A sober look at how to rethink your personal finances in the post-crash economy. ( )

This is a rather dull cookbook affair, nothing profound or exciting. On the other hand, it provides some good sound advice on managing money. Basic living skills are best kept a bit distant from profound or exciting! Walter Willett talked about this in his book Eat, Drink, and Be Healthy. Base your diet on boring textbook science, not the latest research papers. So the fact that Orman's book is a bit dull is a good part of what makes it valuable.

I think she has actually inspired me to move some money out of intermediate bond funds and into a dividend-oriented stock fund. Orman would tell me to use an ETF instead ... well, maybe!

One odd thing: on page 260 she talks about building a bond ladder by buying several bonds with different maturities, i.e. a one year bond, a two year bond, a three year bond, etc. That's not how I understand bond ladders at all! A bond ladder is a collection of bonds all of the same duration but with staggered starts. So maybe I have five bonds, all with five year duration. But it takes a while to build the ladder. I could buy the first in 2014 (maturing in 2019), the second in 2015 (maturing in 2020), the third in 2016 (maturing in 2021), etc. Now, to get this going, maybe I do start off with bonds of varying maturity, so the money that is not yet in the ladder isn't just sitting idle. But the trick is, when the shorter term bonds mature, reinvest that money in the longer term bonds that form the ladder. When the ladder is complete, all the bonds in it have the same duration.

Not that I am any sort of financial whiz. but I am a numbers person. I can't think of any other mistake I saw like this. For a book like this, directed at a very wide audience, it is quite a feat to maintain such a good level of accuracy.

Actually I lied a bit when I said this book is not at all profound. It does have some real profundity. So much of the mindset of the marketplace and the media is that happy days are just around the corner or not much past that. Well, Orman does say that interest rates must surely rise before too long. Well, who knows. How long have they been low in Japan? Anyway they sure can't go much lower! But anyway higher interest rates might have their good side if you are living on investment income, i.e. if you are retired and have managed to save up a decent stash. But it still doesn't mean happy days and Orman doesn't hold out that dubious promise. The idea is not just that such happy days are a dream not to be counted on, but that really a different dream, a dream founded on responsibility and realism, can be the foundation of a deeply fulfilling life. That might be just about the most timely and important message for today's world! To have this message packaged in a very down-to-earth book is a real gift to us all. ( )

It gave me a good deal of information (most of which I didn't know) and left me thinking. It is written in a very straight forward manner that I thought was very effective. There is so much information in the book it did get a little overwhelming at times but I'm very glad I read it and will probably be reading parts of it again just to make sure I get everything out of it.
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After seeing Suze Orman’s latest PBS program on the topic from this book, I decided to get this from the library. I particularly wanted to know more about Ms. Orman’s anti-allowance stance and the work-pay concept for kids that she recommended in the program. The concept of work-pay is that you have a list of household chores—some the child must do for free and the rest are on a gradual scale from the easiest/cheapest up to the most difficult/highest paid. The child must work their way up the pay scale. Her contention is that allowance encourages entitlement and work-pay reflects real-life work and pay raises. I like the concept; I just hoped that she would provide some examples. I was disappointed that she didn’t have any.

However, overall I found the book useful and learned some things. I thought that some of her information is common sense, although as the saying goes, “common sense is not so common,” some is often heard advice, and some was nice to gain in this time of uncertainty.

The book is organized into nine classes with most classes having a number of lessons within them. The classes include:

• The New American Dream – This class provides an overview of where the US is in terms of home ownership, earnings, financial security, retirement pensions and the lack thereof in order to provide the foundation for the rest of the classes.

• Stand in Your Truth – In this class, Ms. Orman leads us through understanding our own financial accounting, understanding your current reality and the need to live “below your means” but “within your needs.”

• Family – This class included the information on work-pay that I mentioned above as well as how to talk honestly to your family about your financial ability to help either with college or financial challenges.

• Home – Ms. Orman talks about the home value crises and what that means in terms of home ownership, renting and ways to deal with your home if you are underwater.

• Career – She provides frank advice in this class to those that are employed, unemployed and starting a business. For the employed she suggests you keep your job if you have one, live below your means, save-save-save and seek a raise/promotion by working hard. She coaches those that are unemployed to cut expenses, not to dip into retirement savings, keep their credit profile strong, and get back to work as quickly as possible even if the job isn’t ideal. (I cringe typing this unemployed part section as I know that many of these are easier said than done.) She also asks direct questions about whether you can afford to start a business and whether it might be time to close a business.

• Classes 6, 7 and 8 are on the new reality of retirement. Class 6 provides retirement planning advice for those in the 20s and 30s and covers the different type of retirement savings accounts and how to invest and how much. Class 7 is for those in their 40s and 50s (me) and what they need to do during this period to further prepare for retirement (working until full retirement age, paying off mortgages, increasing retirement savings and long term care costs.) Class 8 describes some strategies for those currently living in retirement including revisiting earlier discussions on home finances, dealing with high healthcare costs, retirement account withdrawal rates, how to maximize yields yet retain safety in today’s climate of low interest rates.

• In Class 9, she summarizes why she felt the need to write this book at this time.

I don’t think this is a book for the sophisticated investor, but I think that many would discover useful advice here. As I wrote earlier, I found some things that I hadn’t considered and as a result, will be updating some of our family’s financial strategies. I recommend The Money Class for those that may need a push to check or update their own financial strategies given our current financial environment. ( )