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472. The Ascent of Money

Rating:  ☆☆☆

Recommended by:

Author:   Niall Ferguson

Genre:   Non Fiction, Economics, History, Business, Finance

442 pages, published November 13, 2008

Reading Format:  Audiobook on Hoopla

Summary

In The Ascent of Money, Scottish historian Niall Ferguson writes about the human story behind the evolution of finance, from its origins in ancient Mesopotamia to its recent impact on our modern world.   Ferguson demonstrates that finance is the foundation of human progress and that financial history underlies all human history. He specifically looks at the following questions:  What is money? What do banks do? What’s the difference between a stock and a bond? Why buy insurance or real estate? And what exactly does a hedge fund do?

Quotes 

“The ascent of money has been essential to the ascent of man.”

 

“Money, it is conventional to argue, is a medium of exchange, which has the advantage of eliminating inefficiencies of barter; a unit of account, which facilitates valuation and calculation; and a store of value, which allows economic transactions to be conducted over long periods as well as geographical distances. To perform all these functions optimally, money has to be available, affordable, durable, fungible, portable and reliable.”

 

“there really is no such thing as ‘the future’, singular. There are only multiple, unforeseeable futures, which will never lose their capacity to take us by surprise.”

 

“only when savers can put their money in reliable banks that it can be channelled from the idle to the industrious.”

 

“poverty is not the result of rapacious financiers exploiting the poor. It has much more to do with the lack of financial institutions, with the absence of banks, not their presence. Only when borrowers have access to efficient credit networks can they escape from the clutches of loan sharks, and only when savers can deposit their money in reliable banks can it be channeled from the idle rich to the industrious poor.”

 

“perennial truths of financial history. Sooner or later every bubble bursts. Sooner or later the bearish sellers outnumber the bullish buyers. Sooner or later greed turns to fear.”

 

“The subprime butterfly had flapped its wings and triggered a global hurricane.”

 

My Take

While there are some interesting ideas and food for thought in The Ascent of Money, it is too long and would benefit tremendously from some heavy editing.

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168. Everything I Never Told You

Rating:  ☆☆☆☆1/2

Recommended by:

Author:   Celeste Ng

Genre:  Fiction

304 pages, published August 14, 2014

Reading Format:  Book

 

Summary

Leo Tolstoy’s famous opening line from Anna Karenina “All happy families are alike; each unhappy family is unhappy in its own way” is certainly applicable to Everything I Never Told You which tells the story of an American family in the 1970’s.  Parents James and Marilyn and James Lee are an interracial couple.  James is Chinese and has always felt a desire to fit in.  Marilyn is a frustrated stay at home mother who abandoned her Medical School dreams when she got pregnant in college.  Together, James and Marilyn pour all of their expectations and unattained dreams into Lydia, their oldest daughter, with tragic consequences.

 

Quotes 

“The things that go unsaid are often the things that eat at you–whether because you didn’t get to have your say, or because the other person never got to hear you and really wanted to.”

 

“It would disappear forever from her memory of Lydia, the way memories of a lost loved one always smooth and simplify themselves, shedding complexities like scales.”

 

“What made something precious? Losing it and finding it.”

 

“How had it begun? Like everything: with mothers and fathers. Because of Lydia’s mother and father, because of her mother’s and father’s mothers and fathers.”

 

“You loved so hard and hoped so much and then you ended up with nothing. Children who no longer needed you. A husband who no longer wanted you. Nothing left but you, alone, and empty space.”

 

“Before that she hadn’t realized how fragile happiness was, how if you were careless, you could knock it over and shatter it.”

 

“Lydia, five years old, standing on tiptoe to watch vinegar and baking soda foam in the sink. Lydia tugging a heavy book from the shelf, saying, “Show me again, show me another.” Lydia, touching the stethoscope, ever so gently, to her mother’s heart. Tears blur Marilyn’s sight. It had not been science that Lydia had loved.”

 

“You never got what you wanted; you just learned to get by without it.”

 

“You don’t feel like smiling? Then what? Force yourself to smile. Act as if you were already happy, and that will tend to make you happy.”

 

“Sometimes you almost forgot: that you didn’t look like everyone else. In homeroom or at the drugstore or at the supermarket, you listened to morning announcements or dropped off a roll of film or picked up a carton of eggs and felt like just another someone in the crowd. Sometimes you didn’t think about it at all. And then sometimes you noticed the girl across the aisle watching, the pharmacist watching, the checkout boy watching, and you saw yourself reflected in their stares: incongruous. Catching the eye like a hook. Every time you saw yourself from the outside, the way other people saw you, you remembered all over again.”

