Lazy Man and Money

The Best Personal Finance/FIRE Book You’ve Never Heard Of

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If You Made A Million

You probably know that I’m not a fan of clickbait titles. That’s why I didn’t use a clickbait title.

Let’s make a deal. If you’ve heard of this personal finance book, you stick around as a reader. If not, I’m okay if you click away angry and never come back.

Have you ever heard of If You Made a Million by David M. Schwartz? It’s illustrated by Steven Kellogg who happens to have written and illustrated one of my wife’s favorite books, The Mysterious Tadpole. My wife read it when she was a little girl. Our own kids are very familiar with Alphonse.

By now you may have realized that If You Made a Million is not about helping adults understand money. It’s about helping children. But please don’t click away just yet. If there’s one thing I’ve learned over the last 2 years, it’s that adults can learn quite a bit from children’s books.

Let’s dig into what makes If You Made a Million so special. (By the way, I was not paid to write this review. I simply saw it at the library. I will however make a small commission if you purchase the book from the above link.)

If You Made a Million

Before I get started with the review, let’s get a very important number out there: 1989. That’s when If You Made a Million was written. Yes, the book is as old as Taylor Swift. It is also three years older than Your Money or Your Life, which is often considered the first FIRE book. It was also written 6 years before Suze Orman wrote her first book.

Being old doesn’t make things good. (This blog is living proof of that.) Let’s get to the actual content.

Overall, the book takes a child on a journey of earning and spending money. It starts with feeding a fish a penny, which will allow you to buy one of a shyster’s pebbles. It continues to educate children about coins with increasingly more difficult jobs and ways to spend the money. These first few pages are fairly boring, but they go quickly since there’s only a sentence or two on each page. It’s an important to build that foundation.

Once you get into earning a dollar, the book tells the story of compound interest. Here’s the first one:

Compound Interest

At ten dollars, the compound interest story gets a little more exciting:

Compound Interest

At one thousand dollars, the idea of checks and how they work is introduced. It’s simply much easier than carrying around a wheelbarrow of coins or even a bunch of bills.

At fifty thousand dollars, we learn about how mortgages work:

Mortgages

There’s a little more to mortgages. Specifically it shows how you keep giving money to the bank year after year for 40 years. The illustrations show the old man still physically bringing his check to the bank for his castle payment. It also explains that, this time, you are the one paying interest to the bank.

Finally we get to the FIRE part of the book. It only takes six sentences. The first four are:

“If you have some very expensive plans, you may have to take on a tough job that pays well.
If you think ogre-taming would be an exciting challenge, you can have fun and make a great deal of money, too.
Of course, you may not enjoy taming obstreperous ogres or building bulky bridges or painting purple pots.
Enjoying your work is more important than money, so you should look for another job or make less expensive plans.”

Remember what I wrote before about adults learning from children’s books? That last sentence is “Exhibit A” of that.

I promised you six sentences. Here’s two more:

FIRE

Did you catch the financial independence message there? Having that kind of passive income gives you the option to not work at all, but maybe you should choose the work that interests you because doing nothing could be boring.

There’s a quick concluding page after that to get children’s minds thinking about what they’d do if they made a million dollars.

Final Thoughts on If You Made a Million

I found it surprising how well the math from 1989 holds up today. Obviously the banks aren’t paying 5.25% interest like the examples. However, we often work with similar (or even larger) interest rates assuming more risk and different asset allocations.

Also, the one million number at the end might not seem like enough today. However, it is $2,034,157.94 in 2018 dollars. You’ll often see $2 million as the target number for FIRE, so the one million number from 1989 is solid.

After the story ends, there’s a significant section of “A Note from the Author.” Here you get about 1500 words on each of the themes in the book: why money?, how banks work, interest and compound interest, checks and checking accounts, loans, and income tax.

Finally there’s a huge explanation on how he calculated some of the amazing numbers used in the book. These are things like a million dollars in pennies will stack 95 miles high and a million dollars in quarters would way as much as a whale. If you love geeky math, this is fun, but you could choose to skip it and still get all the financial lessons.

Now that you have a good understanding of If You Made a Million, I have two questions:

1. Are you going to live up to the deal and stick around as a reader?
2. Did you think my title was clickbait or just spot-on analysis?

