Review: You’re So Money

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

you're so moneyA few weeks ago, I piqued the interest of many readers by mentioning offhand that I’d recently read a personal finance book that “ticked me off almost as much as Rich Dad, Poor Dad.” Well, this is it. Let me start off by quoting from the back cover:

Finally, a savvy, realistic finance book for thos of us who love our Starbuck mocha lattes and Razr cell phones but don’t want our Jimmy Choo shoes or Bose headphones buried under a pile of burgeoning debt.

In other words, this book pitches personal finance advice for consumerism addicts.

Looking at the cover of You’re So Money, reading the blurb on the back, and browsing through it, I found myself almost in disbelief as to the idea behind this book. From beginning to end, it glorifies a consumerist lifestyle and judging others based on the possessions they have. Jimmy Choo? A hand bag that costs more than $3,000? Whenever I see someone holding a $3,000 handbag, I freely admit to drawing a conclusion about that person – but it’s not the flattering conclusion they’d like. If you have $3,000 to blow on a handbag, why do you not have $3,000 to give to a food pantry?

Let me make this clear right off of the bat. I think Farnoosh Torabi wrote an excellent book here. It made me think. It made me fume in places. It made me alternately want to recommend it to some people and to throw it in the trash. But I finished it, and I thought about the contents a lot. I’m going to criticize pieces of this book very harshly below, but as with my review of Rich Dad, Poor Dad, I think it’s a book very much worth reviewing and discussing, even if I don’t necessarily like the book or agree with the conclusions.

Ready to dig in? This is going to be fun.

When Someone Says You’re So Money, Are They Merely Talking About Your Stuff?

One aspect of this book frustrated me quite a bit: the constant product name dropping. I don’t need to hear about your Gucci handbag or the iPhone that someone has. All that does is reaffirm that these items are somehow essential. They’re not.

1. Life. Is. Good.
Given the rampant flood of consumerism encouragement I expected, the book opened with some surprisingly strong advice. Basically, Torabi encourages the readers to take care of the needs first, and breaks them down into several groups: taxes, benefits, retirement, an emergency fund, housing, and food (stressing a healthy diet), in that order. She argues that these are the essentials and need to be covered before anything else.

This, of course, leaves some portion as a leftover, and that portion can be used in whatever way you wish. If you keep your spending within that portion of the pie, you’ll be fine.

2. No More Debt Drama
You’re So Money basically splits debt into good debts and bad debts. Good debts are ones that buy things that are essential to your life: a prime mortgage, student loans, and automobile loans. Bad debts are basically credit card debts and consumer loans – those with high interest rates. In a nutshell, people should eliminate their bad debts but then not sweat their good debts too much.

Her advice for recent graduates struggling with credit card debt is interesting: basically, make minimum payments on the card, then roll every single “bonus” you get into that card. If a relative gives you money for Christmas, use it on the card. If you get a bonus at work, use it on the card. That’s solid and sensible advice if you’re committed to not throwing more balance on the card and your overall income is pretty low – a situation that should be familiar to recent graduates.

3. Banking in Bed and Scoring
Here, Farnoosh recommends switching to an online bank because their overheads are lower and thus offer many more perks for customers in the form of very convenient online banking services, strong interest rates, and the ubiquity of ATMs for most teller-related needs.

I thoroughly agree with her here – online banking is one of the best things that has happened to my own finances. It makes almost every regular banking task more convenient, the use of online bill pay saves me substantially on stamps and envelopes, and

4. Rich People Dress Good
After three chapters of “good,” here’s where I start to disagree a bit with Torabi. In the first chapter, she admitted that clothing was something she considered very important to her – a part of her definition of “the good life.” Here, the idea that expensive clothing is essential comes in front and center. She argues that you must dress for the job that you want, not the job that you have, which is good advice in some situations but terrible advice in others. If I dressed for the job I wanted at my previous job (in office conditions), I would have basically been ridiculed by my coworkers for massively overdressing.

