Personal Finance Book Suggestions?

luc13n asks: "I've seen others making requests for books or reading suggestions. I've been out of college and working professionally in the IT field for two years now. I have some money in the checking account and the savings account and I've started wondering... is there a better way to manage my money? Kinda the old adage 'make your money work fo you'. Does anyone have any good suggested readings to teach a 'young'n' how to 'make his money work for him'?"

Comments

Suze Orman

[stefanlasiewski]

Suze Orman

Yes, this is that peppy blonde lady that you see on PBS.

She writes good, down to earth, easy to understand books on finances which clarify issues and simplify many financial concepts (which aren't actually that complex, once you think about them the right way).

Not a "make money fast" type of author, but she writes alot on "make and save money for retirement", or "How to save money for when you are laid off and can't find work for 8 months".

Re:money manager

[Urox]

Two more words: be assertive.

Don't let them run you over with what they think is best and don't let them cower you into it (I guess this is more for people who feel very uncertain about what type of investment they should do). I used American Express and what they had me do was layout what I wanted as a goal for a flat fee. They would then offer "services" which are sold hard to help me attain that goal. I haven't heard from my manager in months. I haven't had the time and was wise enough not to give them too much money to "play" with.

They did *not* take a good look at my investment comfortability nor did they take a good look at my interest rates in current investments. They also wanted me to give them authorization to my bank accounts (and were very pushy about it). I'm not that stupid, especially with the paypal stories going around. I told them in no uncertain terms were they, or anyone going to have access because it allowed unmonitored transactions and everyone knows it is harder to get cash back than giving it.

First off, they explained that because I am "young" I can "risk" more and not be dead in the water because I can always "make it up later". I think this is a crappy approach to investment.

Second, they wanted me to invest money in the stock market indexes when I was clearly observing a downward trend. I only gave them the first thousand because I wanted to see where it went. It was guaranteed not to lose money, but had a cap at 6% return. So far, it has not made a dime while my fixed interest CDs are rocking away at 3.75 %. My financial advisor did not seem happy that I had given my credit union 3K for a fixed return and has probably not called me because of it.

Which brings me to my third: find a credit union. They are usually nicer and have higher interest rate return than banks. And if the people from AmEx had actually taken a *look* at my financial data, they would have seen that their "locked, harder to access money, must pay fee to do so quickly" 3rd tier account gave a *lower* percent interest than my savings account which is accessible 24/7.

Right out of college

[Glonoinha]

Honestly you will never be as rich as you feel the first three months of gainful employment right out of college (assuming you can find a job.)

The reason for this is you go from the +/- minimum wage paying job you had taking home $425 a month so you could afford Ramen and Peanut Butter and Dr. Pepper and Bacardi Rum and live in a small apartment with three other roommates ... have about $25 a month left over after bills, food, etc... to buy whatever you wanted - to a job bringing home $2250 a month after taxes, still living with 3 roommates still paying about $400 a month for bills and rent. All of a sudden you have 80x the amount of 'fun money.'

Then you go out, buy a new car, rent your own place, fill it up with stuff (all charged on your MasterCard,) start running the air conditioner, eat out all the time, pay the entire set of bills yourself (not split 4 ways anymore), actually get full coverage insurance on your car, have pizza delivered 5 times a week and Bingo! you are right back to $25 a month left over after you pay all the bills.

I think my monthly liquor bill now runs more than my entire monthly living budget when I was in college (+/- $400 a month) Granted I have been out of college for a little while now, but still.

-:-

Another thing to note - if you take the above and stretch it a little, anybody making $20k a year more than you is rich simply because you would consider yourself rich if you had another $20k a year. Problem is if you start earning another $20k a year you actually only take home about another $1000 a month and within a few months your lifestyle grows to absorb that.

