Review: Get A Financial Life

Every other Sunday, The Simple Dollar reviews a personal finance book.

get a financial lifeLately, there have been a ton of good books targeting people in their twenties with a burgeoning interest in personal finance, from Dara Duguay’s revised Please Send Money (targeting college students) to Ramit Sethi’s I Will Teach You to Be Rich (targeting young professional males) to Farnoosh Torabi’s You’re So Money (targeting young professional females) and Michael Masterson’s Automatic Wealth for Grads (targeting young adults with entrepreneurial bents), among many others (check those links – they go straight to my detailed reviews of each book).

So what niche could Beth Kobliner’s Get a Financial Life target? After all, the cover broadcasts the clear subtitle Personal Finance in Your Twenties and Thirties.

The answer’s pretty straightforward: Get a Financial Life focuses pretty directly on the more analytical folks in that age group, the ones who want the facts and want to draw their own conclusions from them. There’s not a lot of attitude or fluff, just a lot of good information compressed into a tight package. If that appeals to you (and you’re in the target age range – twenties and thirties), Get a Financial Life is probably right up your alley.

Let’s dig in.

Get a Grip on Your Financial Life
It all starts with goals. We all have them, but many of us leave our goals in a very unspecific state – at which point they’re more dreams than goals. Make them specific. Kobliner’s recommendation is to assign them numbers – what will they really cost? Once you have those numbers, they move from being dreams to being savings targets.

Next, figure out where your money is going. Keep track of your spending for at least a month (two or three is better) and figure out how much you’re really spending each month. The big focus is figuring out how much you really spend in an unnecessary fashion and cutting it (not eliminating it). You want to leave the non-essential spending that’s really valuable to you and get rid of the ho-hum stuff, directing that cash towards your goals.

Dealing with Debt
Kobliner outlines some of the issues of dealing with debt, but doesn’t really get into a debt repayment plan, probably under the assumption that readers won’t be in too much debt. I’m not sure if I agree with that, but most of the other advice is useful, particularly the details on student loans.

Kobliner does devote several pages to car leases, which is pretty interesting. Car leases are mostly there for people who are willing to pay to essentially rent a new car. The only problem with that is if you compare the costs of that to driving a car up to a healthy mileage (say, 150,000 miles), leases almost always lose out. The cost of actually buying a car may be more, but the many years you can go without a car payment if you drive a car to the problematic stage more than make up for it. If you’re addicted to a shiny new car and have a trust fund, a lease might be a good choice – otherwise, it’s probably not worth the effort.

Basic Banking
The big message here is that it’s well worth your time to shop around for a bank that treats you well. A good bank should have no fees – no maintenance fees, a huge ATM network without fees, no fees for online banking, or anything else – and great customer service. The time investment you put into finding a bank with these attributes will be recouped over the long run.

So how do you find such a bank? Start Googling for bank recommendations. Use Bankrate.com. Ask people you know and trust what banks they use and whether they like them. I use ING Direct for everything and I’m quite happy with them.

All You Really Need to Know About Investing
What do you do when your debt is under control and you’re bringing in a surplus? First step: build up a cash emergency fund equal to a bare minimum of three months’ worth of living expenses, and keep it in a high-interest savings account or a money market account. Second step: begin investing in stocks and bonds.

Kobliner points towards using mutual funds to balance out your risks. That’s fine, but if you’re doing that, seek out index funds – they’re extremely low cost and provide tons of diversification.

The Brave New World of 401(k)s
What about saving for retirement? The big key is to get started now – don’t put it off. The money you put away now is much more valuable than the money you might put away later because you have more years for the power of compound interest to work for you. A stock bought today has more years to pay you dividends than a stock bought in ten years.

Kobliner strongly encourages people to sign up for a 401(k)/403(b) at their place of employment and get any matching funds that their employer provides. Doing that today means you not only get the advantage of compound interest, but you also get 50% or 100% more for free right off the bat, regardless of what the market does.

Once you’re past the level of matching and still want to save more, Kobliner points towards opening a Roth IRA. Beyond that, she offers a long list of additional things you can do if you want to save more.

Oh, Give Me a Home
Rent or buy? It’s a question that many potential homeowners ask themselves (in fact, I’ve finally come to my own conclusion on this … but that can wait for another day). Kobliner suggests some simple rules: if you can’t envision yourself in the same place in several years, rent. If you don’t have a steady income, rent. Don’t assume you get a tax break from buying (the standard deduction can often be more).

If you do decide to buy, you’re again better off waiting. Get a healthy down payment in the bank – 20%, at least. Get your credit into thorough shape. Have a steady, stable job and a tax return that demonstrates this solid income.

