The Money Book For The Young, Fabulous, and Broke is an attempt by Suze Orman to take personal finance ideas that traditionally appeal to older generations and make them palatable to Generation Y. The back states clearly that this isn’t your parents’ personal finance book, but is there anything really interesting or different about the book that makes it stand out from the crowd? This week, let’s find out!

Chapter 1: Know The Score
The first chapter is all about the credit score: what it means, how to get it, and how to improve it. Most of the main part of the chapter lays out how a credit score is defined, which is almost exactly the same as Wikipedia’s definition of a credit score. Suze’s advice is spot-on here: knowing exactly how a credit score is defined is the biggest key to knowing how to improve it, as most common mistakes with improving a credit score are simply the result of not understanding what’s going on. She’s even wise to the freecreditreport.com ripoff – you should only get your score from the government or directly from Experian, Equifax, or TransUnion.

Most interesting problem: I am slowly paying down my credit card debt and plan to cancel each card as I get the balances to zero. For the love of God, don’t do this. Your oldest credit cards are part of the foundation of your credit report. If you cancel your earliest cards, your credit rating will go down as you are choosing to shorten the length of your credit history, which is a significant factor in calculating your score. Cut them up instead, or put them away in a lock box somewhere.

Chapter 2: Career Moves
The general point of this chapter is that if you’re not happy at your job, find a different one or else subject yourself to a lifetime of misery, something no one wants. Since this book is targeting twentysomethings, this is good advice; you’re at the very point in your life where a career change is most appropriate, before the burdens of a marriage, a home, and children begin to force you to remain employed. Some of her advice here is kind of odd, though; she encourages using credit cards for necessities if you’re working a job that pays very poorly but has strong potential to pay a lot more in the future. I’m not sure I agree with that; I think it’s a better life skill to learn how to suck it up and make it work, so to speak.

Most interesting problem: I hate my job and want to go back to school. In almost every case, this is a bad idea, as it prolongs the inevitable challenge of finding strong employment, increases your debt burden, and also gets you started in the workplace at an older age. For most people, going back to school is a crutch to lean on because they can’t get it done.

Chapter 3: Give Yourself Credit
As I mentioned before, Suze is often just fine with credit cards, and this chapter is basically about how to use credit cards in a sane and sensible manner. I agree with her that they can be used as tools, but the problem is that the modern consumerist society is basically set up to encourage people to spend beyond their means, in which people bringing in $130,000 a year are buying Ferraris and million dollar homes. Marketing has become so effective that for many people it makes the debt risk seem trivial in comparison – and then suddenly they find themselves in desperation. Thankfully, this chapter bookends the “use a credit card” advice with some sense, like making sure that the things you buy are actually necessities, and that eating out (for example) is not a necessity.

Most interesting problem: The only debt I have is my hefty balances on five credit cards. I want to begin to pay them off, but I don’t know where to start. The advice here is a home run: pay the minimum balance on all of them, but pay as much extra as you can on the one with the highest interest rate. Once that’s paid off, move on to the others. This is the route to paying the least amount possible in finance charges.

The Money Book For The Young, Fabulous, And Broke is the sixteenth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

The Money Book For The Young, Fabulous, and Broke is an attempt by Suze Orman to take personal finance ideas that traditionally appeal to older generations and make them palatable to Generation Y. The back states clearly that this isn’t your parents’ personal finance book, but is there anything really interesting or different about the book that makes it stand out from the crowd? This week, let’s find out!

The first thing you’ll notice when you open the cover of Suze Orman’s Money Book For The Young, Fabulous, and Broke is that it’s colored heavily in bright blues and greens all over the place. The second thing you’ll notice is that the entire book has an almost blog-like feel. The end result is a very unusual book reading experience, at least as compared to other personal finance books.

What do I mean by “blog-like”? The book is divided into ten chapters on general topics, which is straightforward enough, but each chapter itself is divided up into tons of short, bite-sized pieces that feel much like a blog post. Many of these are in a question and answer format, meaning that the concepts presented are often adapted into example situations enabling readers to related to the experiences of others.

