Review by
Richard Sumrall"The rules of the game have changed … hard
work and good intentions are no longer enough ... real financial peace seems
so hard to find." The climate for investors and planning your family's
finances has changed dramatically over the past decade; dot-com bubbles,
emerging foreign markets and CEO scandals are but a few examples. In their
new book, "All Your Worth," mother and daughter team Elizabeth Warren and
Amelia Warren Tyagi reveal the truth about money in today's economic
environment, the steps you can follow to achieve a lifetime of riches and
the tools needed to achieve financial security.
According to the authors the secret to financial success is to "balance
your money." This "balance" involves a simple strategy of dividing your
spending into three distinct categories. The categories represent the money
you spend for your regular monthly bills, the money you spend "just for fun"
and the money you dedicate to savings. It is the authors' six-step plan that
explains how you can balance your money and increase your wealth:
"Step One -- Count All Of Your Worth"
This step provides the master plan to help you determine your financial
worth, your spending habits, your actual needs and how to set a reachable
financial goal.
"Step Two -- Escape From The Thinking Traps"
Think about the negativity that prevents you from accomplishing your
goals (my spouse doesn't work, I live in an expensive city, etc.) and learn
how to remove these "traps" from your life. Remember to put up the good
fight against these traps -- you have to believe you're worth the effort.
"Step Three -- Count The Dollars, Not The Pennies"
"Watch your pennies" is no longer the maxim; it's all about the dollars.
This means that it's time to sit down and make some honest decisions about
savings targets, spending necessities and luxuries, and how to lower your
costs. Some examples include higher deductibles on your insurance coverage,
refinancing certain loans, shopping for a better mortgage rate, and getting
rid of long-term contracts. The point is: "Dollars are worth more than
pennies."
"Step Four -- If You Can't Afford Fun, You Can't Afford Your Life"
The authors call this "wants spending"; in other words, the money
remaining after your "must have" spending. The secret to "wants spending" is
to understand that you ignore what you spend the money on and focus
on how you spend the money. The best ways to achieve this are to set
reasonable limits, make the switch to paying by cash and control your
emotional spending (for example, spending to relax or relive stress).
[to top of second column in
this article] |
"Step Five -- To Build Your Future, Pay Off Your Past"
Some of the book's most important advice is contained in this
step. It's a given that you want to reduce your debts as much as
possible. The authors' have placed this step after the previous four
steps for a simple reason -- the previous steps help you determine
where the money will come from to pay down your debts. There are two
key points to remember about debt: (1) Paying off your debts may
be "the most important investment you ever make in your future"; and
(2) debt can steal from your future.
"Step Six -- Build Your Dreams A Little At A Time"
How do you realize your financial dreams? One way is to follow
the authors' four stages of a lifetime savings plan. These stages
include (1) saving $1,000 (to start your security fund); (2) paying
off your "steal from tomorrow" debt (debt from credit cards, loans,
old bills, balances, advances and overdrafts); (3) using these
savings plus the $1,000 to create your security fund; and (4)
launching a lifetime of wealth creation (create a retirement fund,
pay off your home, investigate entering the stock market, etc.).
In the final section of the book the authors talk about the
"Powerful Tools" that you have at your disposal. These tools explain
how to have it all within the volatile cocktail of love, marriage
and money; how to purchase the home that's right for you; and how to
protect yourself with "financial CPR" when things get tough. The
authors describe the eight golden rules of money and relationships
(what's mine is ours, stop playing the blame game, learn to
compromise, etc.) and offer five simple rules for buying the home
you can afford and enjoy. It's also essential to have a plan when
bad things happen or your financial plan hits a snag. You should
stay in control of the situation; react quickly to financial
trouble; call your creditors; pay the bills that matter most; borrow
only as a last resort; negotiate aggressively with your creditors;
and as the final act, contact a bankruptcy attorney.
Unlike other money management books on today's market, "All Your
Worth" contains practical, real-world advice and represents a
realistic plan that virtually anyone can follow. This book is
recommended to everyone seeking a financial plan to help build
wealth and secure his or her future.
[Richard Sumrall,
Lincoln Public
Library District]
 |
