Most Sundays, The Simple Dollar reviews a personal productivity or personal development book.

A reader wrote to me a while back happily extolling the virtues of Find More Time. I get about ten book recommendations a day (about half of which seem to come straight from publishers), so naturally I was a bit ho-hum about the enthusiasm until I read one key phrase. “It’s basically like GTD for the non-work parts of your life.”

For those of you who aren’t quite into the GTD cult, GTD refers to Getting Things Done, a methodology developed by David Allen for organizing your work tasks mostly by minimizing the “gap time” - the time in the middle you would use to think about what to do next. I’ve been an avid user of GTD for a long time and without it I never would have been able to launch The Simple Dollar.

Naturally, I was intrigued, so I checked Find More Time out from the library. With two kids that I love spending time with and a burgeoning writing career to manage, insights on how to better manage the time I devote to household chores and other drudgery are quite welcome, indeed. Lo and behold, the subtitle right on the cover is How to Get Things Done at Home, Organize Your Life, and Feel Great About It.

Let’s dig in and see what Find More Time can teach us.

A Deeper Look At Find More Time

One aspect of Find More Time that I liked right off the bat was the fact that although it was a lengthy 320 pages that are packed with information, the book itself actually boils down to a checklist of eighty very direct suggestions to follow. The suggestions themselves are each immediate - meaning you can pick them up and do them right away - but also lead to some significant change over time. To me, that is a big part of the value of a book like this: mixing immediacy with lasting change, and mixing bullet-point actions with meaty details. I hope to someday really hit on this kind of a mix in a book of my own.

With each of the sections below, Laura Stack (the author) focuses in on ten specific ideas, describing each of them over several pages. Although I found most of the ideas throughout the book insightful, I’m going to really focus in on two of these ideas per section.

Mastering the First Pillar - Plans
The opening portion of the book focuses in on defining goals and making plans for how to achieve those goals. I’m often amazed when I find that people simply don’t do this - they rarely define large-scale goals for themselves and even fewer actually invest the time to break these goals down into actionable steps.

Maintain a list of my life’s goals and dreams, and make plans for their accomplishments
This is something I sat down and did a while back, defining thirteen goals for my entire life and then defining steps I needed to take to reach each one of them. I even went so far as to discuss in detail my five short term (less than three years) goals. I’ll even share my whole list of thirteen goals with you all, right now.

1. Build up my fitness so that I can do at least rung 30 of the lifetime fitness ladder on a daily basis.
2. Eliminate all of our family’s debt besides our mortgage and build up a $50,000 investment portfolio in three years.
3. Read a significantly challenging book every week.
4. Write a journal of thoughts and memories for my son and for my daughter.
5. Make my writing a full time endeavor. (This one’s done! Hooray!)
6. Write and publish at least five books, one of them fiction.
7. Give each of my children at least one hour of undivided attention each day.
8. Buy a plot of land in the country with significant forestation on it and build a house for my wife and I to grow old in.
9. Go on family vacations to at least four continents before my children graduate high school.
10. Ensure that my children have the means to follow any path they choose when they leave home.
11. Go back to school and get my Master’s degree (at a minimum).
12. Tell my wife and my children that I love each one of them every day.
13. Run for a significant local political office.

If I can do these twelve things, I will have a very complete and content life in every sense I can concieve of. Can you write a similar list for your own life? What’s the first step for each one?

Plan for chaotic transition periods during the day.
Around here, there’s a chaotic period early in the morning when everyone’s getting up and ready for their day. My son is in the bathroom brushing his teeth and shouting about something, my daughter is drooling on the bedsheets while I pull her onesie on over her head, my wife’s stepping out of the shower, and I’m sitting there with my hair disheveled trying to remember everything that needs to be packed away in the diaper bag today.

Stack suggests simply making a checklist of all of the things to be done each morning. Our son needs to get up, brush his teeth, go to the bathroom, get a training pants inspection, pick out clothes, get those clothes on, get his shoes on, and (if he’s going to daycare) gather anything he needs for the day. Our daughter needs to get up, get dressed, get a diaper change, and if she’s going to daycare, get bottles prepared and food stowed away for the day. And that’s just the two kids!

Making a checklist of all of the tasks that need to be done - even if they’re individually no-brainers - makes it easier to just run through the things that need to be done and not waste time thinking about them. In other words, we just make a big list of all of these things and just start running through the list without thinking about them, wringing precious extra seconds and minutes from our morning rush. This really does work quite well, but I’ll admit that I felt silly looking at a checklist with stuff like “Change her diaper” and “Help him with his shoes.” The key was that I didn’t have to think about what to do next - I just glanced at the list and grabbed the next item in line.

Mastering the Second Pillar - Priorities
Even with all of the plans in the world, there are still tons of things to do during a day. How can one choose among them in a way that makes sense both in the short run and in the long run?

Spend enough time with the people that are dear to me.
This is something that most people let slip over time because they view these people as being constants. “I can put off giving Mom a long phone call - she’ll be there tomorrow, after all.” Or, even worse, the Cats in the Cradle scenario: “I’ll spend time with little Timmy later - right now, the big game’s on.” Then the time comes when Mom passes away or the child moves out and you’re left with regret - regret in terms of time not spent with that person that you love.

There really is no better time than right now to spend some time with someone important to you. Give your parents a call. Cancel some plans, take your kid to the park, and play catch with them. Call up an estranged friend of yours and patch things over. The more you put these things off, the more you’ll deeply regret the postponement later.

Make my health a number-one priority.
This is a challenge for me - and for the majority of Americans. 60% of Americans get no exercise at all and a significant portion of those remain get insufficient exercise.

My diet is in pretty good shape - I basically prepare all of my meals at home, my typical breakfast is oatmeal, and my typical lunch is a cold cut turkey sandwich on whole wheat bread. I drink about a gallon of water a day. My problem is really centered on exercise - I literally have to schedule it in each day and make myself do it.

It’s worth it, though. The more I exercise, the better I feel, both mentally and physically. I do a nice exercise session, follow it with a shower, and I feel alive and ready to tackle the mental challenges of the rest of my day.

Mastering the Third Pillar - Personality
This section is mostly about harnessing our individual quirks and turning them towards more productivity rather than less.

Refuse requests when appropriate.
Refusing requests is something that I genuinely need to work on. I often take on extra tasks and responsibilities that I don’t really need to, and it’s usually because I stick my neck out for them. Later on, I find I have far too much on my plate and I regret taking these things on.

The biggest problem is that I tend to seek out problems and want to solve them, even if solving the problem is more than I can chew. Stack’s solution is pretty simple: I just need to regularly remind myself that I can’t solve all of the problems all of the time. Instead, I need to just focus on solving a few of the problems, and solving them well.

Know and honor my energy levels throughout the day.
One of the biggest steps forward I’ve ever taken in terms of productivity is to realize that if I spend all day writing or working at a desk job, I go through a big lull from about 1:30 to 2:30 or so, and then after 4:00, I’m mush. I figured this out by spending a few weeks writing down my perceived energy and concentration level every fifteen minutes throughout the day.

So I changed my routine. Now, I eat lunch at about 11:30 and when I feel that 1:30 lull coming on, I go exercise. I run through my daily exercise routine and, if there’s no children around that I need to watch, I go for a walk. If there are children around, I load them in the stroller and walk. Either way, I spend about forty minutes getting my exercise and follow it up shortly with a shower (again, as soon as I’m free to do that). This leaves me feeling very energetic and mentally engaged and it thus eliminates that downturn at 4:00. On a day focused on writing, my day now ends when I plan for it to end, often when I need to start preparing dinner. Even better, I’m still mentally engaged and energetic when my family arrives home.

Pay attention to your natural energy cycle and respond to it appropriately. It lets you not only maximize your most productive moments, but lets you consider ways to maximize your least productive moments, too.

Mastering the Fourth Pillar - Pests
“Pest” is a general term that Stack uses to refer to the little things that interrupt your day, from emails to phone calls to people just stopping in.