While some of the questions are pretty clearly connected to the life experiences of a twentysomething, one mark in the book’s favor is that many of the questions really apply well to anyone who is having difficulty getting started with their personal finances, and the design and layout of the book makes it accessible to very busy people who only have time to read a short piece or two at a given time.

However, the real question is if there’s any meat inside this unusual format, so we’ll spend the next three days walking through the book finding out just that. Then, on Friday, I’ll give a buy or don’t buy recommendation.

The Money Book For The Young, Fabulous, And Broke is the sixteenth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

This week, The Simple Dollar is deconstructing five top personal finance and investing pundits and asking the big questions about their track record and their message.

If you flip through the channels on many evenings, you’ve probably seen Suze, perched behind her desk on her personal finance show on CNBC. You almost can’t help but notice her – a very attention-grabbing voice, an assertive personality, and rather bright clothing tend to attract some attention when you’re flipping around. At first, I was annoyed, but then I started to listen… did my annoyance change?

Background
Suze (pronounced Susie) came from a working class background (which she outlines in a few horrific tales in her books) and eventually wound up as a waitress. Eventually, her obvious salesmanship skill came through and she wound up as an account executive in Merrill Lynch in the mid-1980s. From there, she became a Certified Financial Planner and started her own financial group, which eventually led her to a media career.

In other words, Suze has significant experience managing others’ money. However, it should be noted that although no one disputes her background, there are some unclear areas as to how much time she spent on various different tasks.

Message
Orman’s basic advice is pretty typical as personal finance gurus go: pay off your debts, cut out unnecessary expenses, write a will and/or a trust, invest for yourself, and so on. She’s particularly into what is commonly termed the “latte factor”: cutting down on unnecessary expenses and investing them are real keys to moving forward with a strong personal finance plan.

However, two parts of Suze’s message really set her apart – and I believe that it is these two aspects that have brought Suze to the forefront.

First, Suze incorporates a major spiritual element into her advice. By this, I don’t mean a religion-specific message, but more of a general New Age-type spirituality. She genuinely believes in the dignity and power of the human spirit and that good personal finance habits are one major part of getting in tune with our inner selves. Thus, many of her discussions of personal finance issues tie into the human spirit and an overall sense of having different elements of your life in tune with each other.

Second, Suze has a very strong “successful female” persona. She manages to consistently maintain an aura of a woman who has the secrets of success figured out – and that alone is enough to get some people to pay attention. For example, my teenage niece will actually pay (some) attention to Suze, but every other personal finance guru is pretty much not worth her time (observation based on watching CNBC and listening to the radio while my niece is around).

Why are these important to the message? They relate to the viewer with different cues than many other pundits. Suze makes a lot of people take an interest in their finances that otherwise would not and she follows it with a message that works.

My Take
I have this weird love/hate relationship with Suze, which I’ve talked about before.

On the one hand, her persona on television grates on me, from her voice to her personal appearance to her weird mix of brusqueness and sensitivity towards callers. To tell the truth, most of the time I can’t even bring myself to watch her show at all – it’s just too much for me. I see how it could be appealing to some, but it just doesn’t work for me.

On the other hand, I quite like her book 9 Steps To Financial Freedom and I also find her one of the “good” columnists at Yahoo! Finance. I like the ideas that she spreads – they’re sensible and clearly stated and I’m looking forward to reading at least one more of her books to review on here.

Basically, I like the message quite a bit, but the messenger really frustrates me at times.

The bottom line: Suze’s personality can be abrasive to some people, but her message is quite good. Her “persona” might also help some people get the personal finance help they need, and if it gets some people on the right track, that’s great.

The overall point of The 9 Steps to Financial Freedom is laid out clearly on the very first page of the book. The premise of the entire book is that conquering fears is the key to financial freedom. In other words, most of the limiting factors to financial success exist in the walls we’ve built up in our own minds, and achieving success lies in knocking down those walls.

