I’m way off the pace to accomplish my 52 books in 52 weeks campaign, but sometimes life just gets in the way of our plans.  No big deal.  Considering I only read five books all of last year it didn’t take much to out-produce last year’s totals.

I recently picked up a copy of Debt is Slavery:  and 9 Other Things I Wish My Dad Had Taught Me About Money by Michael Mihalik.  There were a couple things that intrigued me about this book.  First, I like the title, because I hate the idea of being a slave to anything, especially debt.  I also liked the parenting reference because I often wonder myself what things I could do to better prepare my kids for handling their own finances some day.  I thoroughly enjoyed the book.  It’s short - a weekend read for me at only 123 pages, but it is packed with good information.

Debt is Slavery, My Favorite Chapters

Introduction

I thought the introduction of this book was very well done as it provides some background information on both the author and the history of money.  Mihalik’s father passed away when he was just 13, which explains the subtitle of the book.  Like most of us raised by a struggling single parent, or by two parents that were bad money role models,  Mahalik made some bad choices early on borrowing heavy debt loads while in college and immediately thereafter.  It reminds me of my own story of borrowing money to finish school, and then borrowing money to pay for various life expenses when I was newly married because we were living beyond our means.

The introduction also includes an excellent section on how to select a teacher for the world of finance.  Two basic questions are really the key to this section:  Have they done what they are teaching?  Do they have your best interests at heart?  If the answer is no to either of these questions you ought to move on.

Chapter 2:  Time May Not Be Money, but Money Definitely is Time

I think the technique of converting purchases into hours worked is a great one.  Let’s assume you bring home $12.50 an hour from your current job.   A new Nintendo Wii game just released and retails for $49.99.  Are you willing to work half a day at your job to pay for a video game?  The seriousness of that question grows as you consider larger, more expensive purchases.  Let’s say your local bike shop has an awesome deal on a mountain bike you’ve had your eye on–$600 and you can ride it home from the store.  Earning $12.50 an hour it would take you over 40 hours to pay for that bicycle.  That is a week’s worth of full time employment.  There are only 52 weeks in a year.  Are you sure you want to give up one of them for a new bike?  So you see how converting the price of something to hours worked can be an effective strategy to weed out the needs from the wants.

Chapter 6:  Don’t Sell Your Soul for a Salary

I sold my soul for a salary for a long time (and not a very good salary, I might add!).  I worked for a credit card processing company, and I just hated my job.  It was a toxic environment, I didn’t believe in the work I was doing, and I was all-around miserable.  Why was I there?  Because I thought at the time it would lead to something better - more money, more perks, etc.  In this chapter Mihalik looks at the various reasons why we choose the jobs we do, and why we stay there when things go bad.  Lesson learned:  Do not choose a company/profession/position for the money–choose it because it is something you love to do.  And if you find yourself working in a job you hate, find a way to change and fast.

Chapter 9: Save 50 Percent of Your Salary

I’ve written about the 50 Percent Savings Plan before, and when thinking about it I find myself wishing I had a time machine to go back and start the plan in my twenties.  At the moment I’m devoting a large portion of my earnings to debt repayment, so saving half of my income is not feasible.  However, I fully intend to save 50% when I’m debt free.  For every year I accumulate half of my earnings I’ll earn one year of financial freedom, without a change in lifestyle.  Pretty cool idea!

Conclusion

Debt is Slavery was a short, enjoyable read with tons of nuggets of wisdom on repaying debt, living frugally, and finding financial freedom.  At around $10 on Amazon.com I consider it a steal.  It’s going on the bookshelf at home, which is rare for most books I read.  I typically send them back out into circulation via eBay, or just check them out at the library.  But not this one–it’s a keeper.

I’ve gotten away from book reviews the last few weeks, and it took a really good one to motivate me to write another review.  The Ultimate Cheapskate’s Road Map to True Riches, by Jeff Yeager, is one of the best frugal living books I’ve ever read.  Yeager was kind enough to send me an autographed copy last week.  It arrived on Thursday, I started reading it on Friday, and I finished it on Saturday.  It was 241 of the most entertaining pages one could find on living the frugal lifestyle.  As I read each chapter I became more and more convinced Jeff and I were separated at birth!  One thing that quickly becomes evident is that Yeager has a great sense of humor, and it shows in his writing style.  My wife and I agreed he sounds like the Jeff Foxworthy of frugality.

