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3 Books To Unleash The Financial Guru In You

There’s a simple reading rule that Warren Buffett asserts: Read 500 pages a day. He soaks up everything he can get his hands on, and that leads to a massive amount per day. Buffett contends that by reading this voluminous amount of information, you’re effectively investing in yourself – “knowledge builds up, like compound interest.”

The Oracle of Omaha has been doing pretty well for himself these days; reportedly, he’s making an average $37 million a day. His company, Berkshire Hathaway, has skyrocketed in share price in recent years. For him, all that reading means smart investments and terrific paydays.

When I was in high school, I avoided books like they were laced with smallpox. I’d read Sparknotes and research the main topics of books on the web; ignoring the censures and recommendations of astute instructors, pleading that I actually read the assigned novels. When I remark on my primary education, I cannot remember a single assigned book I read cover-to-cover.

Nowadays, I read voraciously. I cannot get enough; albeit, I’ve not reached 500 pages per day – that’s insane. The following are 3 must-read books for the future financial guru in you! Isn’t it time you unleashed the Buffett in you?

1. Confessions of a Street Addict by Jim Cramer

There was one book I remember from high school, and it wasn’t assigned to me. When I was a junior and senior, I thought I might pursue a career in business. The world of investing and finance was tantalizing – I dreamed of getting a job on Wall Street. Those ideas were born from a thorough and repetitive reading of Jim Cramer’s Confessions of a Street Addict.

Despite Jim Cramer taking a beating by popular media types such as Jon Stewart, the man started from fairly humble beginnings and worked tirelessly to make a career on Wall Street. For some time, he lived out of his car and was uncertain about his financial and vocational future. Cramer was educated at the best of Harvard’s schools and went on to manage his own hedge fund that was quite profitable.

This book is less about advice than a thorough look through the eyes of a financial guru. Confessions of a Street Addict is a terrific read – well written – and nasty at times. Cramer does not paint the business world in a pretty light; rather, he shines a spotlight on some of the craziest parts of finance.

2. I Will Teach You To Be Rich by Ramit Sethi

When I got to college, I realized I needed to balance my budget and better understand my cash flow. I was spending money like there was no tomorrow. Living in the moment led me to outspend my budget and eventually into a significant debt load. Ramit Sethi’s I Will Teach You To Be Rich is a wonderful primer for understanding a variety of financial principles.

The book takes readers on a journey of lessons and financial changes. Sethi teaches people how to automate finances and easily control spending. Likewise, the book suggests a variety of personal finance checking, savings, and investment accounts that will help to maximize your interest rates and side income.

Filled with practical tips, this is perfect for millennials that may be starting their financially frugal journey. I refer back to this book quite frequently to recall what steps I should be taking to maximize my return on investments.

3. The Big Short by Michael Lewis

There’s not a lot of fact and depth in the news surrounding the most recent financial meltdown. If you’ve been paying attention, you probably have heard of credit default swaps, bad mortgages, and some of the leading banks being targeted by federal inquiries. Unfortunately, little has changed since the catastrophe, and we may see this happen again.

Michael Lewis is the now famous author for Moneyball, after the book was turned into a movie. Lewis is a gifted researcher and writer, weaving fact and intrigue into effortless stories. Suddenly, complex financial instruments are fascinating concepts that are fairly easy to understand.

The Big Short is one of Lewis’ best books, and a must-read for people that want to better understand the meltdown and see who actually profited off the mess. Surprisingly, there was an elite group of mathematicians and investors that bet in the opposite direction and made millions/billions off the downfall.

This Psychological Trick Will Reduce Your Online Shopping

By Frugaling 12 Comments

The rise of online shopping

Amazon.com went live in 1995. The site quickly became the largest online retailer in the world. Bookstores have been decimated by shopping online and ebooks. The war has largely been fought, and the brick and mortar stores are disappearing. Aside from making it difficult to find a book at your local retailer, shopping online can be a tremendous convenience.