 

“He can guess, but he won’t ever know, not really. What it was like, what she was thinking, everything she’d never told him.”

 

My Take

In Everything I Never Told You, Celeste Ng tells a compelling story about a dysfunctional family and the dangers of parents who try to work out their own issues through their children.  Ng makes you feel the incredible weight that parental expectations can place on a child.  In my own life, as both a child and a parent, I have had to navigate this difficult terrain.  While we all want to please our parents and see our children succeed (at least most of us do).  We need be true to ourselves and give our children the freedom to do the same.

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149. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy

Rating:  ☆☆☆☆

Recommended by:

Author:   Thomas J. Stanley and William D. Danko

Genre:  Non-Fiction, Economics, Finance, Personal Finance, Self Improvement

258 pages, published October 25, 1995

Reading Format:  Book

 

Summary

The Millionaire Next Door is a compilation of research on the profiles of American millionaires (i.e., U.S. households with net-worths exceeding one million dollars).  The authors compare the behavior of those they call UAWs (Under Accumulators of Wealth) and those who are PAWs (Prodigious Accumulator of Wealth).  A $250,000 per year doctor is an “Under Accumulator of Wealth” if his/her net worth is less than the product of their age and one tenth of his/her realized pretax income.  For example, a 50-year-old doctor earning $250,000 should have about $1.25 million in net worth (50*250,000*10%). If her net worth is lower, she is an “Under Accumulator.”  People are usually UAW’s because they are more focused on consuming their earnings than on saving them.  In comparison, PAW’s accumulate usually well over the product of their age and one tenth of his/her realized pretax income.  Living as a PAW is how most people end up as millionaires.  Most of the millionaire households profiled lived below their means, did not have extravagant lifestyles and spent little on purchases such things as cars, watches, clothing, and other luxury products/services.

 

Quotes

Whatever your income, always live below your means.”

 

“Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend.”

 

“I am not impressed with what people own. But I’m impressed with what they achieve. I’m proud to be a physician. Always strive to be the best in your field…. Don’t chase money. If you are the best in your field, money will find you.”

 

“Good health, longevity, happiness, a loving family, self-reliance, fine friends … if you [have] five, you’re a rich man….”

 

“Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline.”

 

“It’s easier to accumulate wealth if you don’t live in a high-status neighborhood.”

 

“If you’re not yet wealthy but want to be someday, never purchase a home that requires a mortgage that is more than twice your household’s total annual realized income.”

 

“Money should never change one’s values…. Making money is only a report card. It’s a way to tell how you’re doing.”

 

“it is very difficult for a married couple to accumulate wealth if one is a spendthrift. A household divided in its financial orientation is unlikely to accumulate significant wealth.”

 

“How can well-educated, high-income people be so naive about money? Because being a well-educated, high-income earner does not automatically translate into financial independence. It takes planning and sacrificing.”

 

“Most people will never become wealthy in one generation if they are married to people who are wasteful. A couple cannot accumulate wealth if one of its members is a hyperconsumer.”

 

“Have you ever noticed those people whom you see jogging day after day? They are the ones who seem not to need to jog. But that’s why they are fit. Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status.”

 

“It’s amazing what you can do when you set your mind to it. You’ll be surprised how many sales calls you can make when you have no alternative except to succeed.”

 

“There is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning one’s financial future.”

 

“The median (typical) household in America has a net worth of less than $15,000, excluding home equity. Factor out equity in motor vehicles, furniture, and such, and guess what? More often than not the household has zero financial assets, such as stocks and bonds. How long could the average American household survive economically without a monthly check from an employer?  Perhaps a month or two in most cases. Even those in the top quintile are not really wealthy. Their median household net worth is less than $150,000. Excluding home equity, the median net worth for this group falls to less than $60,000. And what about our senior citizens? Without Social Security benefits, almost one-half of Americans over sixty-five would live in poverty.

 

“America is still the land of opportunity. Over the past thirty years I have consistently found that 80 to 85 percent of millionaires are self-made.”

 

“Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires.”

 

“It is easier to purchase products that denote superiority than to actually be superior in economic achievement.”

 

“Mr. Denzi can teach us all something about accumulating wealth. Begin earning and investing early in your adult life. That will enable you to outpace the wealth accumulation levels of even the so-called gifted kids from your high school class. Remember, wealth is blind.”

 

“They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way.”

 

My Take

When I was in my early 20’s, my Dad sat me down with an HP financial calculator and demonstrated to me what he called “the magic of compound interest.”  He showed me that if I started a regular program of saving and investing, I could grow my money to a sizable amount.  His advice clicked with me and after almost 30 years of following that simple formula, along with taking some calculated risks, I can happily report that this simple wealth accumulation system works.