Keep interruptions from wasting my time.
At my previous job, I was largely expected to have my email open at all times, checking the server for new messages every ten minutes, and responding to incoming requests as soon as possible. This was difficult, and often a distraction from getting larger tasks accomplished. Near the end of my tenure, I took to closing my email program for long periods, such as an hour and a half in length, then opening the program and answering all of the built-up emails. It enabled me to focus on some bigger tasks and I found it very refreshing.

Now that I’m effectively on my own, I check email twice a day, period. Between those sessions, I don’t even open up my email program. I also turn my telephone completely off when I want to focus on something, whether it’s writing or spending time with my family. In a nutshell, I don’t need the interruption in my life. If it’s truly urgent, they will call back.

Turn off the technology when with my loved ones.
Of course, that flows right into this point, which I wholeheartedly agree with. If you’re spending quality time with your family, don’t open up the laptop and please, for the love of God, turn that cell phone off. I’ve had dozens of family events over the last few years taken down by people hastily answering their cell phones, sending text messages, browsing on their laptop, or something to that effect.

If you’ve got something urgent going on, great, but don’t let that urgency interrupt quality time with your family. Either turn off the cell phone or turn off the quality time - if you try to juggle both, you’ll just undermine both.

Mastering the Fifth Pillar - Possessions
Here, Laura Stack tackles clutter and “pack ratting,” something that my wife has a strong tendency for. Most of my solutions to that battle involve getting rid of stuff when she’s not paying attention, but maybe Stack has some better solutions.

Set up an effective office space in my home.
In our home, there are three bedrooms on the upper level and one in the basement. We transformed one of the upper-level bedrooms into an office - it has a desk big enough to house a computer workstation and room to write and sort papers (for GTD), plus a big comfortable rocking chair to sit in to read (and occasionally rock children to sleep). In other words, it’s perfect.

But does it help with keeping the house organized. Undoubtedly. All materials related to my writing are in this room - and stay in this room. They don’t leave it unless I’m taking a book with me to read in the family room after the kids go to bed and my wife is doing some take-home work. Within that office, I’m pretty picky about organization, so my workstation space is nearly devoid of anything else. This keeps me on focus and more productive with my writing time - and keeps my professional stuff from trailing all over the house.

Keep my house up neat and tidy up daily.
Before my career switch, we would often do minimal housework during the week and really kick things into high gear on Saturday morning, cleaning the whole house vigorously for a good chunk of the day. Over time, though, I’ve found that by just spending fifteen minutes or so just before bed (when I’m nice and tired) getting some basic household cleaning done, it cuts even more than fifteen minutes out of our weekend chores.

The end result is that we can now fit most of our cleaning into Saturday naptime, leaving us most of the rest of the day to just relax and enjoy a weekend together - and that’s really what I want out of a weekend, not a rushed cleaning that leaves everyone feeling exhausted.

Mastering the Sixth Pillar - Paper
One major challenge I have is with paperwork building up. I currently have a massive pile of stuff that either (a) needs to be filed or (b) needs to be shredded. What kinds of tips does Stack have for these issues?

Create and maintain a filing system that allows me to find papers easily.
I have something of an electronic filing system for these documents that worked very well for a short period - that is, until my scanner decided to give up the ghost. In reality, the problem is in the “maintain” part of the filing system - I’m not maintaining it. Not because I don’t have a scanner, but because I don’t have the initiative to replace the scanner.

That’s about to change. Reading this book really called me on what I was doing to undermine my own plans and I’m going to fix the scanner situation today.

Follow a daily processing system for staying on top of the mail and paperwork.
Aside from the accumulation of stuff that needs to be filed, the basic GTD workflow works well for me. I just dump my mail each day into my pile of “stuff that needs to be dealt with urgently” pile, where all new things go, and then I go through each piece, either discarding it, dealing with it immediately, or putting it in a pile of stuff that’s less urgent.

This works quite well for keeping on top of the mail, as long as I don’t let documents that need to be stored in some fashion accumulate over time.

Mastering the Seventh Pillar - Post
“Post,” in Stack’s parlance, refers to the set of tasks you’re responsible for in the home. I’m responsible for the majority of non-child related tasks like grocery shopping and cooking meals and dishes, largely because my wife is incredibly good at handling upset children - when a child bumps their chin, they come running to her and she’s very good at attending to them and fixing the problem - a certain type of nurturing gene that I don’t express as strongly as she does. The advice in this chapter is pretty solid stuff, helpful for keeping me on the ball.

Hire out simple chores to helpers.
This is something that often meets with debate at our house, but it’s one I find a lot of merit in. Let’s say I’ve figured out in the past that I value my productive time at roughly $30 an hour. Thus, it makes complete sense to me to hire someone to complete menial tasks for rates lower than that. Take, for example, a local woman who cleans houses. She’ll basically houseclean at a rate of about $14 an hour. Now, if I can translate that hour into $30 worth of income, it makes sense to hire that individual to clean - it’s a $16 profit for that hour. A similar thought process applies to a lot of tasks: mowing the lawn, etc.

My wife’s counterargument is that it’s only acceptable if the cost of hiring a person is substantially less than half of the value you put on your time. For example, with the housecleaner, I could easily do the housecleaning myself and figure my time is worth $14 an hour doing it. On the other hand, if I spent that time writing, I’d bring home $16 an hour more, but out of that extra, I’d have to pay taxes and expenses, dragging the actual profit down to just a couple dollars an hour. Thus, it’s more profitable to do the housecleaning myself. It’s an interesting debate, but neither of us really question the idea that hiring someone for menial tasks is a great time saver, freeing us up for other things.

Have goods delivered to avoid unnecessary time at the store.
When I read this, I immediately thought of Amazon Grocery. We use Amazon Grocery for pretty much every dry good in our home, especially everything bulky - diaper boxes, paper towels, toilet paper, dishwashing detergent, laundry detergent, etc. We get all of this material delivered via Amazon. With free shipping, the prices wind up being roughly comparable to our local grocery store, but by ordering it online, the costs of driving to the store and driving home are minimized - instead, we’ve basically moved towards going to the grocery store only for produce and fresh foods.

This winds up being a tremendous timesaver. We can now do the majority of our grocery shopping while standing at the pantry, clicking on the items we need. I keep a page listing all of our most common items, and I just click on the links of those that we’re short on and add them to the cart - it’s much faster than trudging through a store. Even better, they just appear on the front step in a few days - no driving around to the store, driving home, and unloading. To me, it’s an incredible timesaver and one that doesn’t cost much at all, if anything.

Mastering the Eighth Pillar - Play
The last portion of the book focuses on setting aside time for yourself for pure enjoyment of life. It’s this pillar that I found weakest in my own life over the last few years and part of my career change choice leans on strengthening this pillar.

Go on a long vacation each year.
This summer, we’re planning an eight day vacation - yes, with two children in tow. The vacation involves a wide mix of things - camping in a national park, a few days in Chicago (and likely a baseball game), and several other child-oriented activities (including two stellar children’s museums). How will this go? I don’t know, but I’m genuinely looking forward to it.

Make time for a favorite hobby.
My favorite hobby is reading, so I’ve penciled in an hour a day for reading challenging books that make me think. As I’ve stated above, I intend to read one a week for the next three years. Better get crackin’.

Buy or Don’t Buy?

Find More Time is loaded with concrete, specific, and applicable advice for organizing your personal life in order to maximize the free time you have available for the things you want to do. Sure, some of the advice is obvious, but much of it is creative and all of it pushes you in directions that make you carefully consider the personal choices you make.

If you’ve gone through books like Getting Things Done and are still having difficulty finding free time in your life, Find More Time is a very worthwhile read. It’s easily the best book I’ve ever read on personal time managemet, as it recognizes that the one thing that I want more than anything else are blocks of uninterrupted time to spend with my family and on my own interests.

Be aware, Find More Time is fairly long for a book of this type, measuring in at 322 pages of actual text, but the book still comes off as feeling dense - each page is loaded with ideas. After reading it and looking at my notes and ideas, then implementing some of them, I feel much the same way that I did after discovering Getting Things Done - I’ve kicked things up to a new level of productivity. That’s why I actually went ahead and purchased this book for my own bookshelf - it’s that good, and I can see myself returning to it as a reference.

