Review: Hot (Broke) Messes

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

hot brokeOne of the best parts about writing The Simple Dollar is the opportunity I have to hear from people who have turned their life around due to better financial choices. They usually end up finding themselves on a better personal and professional path as well because they’re empowered and de-stressed due to the improvement in their financial situation.

That’s essentially the story told in this book, Hot (Broke) Messes by Nancy Trejos, a personal finance columnist for the Washington Post. In 2008, she found herself in a situation fairly similar to the one I found myself in circa 2006. She seemed to “have it all” in her life, but she wasn’t actually able to pay the bills and was deeply unhappy with certain circumstances in her life.

Much like I did, she swallowed her pride a bit and chose to publicly share the details of her financial turnaround both on the ‘net and in the form of a book. This is her story of turning her financial life around, peppered with useful information and ideas all throughout.

One: Life in DC, as in Debt City
The book opens with Nancy relating the tale of her financial bottom in June 2008, paired with a discussion of her childhood and early years where many of the elements of those financial mistakes were already put in place. Many of the themes of this story sounded eerily familiar to me, even as the details were quite different. The general theme of having a financially strapped childhood followed by a lack of understanding of how to properly utilize a somewhat larger income sounded very, very familiar, in fact.

Two: The College Years: Keeping Up with the Jane Hoyas
When she went to college from such a financially tight background, Nancy seemed to feel fairly unworthy when she arrived at Georgetown. In order to undo that sense of inadequacy, she turned to the abundance of easy-to-acquire credit cards, using them to buy the material things that the people who “belonged” at Georgetown seemed to have. Again, this is a story I can really identify with (and I should write about at length at some point…). She offers several solutions to running into credit problems in college; I strongly agree with talking to your parents if you find yourself getting into consumer debt issues during your college years.

Three: Oops! I Did It Again, and Again, and Again
Much like myself, Nancy’s early professional life involved a lot of upheaval and a lot of personal and professional situations she wasn’t quite ready to handle – and that included her finances, which were often used as a panacea to soothe her problems. After all, after a bad breakup, why not just go to an expensive spa to make yourself feel better? Of course, this is a trap – all it does is greatly extend the period of upheaval in your life. You’ll just pay extensively for it later.

Four: Personal Finance 101
Here, the personal finance advice begins in earnest: getting a checking account, keeping your credit score under minimal control, and making sure your income taxes are paid. For most of us, this kind of thing is obvious, but for a surprising number of folks, these basic steps aren’t basic at all. I’ve met many people who are completely unaware that they should be paying income taxes at all, saying things like, “I thought filing taxes was just for rich people.”

Five: Take My Hand
The real key to personal finance is goal setting, and here Nancy talks about her first go-round with setting goals in her own life as they pertain to better personal finances. Why set goals? A well-stated goal embodies something you want deeply in your life and provides a very clear way for getting there, leaving it up to you to focus on what you need to do each and every day to move towards that goal. Of course, you don’t have to do it alone – use the people around you or even a certified financial planner for assistance.

Six: The Kiss of Debt
Debt can feel overwhelming, especially when you see that you’re in debt far, far over your head. When you see balances that compare to your annual salary and interest being dumped on top of that, it feels impossible. What you need here is a plan – one that distinctly states what you need to do each and every month to move forward on that goal. It seems long and painful, but by having a plan and then utilizing every good thing that comes your way to further your progress towards that goal, you’ll find that it’s easier than you thought.

Seven: Love and Money
Financial dependence is a dangerous thing, especially outside of a marriage. If you have a relationship that isn’t based on a long-term commitment and you’re financially dependent on your partner, you’re in a precarious situation that you should avoid. If you’re in a relationship with unequal finances, do not adjust your personal spending to a higher level because there are more resources available because, when the relationship ends, you’re likely to continue those habits and find yourself in a big financial hole.

Eight: To Have or Have Not
Everybody wants some material things. The route to success is to have a grip on your spending habits (meaning you clearly understand how much you can actually afford to spend in a given month) as well as some sensible shopping habits (meaning, for example, that you shop for clothes first at consignment stores and low-end shops instead of heading to a shop where you spend $800 on a tank top). I achieve this by having an allowance, researching my purchases, and waiting around for bargains instead of “needing” something now.

Nine: You’re So Vain
One big step is to stop worrying so much about what others think of you. The next step is to focus on less expensive ways to make yourself look and feel good. You don’t need $50 bottles of shampoo when a $5 one will get your hair perfectly clean (and, in my case, I’m talking a jumbo bottle for that $5). You don’t need tons of expensive makeup when just the basics leave you looking vibrant (or none at all – so many people look better without the makeup they wear). Stop getting your beauty advice from salesmen and those who just repeat the advice of salesmen.

