The Index Card

The Index Card: Why Personal Finance Doesn’t Have to be Complicated by Helaine Olen and Harold Pollack

Personal Finance

Overall Rating: 3.5

Quick summary: Dr. Harold Pollack from the University of Chicago suggested to financial journalist Helaine Olen that all of the financial advice a person needs can fit on a 4”x6” notecard. The idea went viral and Pollack and Olen followed up with their talk with this book explaining in further depth the basic rules that should govern personal finance.

This is an excellent primer for those who are recent high school/college graduates and those who are new to personal finance. The rules are very basic and only a few of them were surprises to me. The basics of save 10-20% of your income and invest for your retirement. Wait to buy a house till you can afford it and buy insurance (car, home, health, etc.).

The rules that surprised me were their advice not to buy individual stocks as it’s a form of gambling. I knew it was a form of gambling, but I didn’t realize that even experts had such a hard time buying and selling at the right intervals. I was also surprised by their advice about financial advisors. They suggested only using a fee-based fiduciary. The word fiduciary is important because a person with that title has basically pledged to only look after your financial best interest. I had not realized that many of the titles in the financial world meant almost nothing, financial manager, financial planner, and other such titles. I knew that most of them worked on commission, but didn’t realize that fee-based professionals existed.

Overall, there’s no concrete plan the way there is in other financial planning books. They don’t suggest doing one step before another and they avoid getting too specific for the most part. But I did learn some interesting things, like 96% of people have used some sort of government assistant, but only 40% believe that they do. It’s for this reason that they suggest supporting the social network, since everyone needs it at some point or another. Like all other financial books, this suggests a certain political outlook, but it wasn’t pervasive throughout the book, rather it was concentrated in this last step. And to me, it makes sense since it’s hard to imagine going through college without government assistance in some form or another, like a grant or a government loan.

Is it worth buying? (Kindle $9.99)

Yes, if you are new to the world of personal finance. If you’ve never read a personal finance book, this is a great place to start because it has all of the fundamentals without being overwhelming. But like a lot of other books, I borrowed it from the library rather than buying it.

Something else you might enjoy:

I’ve already recommended all of the personal finance books I’ve read and thought were worthwhile. What’s your recommendation?

Total Money Makeover

The Total Money Makeover by Dave Ramsey

Personal Finance

Overall Rating: 5

Quick Summary: Dave Ramsey offers concrete steps individuals and families can take to organize their finances, pay off their debt, and invest money for their future. In what Ramsey calls “baby steps,” he outlines seven steps people should take for their financial health. Ramsey is not necessarily interested in saving you money—his snowball debt method prioritizes the smallest debts first which means you wind up paying more money in the long run on interest. His approach, instead, is much more about psychology and motivation. If you’ve tried other methods of paying off your debt and have failed, then this may be what you need to finally ditch your monthly payments.

What I love most about this book is how detailed Ramsey is in what you need to do. In each chapter he offers the general principal and then gives examples from the people and families he has helped. These examples are great in answering questions that otherwise might be overlooked. Having read other personal finance book, I’ve found that this is the hardest thing to do—figure out how the general principals apply to you.

Since I’ve read financial books before and we still have debt, I know that having the intellectual knowledge is not the same as being able to implement that knowledge. This is why, although Ramsey’s method can cost more money in the long run with paying off debt, I’m going to give it a try, because paying off one debt, no matter how small, is intensely rewarding. Just like seeing the scale go down by one or two pounds, seeing small successes really matter in continuing the long journey to financial health.

One thing I did not like was trying to find additional information outside of the book. Going to Dave Ramsey’s website looks like every other financial guy trying to sell merchandise with his name and logo on it. The website did not feel like the straight talking Dave Ramsey of the book and, in fact, made me uncomfortable. Trying to find the answer to a very specific question led me to other sections of the website that were written by other financial advisors, not Dave Ramsey, and they offered NO new insight. What I did like from the website were the transcripts from Ramsey’s radio show. Reading through those were helpful and it was like having access to hundreds of people’s stories, similar to what you find in his book.