Each Friday, The Simple Dollar reviews a personal finance book.

Blunt. That one word sums up this entire book - in fact, it sums up pretty much everything I’ve ever read by Larry Winget. He cuts right to the chase with his message and doesn’t pull any punches to be “nice.” Some people view that as bullying - others view it as helpful.

From just that little blurb, you probably have enough information to make up your mind about whether You’re Broke Because You Want To Be would be a worthwhile read for you. Some people respond really well to cutting to the chase and not pulling any punches - others are driven away by it. Make no mistake, this book falls firmly into the take-no-prisoners camp.

Personally, that approach doesn’t bother me in the least. I know very well that there are some things in life that are best served by a very direct and forceful personality. For example, athletics - a coach that doesn’t demand a lot and push his players will wind up with a weak team. Does personal finance advice merit this same kind of approach? Let’s dig in and see what Larry has to say.

A Walk Through You’re Broke Because You Want To Be

Introduction
Normally, I skip right over the introductions and head directly to the meat of the book, but in the introduction Larry tackles an issue that has been bothering me as of late: the distinction between poor and broke. Larry really nails it here, so I just want to quote a small piece of the introduction here for posterity.

Please don’t say, “But what about the poor people, Larry? They don’t want to be broke.”

Great point. You’re right. I’m not talking about being poor.

Poor is a condition I find very sad. Sad, yet inevitable. Jesus said, “The poor will be with you always.” And they will. There are people who live in soicieties and countries where there are no opportunities for advancement and it takes all their effort just to survieve. They are not going to have enough to eat well or live well or take care of themselves.

So let’s get this straight from the outset so you can get off your high horse and understand what I am really saying. I didn’t write this book for the poor people of the world. I know it is going to take a lot more than a book to help truly poor people. To think otherwise would be insulting.

I am talking about broke. Broke is not a condition like being poor. Broke is a situation you find yourself in because you are either underearning or overspending.

Larry pretty much hits the nail on the head here. Almost every popular personal finance blog will see a comment or two where a reader will go off on poverty issues. Poverty is not something that I have the capability of addressing - that takes grand societal change. What I can address, however, is the issue of broke, because that’s something an individual can grab ahold of and change.

Chapter One: Money Matters
Since the premise of the book itself is that you make the active choices that cause you to be broke, the first chapter deals with the excuses that people use to deny that idea. There are a lot of them, and I’ve been guilty of most of them at various points in my life.

My favorite one is the “parent” excuse: “it takes all I’ve got just to come home, fix dinner for the family, entertain the kids for a while, put them in bed, take a bath, and fall asleep myself.” I have an infant and a toddler at home, so I know that there is some merit to this argument - but it’s also flawed. First, it’s not a good reason for choosing not to curb your spending. Second, you can find time to improve yourself or find success in other areas - I started The Simple Dollar with an infant at home and kept it running while he grew into a toddler and a second infant arrived on the scene.

Winget’s philosophy is that we choose our destiny via the small choices we make all the time, and we deserve the outcome of those little choices. If you’re constantly choosing to spend more than you should be spending, then you’re broke because you want to be. Until you make up your mind that you truly want something different, you’ll remain broke by your own choice.

Chapter Two: Your Real Problem
Right off the bat, Larry writes, “Your biggest problem is not in your wallet or your bank account. Your biggest problem is between your ears.” That sentence alone sums up the gist of this chapter, which is really about goals and values.

Goals and values? The things that you truly value in life are the things that you end up spending your money on, not the things you claim that you value. If you talk about how you really value your children’s future, then buy a Lexus while their 529 sits empty, you don’t really value your kid’s future - you value your ride much more.

Think about the things that you really value. Make a list of three or so of them - the things that you value most in life. Then compare that list to how you actually spend your money. Are they in alignment? If they’re not, that’s a sure sign of financial trouble.

Chapter Three: Know Where You Are
The first step, of course, is to figure out where you actually are. Spend a month tallying up every dime that you spend - every bill, every splurge, everything. Then compare that to what you’re actually bringing in. The first number needs to be smaller than the second one, period - if it’s not, you’re headed for complete disaster.

The next step is to formulate a plan: figure out what you actually want, then figure out how to get from where you’re at to where you’re going. Larry suggests writing this all down and making it something concrete and tangible - and I totally agree with that idea. It gives you something to hold in your hand, and it gives you something to hang on the refrigerator and see time after time as you move forward.

Chapter Four: How to Get Out of Debt
This chapter consists of a large pile of specific tips for debt reduction and removal. Most of these are fairly mundane - call your creditors, pay ahead on your highest interest debt, cut up your credit cards, stop spending - but two jumped out at me.

Make a spending journal. Basically, every time you spend money on anything, write it down. This is really a psychological trick more than anything, but it forces you to realize how you’re draining your wallet drop by drop.

Make micropayments. This one works well with online bill pay. Basically, whenever you see that you’re a bit ahead with your money, spend it immediately… by making an extra payment on your most painful debt. If you have an extra $20, don’t spend it on something frivolous - instead, immediately make that extra payment so you aren’t tempted to spend it.

Chapter Five: How to Cut Your Expenses and Increase Your Income
Much like the previous chapter, this one is full of a bunch of short ideas on … cutting expenses and increasing income.

Larry really gets to the root of the matter with the idea of cutting expenses. Basically, he suggests making a list of the stuff that you’re willing to give up in your life right now, and to push that a little bit. Could you give up cable? Could you give up television entirely? Could you give up your cell phone? How about your internet access? How about your morning latte at Starbucks? Similarly, he suggests looking for stuff you own that’s unnecessary and excessive, like a monstrous DVD collection.

As for earning more, it’s mostly about busting your butt. You’ve got two choices: either start improving yourself in a very serious fashion to earn more money at your current job, or start work on a second job (or developing your own business). Those are really the only two roads available to most people for increasing their earnings.

The key, though, is that when you reduce your expenses or you increase your income, you don’t then expand your spending to fill that difference. Instead, roll that extra cash into debt repayment, an emergency fund, or if you already have those, into investments and savings for your big dreams.

Chapter Six: The Stuff Most People Overlook
This is a third chapter of quick, short pieces on basic money matters and, again, much of this comes across as familiar. These are more detail-oriented things, such as using a shopping list and getting a good checking account.

One area stood out to me, though, and it’s something that I rarely see tackled in personal finance books. Larry suggests taking up reading books. He offers up a few examples of things to read (a mixed bag of stuff), but the simple fact that he broaches the topic of reading as a way of getting ahead financially is admirable. This is something I’m a big believer in - I’m a regular at my local public library, as it’s a giant building full of free books and most of them have knowledge inside their covers that will either enlighten me or motivate me to make some changes.

Please, read a book and think deeply about what you’re reading. The more you do that, the better off you’ll be, both personally and financially.

Chapter Seven: Now It’s Time for Your New Budget!
The book starts winding down rapidly at this point, as this chapter basically says to recalculate what you’re spending and what you’re earning after making these changes. What you’ll find is that the difference between what you earn and what you spend will be in a much healthier place if you’re genuine about making some real change in your life.

Buy or Don’t Buy?

You’re Broke Because You Want To Be is a personal finance motivation book, straight out of the Dave Ramsey mold. Winget comes off with almost a drill sergeant persona - he’s blunt, to the point, and doesn’t pull any punches with anything.

If you know someone who uses a lot of excuses to avoid taking control of their financial life, this is probably a worthwhile read for that person. That person might be you or someone else you know, but in either case, this is the exact person that You’re Broke Because You Want To Be is written for. The personal finance advice inside isn’t complex or anything exceptional and new, but it is presented with a very strong coach-like tone, and for a person who can be driven by a good motivator or coach, this could be the right book.

Be aware, though, that some people can easily see this sort of tone and attitude as being bully-ish. I don’t see it that way, but I am aware that there can be some severe backlash against Winget’s perspective. If you think you might be in that category, pick up the book on the shelf at your local bookstore and read several pages before jumping in.

