Personal Finance 
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Best Personal Finance Books for Your Library

None of these books are new, they’ve been around for years and they’ve been considered by many to be the best personal finance books out there. The topics they cover will vary and their approaches will be sometimes very different, but each has value and as a student of personal finance they all have something to offer to a reader. Many of these books will sound familiar and I challenge you to make an argument that one of these books shouldn’t be on a list like this.

General Personal Finance

The Wealthy Barber by David ChiltonThe Richest Man in Babylon by George ClasonYou can’t describe this category without listing the book I consider to be the defining book in this cateogry – The Richest Man in Babylon by George Clason. This book was written in the 1920′s and is a fiction story that teaches simple personal finance lessons. It’s a tiny little book that you could probably read in less than two hours and the lessons it teaches are simple. There are several other books that are like this, teaching basic personal finance concepts, such as The Wealthy Barber by David Chilton, but this one was the first and most celebrated.

The Millionaire Next Door by Thomas Stanley and William DankoAnother ground-breaking book that deals with general personal finance was The Millionaire Next Door by Thomas Stanley and William Danko, first published in the 90′s. The reason it was ground-breaking was because they showed how many millionaires actually lived. So many of us see the flashy lifestyles of celebrities and sports figures, thinking that’s how millionaires live. Stanley and Danko interviewed millionaires and discovered that most do it by spending less than they earn and by being smart with their money. When this book was released, it really surprised some people and I think it was exactly the type of wake-up call people needed (and still need today!).

Your Money or Your Life by Joe Dominguez and Vicki RobinFinally, the last cornerstone book in general personal finance has to be Your Money or Your Life by Joe Dominguez and Vicki Robin. This book is lauded by many a personal finance blogger and it’s very popular because it helps you re-examine your priorities. Instead of living to work, they help you re-prioritize so that you’re working to live. If you do feel like you’re trapped in the constant struggle between working, bills, and expenses, this book can certainly help you sort everything out.

Bonus book: A book that I haven’t read yet but is also well recommended is Napolean Hill’s Think and Grow Rich, which also happens to be free and in the public domain. I haven’t read it yet, doing so now, but it was written during the Great Depression so it might be helpful during our economic malaise.

Managing Debt

Dave Ramsey The Total Money MakeoverI haven’t read it but so many people have told me about Dave Ramsey’s The Total Money Makeover. I’ve been very fortunate never to have fallen into the credit card debt hole but after I wrote my post about how Dave Ramsey’s Snowball Debt payoff method was brilliant, I’ve gotten several emails from readers telling me it has worked for them when other methods failed. If you are in debt, check out Dave’s book (at the library!) because it goes into much more than debt repayment, it’s an entire overhaul of your financial life.

You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting AheadIf Dave Ramsey hugs you, then Larry Winget slaps you in the face. Depending on which type of motivation you respond you, Larry Winget’s You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead is either perfect or will make you feel depressed. While I haven’t read Ramsey’s book, I have reviewed You’re Broke Because You Want to Be and I thought that it was a good book but might be a little too tough. It has a lot of very useful information and it has an answer for any excuse you could possible have about debt.

Investing

A Random Walk Down Wall StreetBenjamin Graham The Intelligent InvestorNo list of investing books would have any credibility if it didn’t include these two most important texts: Burton Malkiel’s A Random Walk Down Wall Street and Benjamin Graham’s The Intelligent Investor. The basic gist of A Random Walk is that a blindfolded monkey can select stocks as well as a professional. The random walk refers to the actions individual stocks prices can take in the short term and Malkiel recommends index funds the entire way. Benjamin Graham’s The Intelligent Investor, on the other hand, is the seminal text of value investing, where you buy stocks in down and out companies with a long view in mind. If it’s any comfort, Warren Buffett was Benjamin Graham’s protégé at Columbia University.

The Little Book of Common Sense Investing<I also have to recommend The Little Book series which include several books on investing. They each cover a different part of investing and different scenarios, but they’re all written by very accomplished authors and written very well. My favorites are The Little Book of Common Sense Investing by Vanguard’s John Bogle, The Little Book That Makes You Rich by quantitative investment expert Louis Navellier, and The Little Book of Bull Moves in Bear Markets by Peter Schiff (in part because we are in a roaring bear market).

Finally, I have to give a nod to David Bach’s The Automatic Millionaire because it teaches one very important lesson – set it and forget it is one of the most powerful lessons in retirement investment planning. Save in your 401(k) and IRAs by making automatic regular deposits and you’ll be happy in retirement.

