lessons a Millionaire Taught Me, describes the steps that lead to wealth:

#1: Decide to Be Wealthy
“A dentist friend once told me: ‘Those who don’t think about their teeth (early in life) are those who later in life spend the most time thinking about them.’ It’s no different with money.”

… “the people I know who are the most obsessed with money are not millionaires … (they) are the ones who are living paycheck to paycheck” …

“To be in great fiscal health is very much like being in great physical health: it allows you to do more and be more, and it permits you to live your life free of constant pain and bondage.”

#2: Take Responsibility for Your Money
This step involves knowing three things:

  • Know how much money you have. What’s your net worth?
  • Know where your money comes from. Track every tip, bonus, and interest payment. Record the small amounts that normally slip through your fingers, like checks you get for your birthday, dividends from your index funds, and money you get from rewards credit cards.
  • Know where your money is going. Your car, for example, doesn’t just cost the sticker price; it also costs insurance, repairs and registration fees.

#3: Keep a Portion of Everything You Earn
He recommends keeping a minimum of 10 percent of your regular paycheck, plus 90 to 100 percent of your side income.

#4: Win in the Margins
“The most money I’ve made in my lifetime was on a side project,” he said. “(But) it wasn’t my first venture. It was my fourteenth.” In other words, keep your day job, but always look for ways to earn more on the side.

#5: Give Back
Generosity feeds the soul. Give financially to good causes that have a proven track record of properly handing money. In addition, teach others the principals of becoming wealthy. It’s through teaching that we learn.

Should I Read This Book?

This is a quick read, with less than 100 pages of large font. I finished the book in one sitting.

The lessons are basic, and they’re designed to be inspirational / motivational rather than informative. In other words, this book is designed to get a financial novice excited about the possibilities that lay ahead.

This Book is For You If: You want to give a gift to someone who isn’t interested in money. This is a motivational book for beginners.

This Book is NOT For You If: The intended reader is an “advanced student” of money or is looking for specific, actionable information, such as how to set up a Roth IRA or diversify a portfolio.

The 5 Lessons a Millionaire Taught Me is only $5.98 on Amazon, with free shipping. Check it out!

Book Review: Built to Last by Jim Collins

Built to Last by Jim Collins

A few weeks ago I reviewed Good to Great by Jim Collins, which I thought was one of the top books I’ve read this year. Inspired by my love for Collins’ work, I decided to pick up another classic from the same author, a book called Built to Last.

Built to Last is a rigorous analysis of “visionary companies” – industry leaders that maintain dominance for 100 or more years, across multiple generations and product cycles. Collins uses this book to explain WHY some companies endure throughout the ages, while others that have the same shot in life – same industry, same size – falter and fade away.

The answer can be summarized simply: visionary companies revolve around a purpose.

A purpose is different from a business strategy. A strategy can be summed up as “we make X products for Y consumers.” Walt Disney, for example, could have said “we make cartoons for kids.” That describes what the company does, at least for now. But that doesn’t describe the core of why the company exists.

A purpose, by contrast, demands an enduring vision that will last for hundreds of years, based on principals that never become outdated. Disney’s mission, for example, is “to use our imagination to bring happiness to millions.”

The Paradox of Purpose

Perhaps this all sounds like fluff to you. “That’s great in theory,” you might be thinking, “but a company has to make money.”

That’s true. Great companies reject the myth that you either make money or have a clear conscience. They embrace the paradox that you can live by your values AND create profits.

Pharmaceutical company Merck, for example, poured hundreds of thousands of dollars into creating a medicine called Mectizan. This revolutionary drug cured people in the developing world from parasitic worms that invade their eyes, causing horrific and painful blindness.

Merck developed the drug with the hope that governments or nonprofits would buy and distribute the medicine.

When no buyer stepped up to the plate, Merck decided to distribute the medicine for free. It even poured additional tens of thousands of dollars into making sure the medicine reached the patients who needed it most.

Merck chose this route because it’s the right thing to do AND because it keeps their hardworking research team motivated.

“Failure to go forward could have demoralized Merck scientists – scientists working for a company that explicitly viewed itself as ‘in the business of preserving and improving human life,’” Collins says.

In other words, the company had an altruistic reason AND a self-interested reason, and those two reasons were compatible.

When you help others, you also help yourself.

Purpose Over Profit

If purpose and profit come into conflict, visionary companies put purpose first. The companies that stand the test of time are the ones that focus less on short-term profits and more on long-term mission.

These companies need to create profits to sustain themselves, but profit is not their reason for living. “Profit is like oxygen, food, water and blood for the body,” Collins says. “They are not the point of life, but without them, there is no life.”

In contrast, the historic “control group” – companies in the same industries and eras that eventually fizzed – focused more on profit and less on principal. They cut corners with their customers, dissatisfied their staff, and churned out mediocre products. Their quarterly reports looked great for a few years, but eventually they lost momentum.

More MythBusting

Built to Last refutes the myth that you need a brilliant idea to start a brilliant company.

When Masaru Ibuka started Sony in war-ravaged 1945 Japan, he wanted to create a company. He had no idea what this company would sell. He tried his hand at selling lots of things, from sweet bean-paste soup to rice cookers, before he settled on electronics.

His central mission wasn’t to schlep VCR’s, it was — in his own words – “to establish a place of work where engineers can feel the joy of technological innovation.”

Companies that are too wedded to a particular product run the risk of being unable to adapt when that product becomes obsolete – and sooner or later, almost all products WILL become obsolete.

Similarly, companies too dependent on a charismatic leader run the risk of being unable to cope when that leader passes away. The best leaders, Collins found, are obsessively preoccupied with succession planning, with establishing the processes that will enable the company to thrive long after they’re gone.

It’s Not Just Companies …

Collins illustrates how these lessons are applicable to every organization, from a two-person startup to a parent-teacher association.

“Visionary companies come in many packages: large and small, public and private, high profile and reclusive, stand-alone companies and subsidiaries,” he says. It also comes in the form of non-profit organizations like the American Cancer Society, community and neighborhood groups, and religious institutions.

He even likens it to the birth of the United States. The founding fathers didn’t concern themselves with procedures and policies, he says. They didn’t obsess over the new country’s economic engine. Those details would come later.

First and foremost, they laid down a set of principals upon which their risky experiment, this new nation, would be based. The fine print would come later. ‘We the People’ came first.

Should You Read This?

I would not have written a 1,000-word description of this book if I didn’t love it.

This Book is For You If: You want an engaging, reader-friendly description of the fundamentals upon which visionary companies are based, and you want those lessons to be based on careful, rigorous analysis.

This Book is NOT For You If: If you weren’t a huge fan of Good to Great, you probably won’t like this book, either. Both books have the same format: a list of shared traits, heaps of case studies, and an understanding of the paradoxes that form their worldview.

Built to Last is currently selling for $7 used on Amazon. Check it out today.

Thanks to Fivaz for today’s photo.