Four Stages of Financial Development

My friend Mark is the type of person who regularly reads the business section of the newspaper, and I often go to him for financial advice. He has a well-paying job and owns a house. So I was surprised to learn recently that he didn't start out being very knowledgeable or responsible with his money. In fact, Mark started out with credit card debt and car payments, just like many of us. Since then, Mark’s way of thinking about money has shifted as he has learned more and entered new stages of life, or "stages of financial development" if you will.

The Billfold Book Club Has Chosen: Suze Orman’s ‘The Money Book For The Young, Fabulous, and Broke’

For our next book, we will be reading Suze Orman’s The Money Book For The Young, Fabulous, and Broke.

(The next book after that will be Helaine Olen’s Pound Foolish, which specifically critiques Suze Orman’s financial advice.)

What’s The Money Book about? Let’s see what Orman’s publisher has to say:

The Money Book was written to address the specific financial reality that young people face today, and it offers a set of real, not impossible, solutions to the problems at hand and the problems ahead. Concisely, pragmatically, and without a whiff of condescension, Suze Orman tells her young, fabulous & broke readers precisely what actions to take and why.

When a book’s selling point is that it doesn’t contain any condescension, you know it’s going to be a fun read.

Be ready to discuss The Money Book For The Young, Fabulous, and Broke on Wednesday, June 25.

Photo: Greg Hernandez

A Conversation with Helaine Olen About the Dark Side of the Personal Finance Industrial Complex

A conversation with financial journalist Helaine Olen about everything that's wrong in the personal finance industrial complex.

The Billfold Book Club: Suze Orman’s ‘The Money Book for the Young, Fabulous & Broke’

There are two Suzes.

I really like the first Suze. I’d say 90% of the book was written by the first Suze, possibly in combination with the first Suze’s ghostwriter/assistant. This Suze gives you exactly what she promises: a clear, straightforward explanation of how FICO scores work, how a 401(k) works, how to buy a car, and all of those other financial details that are extremely useful to people just getting started in life.

She’s even aware that her Gen X and Millennial readers are experiencing different financial realities than previous generations, and addresses her advice to fit these circumstances. Perhaps her most infamous piece of YFB advice is to go into credit card debt to finance your early career, since you won’t be earning enough money yet to pay for your necessary expenses.

(If you are familiar at all with the Suze Orman story, you’ll know that’s exactly what she did: when she got her first job at Merrill Lynch after six years of waitressing, she immediately bought a $3,000 professional wardrobe on credit. That was in the very early 1980s, and according to the US Department of Labor’s inflation calculator it would be the equivalent of putting $8,661 on your credit card today — just for clothes.)

So I really don’t have any problems with the first Suze. She seems cool.

But then the second Suze slips in.

Retirement Security Is Also About the People You Have In Your Life

Obviously we should all try to prepare our nest eggs for the kinds of lives we want to be living in the future, but I thought this interview by Chris Taylor in Reuters was interesting. The idea is that strong, secure relationships are just as important as socking money away because if, for whatever reason, your finances are wiped out, you'll have people who care about you who can help you turn things around. I don't always agree with Suze Orman, but I've always agreed with her mantra of "people first, then money, then things."

A Brief Encounter with Suze Orman, Queen of Financial Media

She gave me a side eye, and slipped into my boss's office.

Reminder: The Billfold Book Club meets Wednesday, June 25

A quick reminder that we’ll be discussing Suze Orman’s The Money Book for the Young, Fabulous, and Broke on Wednesday, June 25.

I’ve been reading this book and have been surprised at how much Suze’s advice applies to “me of a few years ago.” Even to the point of “thou shalt go into debt up to $15,000 when starting a business, but not a penny more; if you can’t make it work after $15K, it’s time to find another career.”

I’m curious if any of Suze’s advice applies to the rest of us. I’m also about halfway through and waiting for her to get to the part where we start EARNING MORE MONEY; the first chunk is all about taking on debt to invest in yourself (whether you’re going to school or starting a business), and I’m reading along and thinking “yup, I’ve got the debt, I’m building the career, now tell me how to earn more money and stop feeling broke all the time!”

Photo: David Shankbone

A Father’s Dilemma: Saving for His Kids’ College Educations

In the Washington Post, Joe Heim, a father of a six-year-old son and a four-year-old daughter discusses a thing a lot of parents go through: Wanting to save for his kids' college educations, but not actually saving for his kids' college educations.