Ten: The Price of Fun
It is far, far less expensive to entertain at home than it is to go out for entertainment, even if you’re consistently the host. That doesn’t mean you need to become a homebody per se, but it does mean that your wallet will thank you for changing up your entertainment a little bit instead of just doing the same things over and over. Explore some new things – potluck dinners, board games, and movie nights are highly recommended by me.

Eleven: Hot Wheels
Your car is not an expression of who you are. It’s an expensive device that helps you get from point A to point B efficiently. Once you grasp this idea – and then ask yourself if you need a car at all, and if you do, what features you actually need – you’ll find yourself buying much more appropriate vehicles, which means much less financial burden and debt just for that device that helps you move from point to point. To put it frankly, I would not own a vehicle if I lived in a place with mass transit.

Twelve: Good Debt, Bad Debt
Here, Trejos makes the typical “good debt, bad debt” comparison, where she identifies some types of debt as good (student loans, a fixed rate mortgage, your first car loan) and others as bad (credit card debt, mostly). I agree with this dichotomy only to a certain extent, mostly in a sense, for example, that some types of guns do less damage than others (pellet guns versus fully automatic rifles). No debt is really a good thing in the end.

Thirteen: Sex and the City Meets The Golden Girls
Retirement often doesn’t seem like any sort of realistic concern to someone in their twenties or thirties, but the key thing to remember is that if you start to save in your twenties and thirties, you don’t have to save nearly as much for retirement than if you wait until your forties to start. You can get away with (relatively) tiny amounts of retirement savings if you start younger. That’s why the most important thing you can do with regards to your retirement savings is simply start saving – as long as you diversify what you save, you’ll be much better off than if you wait.

Fourteen: What Do You Expect When You Didn’t Expect It?
A healthy emergency fund can make all the difference between a bad event being apocalyptic or merely being a road bump. An emergency fund means cash – it doesn’t mean a credit card that’s available to you only at the whim of a bank who might cut your line of credit when you need it most. The best way to build this up is to open a savings account, then start some small automatic transfers into that account on a highly regular basis (say, weekly). Trejos also offers brief coverage of various types of insurance and unemployment benefits here.

Fifteen: Papa Don’t Preach… Unless He’s Paying My Rent
Here, Trejos covers the phenomenon of children returning to the nest when they find themselves having financial or professional difficulties after college. This tends to happen much more often in times of economic crisis. Even worse, it can be a difficult situation for both the child and the parent if it’s not dealt with in a frank fashion. The key here is candor and discussion, with both parent and child both stating what their expectations and plans are for such an arrangement. Without that, you’re begging for hurt feelings and problems down the road.

Sixteen: Show Me the Money
Near the end of the book, Trejos addresses frugality in earnest for the first time, discussing a ton of little ways (most of them fairly well known) for saving money in just a handful of pages. My favorite? Using your home to make money by renting out rooms, something we’ve discussed doing in the past and may ultimately do in the future.

Seventeen: Somewhere Over the Rainbow
The final chapter is actually a diary by Trejos of her first few months dealing with her financial recovery. It somewhat brings the book full circle, harkening back to the deeply personal nature of the first few chapters.

Is Hot (Broke) Messes Worth Reading?
This book works best when it focuses on Nancy Trejos’ story rather than trying to be a one-size-fits-all personal finance book. The first few chapters and the last chapter are thoroughly engaging and set the stage for threads that carry throughout the book, though the thread is fairly weak in the meaty middle of the book.

If you find that ideas go down better if presented in the context of an engaging story, this will be a great personal finance book for you, particularly if you’re a twenty- or thirtysomething professional female.

If you find yourself too far outside of that description, this book will still offer great advice, but there may be other books out there that click well for you.

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22 thoughts on “Review: Hot (Broke) Messes

  1. Wait, don’t you have a mortgage? Are you saying that taking it out was a bad idea? Or does it exist in some shadow realm where you wouldn’t do things differently but you should be flagellating yourself for having debt which is bad no matter what? I mean, I agree that it’s simplistic to say that student loans and mortgages are per se good debt, but it’s not less simplistic to say that there’s no good debt.