-:-

Original Poster :

If your boss offers you a 401(k) and offers any matching whatsoever (ie matches $1 for each $1 you put in up to x% of your salary) be sure you are putting in as much as possible to maximize his matching funds. Even if the stock market is losing 10% a year, if your employer matches your contributions you are still earning 80% on your money the first year (which is AWESOME.)

Another thing, arrange credit NOW. While you have good cashflow look into overdraft protection on your checking account (no more bounced checks, not that you ever did that anyways, but having a $1,000 credit line attached to a checking account is one of the best things I ever did.) Build your good credit file, buy big work related items on your personal credit cards (travel works too) and pay them back in full at the end of the month (expense account.) In 5 years when you have awesome big credit and can buy a $250,000 house at 5% instead of at 8% you will really, reall thank me for this.

Find out what it takes to get the MBNA Quantum card. Do those things. Getting the card is less important than being able to get it.

a contrary position

[zogger]

I offer a contrary to most advice here:

Stay AWAY from credit, don't use it, ever, despite what almost everyone says, you honestly don't need it. If you need one small card for purchases online, that is different, you never spend what you don't have, just use the CC as a service, not a loan.

Land. Land is the oldest form of accumulated and stored and useful wealth. Pay for your property, then build as you go on it. When the structure is "good enough" move into it. Make sure it is rural property with good water onsite. And yes, this is totally possible. Give you an example, my sis and BIL did this while renting, paid cash for a few acres. Every month took what extra they had towards a home that would normally be a "payment" or two, bought materials,loaded up the pickup, went over, camped out, used up those materials. rinse lather repeat. I helped them with labor quite a bit on that one. Within 6 months (after foundation and well and septic obviously) the house was still rough but "dried in" and wired and plumbed, etc, and good enough to move into. they stopped paying rent then, and freed up even more cash monthly to put into materials. Two years later it was finished (two stories) and is quite nice. They saved many, many thousands of dollars, and have no mortgage, never paid one penny interest to anyone. Total time was a little over three years total to a paid off home on three acres, what's not to like? Ya, they had to live semi-rough for awhile, so what? You are still young, it won't hurt you. You'll look back and be proud of yourself, both from the way you did it and from the perspective of how much cash you saved.

Hard currency. If you want to gamble in the market, go ahead, but put a large portion of any "extra" you have into hard metals. Don't listen to the nay sayers, it preserves wealth. It's a long term deal, just get some coins once in awhile and forget about them.

Have a garden, grow a lot of your own food, you'll save money at the grocery store and also with doctor visits in the long run.

"Get into" alternative energy. Obviously you'll probably start with "normal" grid supplied electricity, but make a concerted effort to start making *some* of your own power while learning to use less power overall by wise decisions in purchases and how you use power. Keep adding to both sides of that equation, eventually you'll be independent, and have one more major important "bill" paid off rather than "financed" all the time.

Pay cash for used car, and keep it maintained well. Skip the flash, cars are transportation. One of my vehicles has well over 300 thou now on it, I changed the oil a lot, that's it.

Keep in mind anytime you can eliminate the transfer of "dollars" to get what you want it means less taxes and more of those dollars you get to keep, and less you have to make just for your day to day living. NEVER assume your "job" will always be there. Swell if it is and you keep getting "more", but it's nice to make that first layer of living as inexpensive as possible and as paid off as quickly as possible. In the long run then all you'll really have to sweat is property taxes and normal maintenance. Some of the exposure and risk can be mitigated by using what is called a family trust for that property,look into it, and a lot of the maintenance costs can be mitigated by building an INTELLIGENT home in the first place.

And don't forget the other monthly "bills", another random example, burning wood for heat (primary or very decent auxiliary) in the winter that comes off your own woodlot, starts to add up after a few years in savings and will always be there for you.

And you can do all this and more and still stay completely geeky and high tech, in fact, most of the alternative ways to live now are intimately tied to efficient use of high tech, think "amish with technology", it's that mindset that's important. They have really good alternative housing designs now, strawbale, cordwood/masonry, various domes, even the old "log cabin" techni