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June 06, 2012


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I read the book (but did not do the exercises) many years ago. I think this was published before The Millionaire Next Door. The concepts are powerful but I did not get into the nitty-gritty. I think you just know too much to benefit from this book. Also, most people would not enjoy the sacrifices the authors made to stop working.

I liked the book, but I forgot what all the steps were. I think it's valuable to figure out if you are spending in the right places. Our monthly budget is a bit high due to housing, but we really like our location and it enable us to save on transportation and utilities.

I like the +/- system for analysing the budget, because it really asks us to look at each category and consider whether we are spending too much or too little in that category.

Too many personal finance authors focus simply on "spend less" and "be frugal", which is a fine first step for someone with large debts or truly out-of-control spending.

I never consciously used this +/- system, but in many years, I noted that my largest category was "Vacation". And I thought to myself - "Wow, another great year!".

I was confident that I was saving enough for retirement, had a good emergency fund, etc. so I had no regrets about spending that money.

It reminds me of a friend who custom-built a house. He started with a "budget" in square feet, and then he designed within that budget. Adding space to one room meant taking from another.

Now perhaps you first have to get the total spending down and then optimize, but even in that phase, you could have some choice in what category to cut most.

FMF -- I think you've hit on the reason this book does not appeal to you like it did to me. I read it two decades ago when first published and I was in my early twenties.

I understand the appeal of the Millionaire books. But those are market research, they are not personal finance. Neither is Rich Dad, Poor Dad. It's closer to a memoir. Fans of the Rich Dad series and Millionaire Next Door, who read those books as personal finance guides, risk falling for a post hoc fallacy, since those two titles (and all first-person personal finance guides, for that matter) perpetuate survivorship bias.

I really enjoyed the Millionaire Next Door. Especially the guy they called 'Bud' who said, "I drink whiskey and two kinds of beer. Free and Budweiser." But most farmers, over the history of America, did not become millionaires. Most lost everything. Titles like the Automatic Millionaire have some good advice in them, but the promise on the cover is a lie. Mathematically, we can't all be in the the top 1% or even the top 10%. There are no sour grapes in my viewpoint. I work on Wall Street and I'm in the top 1%.

YMOYL stood out, in my view, because it puts the tools in the readers hands, regardless of their income level, without selling more books, seminars or pre-paid debit cards. If you've already achieved financial independence, it probably won't appeal to you.

The next best books are Fooled by Randomness and The Black Swan by Nassim Taleb. Those of us who have been successful often think it is primarily due to our own efforts. Mostly, we've been lucky.

I guess I understand how listing out each expense and writing a + or - to determine which are useful and which aren't is a good strategy, but I think just doing this for the subcategory in general will give you a good enough idea of where your money is being used wisely, and where its not. Hopefully although the author says this is the heart of the major concepts he's trying to preach, he will either expand in an interesting way, or give something more and unexpected.

@Kelly: You said "I think just doing this for the subcategory in general will give you a good enough idea of where your money is being used wisely". Well - that's what the author told us to do!

As others and you have said, I think the biggest reason you are not as impressed with the book is that you are not necessarily the target audience.

For a lot (most?) people that have no clue where their money is going or what their goals are, I think the concepts in the book can be very powerful when taken to heart. For those more advanced with their personal finances and quite sure of where their money is going, they are not going to get nearly as much out of the book.

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