Let me know the answers in the comments.

Book Review: Failure to Launch No More

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I usually start every book review of mine with an usual disclaimer… I usually don’t like reading books. My reading speed is extremely slow and I’d prefer to have all the information distilled into 10-20 pages rather than 200 or more.

I often come away thinking that the cost of reading the book is not actually the money spent on the book, but the opportunity cost of my time to read it.

The book I am reviewing today is different.

Failure To Launch No More by Martin Dasko is well worth your time to read it.

I read it in around two hours… as I was doing a little multitasking.

What about the cost of the book? As a fan of the awesome Studenomics website, I subscribed to his mailing list. Dasko sent out an email about a number of things, but in it he mentioned that the Kindle price was a “damn buck.”

The price is a little more now, but my thinking still hasn’t changed… if you don’t have a couple of hours and a couple of damn bucks lying around, just quit trying to launch a company or sell a product.

Since there’s little cost, the next question is, “How good is the book?”

The short answer is that it is very good if you read it in the right context. It isn’t trying to be How to Win Friends & Influence People or The Power of Habit. Don’t expect something that was painfully researched in detail for years and years. It is designed to get you motivated to get off your butt and launch your business… with a focus on practical advice.

I’m usually not into motivational books. They seem to be heavy on “follow your passion” and telling you what you want to hear. Failure to Launch No More takes a practical approach to starting your business. It forces you to look at your financials to see if you can actually live while you are getting going.

My favorite part of the book came early on. Who do you get advice about your business from?

Many people turn to family or friends, but they can be terrible resources. They discourage you from taking a risk so you don’t get hurt. Or conversely they may overpraise you, setting you up for disappointment times get tough.

I often write about multi-level marketing/pyramid schemes and people often look for advice here too. In most cases family and friends give accurate advice to stay away. Thus from my perspective I was ready to say that Dasko gives poor advice.

He follows it up in the book with who you can get great advice from. It is suggested that someone with no vested interested in your success or failure is usually a good sounding board. He takes it a step further and says that you should listen to critics:

“We need to hear the truth sometimes. Thank a critic for being honest.”

This is the kind of practical advice that goes beyond the simple motivational speaking to get that project launched.

There were at least another half-dozen points in this book that I found enlightening. After nine years of blogging and doing a ton of research on these kinds of things, I’m very happy when I learn one or two truly enlightening things a day.

It is well worth it to read something that wasn’t just re-hashing the same old crap… and even better that it didn’t take all day.

If you’ve got a couple of hours and $10 you could go to the movies and watch people blow stuff up. Or for half the price, you could get some information to put you on the path to financial freedom. Suddenly, spending a couple damn bucks on
Failure To Launch No More seems like a good idea doesn’t it?

How Much Money Do I Need to Retire?

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That’s the title of the book that Todd Tresidder gave me at Fincon 13. I was so excited to read it that I churned through it on the flight home. Many months later, I am finally putting together the book review. That’s how busy I’ve been with the new baby. Let’s hope my memory is good enough to do the book justice.

At first glance, the book’s size and scope reminded me of Mike Piper’s Can I Retire? Piper’s book is 100 pages, and Tresidder’s is 120 including appendixes and his biography. This book is part of his “60 Minute Financial Solutions” series. I think it takes more than 60 minutes to really digest How Much Money Do I Need to Retire, but I’m a slow thorough reader and I was focusing intently on the details in order to write the review.

How Much Money Do I Need to Retire? is quite different from Piper’s Can I Retire?. While Piper concentrates on investments, Tresidder’s approach is more concept-oriented. In particular, Tresidder seems to advocate an unconventional approach that I’ve written about in my early retirement plan posts. I’ll get into more details in that later.

How Much Money Do I Need to Retire? is divided into three parts or retirement models. However, in reading the book, it felt that there really are two distinct models. These models serve as blueprints for building a successful retirement plan.

The first model is conventional retirement planning. If you are a regular reader of personal finance, you most likely know what this is. The idea is to get a big nest egg of cash and draw from it, typically using the rule of 4%. Tresidder points out a number of problems with this method. The biggest problems center around having to make guesses at things you can’t possibly know. For example, it is really hard to know what your expenses are going to be when you retire. Who knows what the cost of health care will be? As you get closer, it becomes easier, but from a distance, it is very much a crap shoot. The same is true with investment performance. Even if you retire at 65, you might need that money to last another 20 years. What’s the rate of the return of investments going to be over that time? What if you live another 35 years instead of 20?

