This is the second part of this book review. Part I is here. It’s also a very long post.
The Good News:
1. His initial story about the McIntyres may be the only thing you have to read in the book at all. That story illustrates everything and is pretty powerful. After that, you can almost stop reading.
2. I did like ‘Pay Yourself First’. My best girlfriends are pay yourself first types. They always have savings. If anything, I’m the spendthrift amongst us. Ironically, I’m the only one that owns a home though, because I’m the only one spoiled enough to ask my folks to help me out. (but that’s another post)
3. I also liked calculating how much of your work day is for you section. I calculated that my hourly wage is around $30.00 and I work about 4.7 hours a week for me. At first I thought that was high since his calcuations say people work about 22 minutes a week for themselves, but I double checked it. The 401k savings contribution really does make that difference.
4. Caveat on his advice to pick a percentage to contribute and then do a little more. You have to keep in mind *when* you can change and how easy it is. I worked for a small company last year and though the plan was administered by a large corporation with lots of online services, I could not change my contribution monthly. It had to be done quarterly and I always had to ask HR to make sure it was done. Sometimes they didn’t make the change.
5. He did a good job outlining tax-sheltered retirement savings options. He explained the difference between an IRA and an SEP-IRA very well. I’ve always wondered about that. Now I know that my parents could be putting a lot more in to their SEP-IRA and I will have to talk to them about that. He also introduced me to 401k plans for small businesses and how to obtain one.
6. ‘Emergency Basket of Cash’ I have to give him credit. He’s got the catchy phrases. I really like this one. I’ll have to start using it. It makes me picture myself swinging a deep Longaberger basket of money while skipping down the street in an Easter bonnet. Though I do think he’s a little paranoid about accessibility. I’m ok with locking up my money in laddered CD’s. He is all about the money market account. If you really need liquidity that fast, that’s what balance transfers are for on credit cards. Who needs three thousand of dollars in a blink of an eye? I honestly can’t think of a situation like that which is realistic. If you can get to $1000.00 within 30 days from a laddered CD, isn’t that reasonable?
7. I totally agree when he says keep your rainy day fund and your regular checking account totally separate. One of the biggest failures I’ve had in saving money is accessibility. I have a credit union account that is hard to access, and therefore I don’t touch it. It’s why I’m a big fan of CD’s. The only bad thing about this cache of money is that the interest rate is sickeningly low. Inflation has eaten it up.
8. His 50-50 Savings-Debt strategy makes a lot of sense. I believe in it because the Emergency Basket of Cash is so important. And if you save enough in your EBoC, you can pay a big honkin’ chunk of your debt off at once, feel good about it, and feel like you can afford to do it if you aren’t going to take the cash cushion balance down to zero.
All in all, I think this book offers a lot of hope, which is great. This book is for people who really haven’t started saving at all and need help with getting started. I just feel hesitant because I don’t think he illustrates risk at all. He has one single message, GET STARTED SAVING NOW AND DO IT AUTOMATICALLY. Ok, bud, I got you after the first 4 chapters. It’s repetitious, but if it hammers the message home, then I guess it’s ok. I could see myself giving it to a friend who really needs a kick in the pants to start saving.
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