Book review: The Finish Rich Dictionary

A few weeks ago, a publicist with Oxford University Press kindly sent me David Bach's new book, The Finish Rich Dictionary, to review.

I've been a fan of David Bach for some time, since I read his book, The Automatic Millionaire. In fact, I could have sworn this was a book that I purchased at one time, as The Automatic Millionaire presents personal finance concepts succinctly and in layman's terms. It is also incredibly motivating without being overwhelming or 'preachy'.

In addition to the Automatic Millionaire, David Bach writes the 'Finish Rich' series, including: Start Late, Finish Rich; Smart Women Finish Rich; and Smart Couples Finish Rich. I've only read the 'Start Late, Finish Rich' version, but it's another book that resonates with me and provided some additional motivation that led me to consider increasing my retirement savings.

Bach's latest book, The Finish Rich Dictionary, can be seen as a companion piece to any of his other books as well as to any other personal finance book, magazine or blog you may be reading. The book is filled with short, relevant definitions for many of the words we stumble across (and scratch our heads over) in the journey to financial independence. I know that I have tossed aside a book on investing more than once because I was frustrated by the terminology and the assumption that I have a degree in finance (which I most assuredly do NOT). An added bonus for me is that many of the words are defined along with their linguistic origin---I love languages, and learning that the word bankruptcy, for example, comes from the Italian banca rotta ("broken bench") is fascinating.

Having this book by my side will allow me the confidence to delve into the more in-depth discussions of IRA's, mutual funds, certificates of deposits or municipal bonds. In addition to defining various finance terms (and demonstrating common usage), Bach also inserts chapters devoted to brief discussion of topics such as:

• The Latte Factor
• Saving for retirement
• Determining if you have a credit card problem
• Becoming a homeowner
• Top ten personal finance mistakes people make
• How to choose a personal finance advisor

I should note that the chapter on becoming a homeowner was apparently written in 2003 (possibly distilled from some other David Bach book), in the midst of the housing boom. As you can imagine, the advice in this section seems a bit outdated. For example, Bach mentions several times that with the historically low interest rates, people can purchase more home than they think they can afford. Added to this is the comment that banks are willing to loan homebuyers 95% or even in some cases 100% of the purchase price! Of course, this is how I've been able to purchase two homes since 2003, but with the economy in a tailspin and credit becoming tighter by the day, this chapter sounds a bit silly.

In reviewing this book, I read the personal finance chapters and the first few sections of definitions, while skimming the rest of the vocabulary chapters. I will say that I learned something within moments of opening this book: my second mortgage is set up for a 'balloon payment' in 15 years, something which wasn't fully explained to me when I signed the paperwork. I happened to notice this detail when I was taking a closer look at my bill, to see how much interest I pay versus principle. At the time I purchased my home in 2006, real estate values were still soaring and my loan officer probably assured me that I could refinance and obtain a standard 30 year loan before the balloon payment was due. In reading Bach's book, I learned the following about the definition of a balloon payment:

"A repayment of the outstanding principle sum made at the end of a loan period, interest only having been paid hitherto. Usage: Even though the terms may seem easier to meet, the borrower may not have the money required to make the large final payment."

I pay a whopping $20 a month in principle on my 15 year balloon loan. Which means I'll still have a hefty sum to pay when (or if!) I make it to the final balloon payment in 12 years or so.

All in all, I find this book to be a worthwhile investment if you are someone who wants to increase your knowledge of personal finance, particularly if you find yourself avoiding more technical investment reading because the vocabulary is unfamiliar to you. This is not a book you will read from cover to cover in one sitting, but would be a wonderful resource to have by your side as you delve into some of the more complex personal finance topics.

As I have in the past, I would like to pass this book on to one of my readers (sort of a 'pay it forward' concept). With that in mind, I will mail a free copy of The Finish Rich Dictionary to the first reader to comment to this post with the correct definition of the word 'pogey' (hint: Canadian slang). Once you've commented, I'll contact you via email for your mailing address. . . .

Good luck!

Overwhelmed? Have I got the book for you.

Several weeks ago, I was contacted by the publisher of an author named Louis Barajas. Mr. Barajas has a new book just out, and his representative wondered if I would be interested in reviewing it on the blog. Once I heard the title I had a feeling it would be right up my alley---and maybe yours too!