There are so many variables and any one of them can drastically alter any retirement plan. Even that 4% rule is coming under question. A small difference there makes a big deal in figuring how big of a nest egg you’ll need. Tresidder does a much, much more thorough job of explaining this in the book.

Another alternative model is to use a cash flow model for retirement. Essentially the idea is to have enough money coming in from various sources to pay for your lifestyle. The money could be coming from dividends, interest, annuities, Social Security, income producing real estate, or royalties (for those in such fields). It can even be a business (or hobby business) that you can run somewhat passively or that you truly enjoy. If you have enough of these forms of income, you don’t really need a big nest egg (granted you’ll need a nest egg for dividends and interest, but not the others).

Sometimes it pays to be smarter and not rely so much on the terrible interest rates that banks are giving and put more emphasis on Lending Club where I’m getting closer to 7%. I’m not saying you should put $100,000 in there, but if you were to have similar returns, you could use that to passively earn around $7,000 a year (of which inflation would eat away some). If your bank is paying you close to 1% then you’ll earn $1,000 a year (and inflation would likely put you at a loss). It’s a big difference.

The other half of the coin is matching your lifestyle to fit this cash flow model. Keeping expenses down just a little makes a huge difference in one’s ability to reach financial independence. You don’t have to live his minimalist lifestyle, but if you are able to find happiness in the things money can’t buy, you should be able to keep expenses down.

If your cash flow income passes your expenses… guess what? You can pretty much retire. You want to make sure that you are prepared for emergencies, but for the most part you don’t need to have that big nest egg. You don’t need to worry if the 4% rule will hold up. You don’t need to worry about that burn rate.

Over the years, I’ve gravitated to this cash flow way of thinking about retirement. That isn’t to say that we don’t have 401(k)s and IRAs and we are still building up that nest egg. We are taking a hybrid approach that I will go into more in tomorrow’s post.

Not to sound like the Dos Equis guy, but I don’t recommend a lot of books, when I do I’ll be recommending How Much Money Do I Need to Retire?

Confessions of a Professional Blogger Reviewed (Book Giveaway!)

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If I’ve said it once I’ve said it at least a half-dozen times, I don’t like to do book reviews. I have about 1.2 gigabytes of reading a day from the internet, so the last thing that I look to do is read a book. I’m also not the fastest of readers. It adds up to spending a lot of hours of preparation before I can even sit down and write the book review.

However, when I saw that Miranda Marquit was running an Indiegogo campaign to support her upcoming book, I was intrigued. If you don’t know Marquit, you probably don’t read too many personal finance blogs. She’s written for so many of them, that she’s become almost synonymous with personal finance blogging.

Before I get to her book, Confessions of a Professional Blogger, I have my own confession to make. We have traveled in different personal finance circles for years and only briefly crossed paths in one small email chain back in 2008. The Indiegogo campaign gave me an opportunity to support her work, which was my way of saying, “Thank You. I See You.”

That introduction opened the door to meeting her at Fincon, an annual personal finance blogging convention. And that led to us coming to agreement where she’ll be contributing a couple of articles a month here.

It’s Networking 101, but more importantly it is an example of how seeming small gestures can lead to big things.

With that little bonus out of the way, it’s time to get to the book review itself. I initially thought the book was going to be how to run your own blog (getting a domain name, installing a content management system such as WordPress, designing a theme, getting plugins, etc.). I was wrong. Then I thought it might dish on some dark practices of bloggers such as ridiculous SEO articles like this one. This was a little closer but I was wrong here too.

It is a book mostly about being a freelance writing for blogs. If you are looking for a guide for how to make money writing articles for people with successful blogs, it is a must-read. Confessions of a Professional Blogger walks you through the whole process of getting recognized, building up a resume, deciding on which jobs to take, and more. What I liked best about the book was the pragmatic approach. Sometimes you have to pay the bills and sometimes that means taking jobs a little out of your comfort zone. As you get experience and recognition, you’ll be in a better position to turn down less desirable gigs.