The real point here – once you tease away all of the fluff about “must-have” $300 jeans and other nonsense – is a principle I actually agree with. If you know what you want, you’re far better off buying a quality version of the item rather than a cheap and disposable version. She uses an example of sunglasses. I like my own example of kitchen knives – I’d rather get a Global 8″ chef’s knife and keep it in a magnetic rack than getting a cheap chef’s knife for $10 as part of a set and discard it after a few years because the blade is so beat up that it’s almost unusable and doesn’t hold a sharpening. On that principle, I agree wholly with the author – I just feel that she overvalues clothes when she acts as though a $300 pair of jeans is the norm.

5. Accessorize Right
This is almost a Consumer Reports-lite section tossed into the middle of the book. For the most part, it’s a sensible buying guide for many items – cell phones, other gadgets, and gym memberships take center stage. Basically, keep the plans reasonable and make sure you really are going to use the plan before you sign up for the long haul.

One big quibble here: she suggests using your student ID if you’re no longer a student in order to get a student discount on equipment at the Apple Store, which seems fairly dishonest. The Apple store is pretty clear that they want a valid, current student ID.

6. Lucky Money
I’ll transcribe the entire chapter for you.

Find money. Keep money.

7. Adults Only!
This is a chapter on investing basics, with half of it written by Jim Cramer. The tone is friendly and the advice is solid, but if you’re serious about digging into investing, I would take this chapter as a springboard and move onto other resources on the topic.

The suggestions are spot on: start saving early, invest in index funds unless you’re going to invest a lot of time to doing the homework, and so on. The key message to take is that investing is important, and the earlier you invest, the better.

8. Homeward Bound
Here, Torabi focuses on the various paths available towards owning the place where you live, whether it be an apartment or a home of your own. She’s pretty adamant on the idea that owning the place where you live is important, but it’s not exactly easy for a young professional to come up with the cash to buy – renting is usually the situation that people find themselves in (I know we did).

She presents example cases of various people who moved towards owning their own residence after graduation, including herself, and she offers up some interesting advice on how to get there, including asking relatives for money. While I understand the logic there (and I’d probably help out my nieces and nephews if they needed help), I think that moving down that path can be rather dangerous. Financial relationships with family members – especially a lender/borrower relationship – can create uncomfortable situations very easily.

9. Cruise Control
Torabi offers a tutorial on car buying here, offering pretty standard car buying tips with the usual advice on maintenance (an oil change every 3,000 miles, etc.). She also invites a look at costs that many car owners may not think about: can you afford to park the car, for instance, when you have to pay hundreds a month for a slot?

One aspect of this coverage that I did enjoy was the discussion about whether you need a car at all. There are many people that do not – people living in urban areas, people who work close to their home and have access to basic services, and so on. Asking that question honestly can often convince people not to buy a car – and that can save them a lot of cash.

10. Social Cents
The focus here is on social and hobby spending – how to go out for cheap and so on. Most of the focus is on actually going out on the town socially, offering some pretty solid advice: don’t go out every night, hit happy hour and feast on the free snacks, and so on.

Most interesting was the suggestions regarding dining out. The best idea was pretty bright, actually: instead of eating out with a big group and blowing a lot on a meal, instead just go somewhere by yourself and eat cheaply, then stop by their table just as the meals are finishing and maybe enjoy a drink. You get a tiny bill and also get to enjoy the wonderful after-dinner conversation – and any later socializing that might go on.

11. Because Life Happens
Don’t be Bridezilla. That’s basically Forabi’s advice – which does make sense. Given the philosophy of the book, I think she’d amend that a bit by saying that if you’re willing to devote all of your “extra” money towards your wedding, have what you dream about, but if you’re not willing to do that, don’t have an over-the-top wedding. The chapter largely offers advice on life’s milestones, including sensible advice like not buying $250 blankets for your baby.

The best part was the advice on gift-giving. Basically, you should spend more if the person is close to you or the person has a great deal of power over your future. If they don’t fall into either group, don’t spend much at all – just give a small gift or a nice card. This is largely true for any event – weddings, baby showers, graduations, bar mitzvahs, and so on.

12. Getting Covered
This is all about insurance, from health insurance (get it, no matter what, even if you have to write to your state’s insurance commissioner’s office) to long term care insurance (get it, period) and life insurance (get it if you have dependents). Solid advice all around.

