Well, it probably took me far longer than necessary to read this tiny volume (excluding the 20+ years it has already sat on my shelf, of course...) but, because each chapter/parable has a nugget of information to deliver, I decided to read one per day so that I could digest the information for a bit. Also, it was kind of difficult to get through. :)
Now sit back, pour yourself a drink, and get ready for a long review. Probably should have done a couple of "in progress" ones on this one along the way to ease the length of this one... too late now, though!
My biggest fear when reading this book was that I would think "Crap. I've had this book on my shelf for over 20 years and here is the information I should have know about money 20 years ago." The good news is that that was mostly not true. The potentially bad news is... it might have been a little bit true. But I'll get to that in a moment.
The thing that was supposed to make this book "more readable" was what turned me off the most about it: the parable format. The writing was difficult to get through, what with the "thou"s and the "coins of gold" and the "clay tablets" and all. But... the principles really are sound. So I kept at it.
Some of the early parables seemed to repeat themselves, which I also found annoying. I later discovered that these were published separately and then combined into this book at a later date, so there is some overlap. On the other hand, sometimes it's good to drive the point home?
The basic "rules of monetary acquisition," as presented on the very first page:
1) Start thy purse to fattening
2) Control thy expenditures
3) Make thy gold multiply
4) Guard thy treasures from loss
5) Make of thy dwelling a profitable investment
6) Insure a future income
7) Increase thy ability to earn
But I actually found even more value as I read further on. I'm going to cover the stuff I found most interesting.
A part of all you earn is yours to keep
One of the principles that is repeated throughout the book is one that Michael Pollack frequently told me: pay yourself 10% of your income. This is sound advice, assuming you're not extremely in debt (which I will get to). Basically, live on 90% of your income and put 10% in savings. Then make that 10% work for you to generate more dough. Figuring out where to cut corners can be a challenge, but really, it's a good idea.
Corollary: live beneath your means
"That which each of us calls our 'necessary expenses' will always grow to equal our incomes unless we protest to the contrary." (29) This statement? So. True. (I even underlined it in the book!)
I think many of us can see that happen with the cars we drive. I'm not actually living large in that area -- my car is over 8 years old -- but... it's also not a Geo Metro (my first [less expensive] car). My grandfather always bought Toyota Tercels and drive them into the ground (200-300k miles on those puppies!) He was a good example of observing this principle.
Thinking to myself: "Hey -- I used to make way less than I make right now and I figured out how to get by on that" is a great step towards answering the question, "How do I live on 90% of my income?" Sure, some expenses are going to go up at the same rate that our income goes up, but others? Well... this is a long way of saying: "Live beneath your means." Yeah.
I'm happy to report that, as a result of reading this book, I've upped the amount we are putting in savings. Should have been doing that all along, but hey -- better late than never, right?
"Luck" as part of accumulating wealth
When I first saw the title of this chapter on luck, I thought it would be about not relying on luck to get you anything. But the way "luck" is defined here is actually "opportunity" (vs. gambling, which is clearly stated as not the way to become wealthy) I found this fascinating, because it's not something I think about very much. The concept that procrastination can hurt you if you ignore opportunities to increase wealth particularly struck a chord with me.
Personally, I am not at all entrepreneurial. I never think in terms of "how can this idea make me money?" But Bill always has great ideas -- clever ideas that would make money if acted upon. The kind of ideas that show up again years later, making money for someone else. So this chapter was interesting to me because it basically said, "Got a good idea that you know will make you money? Do it." Again: duh.
Of course, this does not take into account the very real problem of: "I already work a full time job and I like to spend time with my family. So how am I going to find time to make this idea come to fruition?" What they call "procrastination," some might call "living my life." Still. It's food for thought. Got a good idea? Act on it, make it happen, make dough off of it.
So... while I'm not creating the next best-selling iPhone app in my spare time, I have been selling stuff we don't need on eBay this year. Not sure that that's exactly nailing this idea, but I'm taking the opportunity to get rid of stuff and make a little dough. Go, me. I'll be the Richest Man in Babylon in no time! Or... not.