This book is easily worthy of my first-ever giveaway here at Frugal Dad.  If you would like to receive my autographed, gently-handled copy simply leave a comment on this post and be sure to include your email address so I can contact you.  Comments will remain open until next Sunday (April 20th) at 12:00pm (eastern time).  I’ll use the handy list randomizer at Random.org to select the lucky recipient and ship your book as soon as we confirm your address.  Now, here is a quick review of my three favorite chapters from the book.

A Sneak Peek Inside The Ultimate Cheapskate’s Road Map to True Riches

Chapter 2:  Fiscal Fasting

Yeager’s fiscal fasting idea is a bit more extreme than my 48-hour spending fast,  but the rules are the same.  For one week participants must not spend any money that is not absolutely required for life or career-sustaining needs.  No shopping, no eating out, and if you are hardcore, no utilities!  The thought of going a week in some parts of the country with no air conditioning is daunting, so plan accordingly, or stick to the beginner’s level.  I did pick up another book idea from this section, Children of the Great Depression, by Russell Freedman.  Yeager included it on his recommended reading list for your family’s fiscal fast - since you won’t be watching much television or going out for entertainment.

Chapter 3:  Six Golden Rules for Ruling Your Gold

“Gold nugget #1:  Live within your means at thirty and stay there”.  What a great concept!  So many people spend right up to their income, even as their incomes increase.  Applying this golden rule, your spending levels and the amount you “live off” at 30 years-old would never increase.  Any additional income you earn would be used for saving towards financial independence.  Since I just recently turned 30 myself I guess I can kiss any future raises goodbye - thanks Jeff!

Chapter 5:  Buy a Home, not a Castle

How relevant is this advice in the current housing market?  Many people who find themselves in trouble today bought more house than they could really afford, thanks to creative financing from questionable lenders and overconfident borrowers.  Yeager’s advice in The Ultimate Cheapskate’s Road Map to True Riches is to buy a starter home and finish there.  I agree.  So many people are in a constant search for something bigger and better, particularly when it comes to real estate.  What a revolutionary idea - buy a home you can afford, pay it off early and remain there mortgage free.  Actually, this isn’t all that revolutionary.  As Yeager points out, it is the way our grandparents bought real estate a few decades ago.

The Ultimate Cheapskate’s Road Map to True Riches is a definite buy, two thumbs up!  In fact, I liked it so much I almost backed out of my giveaway, but I’ve taken good notes and in true frugal fashion would like to pass it on to someone else who could benefit from the advice.  Don’t forget to leave your comments for a chance to win an autographed copy!

There have been several popular releases in the “early retirement” genre recently, but I found this book hidden amongst the personal finance books at a local library. It was written in 1992, which made me a little skeptical as to its relevancy today. Great books can hold up to the test of time (Your Money or Your Life), but some are “dated” only one year after their release. I found Kiss the Rat Race Good-Bye to be in the category of those books which still have inspiring, relevant personal finance information many years after their initial release. Let’s dive in with a detailed review.

A Look Inside Kiss the Rat Race Good-Bye

Chapter 1: Here Today…Where Tomorrow?
Are you one of those people who put their dreams on hold to pursue a “safe” career? I wrote about this myself a while back, and I think at some level we all are guilty of doing this at some point in our lives. Unfortunately, it isn’t a realistic expectation that everyone in the world can realize self-actualization in their careers from the very start. For most of us, work involves toiling away at the daily grind to pay necessary life expenses, provide for our families, and save for a rainy day. However, at some point we should all aspire to break free from the rat race and do what it is we believe we were put here to do. If you personally believe you were put on this earth to sit in an office nine hours a day and create reports on widget production then congratulations - you probably won’t have a hard time realizing your ultimate dreams. For the rest of us financial independence comes with the promise of blazing our own trail, setting our own schedules, and doing work we love.

Chapter 2: Life Begins at…
This was by far one of the book’s best chapters. Author Elizabeth Lewin establishes the ground work for creating different kinds of goals: short-term goals, medium-term goals, long-term goals, lifestyle goals, and financial goals. Each type of goal has a different time line associated with it, but each is establish through the same methodical approach described by Lewin in Chapter 2. If you need to brush up on your goal-setting or finishing skills this is a great section for you.

