Comments on: Review: How to Be the Family CFO

By: sharon

sharon — Mon, 09 Feb 2009 18:50:15 +0000

Trent, I enjoy your newsletter as well as the comments. Very informative.
I do have a question; we have only a mortgage (1st with 2nd under $100K – live in an expensive part of the world) and I want to pay the small note off quickly so we have more cash and then put the extra to my 401K. Is it better to do this or increase 401K contribution currently? We both work, have 401Ks have a few months expenses saved and no kids.

By: Curtis

Curtis — Mon, 09 Feb 2009 18:24:47 +0000

Trent, I’d like to see some more analysis of this idea that one should save for retirement before saving for kids’ college. The larger question is: At what point has one saved enough for retirement that one can start saving for kids’ college expenses? You can’t wait until you retire, obviously, since your kids will be in college at that point (under most circumstances).

Take my situation: I’m 31, married, no kids, not sure when we’re going to have them but probably in the next five years. We put 20% of our income toward retirement and are putting aside some money for a college fund, which at this point is just in normal mutual funds and CDs, not in an special education account. Before I read your review I thought that 20% of income to retirement savings was pretty solid, now I’m wondering if I should be doing more for retirement and not think about the kids until they’re born.

By: Cheap Like Me

Cheap Like Me — Mon, 09 Feb 2009 18:13:21 +0000

I think taking a CFO perspective also helps take some of the emotion out of managing household money. It’s not “you have to stop spending there” or “I always feel poor” but “This is our financial future, and what choices do we want to make so that we can plan a future that takes our family ship where we want to sail?” That mindset allows for making plans to save a little to remodel the kitchen … or take a vacation … or budgeting to eat out … or whatever floats your boat.

In terms of emergency fund, we started with $1,000. We are gradually building a bigger fund, but in the meantime, we save in separate ING Direct accounts for planned eventualities (Christmas, summer child care, etc.). Once our fund passed $2,000, we felt much more comfortable, because we could pay for a large car repair and STILL have $1,000 just in case.

By: sayjack

sayjack — Mon, 09 Feb 2009 11:29:50 +0000

“Another interesting suggestion from Snider: she encourages people to focus on retirement savings first and not worry about college savings until retirement savings are well taken care of. Why? You can borrow money to go to college, but you can’t borrow money to retire.” This is good advice that most people will not accept. Most parents feel it’s their duty to put their kids through college. I remember when I first heard Suzi Orman give this advice some years ago and I thought to myself how self-centered one must be to put themselves before their kids education. But as with most things in personal finance, an emotional response can land you in a weak financial position. Consider this: if you put your kids college education before your retirement and fall short in your savings, then who will be left to bare the burden? Your kids in most cases. Do your kids a favor and make sure they are not going to have to spend their retirement saving on taking care of you in your “golden years.”

By: richerandslimmer.com

richerandslimmer.com — Mon, 09 Feb 2009 07:05:43 +0000

Just wondering, do you actually buy all the books that you review? One of my biggest expenses used to be books (because I love reading), but I have started checking out books from the local library more and have saved a bunch.

By: Amy

Amy — Mon, 09 Feb 2009 04:47:08 +0000

Thanks for the suggestion. I’m a mother of three young kids, with a husband who has a solid grip on our finances in general, but has a very demanding job that leaves him little time to get the “big picture” of how all the pieces fit together. This task has fallen to me by default, and this book sounds like it was written for someone like me.

By: Beth @ Smart Family Tips

Beth @ Smart Family Tips — Mon, 09 Feb 2009 01:20:04 +0000

Thanks for the review, Trent. I’ve been on the fence about getting this book and your review has convinced me to go ahead and read it. It’s clear that this book may not be the “end-all” guide, but it sounds like it has enough information to help me become more focused in dealing with my family’s finances. I really appreciate how thorough you are with book reviews.

By: Susan

Susan — Sun, 08 Feb 2009 21:36:13 +0000

Section 3 on the emergency fund you state that Dave Ramsey advocates a $1000 emergency fund. That is correct as Baby Step One in his Financial Peace University program (which I just finished going through). He ALSO says after debts are paid off with the snowball effect(baby step 2), to build an emergency fund of 3-6 months and even up to 1 year of expenses (baby step 3) which is what this book, Mary Hunt, yourself and many others advocate. Just wanted to clarify what Ramsey teaches.

By: Wise Finish

Wise Finish — Sun, 08 Feb 2009 21:28:12 +0000

One thing I would add to her book (perhaps she mentions this, but I didn’t get it from the review) is that it is good to have both spouses assume the CFO role at times so that both can understand what is going on with the finances and see where the budget is being exceeded…

By: Dean

Dean — Sun, 08 Feb 2009 20:51:46 +0000

Sorry for the first post to be negative but you have some broken markup, the ‘em’ tags in the final two paragraphs.

By: Duffbert

Duffbert — Sun, 08 Feb 2009 20:17:45 +0000

Just a side note… Dave Ramsey advocates a $1000 emergency fund *as a start*. That takes away the “I have to use a credit card for my “X” emergency”. Once you get things more under control, you should be shooting for the 4 to 6 month emergency fund.

Nice book review…