Frugality

The Complete Tightwad Gazette by Amy DacyczynThe Complete Tightwad Gazette by Amy Dacyczyn is the book on frugality. If you were to ask any frugal blogger for their list of the top three books on saving money and frugality, this book would be in that list with no exceptions. This is also one of the most actionable books on this entire life. When you read a book like the Wealthiest Man in Babylon or the Automatic Millionaire, you come away with solid personal finance information but nothing you can actually do. The Tightwad Gazette is the polar opposite, you can make it through a handful of pages without getting an idea of what you can do to trim. Want a hint of what’s inside? Money Saving Mom listed ten painless ways to save $100, pulled from the book.

The Complete Tightwad Gazette by Amy DacyczynOne of the easiest ways to be more frugal is to simplify your life. One of the easiest ways to simplify your life is to get a book that has over a thousand ways to simplify all aspects of your life – The Joy of Simple Living by Jeff Davidson. This is another one of those extremely actionable books where he goes through room by room by room, giving suggestions on how things could be simpler.

Behavioral Economics

Freakonomics by Steven D. Levitt and Stephen J. DubnerThis category isn’t one that is often discussed when looking at personal finance books but I think behavioral economics is something we should all be familiar with. Behavioral economics refers to “research on human and social, cognitive and emotional factors to better understand economic decisions by, say, consumers, borrowers, investors, and how they affect market prices, returns and the allocation of resources.” The book that introduced me to this type of economics was Freakonomics by Steven D. Levitt and Stephen J. Dubner. I don’t really know how to describe Freakonomics other than to say that the authors took a bunch of interesting economics stories that applied to everyday life and tied it together into a book. You’ll read about cheating teachers and cheating Sumo wrestlers, you’ll read about impact abortion has had on crime, and a dozen other interesting stories that will do nothing but pique your interest for more.

Predictably Irrational by Dan ArielyFrom there, you can’t miss two other books that I’ve read and enjoyed – Predictably Irrational by Dan Ariely and The Undercover Economist by Tim Harford.

Predictable Irrational seeks to explain why we, as supposedly rational people, make such irrational decisions. The best example is how customers often behave economically irrationally whenever free is introduced to an equation, people often go after the “freebie” or “add-on” when it doesn’t make rational sense to do so.

The Undercover Economist by Tim HarfordThe Undercover Economist is slightly different, it explains, among other things, how you can glean information from situations where you don’t think information can be gleaned. The best example I can remember is one where Starbucks began offering fair trade coffee at a higher price. Starbucks charged a higher premium for that coffee than what it agreed to pay for fair trade coffee. In other words, Starbucks was profiting from fair trade (it wasn’t simply higher by the net increase in fair trade versus non-fair trade coffee). The information it provided was invaluable in that it identified how likely Starbucks customers were willing to pay more for their coffee – it showed how elastic the price truly was.

Those are the books that I think would make a fantastic library for the personal finance enthusiast. I’m absolutely certain I missed some great books out there, so if you have a favorite that I didn’t list, please leave a comment so I can be sure to check it out!


 Banking 
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Online Banking: How’d We Do Without It?

Online banking is wonderful. It’s difficult to believe that even as recently as ten or fifteen years ago, online banking was a rarity. It seems ubiquitous now (especially with so many online banks offering high yield savings accounts). My first account was at our local credit union and they were ahead of the curve in offering banking online services. You could check your balance online, transfer between credit union accounts online, and do all sorts of cool online stuff! (Unfortunately, they haven’t upgraded non-security related features in fifteen years, but they are a credit union after all)

Since then, the number of features offered by banks and their online banking services has blossomed. There are banks that operate entirely online, from opening an account to depositing funds, with interest rates that beat the long-term CD rates of conventional banks. It might seem like old hat to many readers, but it wasn’t that long ago that the idea of a 100% online bank sounded like a scam.

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 Personal Finance 
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PFBlogger Spotlight: David of My Two Dollars

Before my wedding in February, I had sent out a bunch of interview requests and questions to some personal finance bloggers I didn’t know too well and then prompted forget I had done so (I blame it on the hustle and bustle of the wedding!). David, of My Two Dollars, was one of them and thankfully he asked about it the other day or this would forever have been lost in my GMail archives!

David’s background is certainly quite eclectic and he single handedly brings a pretty diverse perspective on a lot of things. I don’t want to give too much of it away but the guy has a degree in Criminology and Sociology and has never used either in a job (oh and don’t move across the country for a girl, unless you know her really well :) ).

