Free Money Finance

No One Cares More About Your Money than You Do

Consider this a public service announcement.

I recently ran into a piece that asks who you can trust for financial advice. They never get around to answering the question so I will: you can trust yourself.

After that, everyone else, in some form or fashion, no matter how nice/knowledgeable/friendly they are, can't be completely trusted.

And by "completely trusted" I mean you can't simply hand your financial life over to someone and let them manage it for you. YOU must at least learn the basics of personal finance so you know how to oversee the fundamentals of your own finances. Otherwise you're a sitting duck for people looking to make your money their money.

Fortunately the keys to being successful financially aren't that difficult to understand. Yes, it will take you some time and effort to learn and apply these principles, but the results you'll get are well worth it.

THEN, once you understand personal finance for yourself, you can work with others (if you want to) to make the most of your money. But at that point you'll know enough that it will be difficult for them to take advantage of you.

Remember that no one cares about your money more than you do (or at least you should). Spend just a bit of time learning about the keys to financial success and you will be well rewarded for it.

To get started, here are a few books I'd recommend you consider:

• The Millionaire Next Door
• The Richest Man in Babylon
• Your Money or Your Life
• Bogleheads’ Guide to Investing

These are the best of the best in personal finance books IMO and all have benefited me greatly as I've grown my net worth. They will do the same for you.

Become Wealthy by Reading

Here's a great piece that lists some statistics about how reading impacts your finances. 

The highlights:

• Individuals who read for self-education earned 21% more, as adults, than those who did not.
• Individuals who developed the habit of reading to learn earned more income, had more assets and had better finances by age 38 then their peers.
• 86% of the rich loved reading vs. 26% of the poor.
• 63% of the rich listened to audio books during their commute to work vs. 5% of the poor.
• 85% of the rich read two or more self-improvement books every month vs. 15% of the poor.
• 88% of the rich read 30 minutes or more each day vs. 2% of the poor.

A few thoughts on this:

• There's an old saying in business that, "Readers lead and leaders read." Almost all of the best executives I ever worked with consistently read for self-improvement.
• I love to read -- using "read" in a broad sense. I do still read books (more on that later), but as much of my "reading" these days is consumed in audio form, either audio books or podcasts. I "read" in my car, while doing lawn work, while taking early morning walks, etc. -- anytime I can do one thing and still listen to what's being said. I can't listen where my mind needs to be engaged in other things (like while writing an article, working out, etc.) so in those times I choose music.
• I subscribe to about 200 blogs (scouring the globe for great stuff to write on) in addition to the above.
• I do read a few magazines. I subscribe to Money, Kiplinger's, Business Week, and This Old House. Magazines are great for passing the time in a sauna. If you sweat and drip on them it's no issue (versus who wants to read a book after someone has perspired all over it?)
• I'm not sure when I developed the love of reading. I read comic books as a kid, then youth fiction, then teen fiction, then classic fiction. Eventually I moved to mostly non-fiction (after grad school) and haven't looked back since.
• I'm one of those people who buys a book before he's done with the previous book. Then he starts reading two books at once. Then he finds a third book and buys it and is now reading three books. Anyway, I have several books on my bookshelf now in some state of being read or being read again (that's another issue -- I re-read books I loved the first time, many of them being read 4 or 5 times).
• I visit the library often to see what's new, read what I want, and buy stuff I like and want to keep in my library.

The link between reading and earning is fascinating to me. It's not surprising as I'm sure most of us can see how the two would be related. But to have such a large impact as noted above is amazing.

For the curious, here are the books I have on my shelf right now that are in the "to be read", "reading", or "to be re-read" category:

• The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM) -- Finished not that long ago. Awesome book about how to achieve your life dreams by getting up earlier. Will be posting on it sometime.
• The Personal MBA: Master the Art of Business -- Is it better to get an MBA or just read and apply key books? This book argues for the latter.
• Franklin Barbecue: A Meat-Smoking Manifesto -- I'm the family grillmaster and want to get even better. I hope this book will help. :)
• Nightwing Vol. 1: Bludhaven -- Don't judge me! I LOVE Batman and all things Batman!
• Crucial Conversations Tools for Talking When Stakes Are High, Second Edition -- Got it to try and reason with an unreasonable boss, then didn't read it. Then I retired, but still plan to read it.
• The Bulletproof Diet: Lose up to a Pound a Day, Reclaim Energy and Focus, Upgrade Your Life -- Half way through it. Not sure if it's legit or a bunch of bull (I've seen articles saying both). I am on a health kick so I'm interested in different viewpoints. Not sure what to think here yet.
• The Bogleheads' Guide to Investing -- I've read this one a couple times, so this is a re-read. I'll read it mostly for nuggets I want to pull out and post about.
• Stop Acting Rich: ...And Start Living Like A Real Millionaire -- Another re-read for the blog but this one I've only read once. GREAT book by the author of The Millionaire Next Door: The Surprising Secrets of America's Wealthy, one of my all-time favorite books.
• How Much Money Do I Need to Retire? -- Re-read. best book on retirement planning I've ever read.
• How to Make Your Money Last: The Indispensable Retirement Guide -- I've read this book and will be posting on it some. I agree with 50% of it and am still thinking over the other 50%. Should make for some great blog conversations! :)
• The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change -- After all these years, Amazon still lists this book as #64 out of all books in sales. There's a good reason for it. It's worth reading and re-reading over and over again. I've read it several times, listened to it, and been through the classes back in the day. AWESOME content.
• Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Ind ependence: Revised and Updated for the 21st Century -- Read this a long time ago and kind of blew it off. Then re-read it recently and saw how great of a book it is. I'll be posting more on it sometime in the future.
• Living Forward: A Proven Plan to Stop Drifting and Get the Life You Want -- I bought this during the pre-release so I got the audio free, which I listened to. LOVED it. Great book on setting and achieving life goals. Hope to read it again.
• The Leadership Challenge: How to Make Extraordinary Things Happen in Organizations -- Was recommended by a friend of mine who has experience in executive leadership. Listened to the audio book, loved it, then bought the book. I planned to listen to the audio and take notes in the book at the same time. Then I retired, so we'll see if I get around to it. :)

I know, it's a long list!

How about you -- are you a reader? If not, why? If so, what are you reading now (or planning on reading)?

Book of the Week: The Millionaire Next Door

It's no secret that I love the book The Millionaire Next Door: The Surprising Secrets of America's Wealthy.

I love it so much that I have an entire category here at FMF dedicated to it with over 70 posts in that category!!!!

Some highlights:

• Rich People Know that Things Don't Satisfy
• How to Become Wealthy
• Best of Free Money Finance: Millionaire Next Door, Part 1

For a good overview of the book see The Best Personal Finance Books of All Time: The Millionaire Next Door. 

If you have not read it, do so. If you have, read it again. You'll probably find something new to help out your finances (FYI, I've probably read it as many as 10 times now and always get something from it.)

Almost Infinite Investment Return

I was browsing through my Amazon affiliate sales the other day and noticed that I had sold copies of two great books: The Millionaire Next Door and The Richest Man in Babylon. I got to thinking about these books, what they contain, and the people who bought them. I also started to think about my own life and how it's been impacted by a few good books. This is when I became VERY happy.

I became very happy for the people who bought the books. I know that if they read and apply the ideas found in these books (see Two Books that Will Change Your Financial Life for details), they will be much, much, much better off financially. In fact, if they apply the ideas over several years, they will become quite wealthy. So for a few dollars, these people now have the ideas that could help their net worth increase by tens of thousands, hundreds of thousands, or even millions of dollars.

So what's the return rate on those investments? If you bought something for $10 and 30 years later it had helped you become worth $1 million, that's a pretty amazing rate of return. In fact, it's close to an infinite rate of return. Now you could get these books from the library and make the return rate infinite (since there's no cost to you), but based on my experience, you need to have your own copies of these so you can read and re-read them often, underline, mark, and write in them, and refer to them at various times in the future. (Now if you get one as a gift, the return could be infinite too.) ;-)

That's why I recommend the books that I do. It's because I've read them over and over, have applied the principles they discuss to my life, and have seen my net worth grow substantially as a result. That's also why my recommended book list isn't 100 books long -- there just aren't that many books (at least that I've found) that meet my criteria. For now, the only books I can give this recommendation to are:

If you don't have any of these books, I encourage you to get, read, and apply them. Doing so will give you a return close to infinite.

BTW, I like/listen to podcasts for the same reason!

What Free Money Finance Readers Bought Last Month

As you may know, I have a small (very small, in fact) product store here at Free Money Finance. It's through Amazon and gives me a bit of revenue for every purchase made (note: 1. It doesn't cost you one extra bit and 2. all my revenue goes to charity.) Anyway, I thought you might find it interesting to see what others visiting this site were buying last month (a month, I heard from someone, where a lot of presents were being purchased.) Here are the top seven (there's a massive tie for eighth) in countdown order (FYI, these include products I have in my store as well as others they simply purchased at Amazon):

7. A Woman's Guide to Saving Her Own Life: The HEART Program for Health and Longevity - Decent book -- my wife gave it six stars.

6. Health Care on Less Than You Think: The New York Times Guide to Getting Affordable Coverage (tt) - Another six star rating here. But if you want to know about health care, it's more like an "8".

