Beating Broke

Personal Finance from the Broke Perspective

Review: I Will Teach You To Be Rich

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I Will Teach You to be Rich
By: Ramit Sethi

I’ve been a reader of Ramit’s blog (iwillteachyoutoberich.com) for several years now, so when I heard that he was writing a book (and publishing one) I knew it would have to find a way onto my list of books to read. Which it did, and I did read it.

If you aren’t familiar with Ramit’s writing style, it’s some what irreverent. Light and joking, it’s as if he were talking to you over a beer. Which, of course, works pretty well for a book that is meant to be read by a twenty-something single person. There’s a reason it’s on the New York Times Bestseller list!

Ramit takes you through a 9 chapter, 6 week journey of personal finance.  He covers everything from credit cards, savings and checkings, investing, budgeting, and saving for goals.  For the person who finds themselves fresh out of high school or college and overwhelmed by the amount of credit offers and spending temptations, this book is a must read.  Ramit did a very good job of pointing out and explaining some of the very common pitfalls of personal finance, and he does it in a way that makes sense.

There were only a few things that I found I disagreed with.  The biggest of these was what he calls Conscious spending.  As he describes it, it is the act of consciously setting limits and goals for spending so that you don’t overspend.  Where I disagree is when he says that it isn’t a budget.  It certainly sounds like one to me.  While it may not be a budget that accounts for every penny and every category, it still is a budget.  Maybe I’m giving budgeting too broad of a description, but to me any ordered system that sets limits and goals for spending and saving is a budget.  What conscious spending is, is a very high level budget.

Anyone who has read this site for very long will know that I am not a fan of credit cards.  I’m not really a fan of debt at all, but credit cards (to me) are one of the worst offenders.  So, it was with some trepidation that I began the chapter on credit cards.  It was somewhat refreshing to have someone actually explain how they use cards, and why.  Because of my stance on credit cards, however, I couldn’t help but disagree with several points.

Overall, this is a spectacular book for it’s intended audience.  Seasoned personal finance students will surely find a few nuggets, but the rest is likely review.  If you know anyone that is just stepping out on their own personal finance journey, I suggest you get them this book.  Ramit does an excellent job of laying out a wonderful foundation for successful personal finance management.  And, yes, it may even teach you to be rich.

You can pick “I will teach you to be rich” up at Amazon, or just about any corner bookstore. As of this writing, the book is less than $11 at Amazon, which is likely better than you’ll see it anywhere else.

Is Frugal Normal?

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Do you think that being a Frugaler is normal?  It obviously is a bit abnormal in the American society.  Although, with recent economic news, I think that it’s becoming more popular.  But normal?  I really don’t think so.

Sometimes, we look at the world through the personal finance bloggers perspective.  We see all the other personal finance bloggers we know and read and we get used to thinking that those people, along with ourselves, are the norm.  In essence, we are missing the forest for the trees.  Being a Frugaler is far from normal.

Every day, we Frugalers, task ourselves with finding new and exciting (well, maybe not exciting) ways to spend less money.  At the same time, we try and find ways to make more money.  We hope that the net effect is that we not only have money to pay the bills, but that we have some to save for a rainy day and, maybe, even retirement.  We daren’t say it, but some of us even think about “early” retirement.  And, if you peer no farther than our little realm of the blogosphere, you would think that the whole country does nothing but count pennies and do personal accounting.

I don’t think you would find too many PF bloggers who would argue against more people becoming Frugalers.  In fact, that is the purpose of a vast majority of the PF blogs that exist.  On any given day, you’ll find articles on “best way(s) to save on groceries”, “way(s) to cut utility bills”, and the list goes on.  We exist to talk, share, and teach this stuff.

Being a Frugaler may not be normal, but we’re working on it.

How Much is It Worth to You?

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In every purchase we make, we should ask ourselves how much is it worth to me?  It’s a very simple question, but in many cases, the answer may surprise you.  And it applies to much more than items.

Let’s try a few examples.

I’ve been keeping my eye on LCD HD receiver televisions.  With the big switchover in February and all the fear marketing going on about the loss of signals, my family may need a new television.  We don’t currently subscribe to a cable service, so we get our tv over the airwaves and will need a HD tv or a subscription to cable.  The tv’s that I’ve been looking at are in the $500 range.  Not a huge amount for tv’s nowadays, but quite a bit for my debt averse family.  Each time I look at them, I have to ask myself if having television is worth $500 to me.  We currently don’t have cable and we only receive one channel over the air.  And to be honest, it wouldn’t be a huge loss to us.  Except.  Except that I like to watch Football in the fall.  Except that my wife is addicted to COPS.  Except.  Except.  Except.  With each exception, the TV or cable subscription becomes more and more worth it to me.  I become more willing to spend the money to get the TV or Cable because of them.

Much like cable, there are some services that demand the question too.  In my hometown, there is only one full service gas station.  All the rest are self service.  The full service station charges $0.02/gallon more for their gas.  This is a non-question for me.  I don’t mind filling my tank up.  I only end up filling up about once a month, so it isn’t a big deal if I have to stand and pump gas for a few minutes.  However, with temperatures falling (it’s about 30 here today) I can certainly see why there might be some people who are asking themselves if the extra $0.02 per gallon is worth staying in the warmth of their car while someone else fills the tank.

The more my wife and I budget and track our money, the more often I find myself asking this question.  Is this service or that item worth the extra money?  Is the convenience worth paying more for or am I just being lazy?  More and more, I find that the answer is No.  In many cases, the convenience isn’t worth a little more slavery to debt.  Each penny that I spend on that convenience is another penny that I cannot use to pay down debt.  Maybe my answers will change when we get rid of our debt, but I think by then our lifestyles and attitudes will have changed significantly enough that the answer will often still be no.