The book extends beyond blogging and even freelance writing by giving advice on the business itself. For example, there’s an excellent section comparing the differences between owning a blog and writing for a blog. It’s been a long time since I’ve written about all the things I do running a blog, but there is a huge difference between that and writing for a blog that someone else owns. Each has their own pros and cons, which are well-covered in the book.

That said, there’s a lot more to writing than just pumping out a few articles. Marquit coves that in detail as well.

Finally, I really liked various part that dealt with… ummm… I’ll just call it “life.” Some examples:

  • There is going to be a time when writing or blogging doesn’t come easy. When you reach that point, should you quit, outsource some help, or find another solution.
  • What do you do when you realize that there are 10,000 articles about how to save money on gas? (Hint: you need to add your own spin.)
  • How do you manage cash flow of getting paid by different publishers on different schedules? What kind of business trade-offs do you make to ease the bumps of collecting money?
  • How to be more productive, from planning your posts in advance to something that you wouldn’t expect (in this kind of book)… eating and sleeping well to keep you in top form.

It might sound like the book is 1,000 pages, but it is quite a quick read. It’s a great accomplishment to be able to fit all that information in a small space. As a professional blogger, I’d like to say that I knew everything in there, but I still learned quite a bit. Specifically for my situation, I learned about what I can do to create a good work environment for my writers if I really go full multi-author blog someday.

If you ever thought about making money online and didn’t know how to get started, this book will build a foundation and get you headed in the right direction.

Update: I’ve been able to work out deal with Marquit to give away a book to one reader of Lazy Man and Money. To enter, leave a comment here. The better the comment the more likely I am to give you a few extra entries. (I like to reward those who create or add to the conversation vs. the “give me book” grunts in the comments.) The last date to enter is Feb 16th, 11:59PM. Contest is open to those in continental US (as I’m not sure that Marquit is willing to ship the book to Fiji).

The Economy of You by Kimberly Palmer Review and Giveaway!

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A few weeks ago, Kimberly Palmer of US News & World Report’s Alpha Consumer blog fame reached to me to tell me she’s got a new book coming out. I very much enjoyed her first book, Generation Earn (read my review), so I jumped at the opportunity to read and review this book early.

The The Economy of You is about starting a side-gig to have a back-up income stream. Here’s a little video from Palmer herself explaining the book:

That’s been a core tenant of Lazy Man and Money since 2006, when I coined the term “alternative income stream.” As a software engineer, I had seen many jobs outsourced to countries such as India. They could get a team of software engineers for what it cost to pay me a fair wage in the United States. It didn’t seem wise to bet the house on a software engineer career to last 35 years until I retire at age 65. That’s what got me interested in learning to invest, thinking about becoming a landlord, and other ways to make income as passively as possible. Lazy Man and Money was supposed to be a place for like-minded people to brainstorm ideas (and it is that), but it also turned into one of those income streams itself.

The Economy of You feels to me like two books in one. As Palmer said in the video, she interviewed over 100 people about their side-gigs. A large part of the book is dedicated to snapshots of profiles of those people… the guy who started his cake business, the woman who runs a Yoga studio. The names and businesses come at you quick. Personally, it wasn’t my style and I didn’t feel like I gained much from the stories. Palmer at one point describes herself as a right-brained person, and I’m not that. Maybe if you are right-brained, the profiles of successful side-giggers will be of interest.

The “other” book is what I found most helpful and I hope that Palmer will extract this stuff, possibly creating a Palmer Planner in her Etsy shop. Sprinkled through out the book were a few sections that gave actionable items. For example there’s the Dozen Successful Strategies of Side-Giggers, The Economy of You Handbook, and Five Common Pitfalls to Avoid. In just a few pages, you get the combined wisdom of 100 successful side-giggers along with a guide to get you started. This is why you should buy the book.

However, for one lucky reader of Lazy Man and Money, they won’t have to buy the book. They’ll be getting it free. Kimberly Palmer has agreed to let me give away a copy. If you are interested in receiving a copy, leave a comment and maybe you’ll be the winner. I’ll pick the winner randomly, but I reserve the right to give you 3 or 5 entries if you leave a good or great tip on side-gigging with your comment. Giveaway ends on Tuesday Jan 22, 2014 at 11:59PM ET.