The advice given to me by my father is the same advice supplied in The Millionaire Next Door, a classic in the personal finance world.  The basic message is that it is not what you make, but what you keep that matters.  The authors provide numerous examples of high earning professionals who have little to show financially after a lifetime of work.  On the flip side, more modest earners are able to build up sizeable net worths because they live below their means and regularly invest their savings.  This is an important message, especially to young people just starting out in life.  I encourage parents to give their kids a copy of this book, or at least share some of these basic principles with them.

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82. Happy Money: The Science of Smarter Spending

Rating:  ☆☆☆1/2

Recommended by:  

Author:   Elizabeth Dunn and Michael Norton

Genre:  Non-Fiction, Finance, Happiness, Self-Improvement

224 pages, published May 14, 2013

Reading Format:  Book

 

Summary

Professors Dunn and Norton delve into behavioral science research to explain how money can buy happiness—if you follow the five core principles of smart spending:

 

  1.  Buy Experiences:  Most Americans describe owning a home as an essential component of the American dream. But recent happiness research suggests that home ownership is far from dreamy.  Material things (from beautiful homes to fancy pens) turn out to provide less happiness than experiential purchases (like trips, concerts, and special meals).  Whether you’re spending $1 or $200,000, buying experiences rather than material goods can inoculate you against buyer’s remorse.

 

  1.  Make It a Treat:  Many residents of London have never visited Big Ben.  What stops them? When something wonderful is always available, people are less inclined to appreciate it. Limiting our access to the things we like best may help to “re-virginize” us, renewing our capacity for pleasure.  Rather than advocating wholesale self-denial (say, giving up coffee completely), we’ll demonstrate the value of turning our favorite things back into treats (making that afternoon latte a special indulgence rather than a daily necessity.

 

  1.  Buy Time:  By permitting us to outsource our most dreaded tasks, from scrubbing toilets to cleaning gutters, money can transform the way we spend our time, freeing us to pursue our passions.  Yet wealthier individuals do not spend their time in happier ways on a daily basis; thus they fail to use their money to buy themselves happier time.  When people focus on their time rather than their money, they act like scientists of happiness, choosing activities that promote their well-being.  For companies, this principle entails thinking about compensation in a broader way, rewarding employees not only with money but with time.

 

  1.  Pay Now, Consume Later:  In the age of the iPad, products are available instantly and our wallets are lined with plastic instead of paper.  Digital technology and credit cards have encouraged us to adopt a “consume not and pay later” shopping mind-set.  By putting this powerful principle into reverse—by paying up front and delaying consumption—you can buy more happiness, even as you spend less money.  Because delaying consumption allows spenders to reap the pleasure of anticipation without the buzzkill of reality, vacations provide the most happiness before they occur.

 

  1.  Invest in Others:  New research demonstrates that spending money on others provides a bigger happiness boost than spending money on yourself.  And this principle holds in an extraordinary range of circumstances, from a Canadian college student purchasing a scarf for her mother to a Ugandan woman buying lifesaving malaria medication for a friend. The benefits of giving emerge among children before the age of two, and are detectable even in samples of saliva.  Investing in others can make individuals feel healthier and wealthier—and can even help people win at dodge ball.

 

Quotes

“Looking back on their past decisions about whether to purchase experiences, 83 percent of people sided with Mark Twain, reporting that their biggest single regret was one of inaction, of passing up the chance to buy an experience when the opportunity came along.”

 

“The Big Ben Problem suggests that introducing a limited time window may encourage people to seize opportunities for treats. Imagine you’ve just gotten a gift certificate for a piece of delicious cake and a beverage at a high-end French pastry shop. Would you rather see the gift certificate stamped with an expiration date two months from today, or just three weeks from now? Faced with this choice, most people were happier with the two-month option, and 68 percent reported that they would use it before this expiration date.25 But when they received a gift certificate for a tasty pastry at a local shop, only 6 percent of people redeemed it when they were given a two-month expiration date, compared to 31 percent of people who were given the shorter three-week window. People given two months to redeem the certificate kept thinking they could do it later, creating another instance of the Big Ben Problem—and leading them to miss out on a delicious treat.  Several years ago, Best Buy reported gaining $43 million from gift certificates that went unredeemed, propelling some consumer advocates and policy makers to push for extended expiration dates. But this strategy will likely backfire. We may have more success at maximizing our happiness when treats are only available for a limited time.”