Suze Orman takes this idea and subdivides it into nine steps that you can walk yourself through in order to find the source of those fears, root them out, and remove them from your life. In other words, this book isn’t strong on the actual mechanics of personal finance, but it is strong on setting the psychological stage for strong personal finance habits.

Another distinct feature of The 9 Steps to Financial Freedom is the heavily anecdotal nature of the book. Suze likes to use lots of anecdotes to illustrate her points – and she’s pretty good at choosing strong ones. If overly anecdotal works frustrate you, there will likely be portions of this book that you find difficult. For me, I find anecdotes appropriate in books like this that focus on the psychological underpinings of a thought process; they become less useful when you deal with the actual mechanics of personal finance.

What’s Inside The 9 Steps To Financial Freedom?

The book is divided into nine sections (after the compulsory introduction) that focus on each of the titular nine steps. These steps are:
1. Seeing how your past holds the key to your financial future
2. Facing your fears and creating new truths
3. Being honest with yourself
4. Being responsible to those you love
5. Being respectful of yourself and your money
6. Trusting yourself more than you trust others
7. Being open to receive all that you are meant to have
8. Understanding the ebb and flow of the money cycle
9. Recognizing true wealth

Step 1: Seeing how your past holds the key to your financial future

The focus of this section of the book is straightforward – for almost everyone, there is some key memory related to money in their past that is particularly vibrant. The chapter gives several very strong anecdotes and gives ideas for teasing out that key memory.

Why would you want to tease out that memory? Childhood memories, particularly strong ones, are layered in feelings of all kinds. Those memories are of the moments that defined who you are as a person, and true understanding of those memories can bring about significant insight into your adult life, which is what the second step deals with.

For me, I remembered the time when I worked on a project to raise money for a year, only to have the proceeds stolen from me. It is truly a painful memory to recall.

Step 2: Facing your fears and creating new truths

This second step is really just an extension of the first one. Once you’ve teased out that memory in detail, you can dig through it to see what exactly it says about your current views on personal finance.

The mechanism that the book uses for teasing out these meanings is to make a list of your current fears. What are you afraid of? Once you’re able to actually be honest with yourself and list them, comparing these insights to your memory can be very insightful. Quite often, the memory explains the root cause of your fear. Once you understand what exactly the fear is, you can begin to tackle it in various ways; Suze suggests the “traditional” idea of a mantra that you repeat for comfort and confidence.

To me, the first two steps felt very much like typical “self help” concepts, but they did work; I was able to find a key money memory and it did reflect clearly on my behavior with money today. I don’t particularly find a mantra to be useful for me, but I do agree with the need to conquer fear. The Simple Dollar itself is part of my method of conquering my fear of personal finance.

Step 3: Being honest with yourself

This is definitely the meatiest step of the first part of the book, and it provides the first non-psychological steps you can take to get your financial house in order, though this one is also a psychological trick at its core.

The basic idea is that most people don’t have a real grasp on what they’re spending or what they’re bringing in, and quite often people are spending more than they’re bringing in without really realizing it, thus creating severe financial problems over time. This is pretty typical given the consumerist lifestyle that so many of us live.

Suze’s solution is to take two years worth of records and make a list of everything you spent by category, then make a monthly average for each category. Then, do the same thing for your income and compare the two. Basically, this provides the background for a truly realistic budget; you can see from this data whether you’re overspending or not and you have actual feasible numbers to work with when determining where to cut fat to improve your finances.

Suze provides a lot of ideas on how to use this information in order to subtly trim fat away from your budget, but the real key here is psychological; this step can really make you see where that money is going.

Step 4: Being responsible to those you love

This section is a detailed overview of what I would describe as “disaster planning;” in other words, insurance, wills, and trusts. The general point is that you should focus first on the people that are truly important to you and make sure that insurance and wills and such are set up so that if something happens to you, everything is taken care of in the way you truly want. The argument is that this allows you to feel much more confident about your place in the world.