Oh, and it’s his birthday today, so send him your well wishes!

jim: Hi David, could you tell us a little about yourself?
David: I was born in Boston, MA and moved to California 13 years ago when I finished college. Although I don’t work in the field that my major was in, I spent my first 12 years in California working in the movie and television industry, and just last year left the corporate job to strike out on my own building websites, writing, and doing video editing.
jim: Do you have any crazy or funny stories from your twelve years in the movie and television industry?
David: One that stands out in my mind was when I was working at Paramount Pictures, and I went to use the restroom in my building. As I am at the urinal, who walks up to the one next to me but Tom Cruise. You get very used to seeing celebrities every day at work, but never would I have expected to run into Tom Cruise in the bathroom. Very surreal – and before anyone asks, no, I didn’t look.
jim: What motivated you to begin blogging and how long have you been doing it?
David: I started blogging in 2006, strangely enough, because I was bored at my job and needed something to do. I figured it would be a nice hobby to pass some time in the office, and it was then that I started my first site about the environment, The Good Human. That site is still doing really well now, and in November of 2006 I started My Two Dollars.
jim: Can you tell us a little about your other site, The Good Human?
David: I started The Good Human at first just to diary my thoughts and motivations for becoming a “better human.” There are so many ways that we can all contribute to our existence here on Earth, and I found over time that one of mine was talking about environmentalism and sustainability issues with people. I wanted The Good Human to be a place where people could learn about these types of things without being made to feel guilty or like they were not doing enough.
jim: How did you come up with the name for your blog?
David: I wanted something catchy, and it was called about 5 or 6 different names before this one stuck. My Two Dollars came from watching a rerun of Better Off Dead, that movie with John Cusack where that kid chased after him for his two dollars.
jim: What do you think makes your perspective unique?
David: I think I have a unique perspective because I did not start off life after college as a financially responsible person. I spent like I was made of money, I used my credit cards to impress people (girlfriends, mainly), and lived the high life on around $35K a year. But a few years ago something clicked that I was getting older and was digging myself further into debt that I was not going to be able to get out of. So I stopped spending, learned about finances, starting saving, paid off my credit card debt and came up with priorities that to me saved me from financial ruin.
jim: What’s something no one else in the blogging world knows about you?
David: I have a degree in Criminology and Sociology that I have never used for any job. Also, I moved to California following a girlfriend. And guys, don’t ever do that, seriously, unless you have been together for a very long time.
jim: What are your favorite personal finance books?
David: Lately I have been enjoying The Automatic Millionaire, Your Money Or Your Life, The 4 Hour Workweek, and The World Is Flat.
jim: Which of your posts do you think all your readers should read?
David: I think a few that best represent what kind of writing I do would be Making The Financial Sacrifice To Get What You Want, Why You Should Stop Paying For Storage And Just Get Organized, Sometimes The Simple Things Can Save The Most Money, and The Start Digging Out Of Credit Card Debt Challenge.
jim: What financial “mistake” that you’ve done has bothered you the most?
David: Spending money like it was growing in my backyard. By the time I was 29 years old, I had racked up over $30,000 in CC debt…and had absolutely nothing to show for it.
jim: How about your best decision?
David: To stop leasing cars and to start buying them. I used to lease expensive cars until I realized I was paying over $500 a month to rent a car that I could not even sell at the end of the lease!
jim: What is your favorite personal finance blog and why?
David: That’s a tough one – before I had a personal finance site, I started off reading Five Cent Nickel, Get Rich Slowly and of course, your site – and since I still read all three I would have to say they must still be favorites of mine. There has been such an explosion of PF blogs in the past year, and so many of them disappear after a short time. It’s nice to see the familiar faces are still around, as I hope to be in a few years as well!
jim: What do you hope to accomplish this year?
David: My wife and I would really like to have children, so we will be starting to try this year. And now that I have gotten a clean bill of health from the doctor after a cancer scare, we will be moving forward with our dream of moving to New Mexico, buying some land, and building a house.
jim: I didn’t know about your cancer scare, I’m glad things worked out.
Did it change your perspective on anything (life, money, etc) that you
think would be helpful for others?
David: Going through 6 months of the possibility of having cancer was quite frightening – it opened my eyes even wider to what is really important in life. My wife, my lifestyle, what I do in my spare time and how I expend my energy is way more important to me now than amassing huge amounts of wealth or the finest cars or anything like that. I was on that road before, but after thinking you are going to die relatively soon, the important things come to the front and you realize how useless and unimportant “stuff” and wealth is. Now we just want enough to be happy and to be able to do the things we love – we have no need for getting rich. Thankfully, the symptoms I was having are related to something else that I can live with for a very long time, so we were quite relieved.
jim: That’s great… I’m curious also about New Mexico, why there?
David: We decided to move to New Mexico because we spent a while there last year…and have not stopped talking about it since. We absolutely fell in love with the area; the clean air, the lower cost of living, the wonderful people and the views that go on forever. My wife and I are avid hikers and campers, and this area suits our lifestyle much better than Los Angeles.
jim: And, lastly, if your blog ended today, how would you like people to remember it?
David: As a blog that gave sound advice on lifestyle choices and an encouraging voice to those who are looking for said advice. I am by no means a financial planner, but I have my head on straight and hope I have offered valuable information that will be around for a while. And if only one person got something out of it, I can be happy with what I did.