I enjoyed You’re Broke Because You Want To Be quite a bit. That’s largely because I enjoy straightforward talk, and that’s just what Winget serves up here.

Over the last several months, I’ve had the opportunity to review all five entries in the Little Book investment series. For those unaware, the Little Book series by Wiley Publishing is a series of small hardcover books. Each entry in the series seeks to explain in layman’s terms a specific investment strategy and how an individual can execute that strategy.

After my review of the fifth entrant, The Little Book That Builds Wealth, several readers wrote in to ask what my views on all of the books in the series were in comparison to one another. Thus, here are my thoughts and recommendations when it comes to the Little Books series as a whole.

Best Investing Advice
The Little Book of Common Sense Investing - John Bogle

Out of the five books, I only found one had a clear and thorough enough argument to actually convince me that the advice was worth following, and that book was John Bogle’s The Little Book of Common Sense Investing. The book itself isn’t the best written one in the series - in fact, much of the book seemed merely to be a simplificiation of Bogle’s earlier book Common Sense on Mutual Funds.

What really carries The Little Book of Common Sense Investing is the strength and logic of the argument. The idea of investing in index funds is simple and it makes a lot of sense - just invest as broadly as you can and minimize the fees you pay. This way, you aren’t completely destroyed by the bad moves of one company, but you don’t get to ride the tidal wave of a single company’s success, either. Instead, you ride the overall waves of the entire market. While doing that, though, you make choices to minimize the amount you have to pay to the investment house for their services - and it can be very inexpensive to invest in index funds.

Taking in the complete argument, Bogle’s is really the only one yet that has truly convinced me of the benefits of that strategy. It’s simple and it works - the exact concept that the series as a whole is trying to espouse.

Most Worthwhile Read
The Little Book of Value Investing - Christopher Browne

Although I think that Bogle’s advice is probably the best to follow, I thought that Chris Browne’s The Little Book of Value Investing was perhaps the most compelling read.

One of the books you’ll see on pretty much any investing reading list is Benjamin Graham’s The Intelligent Investor. It’s generally considered to be the definitive book on value investing - it lays out the strategy in thorough detail and the author has a great deal of reknown and prestige among real-world investors (for example, Warren Buffett considers Graham his mentor). The only problem is that it’s dense. The Intelligent Investor is a challenging and demanding book, and for most armchair investors attempting to gain a well-rounded basic understanding of investment strategies, reading The Intelligent Investor is like using a cannon to kill a ladybug.

The Little Book of Value Investing solves that problem by taking the ideas of The Intelligent Investor and rewriting them in a form that beginning investors could swallow. It doesn’t get into the nuances and the analyses to the level of The Intelligent Investor, but The Little Book of Value Investing nails the concepts. Because of that, it’s almost worthwhile for anyone to read The Little Book of Value Investing first and then follow it with
The Intelligent Investor if they need more.

I’ll say this: reading The Intelligent Investor was much easier the second time through, primarily because I read (and enjoyed) The Little Book of Value Investing just before tackling it. The Little Book of Value Investing taught me the big concepts, then Graham just refined them a bit for me.

Worst Entry
The Little Book That Beats the Market - Joel Greenblatt

This first entrant in the series only really succeeds in one respect: it explains in extremely simple terms how the stock market works. After that, it gets into an investment strategy that seems to be flaky at best - it’s vaguely based on value investing, but it really only uses two metrics to find stocks to invest in, not a thorough investigation of those stocks.

The Little Book That Beats the Market is a fun read, and it can be a good one if you have no idea how the stock market works at all, but if you’re looking for an investment strategy to use, this is one to avoid. The actual strategy within is, as far as I can tell, basically arbitrary - it seems to be “pick two stock metrics and find the companies that do well in both, and then just buy ‘em.” That’s not a winning strategy by any stretch of the imagination.

The Rest
The other two entries in the series, The Little Book That Builds Wealth (on competitive advantage investing) and The Little Book That Makes You Rich (on growth investing) both do good jobs of laying out their specific strategies and are good follow-ups to The Little Book of Value Investing in that they can provide a great background on specific individual stock-picking strategies. They’re not particularly weaker than The Little Book of Value Investing, but I found that one to be a touch more enjoyable to read and the strategy to have much more additional material available to learn from.

In a nutshell, The Little Book of Value Investing is the best one to read for learning (along with The Little Book That Builds Wealth and The Little Book That Makes You Rich, which also do a good job on teaching individual strategies) and The Little Book of Common Sense Investing is the best one to read for application. You should probably avoid The Little Book That Beats the Market unless you’re a complete beginner, but you shouldn’t ever follow that strategy unless you deeply understand why you’re doing it (and the book won’t really teach you that).

Good luck, good reading, and good investing.

Each Sunday, The Simple Dollar reviews a personal productivity or personal development book.

I find that time and time again, my greatest opponent when trying to make intelligent and well-reasoned personal finance and time management issues is myself. I’m my own weakness. I regularly make irrational decisions - I’ll stop in the middle of work flow to surf the internet, or I’ll spend my time talking myself into a replacement workstation that’s far more expensive than what I actually need. This is a persistent problem for pretty much anyone who strives for something greater in their lives. We rely on their own rational behavior, but are often undermined by our own irrational impulses. Why?

Predictably Irrational focuses in on this exact question, digging deep into the causes of such irrational steps and laying bare some useful solutions. It’s written by Dan Ariely, the Sloan Professor of Behavioral Economics at MIT, so the book comes with some authority behind it as well.

As always, the question I’m looking for is what this book can teach me to apply to my own life. Does it provide some useful material, or is it focused on pie-in-the-sky nuances of behavioral economics? Let’s dig in and take a look.

Thumbing Through Predictably Irrational

Chapter 1 - The Truth about Relativity
Why Everything Is Relative - Even When It Shouldn’t Be

Predictably Irrational opens with a discussion of relative decision making - in other words, the idea that we use comparisons, whether fair or not, as a piece of our decision making process. A great example of this is the phenomenon of “keeping up with the Joneses” - we make choices based on a comparison of ourselves with our neighbors, not on a basis of whether or not a particular item suits our particular needs. We also do this when choosing among several options at the store - we rarely choose the cheapest one or the most expensive one and instead choose one in the middle (usually the next-to-most expensive one). Knowing that, retailers can organize the prices such that they get maximum profit not from the expensive item, but from that middle item. Yep, the middle item is often the one with the biggest markup in the store.

Chapter 2 - The Fallacy of Supply and Demand
Why the Price of Pearls - and Everything Else - Is Up in the Air

Ariely argues here that we tend to anchor ourselves to initial prices. For example, when we’re going to look for a DVD player at the store, we look at the price of the first one we see and then use that as an “anchor” by which we judge the other ones. That first price becomes a criteria in judging all other prices. As a result, when a new item comes out, it makes a lot of sense for a retailer to grossly overprice the item and thus set in our minds a very high “anchor” price, so that later on when the price drops a bit, it seems like a huge bargain when in truth there’s still a big fat profit margin for the business.

We do this to ourselves in a lot of ways. For example, during my first day as a full time writer, I more or less arbitrarily made up a schedule for the day, alternating between writing and other tasks. Even by the second day, this schedule had begun to seem natural to me and I used that natural schedule to judge my choices for the day - and by default, I followed that pattern of the first day.

Chapter 3 - The Cost of Zero Cost
Why We Often Pay Too Much When We Pay Nothing

Almost everyone behaves irrationally when the concept of “free” is introduced. The idea of getting something for “free” persuades us to engage in completely irrational behaviors that undermine any benefit we might get from “free.” The most stellar example of this I can think of is Amazon’s “free” Super Saver shipping on orders of more than $25. Let’s say I pop onto Amazon and want to order just one book, like Predictably Irrational, for instance. It’s a new hardback, costing $14.27, so I add it to my cart and see that if I just spend $10.73 more, I can get “free” Super Saver shipping! So I try to think of something to add to the cart so I can get that “free” shipping. Meanwhile, the profit margin on that extra purchase makes Amazon substantially more money than the cost of that “free” shipping, so I pay extra to get an item I don’t really want or need while Amazon pads their profit margin. But it’s “free,” right?