Chapter 3: Up Your Assets
As I mentioned in my 7-Day Turnaround series, the first step of determining direction with any new plan is to establish a starting point. Lewin describes in Kiss the Rat Race Good-Bye her ideas for “gathering the data.” This involves taking inventory of all important financial accounts related to your assets and liabilities, and Lewin includes a handy checklist for recording this inventory. After identifying each type of account as an asset or liability you can put together your personal balance sheet, a task Lewin suggests readers do at least once a year.

Chapter 4: You Can Design Your Life-Style
The most significant thing keeping most of us from retiring early is the lifestyles we have chosen. By saddling ourselves with debt, expensive mortgages, car loans and student loans, the idea of retiring early is a pipe dream. After all, we’ll need to work fifteen years just to pay this stuff off and get back to zero! Lewin makes the point in this chapter that is the lifestyle you choose that has the most impact on whether or not you will be able to make an early exit from the rat race. There are some great tips in this section on setting up a budget, monitoring your cash flow and quite a few money-saving tips as well.

Chapter 5: Managing Your Debt
The opening sentence of this chapter is, “Buy now, pay later.” Might as well be the mantra of the average credit card user. Some are responsible and paying for it “later” means when the bill arrives. Others take “later” to mean some point in the future after interest and fees have doubled the initial cost of that single item bought years earlier. Lewin presents an eye-opening statistic on debt levels at the time this book was written.

When the Diner’s Club card was started in 1950, the total outstanding consumer debt (excluding home mortgages) of the American consumer stood at $21.5 billion. Forty years later, the figure had reached $750 billion.

Now that’s a sobering statistic! Obviously this amount of debt is disproportionate to the population growth during this period, so something else has to account for the staggering increase in American’s debt loads. That “something” is spending. We have bought and swiped ourselves into a financial hole that many will never dig out from. Nothing can derail your plan for an early retirement like amassing large amounts of debt.

Chapters 6-16
The next ten chapters covered many of the same topics you will find other personal finance books. I have consolidated their review here not because there is nothing remarkable, but in the interest of time (mine and yours), and because these are fairly standard sections in any book about money. Of course, this book introduces all the concepts with an added sense of urgency since the ultimate goal is to get us out of the rat race within the next decade or two. Topics covered include social security, corporate pension plans, company and other tax-deferred plans, saving and investing, mutual funds, investing for college, insurance, estate planning, and record keeping.

Chapter 17: Putting It All Together: Real-life Scenarios for Kissing the Rat Race Good-Bye
The final chapter of Kiss the Rat Race Good-Bye was an inspiring summary of the plans detailed in previous chapters. The last chapter provided some real-life scenarios of people who had managed to reach their goals of financial independence in ten to fifteen years. It’s always nice to hear of others who manage to break free from the rat race. It makes the very idea a little more believable to those of us who have a hard time imagining what life would be like without doing the corporate shuffle five days a week. I recommend this book for anyone not doing the work they love, or hoping to step away from the corporate grind to pursue a more fulfilling calling free from financial concerns.

Check out my other book reviews in the 52 Books in 2008 Series.

Generation Debt is one of those books I wish I had available back when I was 20, and just entering a phase of my life where I caused financial harm that I’m still trying to dig out from today. At the time I thought debt, and student loans, and car payments were all a normal part of life. Generation Debt is written for the 18-34 year old members of Generation X/Y. If you know someone in this age bracket, or are in this bracket yourself, I highly recommend this book.

A Look Inside Generation Debt

Chapter 1: Why Do We Have So Much Debt, Anyway?
Author Carmen Ulrich focuses much of this first chapter on the costs associated with obtaining a college degree. College costs continue to skyrocket and kids and parents are struggling to keep up. Most are turning to student loans to finance the degree. This is leading to a whole new generation of young adults graduating school owing thousands of dollars. I picked up a few student loans myself the first two years of school, and then worked my final two or three years to finish up. If I had it to do over again, I would have worked the entire time and skipped the student loans.

Chapter 2: Get a Grip. Set Goals. Make a Plan.
This may be the book’s best chapter where Ulrich helps readers separate needs and wants, an important exercise for anyone struggling with their finances. Other topics discussed in this chapter include delayed gratification, budgeting, and the creation of an overall financial plan. I appreciated Ulrich’s tone in this section, not overly preachy like some financial gurus tend to get around the subject of budgeting, etc.

