I’ve decided to share some books from my own personal library as well as those that I may read each week during library and bookstore visits. My hope is that readers will be intrigued by a book (even one that I may not have enjoyed) and will go purchase or borrow the book and read it for themselves. Some of these books are old favorites. Others are books I would never read again. But I believe every book has something to offer the reader and I hope to provide some good learning experiences I had from each book I review as well as my own opinions, criticism or action taken as a result of reading the book.
On a recommendation, I browsed a copy of “All Your Worth” by Elizabeth Warren last week (clicking on the picture will take you to Amazon to see their review of the book but I have no affiliation with them and I’m not receiving any compensation for this review from anyone).
1 minute Synopsis:
Figure out how you will live by building a budget based on the following numbers: 50% expenses, 30% towards things you want, and 20% to savings. While it’s important to cover the necessities without overextending yourself, life is for living and should also include spending on things you enjoy along the way. You don’t have to deprive yourself of everything you love, living on Ramen indefinitely, just because you got into debt.
What I learned:
I really enjoyed the introductory part where she talks about how the rules have changed. She said that it used to be good advice to just get a degree and a good job, and that everything in life would fall into place if you dutifully bought a house and didn’t spend too much. Today, banks and credit cards have helped many people dig very deep debt holes and now they feel trapped and can’t get out. Today, jobs are unreliable and may not last until you’re 65 and ready to retire. Today, the average family can’t afford a new car and a typical house without overextending themselves by several times their annual salary.
DH and I have spoken about this quite a bit during our first years of marriage as we’ve tried to figure out how we may or may not ever achieve the “typical” newlywed goals of homeownership, 2.5 kids, and a dog. However we’re both shocked at how much we’ve paid (and continue to pay) to fund our own degrees. We’re also shocked at how much more our younger family members (who are only 5-10 years younger than us) are planning on taking in loans to attend college for the first time. Tuition costs have risen 20% since I graduated college. Don’t even get me started on the rising costs of housing and food and how those may be impacting room and board charges at the local university. So, these days, we leave college with a boatload of loans, a small amount of consumer debt, and possibly no job- unless you choose your major well. It’s very frustrating. Is this why so many people our age can’t get ahead and just take a leap buying things they can’t afford (houses, cars, designer duds)?
I think it’s extremely important today to be clear about career goals before pursuing expensive academic degrees. There are lots of free educational programs, cheap community college educations, and cheap vocational programs out there for those who are ambitious and interested in other fields. I don’t believe a formal education is a necessity for every 17 year old graduating high school these days and I do believe that 4 years is plenty of time to complete a degree. If your kid is binge drinking and taking fluff classes on the “5 year plan” (spending 5 years to get a 4 year degree due to repeated changes of major, failure of classes, etc) you’re really doing them a disservice to the tune of $30-40,000/year or more. It would be wiser to allow kids to explore volunteer or work opportunities for a few years and then pursue education that has meaning and value to them.
From there the wisdom of the book takes a sharp turn. Perhaps it’s because DH and I are so gung-ho about saving that I couldn’t stomach her advice. But honestly, putting only 20% towards savings just doesn’t sit well with me unless you’ve paid off your debts and have an emergency fund (3-6 months living expenses at least) on hand.
Also, one of the rules my husband and I set for our marriage was that we would always base expenses around the smaller income of the two. If we were to lose our jobs, or become disabled, or get pregnant…we would not face uncertainty as to how we will survive. She makes no distinction about how many incomes the family has (despite apparently being the author of another book encouraging women to stay home?) or how much house or car is too much. Why doesn’t this book address any of that?
What she promises is really over simplified financial planning. It’s less painful to tell someone that they can spend 30% willy nilly on whatever they please than it is to tell them to cut it out and stop spending on junk that they don’t need. Why would you encourage someone to pay the debt off (while not saving a dime since their 20% savings might be entirely used in debt reduction) and to continue throwing 30% away every month on more junk???!
Sorry if I’m too harsh about this book. I may have honestly missed the point if it was sandwiched in between buying ding dongs and shoes while continuing to carry credit card debt… I just felt she really ignored the importance of having savings and not having debt before giving people permission to continue spending like drunken sailors.