The chapter is a pretty solid overview of the world of insurance and estate planning. Suze repeatedly encourages people to contact an expert for handling these things and not to trust her book, which is something I really appreciate. You should never trust a book to give you all of the answers when it comes to areas of the law that you don’t fully understand.

She makes very strong cases for revocable living trusts, long term care and disability insurance, and a large dollop of life insurance, all of which would only be triggered in the event of a major crisis. Some people would likely shrug their shoulders at this, but I think the point for her is that it is psychologically healthy to be able to look at the people you care for and know that if something disastrous were to happen to you, they would not be destitute. This is a great attitude if you can afford it.

Step 5: Being respectful of yourself and your money

The focus of this chapter is getting your own basic financial house in order: putting plenty into retirement, getting out from under any high-interest debt, and so forth. In essence, this chapter tries to ensure that you are on a level playing field with your long term future covered. She argues that this will, again, make you feel better about yourself and your money.

This chapter is pretty basic in terms of such rearrangement of personal finances, hitting upon the usual bromides: pay off your credit cards as soon as you can, take advantage of every dime of employee matching in your optional retirement plans (401(k), 403(b), and so on), and max out what you can put in a Roth IRA. In the last year, I’ve done two of the three of these and she’s right: it has been invaluable in improving my personal psyche. The only one I’m not doing yet is the Roth IRA, as my highest priority for the moment is a house down payment so I don’t have PMI or high interest rates.

Step 6: Trusting yourself more than you trust others

After two chapters of pretty solid individual financial advice, the sixth step focuses on building wealth for yourself. Basically, this chapter focuses on trusting yourself in terms of where to go next once your financial house is in order.

Suze is a big proponent of complete trust in your gut feelings, and most of this chapter focuses on that, particularly in terms of how you can use that gut feeling to guide your investing. The whole point of this chapter, in fact, is that you should become as comfortable as you can with your money so that you can follow your pure gut instinct about what’s right for you, which makes a lot of sense. She even provides a seven page questionnaire that can guide you along this path of comfort.

One portion of this section that made me somewhat uncomfortable is her repeated hinting that one should really get a financial planner, which seems to contradict most of what she says. For example, she continually points out that most index-based mutual funds beat managed mutual funds, but in the next breath she encourages readers to seek out a financial planner for advice. If you’re investing the time to read this book, wouldn’t it make sense to also invest the time to do the planning yourself?

Step 7: Being open to receive all that you are meant to have.

This step focuses on the fact that money in and of itself doesn’t really bring happiness, but that happiness can bring money. Thus, money is merely a tool to bring about happiness.

Suze gives some solid advice here on the therapeutic effects of giving to charities, as well as the strong bromide that you should never let cash gifts interfere with family and friends. Yet much of this comes off as a contradiction, since most of the book up to this point focuses on how to balance your financial life and accumulate wealth.

Step 8: Understanding the ebb and flow of the money cycle.

This step is merely the realization of the fact that much good can come from the bad times in our lives, whether it be new opportunities or merely personal growth. Quite often, the mistakes one makes in life end up being the foundation for much greater things.

Step 9: Recognizing true wealth

The final step is the simple recognition that the truly valuable things in life are not monetary. It seems simple, but so many people overlook this fact. The most valuable thing in my life, for instance, is the smile of my son when I’m playing with him. It has no real financial value, but no amount of money can ever replicate that feeling.

The final three steps are quite short, but they are important in one fundamental way: the true path to wealth comes not from having enough money, but from having inner peace.

Buy or Don’t Buy?

Now we come around to the big question about The 9 Steps to Financial Freedom: should I buy it or should I skip it?

