I’ve always been pretty good with money. No, the Donald and I aren’t hanging out at the yacht club, but I recognize the value of tucking away a few bucks for a rainy day (or maybe just a really humid day if I spot a must-have DVD box set). In the last two years, however, I got married, purchased (okay, mortgaged) a home, and now my wife and I are expecting our first bouncing baby tax deduction. Given such life-altering events, I realized that back-of-envelope budgets aren’t necessarily the most sophisticated financial tools when facing a grown-up future full of college tuition, retirement, and $18-a-gallon gas for the Subaru. For expert guidance, I hit my local bookstore and was stunned to find more than a hundred books, many of them best sellers, promising to unlock the secrets of getting filthy rich. Could it really be that simple, or are the authors the only ones growing wealthy? Here’s my two cents on four top books, and a culling of their get-rich guidance.
RICH DAD, POOR DAD
By: Robert T. Kiyosaki with Sharon L. Lechter
SYNOPSIS: A best seller for the past six years, this book has spawned spin-offs such as (and for all I know) Rich Hamster Poor Gerbil. Kiyosaki uses his father, an educated public servent who wasn’t money savvy, and a friend’s working-class father who amassed a fortune, as a parable for his own moolah mullings. Things is, Kiyosaki apparently made his mint in a Hawaiian real estate boom, so his advice often circles back to acquiring income-generating property at bargain prices. He’s fuzzier on how one actually goes about that. Nevertheless, he offers some forceful insights, including the hard reality that an expensive home can be a financial liability for young people instead of an asset.
- Use job income to acquire assets-if not real estate, then stocks, bonds, and business-that also generate “passive” income. Luxuries are purchased only with the income derived by these extra assets. That’s how “old money” rich folk do it.
- Twenty-and thirtysomethings should adopt a somewhat aggressive investment strategy. Balanced portfolios are the folks who don’t have the time to assume risk.
Smart Couples Finish Rich: 9 Steps to Creating a Rich Future For You and Your Partner
By: David Bach
SYNOPSIS: Unlike money books that stretch thin advice, the best-selling Smart couples Finish Rich is chock-full of useful ideas and charts. Basically, the money tips apply to all, but the couple’s spin he adds recognizes that money often causes more marital discord than the remote control and a dented bumper combined. For instance, Bach suggests making a “money date” with your spouse to get finances organized, confess any undisclosed money issues, and plan for the future. Not only will you create a foundation for future wealth, you might get lucky!
- Lovebirds should avoid taking out a 30-year mortgage on their love nests. (A $250,000 loan at 8 percent interest paid back over 30 years actually costs $660,240!) Instead, don’t purchase more home than you can afford with a 20-year mortgage. Already stuck with a 30-year mortgage? Strive to pay it off early.
- For a week, hubby and wife should track expenditures in a notepad. Write down everything, and don’t change your spending behavior. Then identify simple thing to eliminate- mocha latte, anyone? – that can start creating funds for investment. No big deal you say? Consider this: if a 30-year-old invests $6.35 a day, it could potentially grow to $1 million retirement. Now that’s romantic.
The Number: A Completely Different Way to Think About the Rest of Your Life
By: Lee Eisenberg
SYNOPSIS: Eisenberg is a former Esquire editor in chief, so his book on retirement savings is less of a how-to than an exploration of how society has become fixated on that scary retirement savings “number.” The interviews with wealth gurus and everyday investors yield hard facts (someone who retires at 55 should set aside $200,000 for medical expenses alone) and droll with ( “ What’s not in your control is…a Ford expedition driver talking into a cell phone while sipping a Red Bull while listening to Dave Matthews while you happen to be crossing the street….”). In the end, Eisenberg does provide a quick and easy formula for crunching your own “number.” Luckily, the previous 250 pages have prepared you not to leap off the nearest tall building.
- Embrace your 401K, especially if it offers matching contributions. An average 22-year-old who deposits 6.9 percent of his salary in a tax-deferred plan will have $1.5 million by retirement.
- Too many people are more comfortable switching hairstylists than screening the person who handles their finances. Download the Fiduciary Questionnaire on the Nation Association of Personal Financial Advisors website and ask your adviser to fill it out.
Secrets if the Millionaire Mind: Mastering the Inner Game of Wealth
By: T. Harv Eker
SYNOPSIS: Eker is a big-time motivational speaker, and his book (another recent best seller) reads like a parody of “potential” seminars at the airport Hilton – plenty of pithy maxims, less advice that makes sense once the free coffee buzz wears off. Consider this doozy: “One minute the universe hears that you want to be rich, so it begins sending you opportunities for wealth.” Okaaay. If you respond well to motivational ploys, this book might prompt you to get off the couch and seize the wheel of your financial future. Just don’t count on it to provide a map.
- Buried amid the squishy psychobabble were a couple of decent concrete steps. To start, create a net worth statement (check the web for forms) by adding the value of everything you own and subtracting everything you owe. Use this reality check to plan and track your progress.
- A devotee of “passive” income, Eker nevertheless insists that people should blow 10 percent of their income on extravagances every month! Why? Because we’re “holistic” creatures who need rewards as well as discipline. Thanks Harv, and pass the Cristal.
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