Chapter 3: Master Your Student Loans
Like the first chapter mentioned, thanks to rising costs of a college education, most students graduate with large amounts of student loan debt. This chapter walks readers through the various types of student loans available, the payback options for those who discover they can’t afford to repay, and provides an explanation on the popular consolidation method. I also found the section on student loan cancellation scenarios helpful for those who find themselves deep in student loan debt with minimal starting salary job offers. Military service, or an agreement to teach in an inner-city school district, may come with the perk of loan cancellation.

Chapter 4: The Potential Prison of Credit Card Debt
What financial book on debt wouldn’t include a chapter, or entire section, devoted to credit cards? Generation Debt provides some important background on the use of credit cards over the last few decades. One of the statistics I found most compelling was that “in 1970 the average card holder owed $185.” Compare that to the $8,000 or so the average household has in credit card debt. It’s obvious that the credit card’s marketing campaigns have worked, and carrying large, revolving credit card balances is now the norm in most families. What a sad commentary on our society. We have become a bunch of over-indulgers, buying up things we couldn’t afford to pay for at the end of the month. The remainder of the chapter goes on to explain the mechanics of credit card use, and includes a section on Consumer Credit Counseling Service and bankruptcy law.

Chapter 5: To Rent, Perchance to Buy
Home ownership has long been touted as the American dream. Unfortunately, for many that dream has become a nightmare in the last few months. A booming housing market has come to a screeching halt, thanks in large part to the subprime mortgage lending community who doled out loans to people who couldn’t afford to repay them. Consumers bought into the idea and snapped up properties they knew they couldn’t afford without “creative financing.” If you cannot afford home ownership, or are planning to move in a couple years, or are not sure about the stability of your job, there is no shame in renting. What a timely message from Ulrich in Generation Debt. Somewhere along the way “renting” became a dirty word. Realtors and banks sold consumers on the idea that renting was “throwing your money away.” Why rent when you could buy? Ulrich makes a strong case for renting, but concedes that it is time to buy if you “got a great promotion, love your city or town and you’ve decided to stick around.” The remainder of the chapter provides an excellent overview of mortgages, down payments, closing procedures, and real estate taxes.

Chapter 6: The Need for Wheels
Home ownership may be the American dream, but cars remain American’s first love. There is something about owning a car that makes us feel free, and the bigger, the faster, the sexier, the better. Of course all this comes at an enormous cost. Next to our homes, cars and their associated costs make up most household’s second largest expenditure. Generation Debt walks readers through the maze of car buying options: new or used, lease or purchase, trade-in or private sale, extended warranty or no warranty. I agree with most of what Ulrich has to say in this chapter, but I personally would have put more emphasis on the idea of buying used, and driving it until the lug nuts fell off! Too many people tie up their incomes trying to impress people at a stoplight.

Chapter 7: Honor the Tax Man
Yes, death and taxes are the only real certainties in life. This chapter is a great introduction to the payroll tax system, explaining how W-4s translate to the tax man getting his “fair” share out of each paycheck. I’ve always said that if taxes were not automatically deducted from worker’s paycheck, and taxpayers had to sit down every week and write out a check for 28% of their pay, we would have a tax revolt in this country. But, since Uncle Sam takes his portion right off the top we barely notice. This chapter emphasizes the importance of paying your taxes on time, whether you agree with them or not. Ulrich provides younger readers (and older ones who still don’t understand much about taxes) with an excellent overview of deductions, available credits, and ways to legally minimize your taxable income through pre-tax contributions to 401k plans.

Chapter 8: The Golden Net of Insurance
Insurance is one of those necessary evils in life. Ulrich walks readers through the importance of health insurance, particularly for young adults just beginning to start a family, but otherwise feeling invincible. Many young people are afflicted with illnesses that can crack and scramble a young nest egg. Health insurance costs have been on the rise, but it is just too big a risk to skip this coverage, particularly if you have the opportunity to join a group insurance policy through an employer. I really could have used this when I was 22 and signing up my young family for my employer’s health insurance. The options for health, dental, life, long term disability, short term disability, etc. were all a little overwhelming. Again, this is a time when I could have benefited from a book like Generation Debt, where many of these options are explained in a way a Gen X or Gen Y reader could easily grasp.

