Monday, January 03, 2005

Two New Books, With More Coming

"What if I told you, in just an hour or two, I could share with you a system that would slowly but surely transform you into a millionaire? What if I told you that this was a proven system, that you could set up in just an hour or two, and that would require no budget, no discipline, less than ten dollars a day in investment, and could be done over the phone, in the comfort of your own home?"

I'd say you're a blithering idiot, but because I'm a voracious reader of financial books, I'd buy your audiobook anyway.

Those are the opening words of David Bach's 2004 book, The Automatic Millionaire. I'm now an owner of it, via audiobook format. Yes, I've espoused a less-than-stellar opinion of Bach in previous writings. But I've listened to the only decent audiobook I own — Dave Ramsey's Total Money Makeover — about 289 times, and it is time for something new ... previous prejudices be darned. Bach says he has a "no-nonsense approach" to learning about money. That's good, because I have a no-nonsense approach to hammering authors who spout lame "systems" with not-quite-realistic requirements and feel-good cheerleading.

My other purchase of the day? I'm a big Ben Stein fan, so when I saw his book How to Ruin Your Financial Life, I had to have it. It's a mere 129 pages long, with big print on small pages, so I have no delusions of literary grandeur here. I know what I paid fifteen bucks for, and that is a laugh. And maybe a good quote or two. You gotta love stuff like this:

See, the credit-card companies have a super-computer buried in the Utah desert under thousands of feet of concrete. Its purpose is to take care of you and help you out. It monitors your credit-card use, and if it finds that you're using too much credit, it cuts you off in terms of new solicitations. The fact is that the credit-card companies only want what's best for you — really. If they send you new credit cards, that means you need new credit cards (as determined by the supercomputer) and that you can handle the load, so fill out those applications, mail them out, and watch the credit cards pour in.

Pure Ben Stein ... so deadpan, and so tongue-in-cheek.

— Posted by Michael @ 1:22 AM


clearly you're a big dave ramsey fan. What would be your second choice? Although I've heard a lot of good things about him I can't get through much of Dave's stuff since I find his efforts to promote his religion a little off putting.

Anonymous Anonymous
, at 2:02 PM, January 03, 2005  

I'm not much on Ramsey's religious overtones, either, but I've learned to ignore them for the most part. I can deal with that if it means I get the motivation from the rest of his stuff.

If I had to pick someone behind Ramsey, I suppose it would be Suze Orman. She, at least, has put a distinguished, valuable body of work out there, and makes no false pretenses regarding the "ease" of becoming debt-free or retiring rich or whatever. She's as commercial as it gets, though, and I have to count off for that. (Her recent GM ads knocked her down several rungs in my book, unfortunately.)

Most of the other personas (Jean Chatzky, David Bach) that come to mind are just too full of fluff, too often.


I thought the Suze Orman GM commercial was bewildering. What financial guru worth their salt advises buying a brand new car? Or leasing?

I'm a fan of Dave Ramsey, but not quite a follower... it's tougher than he makes it sound. And he doesn't make it sound easy.

-- John

Anonymous Anonymous
, at 8:18 AM, January 14, 2005  

Although much of what Dave Ramsey says makes sense, I don't agree with his philosophy of always being debt free no matter what. To me it simply doesn't make sense to bust your butt to pay off a 5% mortgage. Wouldn't it be better to take those extra payments and put them in an index fund? In the long run the index fund is going to return 10%. I think a person has to be able to think these things through and not just take the one-size-fits-all approach to managing their finances.



Thanks for commenting, JLP.

You are very correct in that people must consider what is best for them, and not adopt the "one size fits all" mentality when it comes to their finances.

Actually, paying off the mortgage is pretty far down Ramsey's list of priorities, well behind saving 15% for retirement and saving for Kid's college education. It is not all about returns, however, for some of us.

Banking on 10 percent annual returns from index funds from this point in time is, IMHO, pretty shaky, even if you take a "long term" stance. I am too skeptical of bubbles and their aftermaths, I suppose.

Additionally, I'm not sure you can put a price on the security and risk reduction which is achieved by paying off one's residential mortgage. Certainly doing so would mean much more to some folks than to others. In the end, though, debt is always risk, no matter the rate. Investing in the stock market is always risk, no matter the time period or historical precedent.

Risk is impossible to avoid. And whatever one does with it — whether it's paying off the ol' house or pouring money into the S&P 500 — must be engaged with each person's comfort level in mind.


You said:

"Investing in the stock market is always risk, no matter the time period or historical precedent."

I think that depends on your definition of risk. Risk to me is the possibility of outliving my money. I would much rather combat that risk by investing in the stock market.

Sure, there are no guarantees that the market will go up at a 10% rate over the next decade or so. But, even with the bad market we had in 2000 - 2002, the Dow Jones Total Market Index STILL had a weighted average return of over 10% from 1992-2004.

Finally, I think you should go and check out and purchase his book "The New Investment Advisor" he does an awesome job of explaining risk.

Take care,



Yes, there is certainly the risk of us outliving our money. No doubt about that.

I am not saying that folks should steer clear of the market; far from it. I still have student loan debt, plus a home mortgage, and even with those things I am an active investor (401k, 529, Roth IRAs) in the stock market and have been since '97. I have not and will not give up investing in order to throw money at what's left of my family's debt structure. I might, however, curb my market investing a bit in order to pay off my home more quickly.

What concerns me is everyone's reliance on, and relentless reference to, double-digit returns from the stock market. I'm not interested in historic market returns which factor in 1995 thru now; that was an aberration not soon to be repeated, and not soon to be "worked off" either, IMHO.

When dividend yields on the S&P 500 rest near 1.5 percent (as now) and core P/Es sit in the 22-24 range (also now), then I have an extremely difficult time buying into projections of 10 percent annual returns from this point. Not that it can't happen ... just that I'm more comfortable projecting 5-7 annual returns from index/fund investments. (Actually, when I start looking at charts showing 1970 to now, and drawing trendlines on them, I get fairly nervous even about 5 percent returns!)

But hey ... if I can get 10 percent per year over the next 20 years, I'm a happy guy. I done made me some money!

** Comments Closed on this Post **

Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
[About Our Liquid Savings Goal]