Owning your home
So this one is covered under the principle above: "Make of thy dwelling a profitable investment" (35). This one definitely has caveats if you live somewhere where the cost of living is, er, well... how shall I put this? Oh, yes: Totally out of control. Yup -- that about sums it up.
So, yeah -- in concept, rent is flushing money down the toilet and owning your house means, basically, putting your dough in savings (AKA "a profitable investment"). Assuming, of course, the housing market doesn't tank where you are. Or that things aren't so over-priced that you could actually make more dough off the money you save renting v. owning.
Of course, we do own our home, even though things here are, as I said, totally out of control. So I'm technically taking the advice of the book. But our rent was 1/3 of what we pay for our mortgage. Soooo... could we have turned that 2/3 into enough profit to make it even? I don't know.
For me, "investing money" is another full-time job. And if you're not that interested in it (which I am not), it's even worse. Why the heck do I want to come home and do my investment job when I'm exhausted after my real job? On the other hand, Bill really is interested in this stuff, so perhaps he could make that happen. Sooo... I guess we are sort of already drinking this book's Kool-aid. But there are plenty of arguments against it, depending on your situation.
Honestly, just some damn good advice:
"If you desire to help thy friend, do so in a way that will not bring thy friend's burdens upon thyself." (76)
[Are you still with me? This has to be the longest blog post in history. I'm sorry. This might be longer than the actual book itself. Almost there...]
Where the determination is, the way can be found.
I love this message. Basically: work hard. This sentiment is close to my heart because I've been there and done that. I must admit that my bleeding heart protests: "But... but... sometimes this isn't an option." And perhaps for someone who is truly disabled, it isn't. But for the rest of us: be determined, find work, keep at it, succeed. Done. This is a very direct message in a world that seems, at times, to be overly indulgent and you know what? I'm okay with that.
Okay. So here is the part where my fears sort of came to light, but then, after doing the math, not really. For a person in debt, the book advices to pay yourself 10% of your income, pay your debtors 20%, and live on 70%. When I first read this, I felt sick.
As you know, when I graduated from college, my debt was crippling. Without getting into hard numbers here, I owed about 9 times as much as I was making in a year. I went back to school and changing careers to increase my income (also advised in this book, by the way), but I stilled owed 3 times as much as my yearly salary. At that time, I consulted with investment experts and every one agreed that I would never make as much in savings as I was wasting in debt so it made more fiscal sense to pay off my debt, rather than put the money in savings.
When I read this book, I thought, "Crap. Should I have been putting 10% of my income into savings?" It's hard not to think of the savings I would have right now with that money. But then I did the math. The book does not account for interest on the outstanding loans. If I had paid myself and paid my debtors off at the suggested rate in the book, not only would I have not paid off my debt, but I would be in more debt now than I was 16 years ago.
I think this might be good advice for someone who has a "reasonable" amount of debt (whatever that is -- the book advises against any kind at all, of course), but if you're drowning in it like I was, this is not a viable option. So, although I first broke into a sweat about whether or not I should have been saving way back when, doing the math was a good wake up call that that really was not an option for me.
Reading the reviews on Amazon (and it's well reviewed -- 4.5 stars with 459 reviewers), it seems like four other books came up as recommended/better than this book: Think and Grow Rich, The Millionaire Next Door, Rich Dad Poor Dad, and The One Minute Millionaire. I'm putting that out there, but I know I will not read them. I could not possibly be less interested in this topic.
However, by forcing myself to read this book (and write the longest review in history), I have thought more about money, how we spend it, how we save it, and how we can make it work for us to increase our wealth. I guess reading a book like this is like taking vitamins: not really a great experience, but it does benefit you, even if you don't like it at the time.
I think my next book has to be a "fluff" one. I need a break. (And you probably do too, after reading this review!)