Chapter 4 - The Cost of Social Norms
Why We Are Happy to Do Things, but Not When We Are Paid to Do Them

Social norms also play a big role in our decisions. On our block, quite often people will pitch together to help someone do something like move a couch or rearrange deck furniture. No money is expected, though a cold beer is often accepted as a thank offering. However, if you were to give someone a dollar for this work - a fair wage for lifting a couch for a moment - you’d be quickly ostracized for being a jerk. Why is this? It’s because social norms often far outweigh market norms. This happens time and time again, when we make money decisions and time decisions not based upon what is a fair price, but based on what is socially accepted.

Chapter 5 - The Influence of Arousal
Why Hot Is Much Hotter Than We Realize

The conclusion from this chapter is stunning: our emotions are the single biggest factor in dictating our responses to a situation, to the point where we can almost behave like different people depending on our state. This chapter largely focused on the differences in decision making between a “normal” state and a state of sexual arousal and the study concluded that the decisions made were different enough that it might as well have been different people making the choices. In fact, any emotional state causes some significant changes in the decisions that we make.

Chapter 6 - The Problem of Procrastination and Self-Control
Why We Can’t Make Ourselves Do What We Want To Do

The first real solution to these problems is described here and it comes in the form of precommitments. In other words, we are much better at controlling our impulsive nature if we clearly state goals and set deadlines before we even start, and our biggest failures are often the result of not having concrete goals when we begin the process. For example, if we’re going to make a major purchase, we’re always better off doing the research in advance, checking on Consumer Reports and determining the exact nature of the item that we need. The same goes for managing our time: setting self-imposed deadlines and milestones helps us to keep making progress towards a bigger goal instead of falling into the easy trap of procrastination.

Chapter 7 - The High Price of Ownership
Why We Overvalue What We Have

All of us overvalue the things we own. They are a source of pride for us, an example of some sort of commitment of effort. Not all ownership is equal, though - things that we invest a lot of time in have an even greater value for us. Ariely uses the example of individuals waiting for tickets before Duke basketball games - they go through a long and agonizing ritual to get the tickets and some who participate don’t make the cut. Immediately after the tickets are distributed, the people who have the tickets radically overvalue them, while the ones without tickets value them substantially less. The difference is in the perception brought about by owning the tickets - the ticket owners see the investment of time and effort put into acquiring the ticket and the potential memories of a crazy day at Cameron, while the non-owners see the many possibilities for the hundreds of dollars that a ticket might cost.

This effect is true for anything we’re passionate about that we consider ours. I think of my children - I know quite well my opinion of them is higher than any other male on earth. Sure, that’s because I’m a parent, right? That status of parent is the result of a lot of time and emotional investment in my children, and thus that investment gives me a stronger sense of connection - and thus a higher value - than there would otherwise be.

Chapter 8 - Keeping Doors Open
Why Opinions Distract Us from Our Main Objective

Almost always, we prefer to keep our options open when making a choice, but we often do this to our own detriment. For example, let’s say you were about to buy a new car and you began researching models. With so many out there, it’s easy to keep finding new variations to look at and investigate and thus keep researching and putting off the purchase. Most of us quickly discover the first coping mechanism - eliminating a lot of choices and keeping just a few. But what do we do when confronted with just a few choices, all of which seem pretty equal to one another? Often, we get locked into making irrational decisions - we invest so much time in the choice that any difference between the options is negated by the loss of time and energy spent on making the decision.

I did this myself when trying to decide whether to pursue a full time career as a writer/involved parent. I weighed both options incredibly carefully and found myself going over the choice again and again and again. Yet, when I finally made the choice, it was incredibly clear, quick, and decisive, and I realized that for all the hemming and hawing about the decision, I would have been much better off just choosing based on my initial instinct and analysis and then investing that left over energy into making this adventure work.

Chapter 9 - The Effect of Expectations
Why the Mind Gets What It Expects

Most of us have expectations about what will happen in the future. We root for our favorite team in the World Cup and expect on some level that “our” team will win - and we’re deeply disappointed when they lose, even if it was expected. I know I felt this way watching the 2002 World Cup with friends - I was rooting for the United States and although I rationally knew they weren’t likely to do well, I was crushingly disappointed when they lost in the quarterfinals to Germany.

Interestingly enough, this chapter described a study using two samples of beer: one was Budweiser and the other was Budweiser with a few drops of balsamic vinegar mixed into it. Without knowing the “extra” ingredient, most people preferred the vinegar-laced beer; when they did know, virtually no one preferred it. I tried it myself and, interestingly enough, a drop or so of balsamic vinegar in several ounces of a typical Pilsner beer does make it taste better (though more than a drop makes it taste like vinegar).

Chapter 10 - The Power of Price
Why a 50-Cent Aspirin Can Do What a Penny Apsirin Can’t

The idea that an expensive item can do things that an identical inexpensive item cannot is often called the “placebo effect,” and it pops up all the time. Go to the grocery store, walk down the aisle, and grab a box of generic dry spaghetti and a box of “name brand” spaghetti. Compare the ingredients. I’ll go ahead and tell you what the differences will be: very little. Yet we’ll often buy the name brand spaghetti because the placebo effect of the brand convinces us (irrationally) that it will be better than the generic.

It’s really a fun experiment - try it sometime. Do some side by side blind comparisons of generic products and regular products and see which one is actually better. Quite often, you’ll find that they’re basically indistinguishable, and when you do that, you’ve gone a long way towards cutting down the placebo power of brand names and you’ll be well on your way to making better rational decisions.

Chapter 11 - The Context of Our Character, Part I
Why We Are Dishonest, and What We Can Do about It

Dishonesty is a short term gain in exchange for a long term loss. Here’s an example: if you’re dishonest in a few short-term exchanges, you might make a quick buck or two, but eventually you will acquire a bad reputation and you won’t be able to enjoy the benefits of a trusting relationship - you won’t have repeat customers and people won’t believe in the promises you make or the prices you set.

I like to think of eBay in this context. I usually prefer to deal only with people that have a high reputation and a lot of positive feedback - I tend to distrust people without it. I’m not alone in feeling this way, and thus quite often you’ll wind up paying a premium when buying from a seller with a high reputation. That premium is trust and eBay clearly shows that trust has significant value in business.

Chapter 12 - The Context of Our Character, Part II
Why Dealing with Cash Makes Us More Honest

Interestingly, though, when dealing directly with cash, most people tend to be quite honest. Cheating and dishonesty tend to occur more often when the money is abstract - for example, it’s much easier and more justifiable to us to take a Coke out of the fridge at work than it would be to take a dollar off of someone’s desk. I actually think that this is a big part of the reason people get into credit card debt - they’re abstracted from the money, so it’s easier to delude ourselves into believing we’re doing the right thing.

Chapter 13 - Beer and Free Lunches
What Is Behavioral Economics and Where Are the Free Lunches?

The book closes on a subdued note, surveying the general idea that traditional economics often doesn’t provide a good model of how humans actually behave and arguing that behavioral economics - a mix of economics and psychology - models individual human behavior much better.

Buy or Don’t Buy?

Predictably Irrational is one of those books that’s profoundly worthwhile to read and would be quite wonderful to discuss in a book club environment. It looks at human issues, makes you reconsider them a bit, and leaves you with some food for thought to chew on. Unfortunately, it also falls into the same trap that many of the newer “pop” books on behavior and economics fall into - they’re clearly “read once, think about it a bit, and move on” books, not offering the kind of meat that rewards repeat readings.

I enjoyed Predictably Irrational quite a bit and I’m going to recommend it to many of my friends and also to you, but this is definitely a book worth checking out at the library or buying in conjunction with a friend or two so that you can read it in quick succession and discuss it with each other.