I invite you to check out both My Two Dollars and The Good Human, both are excellent blogs and I’m not just saying that (just look how interesting his life has been, how could his blogs not be fun to read???).


 Personal Finance 
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PFBlogger Spotlight: Jeremy at GenXFinance

I’ve been a fan of Jeremy’s blog at GenXFinance for quite some time because I’m Generation X (or Y or whatever the heck I am), the exact target audience he’s trying to reach (and that he is). He’s an INTJ, loves long walks on the beach (*I made this up), and actually answers quite a bit of questions about himself on his About page (some of which are repeated below). With nearly 1700 1900 RSS subscribers (subscribe!) and an average of a thousand unique visitors a day, he can be considered among the more popular bloggers out there. He also has more experience in the professional personal finance realm than most bloggers, writes for About.com’s Financial Planning section and was really interested to talk to for this interview. We’ve swapped several emails back and forth on this and other topics and in general he responds pretty quickly and with a lot of information. If you ever have a question for the guy, don’t hesitate to ask him.

jim: Hi Jeremy, could you tell us a little about yourself?
Jeremy: As you probably know, my name is Jeremy. I’ve always been a bit of a technology junkie and I actually went to college expecting to become a programmer. In high school I taught myself some Pascal and C/C++ while dabbling in Assembly. Well, it only took one semester to realize I hated all of the advanced math courses required, so I did a complete 180 and went into landscape architecture. I always had a bit of an artistic side, and I thought I would enjoy designing golf courses, so I figured why not. I did get my degree in that, but I failed to realize how few jobs there were out there in the field, and the ones that were out there rarely paid more than $30,000 per year. So I did what any 22 year old would do, and I decided to completely change career paths again and began to pursue an MBA and finance everything with student loans. Long story short, I am still a few credits short of earning that degree, but stopped going to school because I had found my love of finance early on in that curriculum, and after a few job offers I haven’t looked back since.
I was a financial planner or advisor or whatever you want to call it for a few years, but the commission-only sales wasn’t for me. I had a very hard time being able to bring home a paycheck while trying to do what was best for the clients (i.e. not sticking them into 5% front-load funds, trying to push life insurance, etc.) What I wanted to do was to simply help people. Well, unfortunately you can’t make much of a living as a commissioned financial planner by educating lower to middle-income families who are just getting started. Thankfully I was able to get out of the sales aspect of financial planning and found a position with a company that strictly deals with retirement plans and pays salary. Now, I have no incentive to try and sell anyone anything, and I strictly provide an educational and service role where I can work with people to help them make better financial decisions. This type of role reflects the very thing I’m trying to accomplish with my blog and the financial planning site at About.com.


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 Reviews 
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Executive Review of The Automatic Millionaire

The Automatic MillionaireI received a free copy of David Bach’s The Automatic Millionaire as part of a promotion from American Century (your fund fees at work) and this is a brief executive review of the book.

Executive Summary:
Automate the saving of retirement funds directly from your paycheck, monitor them periodically, and check back in thirty years to discover you’re a millionaire. Buy a home, don’t rent, and pay down half your monthly mortgage bill every two weeks to shave, on average, 7 years off your liability and tons of money.

Read on for a more in-depth review of the book.

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 Investing 
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Free Copy of The Automatic Millionaire

This offer has ended.

The Automatic MillionaireAfter hemming and hawwing for a while, debating whether or not to call American Century Investments (details on the offer courtesy of MyMoneyBlog, a great site if you’ve never read it) to “request information” and basically get a copy of The Automatic Millionaire by David Bach – I actually called them up.

Details of the offer from American Century’s website are available here. Basically you call up 1-800-826-8323, ask for some retirement info and specifically ask for the book. They’ll want your address (no phone number), whether you want to open an account (No), where you heard of the offer (their website, this website, MyMoneyBlog, whatever), and in about a minute you’re done. I was told to expect the book in 8 – 10 days but all accounts indicate it’s definitely going to show up. I look forward to being the last person on the planet to read it.

Update: The offer expired. :(


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