The most important factor to realize about this book is that it focuses much more on the psychology of personal finance than on the mechanics of personal finance. If you’re looking for nuts and bolts ideas, this book won’t hold very much meat for you. On the other hand, if you’re lost and wondering where all of the money went, this book is right up your alley, as those issues are typically psychological in nature.

This book also features the Suze Orman “personality.” If you find her persona on television to be highly grating, then there are many aspects of this book you will also find grating. Admittedly, the Suze Orman factor isn’t quite as thick in print as it is on screen, but if this is a major turn-off for you, then avoid the book. If you’re already a fan of hers, on the other hand, this book will fit right in.

In short, buy this book if you’re really unsure how to get started in setting your financial ship right. If you feel very lost with your money, her approach is a solid one, because your biggest problem is getting your mind in the right framework so that you can improve your financial situation.

On the other hand, don’t buy this book if you’re already on a solid financial path. There isn’t much to this book in terms of the actual mechanics of personal finance; you’ll be much better off reading books that provide information on specific topics rather than this one.

I originally reviewed The 9 Steps To Financial Freedom in five parts, which you may view here, here, here, here, and here if you’d like to read the original comments.

The 9 Steps To Financial Freedom is the second of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

This week, The Simple Dollar is conducting a detailed review of Suze Orman’s The 9 Steps to Financial Freedom. This title has appeared on countless personal finance shelves over the past decade; does the content inside hold up? We aim to answer that very question.

Now we come around to the big question about The 9 Steps to Financial Freedom: should I buy it or should I skip it?

The most important factor to realize about this book is that it focuses much more on the psychology of personal finance than on the mechanics of personal finance. If you’re looking for nuts and bolts ideas, this book won’t hold very much meat for you. On the other hand, if you’re lost and wondering where all of the money went, this book is right up your alley, as those issues are typically psychological in nature.

This book also features the Suze Orman “personality.” If you find her persona on television to be highly grating, then there are many aspects of this book you will also find grating. Admittedly, the Suze Orman factor isn’t quite as thick in print as it is on screen, but if this is a major turn-off for you, then avoid the book. If you’re already a fan of hers, on the other hand, this book will fit right in.

In short, buy this book if you’re really unsure how to get started in setting your financial ship right. If you feel very lost with your money, her approach is a solid one, because your biggest problem is getting your mind in the right framework so that you can improve your financial situation.

On the other hand, don’t buy this book if you’re already on a solid financial path. There isn’t much to this book in terms of the actual mechanics of personal finance; you’ll be much better off reading books that provide information on specific topics rather than this one.

Next week, The Simple Dollar will take a look at a book that stretches the definition of a “personal finance” book, as it provides a bit of an unusual approach to the topic.

You can jump quickly to the other parts of this review of The 9 Steps to Financial Freedom using these links:
Overview
Steps 1-3
Steps 4-6
Steps 7-9
Buy or Don’t Buy?

The 9 Steps to Financial Freedom is the second of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

This week, The Simple Dollar is conducting a detailed review of Suze Orman’s The 9 Steps to Financial Freedom. This title has appeared on countless personal finance shelves over the past decade; does the content inside hold up? We aim to answer that very question.

Yesterday, we looked at the fourth, fifth, and sixth steps in The 9 Steps to Financial Freedom and discovered that they laid out a path to creating peace of mind by putting your finances in order in a way that increased your ability to trust yourself. Today, we’ll look at the final three steps that Suze recommends.

Step 7: Being open to receive all that you are meant to have.

This step focuses on the fact that money in and of itself doesn’t really bring happiness, but that happiness can bring money. Thus, money is merely a tool to bring about happiness.

Suze gives some solid advice here on the therapeutic effects of giving to charities, as well as the strong bromide that you should never let cash gifts interfere with family and friends. Yet much of this comes off as a contradiction, since most of the book up to this point focuses on how to balance your financial life and accumulate wealth.

Step 8: Understanding the ebb and flow of the money cycle.

This step is merely the realization of the fact that much good can come from the bad times in our lives, whether it be new opportunities or merely personal growth. Quite often, the mistakes one makes in life end up being the foundation for much greater things.