In fact, that’s probably the greatest value this book could have - the interesting discussions it could generate with the people around you. For me, that’s the sign of a very good book, but perhaps not a truly great one. It’s a book that can deeply be enjoyed and leave you thinking for a while, but in a year or two the only memory you’ll have of it is in the few subtle things it subtly inserted into your body of knowledge and understanding of the world.

Each Friday, The Simple Dollar reviews a personal finance book.

The Little Book That Builds Wealth is the fifth book in the Little Books series from Wiley Publishing, each of which focuses in on describing a particular investing strategy in layman’s terms.

This time around, the focus is on competitive advantage, or “moats” - the basic idea that Warren Buffett uses when investing. The author, Pat Dorsey, is the director of research at Morningstar, the well-known investment research firm, so he’s fairly authoritative on the subject.

When I read a book like this one, I’m hoping to really learn the nuts and bolts of an investment strategy, enough so that I can understand how it works and how I might use it to compare companies to one another and decide which one I should invest in. If I learn that without being bored to death, I look at the book as a success - if I’m at the end and still confused, or if the book lulls me to sleep, then I’m not impressed.

Does The Little Book That Builds Wealth live up to this standard, or does it fall short? Let’s take a look.

Looking At The Little Book That Builds Wealth

Chapter One - Economic Moats
The book opens by defining the concept of a moat. In a nutshell, a moat is a significant competitive advantage that one company has over another. The great example used in this chapter is McDonalds - in 2002 and 2003, Mickey D’s caught a lot of bad press because of their poor customer service and perceived slipping food quality. For a restaurant chain without a huge moat, this could have been devastating - for example, look at the implosion of the Little Sambo’s chain in the 1970s, which went from 1,200 restaurants to one in less than a decade. However, McDonalds had some very important moats that gave them time to survive and retool a bit - they had a globally recognizable brand and strong customer loyalty. Those provided a nice moat for McDonalds to keep the competitors from attacking too fiercely and gave the company time to fix their problems and rebound.

Chapter Two - Mistaken Moats
From that explanation, it’s easy to visualize moats for almost any company. Any company with any size is doing something right, and it’s easy to confuse immediate success with competitive advantage. However, quick success usually has very little to do with true competitive advantage. Take Tommy Hilfiger, for example. Once, it seemed they were building a globally competitive brand - but now you can find Tommy clothes on discount racks. The dot-com busts like Pets.com are in the same boat - they seemed to have a competitive advantage because of the internet, but it was a mistaken advantage. There are really only four sources of true competitive advantage: intangible assets (like patents or licenses), customer switching costs (meaning it’s hard for a customer to give up that specific product - think Microsoft), network economics (like an ingrained shipping network), and cost advantages (control over some method of making the product cheaper than competitors are able to). A company with at least one of these and a nice return on capital is a good one to invest in.

Chapter Three - Intangible Assets
Intangible assets are those that don’t have physical form but do produce value. For example, a brand strong enough that people will pay a premium price for it. Take Tiffany’s - if you buy an item from Tiffany’s, you’re going to pay a significant premium for that little blue box, yet the company is consistently able to charge premium prices and customers are willing to pay it. On the other hand, look at Sony - their brand is valuable, but people are quite often willing to choose an identical item with a different brand on it (is your DVD player a Sony?). Patents and regulations are also good moats, but the most valuable ones are those that are composed of lots of small patents and regulations, not a few big ones.

Chapter Four - Switching Costs
I’m a Photoshop user. I know how to use the program quite well and I also know that I’m often frustrated when I attempt to use other image editing packages. For me, there is a large intangible switching cost for abandoning Photoshop, and I’m loathe to pay that cost. This is a clear-cut example of a moat - Adobe can charge a high price for Photoshop because many image editing folks are trained in it and it’s difficult to switch. Lots of businesses have moats along these lines - banks, software vendors, and so on.

Chapter Five - The Network Effect
Any company that has an already-running distribution network for their product, like Anheuser-Busch, has this type of moat. Because of the cost and effort in getting a distribution network set up - and often the challenge of fighting through distribution agreements - a pre-existing distribution network can be a huge moat. It is this reason why it is almost impossible for another large-scale beverage company to independently become as large as Coca-Cola or Pepsi - they can’t afford the costs of distribution. A similar logic occurs with internet companies - they use the internet as their network and reduce brick and mortar costs that way.

Chapter Six - Cost Advantages
Cost advantages come in the form of better locations, better access to resources, and better processes. All of these allow a company to cut costs in ways that their competitors cannot. However, some cost advantages are stronger than others - for example, another company can easily copy the cost advantage of a process, while they can’t easily copy the advantages that a maple syrup company would have in a giant forest of old maples.

Chapter Seven - The Size Advantage
Larger companies simply have a natural advantage over smaller ones. They can execute their plans on scales much larger than the smaller companies and because of their size find efficiencies and discounts unavailable to smaller groups. They can use their size as leverage, promising plenty of business to suppliers in exchange for exclusivity, for example. They can also find efficiencies in processes that smaller companies can’t, like having a person devoted to one tiny nuance of the production while other companies must multitask their workers. Thus, large companies often have an inherent moat, albeit one that can be superceded by other companies over time.

Chapter Eight - Eroding Moats
Obviously, moats can erode over time. One of the biggest factors in moat erosion is technological change. When a new technology arrives on the scene, particularly one that has the potential to change that market significantly, there’s usually a big opportunity for a competitor to severely erode the moat of another company. Similarly, when a company with a moat begins to make bad decisions, they cause their own moat to erode - think of the earlier McDonalds example.

Chapter Nine - Finding Moats
There is no true sure-fire way to find a moat. You have to investigate the business, see how they operate, and then see if they have anything that might be construed as a true moat. Some industries have many companies with moats; others have basically none. Your only true recipe for success is learning how a company really operates, and that takes some research.

Chapter Ten - The Big Boss
Many investment strategies put a lot of importance on the leadership of a company. However, Dorsey makes it quite clear that moats and leadership have little to do with each other. A great leader is not a moat, and a truly great leader cannot usually create a moat, either. On the other hand, even a merely average CEO will not erode an existing moat. Thus, if you’re looking at competitive advantage as a reason to invest, don’t spend much time worrying about the CEO - worry about the business itself.

Chapter Eleven - Where the Rubber Meets the Road
There is one strong way of finding companies that might potentially have a moat, although it’s not a sure indicator: long-term return on capital. Dig into online research tools like Yahoo! Finance and take a look at a company’s return on capital, especially compared to competitors. Is it substantially higher than the competitors? If so, that company may in fact have a moat, and it’s worth your time to start digging into information about the company to see if you can identify their moat.

Chapter Twelve - What’s a Moat Worth?
This chapter is basically an argument for value investing. In other words, a company with a great moat can still be overvalued. Rather than offering an exact recipe for the value of a moat, Dorsey instead suggests looking for companies that are reasonable values to begin with (using factors like a low P/E ratio) and then identifying from among those which ones have moats.

Chapter Thirteen - Tools for Valuation
Dorsey recommends looking at the price-to-sales ratio as well as the price-to-book ratio. The P/S is particularly useful for companies that are temporarily unprofitable, while P/B is great for companies that offer services, particularly financial service firms. P/E (price-to-earnings) is a good general indicator, but make sure that you study this one over the long term in order to minimize the fluctuations in the economy.

Chapter Fourteen - When to Sell
Homework, homework, homework. Moat-based investing isn’t for people who don’t want to put in the time to do some homework. Basically, if you buy a company’s stock, you should have a specific reason for doing so. When that reason changes or goes away, that’s the time to sell. Better yet, that specific reason should have nothing whatsoever to do with what other people are doing in terms of buying and selling - if your reason for investing still exists, you shouldn’t sell it just because the herd is panicking because of a down market.

Buy or Don’t Buy

Much like the other entries in the Little Books series, The Little Book That Builds Wealth is a strong introduction to a particular investment strategy. After reading it, I feel I have a pretty strong grip on how to invest in companies based on competitive advantage and I know some of the basic techniques for identifying companies that might have a good competitive advantage.

