Chapter 1- The Financial Illiterate
The author gives a description of what he enjoys and what he likes to do in his spare time. For example, he enjoys the month of April for 4 reasons: the NBA playoffs, NHL playoffs, the start of MLB season, and April is the start of the Golf season. He then introduces his wife, and the fact she is expecting a baby soon. Both of them are excited for the delivery. The author admits that he is completely clueless when it comes to managing money. With a wife and a baby on the way, David needs to make himself a very literate financial individual. And fast.
Chapter 2- A Surprising Referral
The author talks to his father about saving money and paying for big purchases such as vehicles. His father tells him that he never bought anything without saving for it first. There was one thing that the author's father did borrow money for, which was a house. He assumed a 30 year mortgage. He tells his son that he became financially literate from the local barber named Roy. David decides to pay a visit to Roy so he can become financially literate.
Chapter 3- The Wealthy Barber
David goes with his sister named Cathy and Cathy's husband, Tom to visit Roy. He tells them how they handle their income and assets will determine their success. To ensure this, he tells them they must manage their cash flow. He promises by the end of 7 months all of them will be on the road to prosperity.
Chapter 4- The Ten Percent Solution
Roy tells them his story of becoming wealthy and he says an old man once told him to "Invest ten percent of all you make for long term growth." Roy goes on to tell them that if they saved 30 dollars a month from age 18 to age 65 at 15% annual return, they would end up with 2 million dollars.
Chapter 5- Wills, Life, Insurance, and Responsibility
Wills are important. If you die without a will things will not work out as planned. When there is not a will, the estate assets are frozen and the court manages it. No thought is given to the deceased or the family of the deceased. Each state as different rules. Donations, scholarships, gifts for children, none of it would be given to the people it was intended for. A living will is a document that states that if a person is ill they do not have to be kept alive but machines. People should buy life insurance so that wen they die, they can allow for their financial affairs to wind down and provide a standard of living for their dependents. it guarantees dependence and is financial protection. Your living estate and insurance must provide enough money to cover all debt, future obligations, and support dependents.
Chapter 6- Planning for Retirement
We all plan for the future and should plan to save for vehicles for retirement. Roy says that retirement should be the best years of your life and should be planned in advance while you are younger. You must accumulate substantial savings before you retire so that you can stay comfortable. Roy also goes on to say that Social Security is intended to be a safety net for retired Americans or an augmentation of retirement income, investment assets or even both.
Chapter 7- Home Sweet Home
Roy tells Dave and Cathy that renting is not throwing money away. Shelter is one of the biggest necessities in life and you need a place to live. He goes on by saying that there are some wide misconceptions about renting. There are 2 things that can lead to an inability to carry debt: rising interest rates and layoffs, wage cuts, and shut downs. The reason that these are feasible to occur is that many people have been living beyond their means for an extended amount of time and it will eventually take a toll on the economy.
Chapter 8- Saving Savvy
Dave comes back to the barber shop after having a new baby and purchasing and moving into a new home (which he spent 10,000 less than he expected to). Roy gives a lesson on the merits of thrift. He says thrift is exercising a degree of self-control. He goes on to say that it is virtually impossible to budget perfectly because wants become needs and the budget goes out the window. "A dollar saved is 2 dollars earned."
Chapter 9- Insights into Investment and Income Tax
Roy's lesson is about how to reduce annual income tax. He says that an investor is doomed if they do not have an eye for failure and discipline. With out discipline you are a sheep heading toward slaughter. Finally you should do some reading. Skim a few books, and become familiar with common mistakes when doing taxes.
Chapter 10- Graduation
Finally you need to keep an emergency fund for if and when you become out of work. Life will be less stressful knowing that you have a little extra saved a way for a rainy day.
I like the review, but there is a glaring error in Chapter 3. Your refer to the three friends as David, His sister Cathy, nad her husband Tom. Tom and Cathy are not married. Tom is David's best friend.
ReplyDeleteGg man
ReplyDelete