Step 9: Recognizing true wealth

The final step is the simple recognition that the truly valuable things in life are not monetary. It seems simple, but so many people overlook this fact. The most valuable thing in my life, for instance, is the smile of my son when I’m playing with him. It has no real financial value, but no amount of money can ever replicate that feeling.

The final three steps are quite short, but they are important in one fundamental way: the true path to wealth comes not from having enough money, but from having inner peace.

Tomorrow, in the final part of this five part series reviewing The 9 Steps to Financial Freedom, I’ll give a final judgement on this book: buy or don’t buy.

You can jump quickly to the other parts of this review of The 9 Steps to Financial Freedom using these links:
Overview
Steps 1-3
Steps 4-6
Steps 7-9
Buy or Don’t Buy?

The 9 Steps to Financial Freedom is the second of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

This week, The Simple Dollar is conducting a detailed review of Suze Orman’s The 9 Steps to Financial Freedom. This title has appeared on countless personal finance shelves over the past decade; does the content inside hold up? We aim to answer that very question.

Yesterday, we looked at the first three steps in The 9 Steps to Financial Freedom and discovered they mostly dealt with psychological self-analysis. Today, let’s look at the next three steps in a bit closer detail.

Step 4: Being responsible to those you love

This section is a detailed overview of what I would describe as “disaster planning;” in other words, insurance, wills, and trusts. The general point is that you should focus first on the people that are truly important to you and make sure that insurance and wills and such are set up so that if something happens to you, everything is taken care of in the way you truly want. The argument is that this allows you to feel much more confident about your place in the world.

The chapter is a pretty solid overview of the world of insurance and estate planning. Suze repeatedly encourages people to contact an expert for handling these things and not to trust her book, which is something I really appreciate. You should never trust a book to give you all of the answers when it comes to areas of the law that you don’t fully understand.

She makes very strong cases for revocable living trusts, long term care and disability insurance, and a large dollop of life insurance, all of which would only be triggered in the event of a major crisis. Some people would likely shrug their shoulders at this, but I think the point for her is that it is psychologically healthy to be able to look at the people you care for and know that if something disastrous were to happen to you, they would not be destitute. This is a great attitude if you can afford it.

Step 5: Being respectful of yourself and your money

The focus of this chapter is getting your own basic financial house in order: putting plenty into retirement, getting out from under any high-interest debt, and so forth. In essence, this chapter tries to ensure that you are on a level playing field with your long term future covered. She argues that this will, again, make you feel better about yourself and your money.

This chapter is pretty basic in terms of such rearrangement of personal finances, hitting upon the usual bromides: pay off your credit cards as soon as you can, take advantage of every dime of employee matching in your optional retirement plans (401(k), 403(b), and so on), and max out what you can put in a Roth IRA. In the last year, I’ve done two of the three of these and she’s right: it has been invaluable in improving my personal psyche. The only one I’m not doing yet is the Roth IRA, as my highest priority for the moment is a house down payment so I don’t have PMI or high interest rates.

Step 6: Trusting yourself more than you trust others

After two chapters of pretty solid individual financial advice, the sixth step focuses on building wealth for yourself. Basically, this chapter focuses on trusting yourself in terms of where to go next once your financial house is in order.

Suze is a big proponent of complete trust in your gut feelings, and most of this chapter focuses on that, particularly in terms of how you can use that gut feeling to guide your investing. The whole point of this chapter, in fact, is that you should become as comfortable as you can with your money so that you can follow your pure gut instinct about what’s right for you, which makes a lot of sense. She even provides a seven page questionnaire that can guide you along this path of comfort.

One portion of this section that made me somewhat uncomfortable is her repeated hinting that one should really get a financial planner, which seems to contradict most of what she says. For example, she continually points out that most index-based mutual funds beat managed mutual funds, but in the next breath she encourages readers to seek out a financial planner for advice. If you’re investing the time to read this book, wouldn’t it make sense to also invest the time to do the planning yourself?