Dorsey’s style is perhaps not as animated as others, but he still gets the point across. His writing actually reminds me of an old economics professor in a rumpled sweater, teaching in a world-weary style that doesn’t necessarily make you leap out of your chair and take action now, but holds your attention and makes you think.

If you’ve ever wanted a good introduction into the model of investing that Warren Buffett uses, this is a very good place to start. Dorsey lays it out in a very approachable way and offers up enough concrete examples that anyone can actually see the principles at work. That, my friends, makes for a worthwhile read.

Each Sunday, The Simple Dollar reviews a personal development or personal productivity book.

About two months ago, I settled in to read Margin, a book recommended to me by several readers. Subtitled Restoring Emotional, Physical, Financial, and Time Reserves to Overloaded Lives, it seemed like a book that would match my interests - and the interests of a lot of my readers - very well.

It did. I was blown away by Margin and a big part of me wanted to sit down and write a “home run” review of the book right away. As I sat down to write, though, I was troubled for one big reason: Margin is clearly written from a Christian perspective and makes no bones about it. Since my readers are of a very wide range when it comes to religion (Christians, people of other faiths, agnostics, and atheists all mixed together), I was really hesitant to write about Margin, and I even wrote in detail about my hesitation several weeks ago.

Since then, I’ve thought carefully about the book, read it again, and read the reflections of my readers on the topic. Simply put, this book was too powerful for me from a secular perspective for me to not write about it.

This review is going to be glowing, but please do note that it is written from a Christian’s perspective. If this offends you or turns you away from the book, that’s fine, but there is a lot of valuable and thought-provoking material between the covers of Margin. Let’s dig in.

A Deeper Look at Margin

Marginless Living A lot of us live a marginless life, and that’s why the book opens here, because it’s often easier to define the concept of margin by looking at marginlessness. Financial marginlessness means living from paycheck to paycheck. Time marginlessness means your schedule is tightly packed every moment of the day. Social marginlessness means you have to plan out who you’ll spend time with and when so that you don’t overlook someone. Work marginlessness means even a second of downtime is a terrible waste.

This sounds a lot like my life over the last few years. While I’ve been able to juggle everything, it does not seem like a long-term sustainable and healthy life.

Part One - The Problem: Pain

The Pain of Progress In our daily lives, progress often brings additional complexity along with it. A promotion at work brings more responsibility. More stuff at home means more stuff that requires attention, maintenance, learning, and effort. Progress, in the traditional sense of the word, eats into our margins. We spend more time on maintenance and continued effort and less time on growing and enjoying free time.

The Pain of Problems When we have smaller margins, problems amplify themselves. If you have a schedule that’s tight, a car breaking down is an unmitigated disaster. A sick child can mean a rather significant setback in our career progress. When we’re living paycheck to paycheck, a leaky roof or a blown hot water heater can be almost insurmountable. In each case, a little bit of margin makes that problem far easier to deal with.

The Pain of Stress When your margin gets so small, it becomes stressful to maintain everything. Every change eats away at your small remaining margin, and every problem eats into it, too. Indirectly, knowing this adds a lot to one’s stress level - you know that you’re walking a tightrope, and just one slip spells disaster. Thus, even the “normal” easy things in life bring about stress.

The Pain of Overload So often in our lives, we get “just one more thing” thrown on the stack of things we have to get done. This stretches our margin even thinner, amplifying the pain of problems and the pain of stress even more.

I’ve seen exactly how these things all work together to make your busy life into a personal prison. You keep adding little things to the mix until suddenly you find yourself in a home that really needs a thorough cleaning, sitting down in the basement at 4:30 in the morning after a night of poor sleep because your child was sick, trying to write an article for this morning so that you can get a shower in before you head off to work at a full time job, knowing also that your truck is starting to act up and there’s likely going to be a nice big bill for that due sometime soon, too. That describes me about a month and a half ago - and it’s painful to read and really think about.

Part Two - The Prescription: Margin

Margin Margin, if you’ve not deduced it already, is the difference between the load you’re carrying and the absolute limit that you can carry. In other words, a person with only six hours of scheduled activities in a day has more time margin than a person with ten hours in a day, and a person with $50,000 in an emergency fund has far more financial margin than a person living paycheck to paycheck.

Margin focuses in on building margins in the areas of emotional energy, physical energy, time, and finances, but in truth there are margins in almost every aspect of your life.

Margin in Emotional Energy Swenson offers fourteen solutions for cultivating margin in emotional energy, among which four stood out to me. Cultivate social supports by calling your friends and putting continual effort into building strong relationships with them and not letting them die on the vine. Reconcile relationships by talking to people who you’ve had a difficult relationship with in the past - just call them up and work through it. Rest by simply sleeping more - naps are good (trust me on this one). Grant grace by realizing that your enemies are human and it is good for both of you to forgive their transgressions and move on with life. There are ten more here, too.

Margin in Physical Energy There are really three big tenets here: sleep, exercise, and eat a better diet. Those are three things that we can all do to improve our physical energy level, and the book offers basic tips in each area. As I’ve stated before, I look at exercise and dieting as an investment in yourself, as they build physical energy and endurance and positive feelings that help with every single aspect of life.

Margin in Time Basically, this section encourages finding ways to more effectively manage your time, not so you can squeeze more things in, but so that you have more margin to escape, enjoy non-required activities, and perhaps follow your passions. While there are some very good tips here for time management, I’ve found just three really help me: minimizing electronic interruptions (by closing my email program and web browser when I’m writing, for example, and doing only one email session a day), penciling in blocks of truly free time, and turning off the television.

Margin in Finances There’s also a nice chapter in here on basic personal finances with a focus on building a margin. In other words, Swenson preaches the spend less than you earn philosophy and encourages emergency funds.

Part Three - The Prognosis: Health

Health Through Contentment What makes you feel content? What moments in your life leave you feeling genuinely like things are all right? For most people, these content moments have several things in common - they come from within you and they’re not really influenced by the values of others. For example, I feel most content when I’m eating a really tasty meal at home with my wife and my two children. This contentment has little to do with what others are buying or saying or doing.

Swenson’s advice is to start by ignoring what your peers are doing and ignoring what advertising is telling you. Listen only to your own heart to figure out what contentment is, then follow that exclusively. Don’t let peer pressure or marketing influence what makes you feel content and happy.

Health Through Simplicity By this, Swenson mostly points towards minimizing the complexity in your life. Have a home that’s just big enough, not too big (so you’re not wasting extra time and money and energy on maintenance). Don’t buy a lot of stuff that you have to pick up and maintain (eating time and energy). In other words, strive to nail the basics rather than getting bogged down in the complex.

Health Through Balance Most things in our life require balance. We balance work and free time. We balance time with our spouse and time with our children. We balance action and meditation, speaking and listening, leading and following. Internally, we have a pretty good sense of what the right balance is for ourselves. Listen to what your heart is telling you. Often, if there’s something nagging at you, there’s some balance in your life that’s off-balance. Figure out what it is and put effort into correcting it.

Health Through Rest By rest, Swenson isn’t referring to sleep (physical rest). He’s also talking about emotional and spiritual rest, which he views as actually more important than the physical rest (since your body will make you get the physical rest). He advises spending time mending and nurturing relationships as well as spending time in prayer and meditation each day in order to find that new balance.

Pain, Margin, Health, and Relationship The conclusion was strangely powerful to me. Swenson basically closes the book by stating that without margin in our lives, we can’t open ourselves up to the things that are truly important, the one true path that we should be following in our life. There are so many deeply powerful things that we have the opportunity to do in life - without margin, we can’t open ourselves to finding these things and doing them.

Buy or Don’t Buy?

This is truly an incredible book, and it singlehandedly gave me the courage to dive towards my writing career. That choice gives me the margin I needed to be a much better parent and spouse for starters and opens up the possibility of finding other options and value in my life.

I recommend Margin to everyone, period. It will make you think about what you’re doing with your life in a profound way and may guide you to making choices and decisions that you might not expect. It will stick in your mind for a long while - and perhaps it will make you read it a few more times, too. I’ll say that I’ve read this book four times in the last three months and each time I came away with something different, something new, and something powerful to work on and think about in my life.