My Take

There a lot of practical advice in Happy Money that, if followed, is likely to make you happier.  In my life, I have long practiced “pay now, consume later,” especially with travel (which also involves spending on an experience, rather than a product).  For me, at least half the fun of a trip is the planning that goes into it.  I also really enjoy looking back on trips that I have taken in the past and have never regretted any money that I have spent on travel.  I am also a big fan of “make it a treat” and can personally attest to the happiness boost that results.  As a devoted student of happiness, I can unequivocally recommend Happy Money as a way to increase your happiness.

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80. The Richest Man in Babylon

Rating:  ☆☆☆☆

Recommended by:  

Author:   George S. Clason

Genre:  Fiction, Finance, Self-Help

144 pages, published 1926

Reading Format:  Book

 

Summary

First published in 1926, The Richest Man in Babylon is a classic book in the world of personal finance and reveals the secret to personal wealth.  The book uses the format of an ancient tale to impart the following precepts:

The 7 simple rules of money: 1) Start thy purse to fattening (save money); 2) Control thy expenditures (don’t spend more than you need); 3) Make thy gold multiply (invest wisely); 4) Guard thy treasures from loss (avoid investments that sound too good to be true); 5) Make of thy dwelling a profitable investment (own your home); 6) Ensure a future income (protect yourself with life insurance); and 7) Improve thy ability to earn (strive to become wiser and more knowledgeable).

To bring your dreams and desires to fulfillment, you must be successful with money.

The laws of money are like the laws of gravity: assured and unchanging

Money is plentiful for those who understand the simple laws of making money.

Babylon was the wealthiest city in the world at the time of its height because its people appreciated the value of money.

You must constantly have an income that keeps your purse full.

“It costs nothing to ask wise advice from a good friend.”

It’s simple to say, but many people never achieve a serious measure of wealth because they never seek it.  They never truly seek it, focus on it, and commit to it.

Youth often assumes, incorrectly, that the old and wise only have wisdom about days gone by.

You will only begin building wealth when you start to realize that a part of all the money you earn is yours to keep.  That is, pay yourself first.  You always pay others for goods and services. Pay yourself as much as you can. Save money.

You should save at least 1/10th of what you earn. More if you can afford to do so.

Do not take advice on finance from a brick layer. Go to people who are experts in a particular subject if you want expert advice. It’s too easy for amateurs to give out advice.

Build for yourself a mountain of gold first, then you can enjoy as many banquets as you wish without worry. Don’t spend your money as soon as you earn it.

Surround yourself with people who are familiar with money, who work with it each day, and who make lots of it.

Enjoy life while you are here.  Do not overstrain to save.

Do not put your money in investments which do not pay a dividend, but also do not invest in risky places that seem too good to be true.

What each person calls their “necessary expenses” will always grow to match your income unless you resist that urge. Do not confuse your necessary expenses with your desires.

“A man’s wealth is not in the coins in his purse. It is in his income.”

Ensure a future income. Every person gets old. Make sure your income will continue without work.

By life insurance.  Provide in advance for the protection of your family.

Increase your ability to earn.  Improve your skills.  As you perfect your craft, your ability to earn more increases.

The more we know, the more we may earn.  The person who seeks to know more of their craft is capable of earning more.

You cannot arrive at the fullest measure of success until you crush the spirit of procrastination within you.

The 5 Laws of Gold: 1) Gold comes easily and in increasing quantity to the person who saves at least 1/10th of their earnings; 2) Gold labors diligently and multiplies for the person who finds it profitable employment; 3) Gold clings to the protection of the person who invests their gold with wise people; 4) Gold slips away from the person who invests gold into purposes through which they are not familiar; 5) Gold flees the person who tries to force it into impossible earnings.

If you desire to help you friend do not do so in a way that brings their burdens onto you. There are many ways to help people. You don’t have to choose the ways that restrict your time, money, energy, or ability to care for yourself.

The wise lender always has a guarantee of repayment should the investment go poorly.

Above all you should desire safety for your money.  Better a little caution than a great regret.

Protect yourself with insurance. You cannot afford to be unprotected.

Do not live beyond your means.

No man respects himself if he does not repay his debts.

The soul of a free man looks at the world as a series of problems to be solved. Meanwhile, the soul of a slave whines, “What can I do?”

“Where the determination is, a way can be found.”

If you are in debt, live on 70% of what you make. Save 10% for yourself. Use the remaining 20% to repay your debts.

Stick with the plan. Money accrues surprisingly quickly and debts are gone fast with discipline and consistency.

Work attracts friends who admire your industriousness. Work attracts money and opportunity. “Hard work is the best friend I’ve ever had.”

