If you’re a long-time reader, you’ve probably learned that I’m a fan of David Bach. He makes good sense with most of his suggestions, and has a cheerful, optimistic style that makes you feel hopeful about your financial future. I wouldn’t go as far as calling him my favorite personal finance adviser of all time, but he’s definitely near the top.
So, when I saw that he had come out with a new book specifically designed to target some of the areas where people have had trouble in the past few years, I decided to give it a shot. Start Over, Finish Rich is designed as a guide to getting yourself and your finances back on track in 2010. Is it the possible solution to all of your financial woes? Let’s read through and find out!
Start Over, Finish Rich is organized as a series of steps to overcoming the financial problems so many of us seem to be facing lately. The first step (and first chapter) is on recommitting to wealth. After a personal story (all of Bach’s books that I’ve read have featured someone who shared a story with Bach about their personal financial journey) about a woman having trouble with money in spite of doing ‘all the right things’, Bach urges everyone to not give up and instead, to continue to strive to become wealthy.
The second chapter covers finding your money; organizing and understanding your current financial standing. Bach presents the system of hanging files he recommends in order to organize and get your financial life under control. The chapter then brings up the ‘Latte Factor'(R), his term for small, everyday expenses that use up much of our money without us even noticing.
Handling credit card debt is the subject of the third chapter. For people who can afford to make the minimum payments on all their debts, Bach recommends his DOLP(R) (Dead On Last Payment) method; paying as much extra as you can afford on the debt with lowest ratio of total amount owed to minimum payment due. If you can’t make your minimum payments, he provides some advice and a few resources to get help paying down your debts (as well as some warnings about credit counseling and debt settlement companies). The chapter ends with a brief overview of the changes brought on by the new CARD legislation.
Step four is a short guide to checking and fixing your FICO score, explaining how to check your score and a list of steps to improving it, covering suggestions from paying down your credit card debt as much as possible to keeping your old cards active by occasionally using them. Chapter five goes over creating an emergency fund, starting with where to put your money and how much you should have (at least three months worth, up to enough to make you feel comfortable). He emphasizes using a bank with FDIC insurance to ensure that even if your bank has financial trouble, your money will be protected by the federal government.
The sixth chapter is about getting your retirement saving and investing back on track. Bach suggests not panicking (and definitely not pulling out all your investments just because they’re down), considering target date funds for your investments, and how to get advice if you need it. He also emphasizes the fact that pre-tax accounts allow you to invest more money than you actually see removed from your paycheck (and that if you get a decent match on your 401(k) contributions, as well, you can end up investing more than twice the amount of money that actually disappears from your pay check). The short seventh chapter provides some advice on ‘Making It Automatic’, automating your investing and other financial actions to simplify your life (sort of like a micro version of The Automatic Millionaire).
Chapter eight covers how to get rich in real estate. Much of his enthusiasm for real estate echoes what he said in The Automatic Millionaire Homeowner, although he makes a few points specific to the current real estate market. He suggests refinancing your mortgage while you have the time, not bailing out even if your house is underwater, and how to get the bank (or a government organization) to help modify your loan if it comes to that. The chapter finishes with some advice on investing in real estate, either directly or via REIT funds.
Chapter nine covers ways to help save for the cost of education for your kids, giving a list of rules about such savings (not to save for your children’s education before you save for your own retirement, for example) and a number of possibilities if you can’t quite repay your debts. The tenth chapter is a list of twenty-five ways to cut down on your expenses, covering everything from cutting out cable television to not playing the lottery any more. Not a bad set of suggestions for decreasing your expenses.
There’s an eleventh ‘bonus’ chapter that covers many helpful sites if you are trying to donate to charity (many of which I’ve been using, with Bach’s prompting in the Automatic Millionaire, in order to do my own donation research). The book ends with Bach sharing the story of his recent divorce and how he was able to hit the ‘reset button’ when he and his wife separated.
-Very optimistic: As always, Bach is very optimistic and supportive in his writing, giving plenty of encouragement to the reader to get their finances in shape this year. He provides lots of encouragement to the reader, as well as helpful suggestions to help get your financial life in order, all in a very upbeat manner.
-Simple, Clear Instructions: Bach is never opaque with his recommendations or more complicated than he needs to be. Everything that requires substantial effort is broken down and explained in a step by step fashion, making it easy to use this book as a guide to reworking your financial life.
-Engaging style: The book never seems hard to read through, coming off more like a friendly conversation with a helpful adviser than a detailed list of does and don’ts for you financial life. The overall effect makes the book much more readable, and the whole thing goes by quite quickly. Being interesting also helps make the suggestions and advice in the book more memorable.
-Some Questionable Advice: There are several points in the book where Bach’s recommendations (or his omissions) raised my eyebrows. His DOLP method of paying off debts, for example, isn’t the most effective way to pay off your debts (I ran the numbers to prove it), and he champions traditional IRAs and 401(k)s without any acknowledge that the Roth versions will be better if tax rates rise in the future (which they likely will). His advice isn’t bad, per se, since you will pay off your debts and build up your retirement account, but it is just a bit incomplete.
-Limited Depth: Even more so than the previous Bach books that I’ve read, Start Over, Finish Rich, covers a wide swath o f personal finance territory, necessarily meaning that some of the topics get short shrift. If you are looking for a thorough guide to real estate ownership, investing, or finding ways to cut down your spending, you’ll need to expand your search beyond this book.
-More of the Same: If you’ve read a David Bach book before, many of the terms I’ve used in this review are probably familiar to you. Things like DOLP, the Latte Factor, Make it Automatic, and even his fondness for home ownership have all been covered in his earlier guides. If you’ve read some of Bach’s previous books, particularly the Automatic Millionaire/Finish Rich books, the amount of new material in this book will be under whelming.
If you’re new to David Bach’s writing, it’s definitely worthwhile to read through Start Over, Finish Rich, learn his philosophy, and try to apply many of his suggestions (being aware that sometimes he misses some possibilities, of course). He makes many good points, and it’s always nice to learn another perspective on savings, investing, debt elimination.
If you have read his books before, it’s a less clear decision; if you found his advice helpful before, the new content might justify the purchase of this book. If not, you might want to consider something else, since there’s not much new information here, and he certainly hasn’t made any big departures from his established positions on most monetary issues. Good luck to anyone who needs to start over, in either case.