  2. One can say that there is no ‘good debt’, but that there is ‘less bad debt’. ‘Good debt’ does give people license to not think and not repay, whereas thinking of all debt as bad, but some of it worthwhile gives you the freedom to spend where more practical, but a reminder to repay it.
    It’s all semantics.
    Whatever you call it, no car loan should ever be included. A car is NOT a necessity, and a first car should be a really cheap one that you drive into the ground while saving money for something else.
    .
    Remember – there are places without mass transit, and people who like to go to those places. and I’m no talking cornfields. I’m talking wilderness.
    I live in a big city with mass transit. I live downtownish, I bike to work, walk to the grocery store, and take the trail when the weather’s horrid.
    And i own a car.
    Because once a week at minimum, and up to three or four or more times when I can, I leave the city. and I go to places that are interesting particularly because there is no transit there. And sometimes no roads, and no people.
    .
    I can’t imagine a life in which you have no desire to ever leave your city. (Or to do it so rarly that a car-share service works).

  3. I can’t imagine a life in which you have no desire to ever leave your city. (Or to do it so rarly that a car-share service works).

    Really? That’s a fairly limited view. I’ve been happily living that life for years, as have most of my friends. Well, a car share service combined with rental cars, planes, trains, and going places with the odd friend who does own a car. I love going to the wilderness too, but I live in the city I do because I love it and it certainly has more than enough to keep me out, about, and occupied a large percentage of the time. (And consider the average person spends $8,000 a year on their car; that’s a LOT of Saturdays with Zip Car.)

  4. I liked this book for the stories and personal anecdotes as the author got herself in trouble. I think it was very relateable and her writing style is quite fun. But it’s for sure a very targetted book for that niche of reader! I could see a lot of people turned off by the author’s use of $50 shampoo and high salary but still getting into major debt trouble and borrowing/taking money from her parents.

  5. Re: makeup. While I agree that the basics will do, there is a difference in quality between name brands and those that are not name brands. While no-makeup is best for your skin, if you must wear it, finding what works for you is more important than saving a few bucks. I personally don’t wear much makeup–a light dusting of foundation and maybe something around the eyes–but it has to be Bare Essentials, because otherwise my skin just gets really really irritated.

  6. To Katie (#3)
    I find your view/life to be limited – and the number of people living it doesn’t change that. I don’t understand what on earth keeps people enthralled in a city – shopping?
    I don’t know zipcar, but speaking to those available where I live, shared-cars are more for picking up big items, doing some errands here and there, and other such short trips. It’s not really designed for extended full-day trips – let alone multi-day backpacks. And I don’t see 4x4s in any of those programs. :)
    The odd Saturday jaunt out to look at some mountains might be covered by a shared service. A serious regular habit of leaving the civilised places would not.
    But I’m not trying to convince you to change your ways or anything – the lack of other people is a big part of my enjoyment. All city-dwellers are welcome to keep at whatever it is that they do, and I’ll keep enjoying leaving you every chance I get. :D

  7. Wow, Kai. Cities are just about shopping? Yeah, it’s not like there’s theaters, concerts, parks, museums, restaurants serving cuisine from all over the world, and, you know, amenable companionship with whom you can organize all kinds of entertainments.

    I grant you, a car probably makes sense for you if you do regularly do extensive multi-day wilderness activities within driving distance from where you live even if you can cover all other activities through public transit. (Though since the average person spends something like $8k a year on their car – that’s a lot of weekend car rentals before you come close.) But it does occur to you that people live fulfilling lives without that being their personal hobby, right? I mean, my personal passion is international travel, something which I can afford in part because I don’t own a car; maybe I should proceed to judge everyone else for failing to structure their lives so this is their highest priority. Stunning.

  8. Why is this book good for 20/30something professional women, and not all 20/30something professionals? Gender seems like an odd way to divide people in terms of personal finance advice.

  9. $800 tank top? I’ve never even seen such a thing. When you pare down the wardrobe so you are replacing standard items on a need basis you will be okay with just buying those replacements at your favorite quality store and they won’t cost more than a few hundred dollars a year anyway. I also don’t mind buying the expensive shampoo and conditioner as it is supporting my hairdresser who is independent. The products are of noticeably better quality and a small bottle lasts me forever as I only have to use a small amount. An interesting experiment sometimes is to date an item to see how long it takes you to actually use it up. It gives you a better handle on how much bulk buying to do. I try to think of stores as warehouses so I don’t have to keep a lot of stuff at my house.

  10. @TC: Because boys don’t like books with pink covers? Because only girls are too stupid to realize on their own that $800 tank tops are bad for their financial health? Who knows?

  11. More to the point about the car, Trent *frequently* takes long range car trips to see his family (apperently using more than one car), so I find point 11 confusing.

    Point 9 is annoying as usual, but thanks for not using bathing suits as an example of how girls waste money.