 

Quotes

“Advice is one thing that is freely given away, but watch that you only take what is worth having.”

 

“If you desire to help thy friend, do so in a way that will not bring thy friend’s burdens upon thyself.”

 

“The hungrier one becomes, the clearer one’s mind works— also the more sensitive one becomes to the odors of food.”

 

“As for time, all men have it in abundance.”

 

“When no buyers were near, he talked to me earnestly to impress upon me how valuable work would be to me in the future: ‘Some men hate it. They make it their enemy. Better to treat it like a friend, make thyself like it. Don’t mind because it is hard. If thou thinkest about what a good house thou build, then who cares if the beams are heavy and it is far from the well to carry the water for the plaster. Promise me, boy, if thou get a master, work for him as hard as thou canst. If he does not appreciate all thou do, never mind. Remember, work, well-done, does good to the man who does it. It makes him a better man.”

 

“Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.”

 

“One may not condemn a man for succeeding because he knows how. Neither may one with justice take away from a man what he has fairly earned, to give to men of less ability.”

 

“Opportunity is a haughty goddess who wastes no time with those who are unprepared.”

 

“The reason why we have never found measure of wealth. We never sought it.”

My Take

While the language and stories in The Richest Man in Babylon can be a little corny at times, its message is rock solid and inspiring.  When I was 21 and newly graduated from college, my dad sat me down with a HP Financial calculator and showed me the magic of compound interest.  I got the message that it I started a regular practice of saving and investing then I would have a vast sum of money later in my life.  A few years later, my mom and stepdad preached the value of investing in real estate to me and helped me with a loan to buy my first house at age 26.  25 years and several houses later, my husband and I have made a huge amount on our real estate investments.  The Richest Man in Babylon articulates these principles (and more) in an easy reading, parable style.  I highly recommend this book for young people just starting out or for anyone else trying to figure out how to make money work for them.

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26. Rich Like Them:  My Door-to-Door Search for the Secrets of Wealth in America’s Richest Neighborhoods

Rating:  ☆☆

Recommended by:  

Author:  Ryan D’Agostino

Genre:  Non-Fiction, Finance 

Info:  256 pages, published January 5, 2009

Format:  Audiobook

 

Summary 

Ryan D’Agostino, former senior editor at Money, knocked on 500 doors in the twenty wealthiest zip codes in the U.S. to discover how people got rich.  He met with a wide variety of men and women who shared their most difficult financial decisions, toughest setbacks, greatest strategies, most triumphant moments, and deepest insights.  In Rich Like Them,  D’Agostino shares what he found.  The best pieces of advice:   

Connect the people you meet

Once you connect the dots, then follow through

Don’t deviate from your planned path to get a quick gain

Perseverance doesn’t take forever

Do one thing and do it well

Don’t plan a career – plan a life

Never stop being a student

Calculate every risk – even the one you live in

Don’t worry about what other people think

If you hate your career, um, change it

Sometimes the biggest risk is doing nothing

Never let pride get in the way of profit

Be humble even if you’re as rich as Brooke Astor

Understand your limitations

Don’t be a slave to Plan A – it’ll prevent you from seeing Plan B

 

Quotes

“Anyone can find herself at the right place at the right time but if you don’t recognize that and don’t work hard to take advantage of it or if you’re lazy you’re unfocused you can be at the best possible place at the best possible time and still end up making $70,000 instead of $700,000.

“Never let pride get in the way of profit.”

“A humble person never believes he knows everything or has done everything, and that’s what keeps him working hard. He believes there is always more he can learn, that he can always do a better job next time, and that hard work is just part of getting better.”

“When you fail miserably, be thankful.”

“Humility makes it OK to roll up your sleeves and stay late when no one else does it.  To make your own coffee instead of having an assistant.  Humility makes you work harder.”

“ Money is simply a tool, to make a good life and to make other lives good.”

Read more

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20. Not Buying It: My Year Without Shopping

Rating:  ☆1/2

Recommended by:   

Author:  Judith Levine

Genre:  Non-Fiction

Info: 280 pages, published September 24, 2015

Reading Format:  Book

 

Summary

Author Judith Levine writes about the year-long experiment that she conducted with her partner Paul where they decided to stop all buying anything but the most necessary purchases.It is harder than she anticipates, but Levine gains new insight into our consumerist culture and economy.

 

My Take

This was really a book fail.  I picked it up from the Library based on its subject matter as I had made a 2016 New Year’s resolution to have a “no-buy” year.  I really did not want any more stuff coming into my already full house.  Unfortunately, Not Buying It was more of a political screed and offered little in the way of helpful advice.  Best to “not buy it” and avoid this book.

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