5. The Net Worth Workout: A Powerful Program for a Lifetime of Financial Fitness - A great book -- I gave it seven stars. This one was a surprise to me since I just recently reviewed it. But I'll have much more to say on this book this month as I post bits and pieces from it throughout January.

4. The Automatic Millionaire - Great book -- one on my must-read list.

3. The Richest Man in Babylon - Another on my must-read list. I've posted some of the great tips from this book -- start with The Richest Man in Babylon: Seven Cures for a Lean Purse Part 1, Start Thy Purse to Fattening and read the whole series to get some good financial wisdom from this book.

2. The Millionaire Next Door - My personal all-time favorite. It's the book that I've modeled my finances on. Also a must-read.

1. The Bogleheads' Guide to Investing - The newest addition to my must-read list (I rated it 9 stars) and one I've been sharing the past month or so with all of you. It's the best book on investing that I've ever read.

Bantam Dell Pays Reported $7 Million for First-Ever Authorized Warren Buffett Biography

Here's a post about Warren Buffet's new book. The things I find interesting:

• It's an Alice Schroeder/Warren Buffett book collaboration.
• Tentatively titled The Snowball: How Warren Buffett Collected Friends, Wisdom and Wealth.
• The agent who conducted the auction, told The Book Standard, “I just want to stress [that] it's her book,” referring to author Schroeder, a former Morgan Stanley insurance analyst.
• Reports published last week placed bidding on the book, scheduled for release in 2008, somewhere in the neighborhood of $7 million, making the acquisition one of the most lucrative in history.

Thoughts:

1. No one wants to read a book by Alice Schroeder (sorry, Alice). Everyone wants to read one by Buffet. Someone in marketing at Bantam Dell Publishing better squash the "it's her book" talk unless they want to be stuck with about $6.9 million in unearned royalties.

2. I think the title stinks. How about: "Warren Buffet: How I made Billions and You Can Too!" Now THAT would sell!!!!

3. $7 million? Didn't Hillary and Bill Clinton each get more than this? (In the $10-$12 million range?) Isn't Warren worth more than they are? Maybe the whole "it's her book" thing drove the advance down.

Two Recommended Books

I have two great book recommendations that I just HAVE to share with you.

First, Instapundit blogger Glenn Reynolds has a book coming out in March 2006 titled An Army of Davids. For those of you who don't know, Glenn is one of the premier (and best in my opinion) bloggers out there and has been around for a long time. I have no idea what the book is about (other than the subtitle that reads: How Markets and Technology Empower Ordinary People to Beat Big Media, Big Government, and Other Goliaths), but I know I will be buying one. If you're serious about blogging or just want to hear from an expert on the subject, this will be a must read.

Second, I just finished a fiction book titled Millions. Here's how Amazon describes it:

When fourth-grader Damian finds a bag full of cash by the train tracks, he and his brother try to spend it fast. The bills are all pounds, and England is just a few weeks away from converting to the euro, so anything they don't use will, in their minds, soon be worthless. This happy predicament sets up some excellent comic situations, including rampant inflation at the school yard and some suspiciously materialistic Mormons. But a lot more is going on than money-related antics. Damian, obsessed with the lives of the saints and a bit muddled about the real world, narrates with endearing naïveté and unintended deadpan humor. Fifth-grader Anthony has an endless supply of schemes, contrasting with his brother's more charitable sensibilities. Though their mother's recent death is not described until later, the boys' sense of loss permeates the story, and their instant fortune subtly leads them to a point where they can finally face their grief. Damian's encyclopedic knowledge of saints is hilarious at times, but also reveals his touching need for faith and reassurance. Supporting characters, including their dad and a shrewd female fund-raiser, have distinct personalities. The imagined 1998 monetary changeover may be confusing to American kids, who might assume the event really occurred, but readers should grasp the resulting need to act with dispatch. There's plenty of excitement as the deadline approaches and the brothers' secret becomes known, but the humor, the strong family story, and Damian's narrative voice make this satisfying novel succeed on several levels.

I won't ruin it for you other than to say it was funny, entertaining, and had a very good message about what money does to people. If you're interested in personal finances but want a bit of "light" reading, this is for you.

Free Copy of Seth Godin Book

As my regular readers know, I like to give away things (t-shirts, towels, stuffed animals, etc. have all been past giveaways). But those were always giveaways to select winners -- a few people of the many who entered to win. But this time, I have something that's FREE to EVERYONE and it's VALUABLE!

I have a copy of one of my favorite author's latest books, "KnockKnock" by Seth Godin, to give away free. It's listed as an attachment on this post in PDF format -- simply click on the link to download). It's on web marketing, and while I haven't read it yet, I know it will be good (I've read a lot of Seth's stuff and it's always good). Get your copy too and enjoy!

Thanks, Seth, for making it available. Download knockknock.pdf