As with all things, Ramsey comes at finance from a political and religious perspective. In my previous book review of his shorter book, The Money Answer Book, I mentioned that he is a Christian and presents his advice from that particular perspective. I appreciate how upfront he is about this, from the beginning of the book, and found some of his Biblical quotes motivational. However, what I find odd is his aggressive justification for Christian’s having wealth at the end of the book. I didn’t realize that so many people thought being Christian and being wealthy were at odds.

Additionally, Ramsey has certain political views that bleed through, particularly in regards to government run programs like social security and disability. If you are easily offended, just be forewarned that there are slight digs at the government. For me, Ramsey’s anti-government stance is softened by his exhortation to give charitably. Giving not just to whatever church you happen to belong to, but to organizations and people that you believe in. He emphasizes that wealth will not solve any problems in your character—if you’re a jerk, you’ll still be a jerk, and if you’re a giver, you will continue to be a giver, just with a bigger wallet.

In the end, while I’m not convinced of every single piece of advice (who would be since we all have our own opinions), I personally am going to try and implement his plan. If it works, I’ll update this book review. If it doesn’t, I’ll update this book review. But certainly his argument is compelling enough for me to give it a try and that’s saying something.

Is it worth buying? (Kindle $12.99/Hardcover $14.99)

Obviously if you do not have debt and have a clear financial plan, you don’t really need this book. But if you are struggling financially, it’s certainly worth a read. I borrowed the copy I read, which I thought was appropriate since the whole point of the book is saving money. If you’re the kind of person who likes to check back on his advice, look things up, and use the workbook pages that are included, then you should certainly purchase the book.

Something else you might enjoy:

I’ve read Rich Dad, Poor Dad and while I enjoyed it, it didn’t change my life. It’s still worth reading, since it’s a powerhouse in the personal finance genre.

The Money Answer Book

The Money Answer Book by Dave Ramsey

Non-fiction/Personal Finance

Overall Rating: 3.5

Quick Summary: Dave Ramsey is best known for his snowball method of paying off debt. In this book he explains his method through a straightforward question and answer format. It covers topics like budget planning, retirement and college savings. At 176 pages, it’s a quick and easy way to get some financial advice.

Like most financial advisors, Dave Ramsey advocates living debt free. However, he even goes a step farther than other advisors in saying that you should pay cash for buying cars and for paying for college. He also advocates tithing and would come under the general umbrella of a Christian financial planner.

I wanted to read this book because his method is all over Pinterest. After browsing through the books available from the library, this one was the most accessible and currently available to borrow (the other books had wait lists). I knew going into it that he would be advocating a debt free lifestyle, after all what financial advisor tells you to say in debt?, and I also knew he had a religious inclination. I was surprised by his college advice, since going to community college is not ALWAYS the cheapest option (I say this as someone who worked in college admissions for three years so you can take this with a grain of salt).

I’m really glad I read the book because reading financial management books always remind me to be grateful for what I have and to try and find contentment. I can’t say that Ramsey’s advice in particular is all that groundbreaking, but it sparked a discussion between my husband and I about selling our second car, putting off home improvement projects, and even scrutinizing our stance on Christmas gifts (gasp!).

His most controversial tip, the snowball method of paying off debt, seems like a good one. Pay off the smallest debt first to gain momentum and then add the amount you were paying on that debt to the next lowest debt until you pay off everything. It helps to free up some space in the monthly budget since a $50 minimum payment gets paid off quicker than a $200 minimum payment. He also warns against credit cards with rewards because most people start off paying the card off every month, but slowly wind up building a balance. Since I’ve done this a few times, I can vouch for that and know I need to change my approach. All in all, some common sense reminders to handling household funds.

Is it worth buying? (Kindle $5.99)

If you really believe in this method it might be worth buying so that you can consult it again when you are ready to invest in college savings funds and retirement. Otherwise, just borrow it from the library like I did, read the relevant questions. There’s no sense in overwhelming yourself with information you don’t need right now.

Something else you might enjoy:

I personally love Suze Orman. She is a straight talker and I’ve learned so much from her over the years. Plus she supports public television, which I love! Her 9 Steps to Financial Freedom is great because it addresses the psychological and emotional aspects of money along with the numbers.