The gateway to online shopping starts with your 16-digit credit card (debit, gift card, etc.). After every order, you’ll be required to enter your shipping and billing addresses, contact information, and your payment method. Credit cards are wonderful tools for these online shops, and they’re safer due to complete fraud protection.

There’s just one problem: convenience can wreak havoc on a healthy budget.

Credit card numbers are easy to memorize

They do it. This is aided by websites that save your billing information for later purchases. For instance, Amazon.com — by default — tries to save your credit card details. Then, when you go shopping again, you’ll just be able to select the card. In seconds, you can have your new products. It’s so easy on Amazon.com that they even have a one-click buy button.

You do it. I’ve been shopping online for years, and noticed only quite recently that I memorized a couple of my 16-digit credit card numbers. How? Excessive purchases over the years, but also a training process. Unless you’ve lost your card, had it stolen, and/or suspect fraud, your number generally doesn’t change. If you’ve had a credit card for years, you have more exposure to the same digits. Memorization is made easy and purposeful.

Delay the purchase, reduce the urge

Research shows (and trust me, Amazon is listening to it) that aiding consumers in making impulse buys equals more money. If I can reduce the time and effort to make you spend, you’ll come back and spend more over time and in single sittings. Pretty awesome if you’re a Fortune 500 company with a near-$400 stock price! If you’re an average Joe or frugal Jane, this can mean trouble. Here’s a two-step solution to this problem:

“Lose” your credit card. The first step is to call the credit card company and tell them you can’t find your credit card — you’re worried you lost it. Once you do this, they will issue you a credit card with new numbers. This will restart the number learning process and delay new purchases online, as you’ll be able to think more critically. After all, critical thinking takes time — you owe it to yourself. Note: you won’t be able to use the card anymore — you’ll need a backup card for a week.

Delete your details. If you’re an Amazon.com shopper, delete your billing details off the website. You’ll have to add them again at a future purchase, but having the inconvenience may actually mean less money spent. Give yourself time to think, “Do I really need this?”

Memorizing a credit card number — as the retailer or consumer — is trouble for a delicate budget. This simple psychological trick of slowing your purchase down can significantly reduce your spending and keep you on track for a frugal future.

3 Mind Tricks To Enjoy Life And Strengthen Your Budget

By Frugaling 9 Comments

That's me. I'm an extrovert. Can't you tell? — *That’s me. I’m an extrovert. Can’t you tell?*

I’m an extrovert. When I’m around crowds of people, I feed off the energy and feel excited to be alive. In a college town, with little else to do than drink yourself silly or try a new restaurant, I frequently opt for a moderate balance of both. Unfortunately, this is a black eye to my carefully crafted budget.

Participating in these social romps are one of the highlights of my weeks. Meeting new people and getting to know someone on a deeper level – there’s nothing better! But let’s face it, they do take a toll on my ability to pay off more debt. Sometimes I wish I could have the best of both worlds: social time and the frugal life. Thankfully, there are some simple mind tricks that help keep me within my budget and enjoying the company of others.

Pretend it’s a necessity

Most visitors to Frugaling are likely a part of two camps (look at me already dividing people): those who need to reduce their expenses and make more, and those who want to reduce their expenditures. If you don’t need to trim all the excess from your budget, you’re usually less inclined to do so.

The motivation for creating and following a budget is highly determined by your financial situation. The more stability you have, the more likely you’re going to be comfortable spending money on a night out with friends. Nonetheless, my guess is that if you visited this article, you at least want to reduce your expenses.

Maybe you have a little emergency fund, a great big checking account, and/or a sizable investment portfolio. Being frugal may be a life choice more than anything else. For me, I need to get my budget balanced, but I have this generous wiggle room that the federal government taunts me with: student loans.

When I’m out on the town and could pay even more for food, I think about my aim: I don’t want more loans. That places me somewhere between choosing frugality and needing it. For me, the trick is pretending like it’s a necessity to stay in budget.