  12. First it’s the elusive $2 women’s bathing suit and now on the other end we have Trent talking about $800 tank top (I assume this is from Trent and not the book).

    Honestly, Trent, when you aren’t familiar with a topic you need to just either stay away or do some legit research to sound more knowledgable.

  13. Yeah, Gretchen, I have a hard time believing him on that, too.

    As for the $5 jumbo bottle of shampoo… sometimes it’s more complicated than merely cleaning your hair. For example, I know people with skin allergies and they really need to use the expensive kind. It’s not always about vanity.

    $800 tank top? Okaaaaay.

  14. Not to mention cheaper products like shampoo, body wash, and detergants are mostly water. I use as shampoo that’s in the $8 range for 1 (well tube) but it’s thicker, not like the bargin brand that is super runny and obviously mostly water.

  15. More on the shampoo: Cheap shampoo works well for me, but since I have long hair and live in a place where it gets humid in the summer, I need to use decent conditioning products (yes, products, plural), or my hair turns into a giant frizzball for six months of the year.

    Somehow I doubt that Trent would think I look just as “vibrant” with frizzball hair as without, but even if he does, so what? It’s my hair – I get to decide. Believe it or not, not everything I do with my appearance is to put on a show for men.

  16. “To put it frankly, I would not own a vehicle if I lived in a place with mass transit.”

    Come now, urban Trent belongs on a Vespa scooter.

  17. Katie – You stated twice in your comments that “The average person spends $8,000 on their car each year”.

    That’s amazing. I’ve never spent anywhere close to that much for the vehicle I had for 19 years. And that’s including initial cost, all insurance and all repairs AND gas. Is $8,000 per year really an average, or just some statistic someone made up? 0_o

    As for the book, eesh, there are so many people out there that spend like crazy over luxuries and “keeping up with the Joneses” and get themselves into hot water over it. That amazes me too.

    Are there any books out there about someone who had a lot of things going against them, but was still frugal and responsible, and still ended up succeeding? I don’t mean people who made it rich by getting *lucky* in the stock market or by being a computer genius who invented the next hottest software or website, but stories about regular average-intelligence people who overcame dead-end careers and minimum-wage jobs and succeeded at reaching middle or upper-middle class status…and how they did it?

  18. That’s amazing. I’ve never spent anywhere close to that much for the vehicle I had for 19 years. And that’s including initial cost, all insurance and all repairs AND gas. Is $8,000 per year really an average, or just some statistic someone made up?

    My understanding is that it’s including the purchase price spread out over the life of the car, then plus insurance, repairs, gas, and parking. I can’t guarantee it’s accuracy though; I got it from a reliable source (a book on urban planning), but I don’t have the time to track it down right now and anyway, statistics from a reliable source are not fool proof anyway.

  19. About the $8000 per year cost of a car: we also don’t spend that on either of our cars. When the purchase price is spread out over the life of the car thus far, we get closer to that amount, though the longer we keep our cars, the lower that price goes. If you have someone who buys a new car every five years or so, that price would never really drop. I can also see why the parking cost might be skewed higher for those who live in large cities. A friend of mine had a car in Chicago for awhile, and he was paying several hundred dollars a month in parking alone. Then, while he was parked on the street, his car suffered a hit and run, causing him substantial repair costs.

  20. Yeah, I was thinking about it this morning and I imagine that people who buy a new car every five years as soon as the old one is paid off (and, of course, finance it so they’re paying interest) really skew the numbers. If you buy a $20k car every five years, that’s $4k a year on your car even before interest. Even $100 a month on insurance, $100 on gas, and $100 on parking gets you pretty close to $8k before interest, repairs, etc. People on this blog – who are inclined to buy used cars with cash and drive them longer – will naturally have lower numbers.

    Still, even if you take the $120 I used to pay in insurance, I can rent a car one weekend a month and come out even. For me, owning a car that I will only use for our of town trips makes little sense.

  21. For anyone questioning the existance of an $800 tank top – peruse the Neiman Marcus website. It’s highly entertaining…

  22. “Champu” was the original word for shampoo and was actually a combination of a scalp massage and extensive hair brushing to redistribute oils from the scalp onto the hair and make it shiny/glossy.

    This idea of a generalized hair treatment procedure then was commoditized by turning it into a product which can be purchase–our current idea of “shampoo” as a hair-specific cleanser in a bottle, used daily or every couple of days.

    In truth, if you stick with massaging your scalp and brushing your hair (the “champu”, perhaps wetting it to help it behave, you can skip the liquid “shampoo” for as much as two weeks. Or at least to once a week.

    This will save you a ton on hair care expenses.

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