This self-help book is called 'Overworked, Overwhelmed, and Underpaid: Simple Steps to Go From Stress to Success'. Mr. Barajas is a financial planner, who focuses on underrepresented, lower income families who need help digging themselves out of debt and determining what to do with their limited money to afford the greatest security. He also does work with upper income folks, many of whom also struggle with questions surrounding personal finance.

I found his website to be very helpful, with many of the downloadeable forms that were mentioned in his book. I should note that Mr. Barajas has also written books regarding entrepreneurship and small businesses, which is a focus of his newest book.

So, how DOES one escape the cycle of feeling overworked, overwhelmed, and underpaid? The book is actually laid out in a very organized fashion (and I do love organization!).

First, Mr. Barajas discusses the concept of overwork (as someone who works two jobs and goes to school, I felt I could relate). In essence, the message is very similar to my other favorite book, Your Money or Your Life. The main focus of this chapter is on determining what is important in our lives, and gaining balance based on that knowledge. There is a 'life blueprint' form that can help us to figure out how much of our lives we really want to devote to work, versus the time and energy we'd like to devote to family, other relationships, spirituality, or hobbies. For me, it was incredibly helpful to see my life on paper, and to make decisions that I could view in black and white, versus simply considering---with no commitment to change---while on my way to work!

Next, Mr. Barajas turns to feelings of being overwhelmed. Again, the key word in this section is 'balance'. Except in this case, Mr. Barajas discusses the 80/20 rule, in which it is posited that 80 percent of our 'output' is actually connected to just 20 percent of the energy we expend. The key here is to determine (by using lists and prioritizing our activity based on level of success or output) what it is we're doing (what is the 20%) that is accounting for 80% of our output. The theory is that then, we can achieve more with less. Less time, that is. Now, for someone with just one job or one obligation, I think this might make sense. In my own life, I found it difficult to separate each of my jobs and obligations and determine what to cut. For example, my day job is a 40 hour per week position. Although I know that some of those 40 hours are much more productive than others, I need a full time salary to pay my bills (or most of 'em, anyway!). Therefore, even if I'm only using 20% of that time usefully, I can't just leave work when I'm finished---I at least have to pretend to be getting things done so I can keep my salary and my benefits. My 'overwhelmedness' comes not from having too much to do at ONE job, but at having too many jobs! Something to think about, definitely. When I have time, I'm going to try to apply Mr. Barajas' ideas to my own unique situation to see if I can make some changes that will help.

Finally, we come to being underpaid. This section brought up some very good issues, such as the five reasons we may feel underpaid:

1. You really ARE paid less than you're worth
2. You don't make enough to support the lifestyle you want (or the one you already have)
3. You're putting in more effort than you're being compensated for
4. Work is taking you away from what's important to you
5. You don't enjoy your work

As you can see, these are all quite different reasons for why we might feel like we're not making enough money (I can relate to several). Mr. Barajas then goes through a myriad of options for either changing careers, making more money at the career you already have, or making other changes that will affect the 'bottom line'. I hoped to see more discussion of frugal living (since that's my interest, and how I've given myself a 'raise' over the past year). However, this book is focused more on people who are willing and able to make career changes---maybe even those who would want to start their own business, since that seems to be a way to control and grow one's income more quickly than through conventional routes (like working in public education, as I do!)

In the end, I feel that this is a worthwhile book. While I've linked to Amazon.com just so you can read a synopsis of the book, I (of course) always recommend trying your public library or used book store first---it's not a financial 'bible', like Your Money or Your Life. But it is a good read, and one that I recommend to those who are thinking about making some big changes in the way they consider the interaction between work and personal life.

In fact, if this sounds interesting, I'll spread the love and mail my copy of this book to the first person who comments on this post (if you've actually made it this far you DESERVE a free book!). Just be sure to either enter your email address, or send me a separate email with your mailing address so I can send it along to you.

Rich by 30. . . . .

Last week, while perusing Wise Bread, I came across a review for a book entitled: Rich by 30. I left a comment thanking the poster, Lynn Truong, for her review. Amazingly, Ms. Truong emailed me and offered to send me her copy of the book, with the caveat that I donate the book to my local library when I was finished. I happily accepted, and the book arrived on Saturday!

Although I had a friend visiting this weekend and was therefore busy, I was able to go through the book at lightning speed. It's truly basic, and much of the information presented will be familiar for anyone with an interest in personal finance. I commented to my friend that it would be an amazing gift for a teenager just starting his or her first job. How I wish I had had the wisdom to start saving (even just a little bit!) at the age of 16, when I got my first job!

