Debt is Slavery: and 9 Other Things I Wish My Dad Had Taught Me About Money, by Michael Mihalik. This book is short, to the point, and packed with lots of great advice. I’ve read it three times and I would put this in my top five personal finance books, possibly at number one. I think for someone just getting started with figuring out their debt and finances this is probably the first book to read. It’s short enough to get through very quickly and find some immediate advice and inspiration to get your finances under control.

The book offers this definition of slavery: “The state of being bound in servitude as an instrument of labor” [pg. 23]. Do you ever wake up in the morning and not want to go to work that day? Do you go anyway? Do you go because you really love your job that much or do you go because you owe money to someone (probably many people) and even though you may have a choice of how you’ll earn your money, ultimately you have no choice but to go to work and get that money. Lately, I’ve been dreading Monday mornings as early as Saturday night. I feel trapped and bound to this service by my debts.

“Too many people hate their jobs but are afraid to leave, because they wouldn’t be able to pay their mortgage, credit card bills, car loans, or boat loans. Debt can turn a free, happy person into a bitter human being. Debt can turn you into a slave.” [pg 25].

It’s possible for debt to be good, but debt is still slavery. A mortgage can usually be thought of as good debt, but you still must make sure you can afford the mortgage you are signing up for.

“The word ‘mortgage’ is derived from the Latin word ‘mort,’ which means ‘death’, and the Germanic word ‘gage’, which means ‘pledge’. So ‘mortgage’ means ‘death pledge’. What does that tell you?” [pg 30]

When we spend money, we are really trading our time for the things we buy. We make this even worse when we go into debt to buy things. We are now committing our time in the future to work to earn money to pay for the things we bought in the past. This becomes even more painful if you don’t like your job.

‘Stuff’ ads busywork and stress to our lives. So much stuff we buy we don’t even need. Eliminating unwanted stuff from our lives is an important part of getting control of our finances and getting out of debt.

Experiences are more valuable than stuff. Don’t find happiness only in buying things. You won’t look back on your life when you’re older and fondly remember the stuff you accumulated.

It will be easier to stop buying stuff if we avoid advertising and understand that we are constantly being marketed to and a lot of money is being spent to convince us to buy things.

Make a goal of saving 50% of your income. If you do this, you would have the ability to take a month off from work for every month you work (assuming you’re earning an income from a job and not passive sources). Don’t spend more money when you get a raise. If you keep your expenses the same as before, you can increase your savings exponentially, even as your income may not be increasing at such a high rate.

Money doesn’t buy happiness, it buys freedom. This is my greatest motivator for making more money and getting out of debt right now. I want to be free again.

This book is packed with solid advice, expertly fit into a short, easy to read format. If you’re just getting started with fixing a financial mess in your life, I would buy this book immediately. If you need a little extra motivation and a better understanding of the mistakes of the ‘normal’ American way when it comes to money and work, read this book. I had planned to give away my copy after reading it, but I decided this is one I want to keep on my bookshelf so I have it available to read again when I see bad habits creeping back into my life.

By Eden, Sat 15 Aug 2009, Comments Categories: Books, Reviews

I recently read Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions, by Dan Ariely. This book is well written, and easy to read. The many experiments described in the book are presented in a lively way which elicits interest, and Ariely goes into just enough detail without boring the reader by getting into esoteric points which are more appropriate for journal papers.

If you think you’re a rational person, read this book as soon as possible. It will help you understand how we are wired and/or conditioned to be irrational, and we typically aren’t even aware of it. This concept can be a bit disheartening, but the good news is that we can fix at least some of this irrationality by being aware of how it can occur and by making a steady effort to compensate for it. The key, it seems, is increasing our awareness and planning to be irrational (this concept is explored in-depth in The Black Swan
as well).

This may not be a ‘personal finance’ book, but it offers a lot of insight into how and why we make decisions and it presents a lot of examples tied directly to money. Not only is this book very interesting and enlightening, but I found it to be quite entertaining as well. I would put this one near the top of your reading list.

By Eden, Fri 17 Jul 2009, Comments Categories: Books

I just finished reading 48 Days to the Work You Love by Dan Miller. I found this book to be generally helpful and easy to read, but it doesn’t offer anything groundbreaking or terribly enlightening either. I thought it had a lot in common with What Color is Your Parachute, though I found 48 Days to be much more readable and less boring (maybe it’s just me, but I didn’t care for What Color is Your Parachute at all).

48 Days to the Work You Love will likely help you find inspiration, motivation, and just may spark a few ideas. However, there isn’t much ‘meat’ to the book. It only glosses over these topics at a high level and leaves you still to do the work of figuring out the details and coming up with a plan for finding new work or making money on the side. It offers nothing that you can’t find on hundreds of websites for free, but if you want to spend some money on this book you’ll have it packaged into an easy-to-read, paper format.

If you think that earning an hourly wage, working for someone else is the only way to make a living, you can certainly benefit from reading this book. If you already know that isn’t your only option, and/or you are already earning money on the side, you probably won’t find anything new here. I’d say it’s worth reading if you think you need some help finding a new direction with your work and income. If you already have that part figured out, there isn’t anything else for you here.

By Eden, Thu 16 Jul 2009, Comments Categories: Books

To follow-up yesterday’s post, here is another excellent book that I came across while cleaning out my book collection yesterday. The Top 10 Distinctions Between Millionaires and the Middle Class by Keith Cameron Smith.

This is another short, excellent book that covers the basics that need to be understood to become wealthy. Don’t read too much into the title though, the focus isn’t about becoming a ‘rich millionaire’ rather solid advice that anyone can follow to become wealthy an successful.

Much like The Richest Man in Babylon, this book is packed with great information and keeps the advice short and sweet. It’s only 112 pages long (small pages at that), so you should probably set aside a couple of hours to read it all at once. However, the key with this book isn’t to just take in the information and move along. I highly recommend looking at each of the 10 sections and taking the time to review and work on the areas that need improvement in your life.

Read this book if you want some great motivation and an outline for financial success.

By Eden, Tue 16 Jun 2009, Comments Categories: Books, Reviews

I spent some time cleaning out my book collection today and came across a few favorites that are worth mentioning again. One of which is the The Richest Man in Babylon by George S. Clason.

This is one of my favorite personal finance books and it’s a definite must-read if you are working on improving your finances. Not only is the information excellent, but it’s a short book too (my version is only 144 small pages).

The beauty of this book is that it’s not selling a gimmick or an easy way out. It simply gives you good fundamentals and a simple plan that anyone can understand and implement in their lives.

If you already know to pay yourself first and avoid debt, then you probably don’t need this book. Everyone else should read it as soon as possible. I found it to be one of the best books I read as I was getting started with figuring out my financial mess. This book and Your Money or Your Life are the two that come to mind first when someone asks me where to get started with personal finance.

By Eden, Sun 14 Jun 2009, Comments Categories: Books, Reviews