Category: Book Review

This post is part of my review of Smart Couples Finish Rich by David Bach. I had planned to go through the whole book and talk about the main points of each chapter in a separate in depth post – however I’ve pretty much lost interest in that idea so I’m going to review chapter 3 today, since the post was already written and I will review the remainder of the book in a separate post.

The first part of this chapter is about organizing your finances – first go through all your paperwork and figure out what you own and what your debts are. Then organize every other aspect of your life as well.

I would tend to agree with this advice although he advocates a pretty radical re-organization of your life to get everything organized perfectly. As most people who have tried to organize at least part of their life know, it’s not the organizing that is the hard part (if you are motivated) but rather the ability to keep things organized that is the hard part. Coming up with a good and logical system that doesn’t require too much work, is the key for keeping yourself organized. He also mentions that the less “stuff” you have, the easier it is to organize it and keep it organized so purge, purge purge! For more tales of organizing, check out Tim’s interesting posts on his own organizing challenge at the Canadian Dream. Post 1, post 2, post 3, last post.

The next bit of advice he has is to write down your goals – people who write down their goals are more likely to fulfill them.

I like to write short term “to do” lists but I don’t really have any “goals” written down although I do sort of have an investment policy which is not written in stone (or anywhere else for that matter). This seems like a good idea but personally I think if you want to achieve something, I don’t see how writing it down will make much of a difference. Maybe if you have a bad memory then writing it down might help? On the other hand I’ve been posting (writing down) about my weight loss goal and I’ve found that I’ve been pretty motivated. Now, whether that’s because I wrote it down, or I’m doing weekly public updates or because I’m just motivated is impossible to say.

This post is part of my review of Smart Couples Finish Rich by David Bach. The chapter 1 review can be found here.

This chapter is about your values and what you want to do with your life. I found it quite interesting because a lot of personal finance books focus on trying to retire with as much money as possible or they focus on trying to retire with as little as possible. The reality is that you have to decide for yourself what is important in terms of your financial security and figure out how you want your life to go. It’s not good enough just to decide that you need $X dollars in retirement, you have to tie together your current lifestyle while working with your retirement goals so that it all goes together. Usually this means cutting back on your lifestyle while working so that you can save for retirement.

One of his examples of analyzing your values during your working years was health & fitness. Bach says that if it is one of your top values then you should devote the time and money to work on it. If $50/month for a gym membership doesn’t fit into your budget then you should cut something else out that you don’t value as much and make the gym membership happen. Obviously if your values include expensive hobbies then you have to make some decisions. One of the important points of this chapter is about taking control of your life and schedule. Sometimes people get so busy that they don’t make time to do things that they like to do, like get together with old friends, hiking, bicycling etc. Some of these activities don’t even cost any money but they take some time and planning in order to happen.

Determining values is an important exercise for a couple because lots of times people don’t know what their partners values are and this can complicate retirement planning as well as planning your finances during your working years.

I recently read the book Smart Couple Finish Rich and really enjoyed it. Since there were so many interesting ideas in the book that I agreed & disagreed with, I thought I would cover the book one chapter at a time (yeah, I like stretching things out).

The basic premise of the first chapter is that couples have to work together on their finances. They should plan together and both of them should know all the relevant financial details ie bank accounts, insurance policies investments etc.

In order to achieve their goals a couple must be able to agree on financial goals to achieve, and be able to work together on saving, investing and spending.

I couldn’t agree more with this bit of advice. I think it’s pretty common for couples to separate their “family duties” and responsibility for looking after the money often falls onto the spouse who is more interested (or less disinterested) in that topic. Canadian Capitalist talks about some solutions for the problem of the spouse who looks after the finances dying and the other spouse having to take over. One of the more interesting suggestions was for the “financial” spouse to give a regular power-point presentation to the other spouse.

My wife and I were both into finances before we met and although I do more of the investment stuff, we both know what’s going on in our finances. We are currently working on a list of all our financial assets/ accounts / passwords etc that we will keep somewhere so if one of us passes away the other can take over. In the event that both of us die, our executor will have a copy of this information as well.

Do you have a partnership where the finances are shared? Or is one partner the main “financier”?

Next Chapter.

This is another book in the Bernstein recommended list and the second book I’ve read and reviewed by James Grant. The other review was Money of the Mind.

Along with being an author, Grant is also the founder of Grant’s Interest Rate Observer, an investment newsletter based in New York City. As one might expect, books written by a guy who sits around and observes interest rates all day long, might not be that exciting. I’ve concluded that although he is a good writer and his books contain tons of research – he’s no Clive Cussler. Ironically I was reading a Cussler novel at the same time I was trying to read this book.

For the record, I managed to get through two thirds of this book and just skimmed the remainder, so needless to say I don’t recommend it unless you are absolutely desperate for an insomnia cure.

The premise of the book (not that it really matters at this point) is that Grant is of the opinion that there are natural business cycles which shouldn’t necessarily be interfered with as much as governments and central banks tend to do. In particular he says that when there excesses created as a result of good times (his theme in Money of the Mind), it’s important that when the inevitable recession or depression occurs that it be severe enough to “clean up” all the inefficient investments, companies etc. If the central bank works too hard to soften the blow then it only prolongs the inefficiencies. He uses Japan as a prime example of a country where the banking system was sorely in need of a major overhaul after that country’s great economic success in the 80’s but as we’ve seen, Japan never had the major downturn that might have let them fix their problems and then grow normally.

Although I don’t disagree with his logic I’m not sure I completely buy the fact that you have to make every business a lean machine before heading into the next upswing. If you only have a mild recession after a long up cycle then there will be companies that are not all that efficient staying in business, but the way I look at it, if the market values them accurately then someone will come along and buy them and make them more efficient.