Tomorrow, in the next part of this five part series reviewing The 9 Steps to Financial Freedom, we’ll tackle the final three steps that Suze offers.

You can jump quickly to the other parts of this review of The 9 Steps to Financial Freedom using these links:
Overview
Steps 1-3
Steps 4-6
Steps 7-9
Buy or Don’t Buy?

The 9 Steps to Financial Freedom is the second of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

This week, The Simple Dollar is conducting a detailed review of Suze Orman’s The 9 Steps to Financial Freedom. This title has appeared on countless personal finance shelves over the past decade; does the content inside hold up? We aim to answer that very question.

Yesterday, we looked at The 9 Steps to Financial Freedom as a whole and observed that this book focuses on laying a psychological foundation for healthy personal finance. Each step in the book seeks to strengthen this foundation so that, by the time one works through the concepts in the book, a much healthier concept of finances can grow. Today, let’s look at the first three steps in a bit closer detail.

Step 1: Seeing how your past holds the key to your financial future

The focus of this section of the book is straightforward – for almost everyone, there is some key memory related to money in their past that is particularly vibrant. The chapter gives several very strong anecdotes and gives ideas for teasing out that key memory.

Why would you want to tease out that memory? Childhood memories, particularly strong ones, are layered in feelings of all kinds. Those memories are of the moments that defined who you are as a person, and true understanding of those memories can bring about significant insight into your adult life, which is what the second step deals with.

For me, I remembered the time when I worked on a project to raise money for a year, only to have the proceeds stolen from me. It is truly a painful memory to recall.

Step 2: Facing your fears and creating new truths

This second step is really just an extension of the first one. Once you’ve teased out that memory in detail, you can dig through it to see what exactly it says about your current views on personal finance.

The mechanism that the book uses for teasing out these meanings is to make a list of your current fears. What are you afraid of? Once you’re able to actually be honest with yourself and list them, comparing these insights to your memory can be very insightful. Quite often, the memory explains the root cause of your fear. Once you understand what exactly the fear is, you can begin to tackle it in various ways; Suze suggests the “traditional” idea of a mantra that you repeat for comfort and confidence.

To me, the first two steps felt very much like typical “self help” concepts, but they did work; I was able to find a key money memory and it did reflect clearly on my behavior with money today. I don’t particularly find a mantra to be useful for me, but I do agree with the need to conquer fear. The Simple Dollar itself is part of my method of conquering my fear of personal finance.

Step 3: Being honest with yourself

This is definitely the meatiest step of the first part of the book, and it provides the first non-psychological steps you can take to get your financial house in order, though this one is also a psychological trick at its core.

The basic idea is that most people don’t have a real grasp on what they’re spending or what they’re bringing in, and quite often people are spending more than they’re bringing in without really realizing it, thus creating severe financial problems over time. This is pretty typical given the consumerist lifestyle that so many of us live.

Suze’s solution is to take two years worth of records and make a list of everything you spent by category, then make a monthly average for each category. Then, do the same thing for your income and compare the two. Basically, this provides the background for a truly realistic budget; you can see from this data whether you’re overspending or not and you have actual feasible numbers to work with when determining where to cut fat to improve your finances.

Suze provides a lot of ideas on how to use this information in order to subtly trim fat away from your budget, but the real key here is psychological; this step can really make you see where that money is going.

Tomorrow, in the next part of this five part series reviewing The 9 Steps to Financial Freedom, we’ll tackle the next three steps that Suze offers. These three steps make up much of the meat of the book; you won’t want to miss The Simple Dollar’s take on it!

You can jump quickly to the other parts of this review of The 9 Steps to Financial Freedom using these links:
Overview
Steps 1-3
Steps 4-6
Steps 7-9
Buy or Don’t Buy?

The 9 Steps to Financial Freedom is the second of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.