Wealth Today » Money Books

The Wealthy Barber Lesson 6

joshuak — Mon, 02 Jan 2006 22:50:28 +0000

This lesson in The Wealthy Barber covers investing and taxes. The author and his siblings are told by Roy, the barber, that to make good decisions regarding investments other than real-estate suck as stocks and bonds, takes knowledge, math skills, self-discipline, and intuition. He suggests seeking professional advice if you choose to do this. This may not be the best advice for some of the more savvy readers, but if you’re not sure or committed, then he provides another suggestion I like. If you happen upon a large lump sum of money, increase your regular contribution to your tax-advantaged savings until the lump sum is exhausted. Doing this puts dollar-cost averaging on our side, and we still have the found fortune.

The second part of this lesson is taxes. Again, the author suggests seeking professional assistance if you have special circumstances, such as being self-employed or owning a home, because of the complicated laws that allow for some helpful deductions.

The basic concept related to both of these lessons is “A dollar saved is two dollars earned.”

The Wealthy Barber Lesson 5

joshuak — Mon, 19 Dec 2005 03:58:57 +0000

The fifth lesson in The Wealthy Barber by David Chilton covers “Saving Savvy.” This chapter is mostly about common sense. It’s diverse and briefly covers some down-to-earth concepts that I’ll list here for a quick overview.

For obvious reasons, avoiding credit cards is to our advantage. After monthly fees and the high interest rate, as well as buying things we wouldn’t have bought if we had no credit card, we tend to lose a lot of money through using them.
Instead, pay yourself first and plan for the purchase.
By investing a little time shopping around, you can save a lot of money.
It may be helpful to try to establish a budget.
You should also consider a ‘household financial summary’ to discover what kind of hidden expenses you may not be aware of that are holding you back.

The Wealthy Barber Lesson 4

joshuak — Fri, 09 Dec 2005 06:37:02 +0000

This lesson seems to be one of the longest in the book. It’s a very thorough lesson on the value of home ownership and does very nicely explaining a potential buyers options. Mr Chilton stresses that owning a home may not be for everyone. He states the importance of making sure you’re saving your 10 percent first and meeting your other financial obligations, including saving for retirement and protecting your estate with insurance, before committing to the purchase of a home. This has probably been the most comforting book supporting my decision to not immediately purchase a home. I’m not quite sure I’m ready for the financial impact. He states that while it’s not exactly all that much more, it does have considerable costs. He explains PMI, FHA and VA loans. For more about mortgages, he suggests The Common Sense Mortgage by Peter Miller. He discusses the advantages of condo ownership. He explains that it may not benefit to prematurely pay a mortgage, but also explains why a shorter term can save thousands. He makes it clear that if you’re obligated to move within the next one to two years then after fees and expenses, it may be more costly to purchase a home compared to renting. He explains the tax benefits of home ownership. With so much information, it’s easy to forget that the main lesson of this chapter is to carefully consider buying your own home and make an informed decision.

The Wealthy Barber Lesson 3

joshuak — Tue, 06 Dec 2005 14:59:25 +0000

The third lesson from The Wealthy Barber is to make sure to take care of retirement. This is separate from paying yourself first. This is making sure that you’re able to afford your desired lifetime upon retirement.

David Chilton says it best in this quote:

Your years in retirement should be among the best years of your life, so you owe it to yourself to do everything possible now, without crippling your current standard of living, to enable you to enjoy them to the fullest.”

Chilton advises using IRAs, CDs, and 401k as vehicles in the financial planning for a wealthy retirement.

The Wealthy Barber Lesson 2

joshuak — Mon, 05 Dec 2005 21:57:02 +0000

The second lesson in The Wealthy Barber is to protect your estate with an appropriate will and the correct quantity and type of life insurance. It covers this issue in two parts.

It explains the need for a will in an easy to understand no-nonsense format. It explaisn that with no will, the outcome of what happens with your estate may not be in your loved one’s best interest, and you probably know better than the court what should happen with your money. It explains why you should get one TODAY (no, I still haven’t).