By far, I was most impressed by the suggestions about what to do if you don’t have health insurance. Find and call your state’s insurance commissioner’s office, for starters, and ask for help. Another good idea is to try to get defined as your own “group” for health care purposes and then try to get group coverage through a large health care insurance provider (not much detail, but it’s an interesting topic for future research). This is a serious issue for those without insurance and Torabi handles it very strongly.

13. Just Say No!
Torabi’s advice here basically boils down to my ol’ ten second rule: if you aren’t absolutely sure you need something, just say no. You can always get it later if you need to get it.

This extends beyond just mere purchases. Say no to extended warranties. Say no to credit card offers that you haven’t researched. Heck, say no to any offer that you haven’t researched. Say no to temptations, wherever they spring up.

14. Money Is Everywhere
You’re So Money concludes by looking at the other half of that “spend less than you earn” mantra: earning more. She suggests getting a side job that can fill your spare hours, suggesting all kinds of things (starting a blog, writing a paid blog post for someone else, tutoring, and so on).

The point of this topic is to realize that if you’re trying to stuff too much spending into your actual income, then you may need to expand your income, and there are opportunities for doing this if you’ll look. Just look into what you’re passionate about and seek opportunities there.

Some Thoughts About You’re So Money

After reading the book, I was left with several thoughts floating around in my head that were worth discussing. Here are a few.

Do products really define people? Almost incessantly throughout this book, Torabi dropped name brands, particularly clothing and fashion-oriented brands, as though these brands were important by themselves and spoke to the “eliteness” or “individuality” of Torabi and her friends. I find it somewhat sad that the idea of eliteness and individuality is intrinsically tied to the label a corporation decides to place on a product.

Is the cost investment in clothes and appearance genuinely worth it? I think there is value in personal appearance, but does that require you to spend $300 on a pair of pants or $3,000 on a handbag? You can dress quite well for much less than that – is that extra little bit of theoretical “oomph” in your appearance worth that much? Likely, what you’re actually buying here is ego fuel – perhaps some people genuinely feel better about themselves when holding a $3,000 handbag. I’d argue that if that were true, then your self-worth is being defined by things and not by who you are, and that’s a psychological problem.

Are some debts acceptable, regardless of interest rate? For example, if you can’t get a good home loan, should you just keep renting? My thought is yes, for the most part, which means that the “good” and “bad” dichotomy isn’t always true. I think that the idea of “good” and “bad” debt is misleading and not that cut and dried, as there can be debts that help you get transportation to go to work (good) but have a very high interest rate (bad). My philosophy for debt repayment doesn’t really care whether a debt is generically “good” or “bad” – I only care if the interest rate is high.

The dollar store conundrum: is it better to buy ten disposable versions of an item or one top-quality one? I find myself agreeing with Torabi on this one – for many items that you use frequently, you’re better off getting a top-quality version that you’ll use forever than a cheap one that will have to be regularly replaced. Yet, I often hear the counterargument: “spending hundreds on a single knife is stupid” is one comment I fondly remember. I wonder where others stand on this idea.

Is You’re So Money Worth Reading?

For the most part, this book seems to be a pretty solid personal finance book with some wonky bits of life advice wrapped in a sugar-coated pill of youth culture consumerism. In other words, the overconsumerist attitude represented by the blurbs in this book (and the heavy product references early on) were intended to attract a specific demographic, the older edge of that 16-25 crowd that has spent the last decade of their lives being heavily marketed to, living through the “generic college experience” of studying hard and playing hard, and now dipping their feet into the reality of the modern workplace.

If you know someone that’s well-described by the above paragraph and you can’t conceive that they’d suddenly get a big “voluntary simplicity” streak and swear their financial future on a well-worn cover of The Complete Tightwad Gazette, then You’re So Money is a book well worth reading.

For me, at least, I found the incessant consumerism and materialistic references offputting, but I’m 29. I’m now on the outside of the “materialism marketing” demographic and I have two young children at home. I have different concerns at this stage in my life.

In short, You’re So Money is potentially a great gift, but there are aspects of it that made it a very frustrating and annoying read for me. Obviously, I’m not in the target audience, but that should have been obvious when I saw the section about Jimmy Choo on the back and didn’t think, “Hey! Jimmy Choo! That’s awesome! I want to read her advice!” If you know someone that might feel that way, this is probably a great book.

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