Thanks, Lynn, for the book! I enjoyed reading it, and will pass it along to the Multnomah County Library system this week, so that others in my area can benefit from it as well.

What's going on in the blogosphere. . . .?

It's pretty quiet in my personal finance world, so I thought I'd create a compilation of recent posts from other personal finance and/or frugality blogs:

Lynnae at BeingFrugal posted a great article with suggestions for frugal spring break activities. For those with kids, there are some helpful tips on how not to blow the budget while entertaining the children.

Along the same lines, FrugalMomLA has posted some links to websites for the pre-Kindergarten to grade 2 kiddos.

J.D. over at Get Rich Slowly asks the question, "how to live simply, without looking cheap"? Something I've struggled with as I attempt to have a social life while living frugally.

Meanwhile, Moolonomy explains why a penny saved is actually better than a penny earned.

The Simple Dollar (which I haven't visited for quite some time) reviews a book called The Little Book that Builds Wealth. This is book five of a series of investment books by Wiley Publishing. Today, maybe I'll do a search of the site for a review of the first in the series, so as not to miss anything.

As for me, I'm all set to go out and help and friend celebrate her birthday tonight, and am planning to eat before I go----and I'll be driving, so that means my alcohol consumption will be limited. I'm hoping to keep the entire evening under $10, including the drink I plan to buy for the birthday girl.

Retail therapy. . . .

Mark Morlock, my favorite columnist of all time, writes today about the American need to spend our way out of feelings of powerlessness, misery, and depression. His message is extremely political, as usual (one of the reasons I love him so very, very much), so if you're not overly liberal or if you're even slightly right of center, you might want to avoid clicking on his link---his writing WILL piss you off! Just a fair warning. . . .

Politics aside, his message is a good one for a newly frugal gal (a Fru-Gal?) like myself. Many an afternoon I've spent cruising the aisles at Macy's, Banana Republic, or The Gap, looking for that something special to make me feel. . . .well. . . special! Especially after a rough day at work in which my imperfections were magnified 1000x under the very nose of my boss, a new pair of shoes or a cute sweater could do wonders for the soul!

Morlock's column, of course, mentions the Bush presidency and our current economy of consumption as reason enough to begin to purge our collective STUFF (Mark doesn't suggest recycling or donation, though, which perturbs me---bad Mark, very bad!). Personally, regardless of politics, I'm trying to live less as a consumer (see my review of Not Buying It if you're interested) and take more time for the people in my life---the less stuff I buy, the less I'll have to (eventually) work, and the more time and energy I'll have for the people I love.

Book Review: Not Buying It, by Judith Levine

In my quest to inspire myself to decrease the money I spend on non-essential items, I’ve been reading a book called Not Buying It. Since I’ve been home sick for the past two days, I finally finished it, and thought I’d introduce it here, for others who may be interested.

Judith Levine and her partner, Paul, spend an entire year doing exactly as the title describes: not buying anything other than essentials (food, mortgage, utilities, gas for the car, etc). Of course, Paul and Judith have differing ideas of what constitutes a necessity. Paul is Italian---therefore, he is loathe to give up his wine. Judith has a love of Smartwool socks (I admit, they’re great!) but spends the year without replacing hers. The book describes their journey, from January to December, the difficulties, the disagreements, and the epiphanies related to being citizens, rather than consumers.

I found myself questioning my own ability to pass a shoe store without feeling a deep need to enter it and try on a pair of sandals, some ballet-inspired flats, or tall leather boots. Could I spend a year without purchasing anything frivolous? I’m not so sure! Not Buying It reminded me in many ways of ‘The Compact’, that group of people who pledge at the beginning of the year to do just as Paul and Judith did---to avoid becoming another cog in the wheel of American (or maybe I should say 'Western'?) consumerism. Instead, followers of The Compact use creativity and imagination to obtain the ‘things’ that most people pick up on the shelves of WalMart without a second thought.

Not Buying It is not a ‘how to’, explaining the ins and outs of getting by without spending money on new shoes, knic-knacs, and collectibles. Instead, it’s more of a philosophical discussion about how the need for stuff permeates every minute of every day, and how Judith and Paul reacted to that (ultimately their relationship strengthened, primarily because they spent more ‘quality’ time together). My favorite quote from the book is:

“As I ramble through the aisles, a young salesman asks if I need help. He seems genuinely concerned, as if offering spiritual counsel or a hot meal. But I don’t need help. In fact, I am feeling almost lightheaded with the absence of need or desire”.

This absence of need or desire sounds like nirvana to me!