Chapter 9: The Magical 401(k)
There are few plans out there with the kind of wealth-building power as the 401(k). I know it is hard for twentysomethings to think about a retirement some forty or fifty years away, but if you start early it is possible to become extremely wealthy over the years thanks to tax-deferred compounding growth. I wish I had started contributing to my 401(k) and Roth IRA at twenty years old! I like Ulrich’s plan of paying off “bad” debt, or debt with interest rates above nine or ten percent, before you begin to invest. However, if you have low-interest debt, such as a mortgage or student loan, continue to pay on that debt and simultaneously make contributions to saving plans.

Chapter 10: A Pricey Future
All indications point to costs continuing to rise, so now more than ever it is important to get out of debt (and stay out), save a significant portion of your income, and keep costs low. Ulrich shares with readers her wishlist of reform she hopes to see in the coming decades. Here are a couple of my favorites:

• Expand access to health insurance for part-timers and/or expand dependent coverage for young people who do not have their own insurance, but are no longer eligible for coverage under their parent’s plan.
• Make student loan deferments longer (a year or eighteen months, instead of the existing six month grace period after graduation). This would allow graduates a longer period to get on their feet before larger student loan payments came due.
• Require more personal finance education in schools. I think this one may be the most important. If we did a better job of teaching our kids the principles of sound personal finance, and prepared them for the dangers of credit cards, car loans and other financial traps, perhaps they would be better prepared to go out in a world full of financial pitfalls.

Again, I believe Generation Debt would make an excellent read for any young person starting out in a new career, or just beginning to think about college options. Personally, I think this book and The Total Money Makeover make excellent graduation gifts for a loved one, because they reinforce sound personal finance concepts, and provide information in an entertaining way that sits well with young people. Some personal finance books make you think the author is some stuffy finance professor talking down to you over his glasses. Generation Debt is a relatively short read at 241 pages, but is packed with great information for any young person hoping to get a better understanding of the principles of personal finance.

Check out my other book reviews in the 52 Books in 2008 Series.

Getting a Life was another book that wasn’t on my initial wish list for 2008, but after reading Your Money or Your Life and being fascinated by its ideas, I discovered this “follow up” book published a few years later. The authors of Getting a Life, Jacqueline Blix and David Heitmiller, were two success stories from the Your Money or Your Life instructional series. Former yuppies, living up the good life in the 1980s, they decided to downsize their lives to chase other pursuits free from the corporate rat race.

Getting a Life

The first 100 pages or so of Getting a Life are dedicated to recounting the former extravagant lives of the authors, and the various motivators that precipitated their adoption of a more frugal lifestyle. The introduction of the book was written by Joe Dominguez, author of Your Money or Your Life, and it may have unfortunately been his last. Dominguez died in January of 1997, but as the authors eloquently state in their dedication, “his work and message live on in these pages and in the transformed lives of program followers throughout the world.” Indeed it does.

To give a detailed review of this book would be highly redundant to the one I provided for Your Money or Your Life (YMOYL), as many of the principles are the same. YMOYL was a relatively quick read for me, while Getting a Life took a bit more mental energy to work through. The book is riddled with examples of people who have successfully applied the YMOYL principles - almost to the point of overkill.

I enjoy books with personal examples sprinkled in because it makes the author’s advice more palatable - sort of the, “If they could do it, I could do it” line of thinking. However, I found most of the examples in this book difficult to relate to. Many of these referenced had high-flying jobs in corporate America and simply decided to walk away, selling off many of their possessions and living on the earnings they had managed to accumulate through the years. For us “regular Joe’s” out here in middle class jobs with a wife, two kids and a dog to feed walking away doesn’t seem very feasible. Now, in most cases the loss of full time employment was replaced with part time work, or consulting. I guess this makes the idea a little more believable, but certainly not any more attainable in my current situation.

If you enjoyed Your Money or Your Life and want to read some follow-on material related to the principles first introduced by Joe Dominguez and Vicki Robin then I think you will enjoy reading Getting a Life. If you finished up YMOYL and decided you had your fill of the “living simple” message, this might be a little overkill. Weighing in at 342 pages it makes for a long read, but one that is full of real-life examples of people who have had their lives successfully transformed by Your Money or Your Life.

Check out my other book reviews in the 52 Books in 2008 Series.