I’ve already written a bit about Adam Baker and recently released e-book, Unautomate Your Finances. But, if I know my readers, you’re not going to be satisfied until I go into deeper detail and dive headfirst into the e-book myself. Given my fondness for automating my finances, I suppose that this could provide me with a completely different approach. Let’s get started, then!
The book starts with a foreword by Leo Babauta, who makes the main point of the book crystal clear: the goal of unautomation is to make you stop and think more about how you spend and otherwise use money. Having to pause before spending, by ensuring that your money isn’t on automatic pilot, increases the amount of thought you have to devote to the spending and helps you control your money. Baker picks up this theme in the introduction proper, noting that while he doesn’t oppose automation in principle all it does is make our habits, either good or bad, more amplified. He shares the story of how he and his wife found themselves cruising along financially, until the birth of their daughter caused them to look closer at their financial situation.
The remainder of the book is divided into three different sections. The first section covers The Unautomation Theory, prioritizing your finances in order to simplify them. The first chapter stresses one of the major points of the entire book: the importance of simplifying your expenses in order to get a better handle on your financial situation. Getting a grip on your finances is the best way to improve your financial life.
The second chapter of this section focuses on creating sustainable finances. It emphasizes spending less than you earn (or earning more than you spend, if you prefer to look at it in that way). It ends with a list of tangible steps for preventing lifestyle inflation, from creating a list of everything you own to selling off half the items on that list.
The third chapter covers the power of focus, the importance of not trying to do everything at once, and ends with another list of steps, to concentrate your personal finance efforts. Baker uses the metaphor of starting a fire; if you build it up slowly, you’ll have much more success than if you toss a match under a log.
Chapter four is all about building up your financial consciousness, and includes several lists of action steps on self-intervention in your spending, opening your eyes to your financial situation, and getting into the personal finance zone. Chapter five raises the issue of bad financial automation. If you allow bad personal finance habits to be automated, it pushes them out of your head and makes them more ingrained in your life.
Which brings us to the second section of the book, about how to unautomate your life and take control of your finances back into your own hands. Chapter one of this section (Baker takes the unorthodox approach of starting over the chapter numbering for each section) starts with a brainstorming session to determine what you want out of life, focusing on what you can do today. He then asks you to imagine what you’d do with half your current income, to see how you would cut back on your lifestyle to adapt, and then finding the next step for each of these goals, the thing you can do immediately to work towards your goals.
Chapter two of this section has a great title: ‘Drop a Bomb on Your Finances!’ It’s a short little one page chapter, advising you to look through your list for quick little next steps that you can take care of in a matter of no more than 15 minutes, in order to build momentum. Chapter three shows how to keep the motivation going once these low hanging fruits have been picked, leading us into the third part of the book…
The third part of the book is all about putting the ‘unautomation’ plan you created into effect. The first chapter covers tracking your expenses, ideally at the time of sale, with a pen(cil) and paper. The goal is to spend at least thirty days writing down every purchase you make right when you make it.
Chapter two is all about creating a budget. The chapter is filled with advice on the budgeting process, from using the level of income you had last month in your budget making procedure (and not worrying too much about the fluctuations in salary many of us experience) to rounding income figures down and expense figures up. There’s also a major emphasis on not just budgeting for the regular monthly expenses, but also for ‘Budget Busters’, large, irregular expenses like Christmas spending or car repairs that can derail your budget if not included somehow. The chapter ends with a reminder that budgets are only good if you stick to them, and recommending an ‘envelope budgeting’ system as one way to ensure that you do so.
Chapter three of this section focuses on the three buffers you’ll have in your budget: an E-fund (the emergency fund, only for use in a real emergency), a 1-month cushion (the money for you regular expenses for the next month, so you don’t need to worry about paying the bills) and an I-fund (the irregular expense fund, to cover those once a year or otherwise ‘irregular’ bills that come up). The first step to getting any of these funds started is building up a cushion of money equal to at least a month’s worth of regular expenses, either by diverting an expected windfall to that purpose (the ‘knock-out’ punch method) or by directing a portion of your monthly spending to building up such a fund (‘inch-by-inch’ method).
Chapter four covers paying off debt with the ‘debt tsunami’. Rather than paying off the lowest balance debt or the debt with the highest interest, you allow your emotions to guide you and pay off the most annoying debt first. Chapter five is all about credit cards, with a decided push to closing out credit card accounts and eliminating credit card usage. After going through a fairly typical list of the pros and cons of using credit cards, there’s another list of the pros and cons of eliminating credit cards altogether, followed by instructions on how to cancel your credit cards and put a freeze on your credit reports.
The last few chapters are pretty short, and cover some of the other aspects of your financial life. Chapter six is about simplifying your ride, spending less on your car(s), or even eliminating cars in your life altogether. Chapter seven covers the issue of where to live, and provides a few suggestions for fighting back against mortgages and other costs of homeownership. Chapter eight covers investing and retiring in two pages (because Baker doesn’t invest and isn’t planning on retiring), and ends with the fisherman’s parable. The whole thing ends with a thank you page, and the advice to keep what works, and chuck the rest.
-Very Easy to Follow: There is plenty of advice on how to do everything suggested in this book, with step by step instructions provided for many of the stages for unautomating your finances. You’ll have an easy time following everything that’s being presented, usually without any extra effort needed on your part.
-Great Approach to Personal Finance: Baker succeeds where many personal finance writers fail; he creates a complete personal finance plan that seems both easy to follow and highly useful. Just reading through it made me feel motivated to remake my personal finance life.
-One Word: Hi-Larious: This book has one advantage that few other personal finance books offer: unending hilarity. Besides Baker’s own entertaining and creative writing, there are plenty of quotations sprinkled throughout that add to the hilarity. Any personal finance (e-)book that quotes Homer Simpson gets a big thumbs-up from me.
-Dies Out Near the End: While the e-book has great momentum through most of the material, by the last few chapters, there’s not a lot of useful information being provided. There’s just not a lot of information provided on saving money on automobiles and housing, and even less on investing or retirement, which make the inclusion of the last few chapters a bit confusing.
-Questionable Advice at Times: As with almost any comprehensive guide to personal finance, there’s going to be some areas where you disagree with the advice given. I’m a bit skeptical of several issues including the debt tsunami and the teetotaler approach to credit cards (although, for the latter, at least, I’m starting to come around). Taking the epilogue suggestion to apply what works and chuck the rest is definitely a good one. (Not just with this book.)
I really, really like Unautomate Your Finances. I’ve gotten a bit jaded with personal finance reading with all the reading I have to do for this blog, but this book actually got me excited about changing my personal finance habits. Perhaps the best endorsement I can give is this: this is the first personal finance book I’m going to be sharing with my fiancee, as I try to get both of us to follow (most of) its principles.