The best part of this chapter deals with life insurance. In my experience, this has been the best explanation of how to decide how much life insurance anyone will need. It tells you who you need insured. It tells you if you have no need for life insurance. I never expected to find this in this book, but I’m really glad I picked it up. I didn’t expect to enjoy the chapter even, but the lesson has been very valuable.

The Wealthy Barber Lesson 1

joshuak — Mon, 05 Dec 2005 04:56:08 +0000

I’ve switched to another book and this is a quick read, so I’ll be moving quickly. This book gives a few simple lessons to become wealthy rather slowly and steadily. This book is for everyone intent on building long term riches. I’ll share the lessons as I learn them and follow up with a summary when I’m through with the book.

Here is the first lesson:

Wealth beyond your wildest dreams is possible if you follow the golden rule: Invest ten percent of all you make for long-term growth.

A Book Review of Suze Orman : The Courage To Be Rich

joshuak — Fri, 02 Dec 2005 05:29:30 +0000

I finished Suze Orman’s The Courage To Be Rich last night. I found it rather enlightening. There are 6 parts and 22 chapters. She covers courage, value, love and money, buying a home, retirement, and courage to use your money to connect to the world. She presents her own tales and stories told by clients or other people she’s dealt with and uses these experiences to share financial wisdom. If you’re afraid of money because of the math, she’s provides guidance without throwing a barrage of formulas at you. She’s realistic, informed, and friendly. The book extensively covers some serious issues including money and divorce, money and retirement, and money and financial ignorance. She explains the value of getting second opinions. She shows how some kind of active interest in creating wealth will benefit everyone. If you’ve never read any of her books, the first part is probably the best part. It helps you overcome your fear and procrastination related to money. The 5th part helps you plan for retirement and has a really good chapter on IRAs. I think the book would be good for beginner investors and those readers just about to jump out of the debt hole. The part on money and love is good for newlyweds and people considering divorce. It’s not for people looking to start their own business. It’s not for those looking for trading secrets. I’ve read other books that give more detail on becoming debt free, so this wouldn’t be my first choice for readers seeking that advice. My wife now plans to read it, and I’ll ask her to do a review of it after she’s read it too.

A Law Of Money

joshuak — Thu, 28 Jul 2005 21:55:36 +0000

Many settle for the comfort and stability of a job, while never really asking if we’re being paid what we deserve.

Suze address this with a law of money:

Law Of Money
When you undervalue what you do, the world will undervalue who you are.

Try stopping to ask yourself if you’re being paid what you would expect to pay for the service or product you provide. Answer honestly. If you’re being paid less, perhaps it is time for a change. If you’re being paid more, maybe it’s time to raise our perceptions, and at the same time our expectations, and we will value ourselves more.

Asking More From Yourself

joshuak — Thu, 28 Jul 2005 21:43:08 +0000

In The Courage To Be Rich, Suze Orman gives some advice on putting into perspective the relationship between our current financial status and where we want to be financially. Sometimes getting more is as simple as asking. We have to ask more from ourselves, ask more from our financial transactions, and more from our money. People struggling with their current situation may do better by asking themself if they really are doing the best that they can. Without allowing room for improvement, it may very well never happen. My favorite quote from this section:

In order to become rich, your self-worth has to rise along with your net worth– you must feel you deserve to be rich, you must never cast yourself as the victim, you must stop settling or feeling as if you’re just getting by, and you must make the most of what you have.

The First Law Of Money

joshuak — Wed, 20 Jul 2005 18:41:41 +0000

Suze Orman writes that quite frequently people misplace items as they prioritize. She states that it’s commonly understood that people (loved ones) are first, but many people seem to incorrectly place things before money. She demonstrates this by retelling the story of asking a 7 year old what she values most. After the little girl responds with family, house, tv, candy, and money being last, she explains to the young one that while family should be valued first, money is required to purchase everything else, including the candy.

SO to clear it up in case there’s any questions:

The First Law Of Money

First People

Then Money

Then Things