I do realize that the Christian tone of the book may reduce the value of it in some eyes, but if you find yourself in that group, just focus on the actions and principles. They work whether you’re a Christian or a completely secular person.

This book is going on my permanent bookshelf, a place that not many books I review on this site wind up. I can’t give it a higher nod than that.

Each Friday, The Simple Dollar reviews a personal finance or personal productivity book.

I had to dig through some very old emails to make sure, but it’s true: Money Drunk, Money Sober was the first personal finance book anyone recommended to me. It was in an email from one of my college mentors, sent to me just a couple days after my college graduation, where he had several suggestions for my personal success in life - and one was to read this book.

As I mentioned a few days ago, I think Money Drunk, Money Sober is a very good personal finance book. It’s short (about 200 pages, but the book itself is small so each page is pretty brief) and to the point while still offering some very insightful perspectives I hadn’t read anywhere else.

You already know I like it. Let’s dig in.

A Tour Through Money Drunk, Money Sober

Part One: The Problem

Chapter 1: From Money Drunk to Money Sober
The premise of Money Drunk, Money Sober is that poor money management has a lot in common with alcoholism. When you don’t know how to manage your money, you’re drunk - stumbling around and doing things rashly and ineffectively. When you’ve got good money management skills, you’re sober. The transition between the two - breaking the “addiction” to bad habits - is like breking one’s addiction to alcohol - painful and uncomfortable all around.

Chapter 2: The “Drunk” in Money Drunk
Here, the profile of the “money drunk” is described, and it sounds familiar. Not only are really bad choices part of the mix (things like spending too much), but strong emotional ties to this behavior are there as well. Money causes giant mood swings, bringing elation one moment and depression the next. Money drunks like about their real financial situation to themselves and to others, and often bring anger and divisiveness to the table when money is being discussed.

Chapter 3: The Last of the Addictions
Money Drunk, Money Sober makes the case here that spending addictions are often tied to other compulsions, perhaps not even ones you can directly see. Some addictions are obvious - like an alcohol addiction - but others are more subtle. Perhaps you’re addicted to the act of shopping, or to a particularly engaging hobby. In any case, when you allow such an addiction to blind you, you often open the door wide to being “money drunk.”

Chapter 4: Growing Up Money Drunk
I think that, in some ways, I grew up “money drunk,” even though we didn’t have a lot of money growing up. Basically, Money Drunk, Money Sober argues that people who are “money drunk” often raise children that become that way, while “money sober” people raise “money sober” kids.

Part Two: Types of Money Drunks

The scary part is, as I read these five profiles, I could think of at least one person that fit each profile.

Chapter 5: The Compulsive Spender
These are people who are addicted to shopping. They get an emotional rush from spending money and buying stuff, and when they haven’t felt that rush recently, they need to fill it. So they run out and buy some more stuff to feel that high.

Chapter 6: The Big Deal Chaser
Big deal chasers are the type who spend above their normal means because they believe a giant payday is just around the corner. They wear expensive clothes to make themselves look very important, but these items are far outside of what they can really afford - their psyche rests on the idea that these expensive purchases will help them to seem important and thus help them to land the “big deal” that will solve all of their financial worries.

Chapter 7: The Maintenance Money Drunk
Basically, these are people who are swept along with the flow of life, never able to stand on their own two feet and take care of things. They constantly blame events out of their control for their problems and thus don’t see any need to step up to the plate and take personal responsibility for things.

Chapter 8: The Poverty Addict
People who follow this route believe that a poverty-like state is the natural state of their life, so they naturally choose behaviors to reflect that state. They take pride in poverty, believing it is a more righteous way to live, so they often underprice their own skills and forget to claim monies that are theirs, for example.

Chapter 9: The Cash Co-Dependent
These are people who enable the bad choices of others. They themselves don’t buy into any of the above four mindsets, but they support and enable the people around them that do.

Part Three: The Solution

The second half of the book consists of a ninety day plan to “recover” from being money drunk. This is really the value of the book - it’s a great complement to the stuff I talk about in my 31 Days series. This plan is intended to cover a three month period, but many of the tasks here can easily overlap and it could be compressed into more time if need be.

Counting and Time Out: The Recovery of Clarity
The opening step is to take a serious accounting of your spending, and also to tell anyone who you owe money to that you can’t answer their plea right now, but you will be able to within ninety days.

Abstinence: The Recovery of Dignity
Interesting advice here. Basically, Money Drunk, Money Sober encourages a period of abstinence from all debt spending - if you need to buy something, use cash. Also, one should get some extra sleep and a bit of exercise. Why? The authors view kicking this habit as being much like kicking other psychological dependencies - you need to be of sound mind and body to give it your best shot.

Inventory and Keeping a Journal: The Recovery of Authenticity
A couple days ago, I mentioned this section in a discussion about asking yourself some deep money questions. The idea was inspired by this chapter, which encourages keeping a money journal and writing down your thoughts and notes in it. They offer a list of suggestions (pretty different from my list) for what to keep in it, but the idea is similar: keep track of what you’re doing.

The Bottom Line: The Recovery of Balance
Make a list of all of the bad behaviors you express in relation to money - and stick with the ones that are non-judgemental. For example, “not working hard enough” is judgemental - there’s no concrete action you can take there. Then, from that list, make a list of the concrete actions you can take from each one of the bad behaviors you listed. I love this kind of thing - setting short term goals is magic.

The Money Map: The Recovery of Accuracy
This step consists of the nuts and bolts of budgeting - making a list of all of your expenses and setting target numbers for each one. I find budgeting to be a very useful thing to do when you’re first turning things around, but budgets are like training wheels - they become a hindrance when you learn how to ride the bike.

The Resource List: The Recovery of Humility
Basically, the idea here is to look for help in your recovery. They advocate Debtor’s Anonymous and other similar groups, as well as talking to those you trust about your problems. True friends are people who will back you up through thick and thin - realize that and talk to them when you need their help.

The Money Buddy: The Recovery of Trust
The idea of talking to friends continues here - find a money buddy. A money buddy is a friend you trust who you can talk to about your money problems and your efforts to fix them and recover from the psychological blockages associated with them.

The Freedom Accounts: The Recovery of Character
Most people who wound up in a bad financial state, particularly people who were “money drunk” in some way or another, eventually show signs of bad character, usually in the form of letting someone down. Cameron and Bryan recommend confronting these shameful moments. Make a list of all of the people you’ve let down and make an effort to make amends. Apologize. Fix the damage you did (as best you can). Repay what you can. Face the music, and you’ll feel better about yourself.

The Prosperity Plan: The Recovery of Joy
Financial recovery doesn’t have to be incredibly boring. Most people go at it hardcore and thus burn themselves out. That’s a bad idea - don’t eliminate all of your spending at once. Instead, find things you enjoy doing/eating/etc. that cost less than what you’re doing now. Maybe you can take up a new inexpensive hobby, or perhaps you can start eating at home more.

The Time Grid: The Recovery of Self
Time management? A lot of people are surprised when such topics show up in a personal finance book (or blog), but I really believe the topics go hand in hand. Money management and time management are two sides of the same coin - because, in the end, time is money and money is time. Money is just a representation of how you spend your time - and in the end, time is what we really all value.

The Relapse Checklist: The Recovery of Compassion
All of us relapse at some time or another, falling back into old habits because they’re familiar to us. I sometimes spend money when I shouldn’t, even now, for example. Falling down every once in a while, though, isn’t irrecoverable - you just need to spend some time understanding what went wrong and how you can fix it.

Spirituality: The Recovery of Peace
This is a big dip into the spiritual nature of money, particularly Christianity. This chapter would fit in well in a Christian book, but it’s the only place in the book where spirituality is really discussed. I agree with the ideas here, though - spirituality and faith can play a big role in recovery and personal growth.

Vision: The Recovery of Hope
In a nutshell, dream. I’ve talked to a lot of people my age over the last year and I’ve found one thing in common: most of them don’t really dream. They used to dream when they were younger, but somehow they’ve moved on to think that dreams are childish and they&