Insurance: What You Need and What You Don’t
On the insurance issue, Get a Financial Life covers the basics: life insurance, disability insurance, health insurance, homeowners and renters insurance, and auto insurance. In each case, shop around and investigate all of your options.

Kobliner’s style is to explain all of the options available in a readable style and more or less allow the reader to draw their own conclusions. While this is really helpful, many people often turn to such books to largely be told what to do. The answer isn’t always cut and dried, so Kobliner takes the analytical route – if you spell out clearly the pros and cons of a lot of options, a thoughtful person will clearly be pointed to the right answer for them. That’s why I think Get a Financial Life is a great option for a young, analytical, and thoughtful person – it doesn’t just cram a conclusion down your throat, but explains options in a clear and reasonable way.

How to Make Your Life Less Taxing
The book wraps up (aside from some appendices) with discussions on how to minimize taxes. She offers up a huge list of ways to trim your tax burden via tax writeoffs and deductions.

Surprisingly, Kobliner doesn’t really discuss tax preparation software. We’ve used TurboTax to prepare ours for years and it’s been quite worthwhile, especially with the challenges of filing if you’re self-employed.

Is Get a Financial Life Worth Reading?
Get a Financial Life is short on motivation and long on facts. That makes it the perfect book for some (simply because it stacks so much information together in one place) and useless for others. Unfortunately, it also means that it covers a lot of the same ground as other personal finance books – there’s more detail, but there’s less motivation.

Get a Financial Life works for someone who already is heading in a stable financial direction and has an analytical mind that thrives on facts. Kobliner does a great job of breaking down the pile of information out there.

Get a Financial Life won’t change your life, but it can provide all the meat you need to head in the right direction. For some, that’s perfect. It’s a well-written example of an information-heavy personal finance book.

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  1. Dave says:

    This looks like a good one to check out. I wish I would have had more guidance and rational during college. I hope this book and others will help many of those entering college realize their financial potential so early.

    Well wishes and good luck to you all…

    Dave
    LifeExcursion

  2. AJ says:

    This book sounds like it would be great for me. Thanks for the review.

  3. Amy says:

    Thanks! I totally fit the description of the perfect reader of this book. That saves me a lot of work finding this info.

  4. Hannah says:

    Trent,
    I am curious why you say I Will Teach You To Be Rich targets young professional males. I call that book my bible, and I’m a girl!

  5. I have this very book sitting on my bookshelf, and your review has motivated me to pick it up and read it. Ever since a friend of mine gave me an advance copy of Loral Langemeier’s forthcoming book, “Put More Cash in Your Pocket,” I have been more motivated to take charge of my finances.

    Langemeier’s book gives some good tips on how to start a side business to make extra money each month. It sounds like Kobliner’s book gives some advice on all the basics and would be a good complement.

    I’m glad I found your blog! There’s lots of great information here.

  6. This sounds like a great book. I will add it to the list.

    Thanks!

    -DC

  7. David says:

    There is no doubt in my mind that this book is packed with relevant info on the topic of personal finance. However, it seems to me that what most people need whose finances need work is motivation, and not facts.

    Again, I am sure it is packed with facts, however, I probably would have tossed in at least a few motivational sections as well

  8. Yolander Prinzel says:

    Thanks for the review. This sounds like a great resource book for all those interested–which is perfect for those consumers who want to do something but are overwhelmed with information.

  9. tentaculistic says:

    My comment is not so much about the article (although it is, tangentially, since he provided that link to the bank evaluation site), it’s about changing banks.

    I have Bank of America, and I am just *furious* with them for their fraudulent misuse of our taxpayer bailout dollars for Merrill Lynch bonuses. Then to add insult to injury, they are trying to repay for their fraud (using our – in the broad taxpayer sense- money) by taking our – my family’s – money in ridiculous fees. Our checking accounts’ fees have just skyrocketed to $9, each account; a simple order of checks is $30! What?? And their customer service has shifted abruptly from serving to denying.

    So now I’m trying to figure out how to choose another bank, since it seems like all of them are run by crooks anyway. We need a bank with ATMs, so ING and Emigrant are out. Does anybody know of a bank that is not fraudulent, has ATMs, and has reasonable fees? Thanks, I would appreciate the advice.

  10. tentaculistic says:

    Second question – Bank of America has a “My Portfolio” feature that shows all of your financial accounts (even those that are not BofA) so you can calculate net worth. I have seen several comments on this website that it is actually another website’s software, and the website is free… but can’t remember the name. Anyone know the website?

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