For instance, let’s say I had $300 this month for food. That budget included everything from restaurants, fast-food, and even supermarkets. If I hit $300, I’m out of money for this month. More importantly, if I pretend and remember that that limit is a stopping point before catastrophe, I’m going to be very careful about where I put my money next. By pretending it’s a necessity, I realize how great the consequences of my actions can be.

Predict, plan around your social desires

Despite tricking my mind into realizing the necessity of a solid budget, there’s a humble need to share and socialize. Somehow, I want that to be filled. If most everyone is venturing off into the little downtown nightlife, I’d like to be able to go with them. Unfortunately, this is rarely friendly to my budget.

A night out on the town that includes dinner and drinks at a couple bars may cost about $40-50 after tips. Done once a week, and that eats away $200 a month from my budget. That’s not an option!

The trick here is simple: Know both your social and financial needs before the invite comes and night sweeps you away. If you’re gearing up for a fun, late, Friday night, there are a couple things you can do that will really add up:

Eat at home, before you go out. Maybe get an appetizer when you’re at a restaurant with friends.
Like those kooky college students always do: pre-game at home. By the time you’re out on the town, you’ll be ready to drink water instead of another expensive booze concoction.

Stories beat stuff

The great country of New Zealand has a wonderful advertising campaign to attract tourists. Ads feature young people skydiving, eating exotic foods, and experiencing the diverse geography of the Hobbits’ native land. All of the marketing centers around one tagline: “Stories beat stuff.”

All they’re saying is that you should get over materialistic wants and show the world what you’re made of! Rather than collecting another display piece for your home, a luxury car, or buying expensive jewelry, try running around, taking a random road trip, or flying to another country! Let these experiences fuel and motivate careful decisions regarding your budget.

It’s important to gain those experiences because ultimately they can help perpetuate and fuel a well-balanced budget. Debt destruction is easier when you’re psychologically well and whole. I guess what I’m trying to say is that every now and then, that night out on the town is a short-term loss for long-term gains.

Find A Roommate And Financial Freedom

By Frugaling 4 Comments

As a student, I feel like a pinball getting smacked around from location to location. I’ve moved about 9 times in my adult life. I’ve lived with significant others, friends, acquaintances, and even by myself. I trekked across campuses, cities, and the country. After two years living alone, I found a roommate and will make my tenth move this summer. Today, I wanted to spend some time reviewing my current and future living situations, a hesitancy regarding roommates, and the effect on my budget.

My Man Cave

Two years ago, when I received my admission to graduate school and decided to move to the Midwest, I was ecstatic, but clueless about housing. I didn’t need much – just a roof over my head and basic utilities. I jumped at an opportunity to live in the university apartments. I hadn’t seen the outside or inside of them, but the price ($435 a month for a one bedroom) was unbeatable.

*Look at these digs! Perfect for a window air conditioner.*

What I found was both decrepit and lovable. The apartments bubble with rust. A perma-dirty linoleum floor greets my toes when I slide out of bed each morning – you never get used to the cold. The faucets run a yellow/red when they’re not run regularly. My circular thermostat doesn’t account for certain parts of the apartment, which seem to be unprotected from the harsh, Midwestern cold. Cinder blocks are stacked high on the walls, painted over in what can only be assumed to be lead paint. A thick coating of asbestos lines the ceilings.

Despite misgivings, it’s my home, and I love it. Actually, I find it comical how much I don’t want to leave my current apartment, and I’m only leaving because the university is demolishing them.

Forced to move again, while balling on a serious budget with severe time constraints, seemed impossibly difficult. Then, the university notified everyone that new apartments were being built in time for my departure from the old ones. I could just move right into them!

Luxury Living At A Price

Over the last decade or so, the university considered a construction project to repair and rebuild the flood-damaged, aged, asbestos-filled apartments. Year after year seemed to pass without resolution. When I moved in summer 2012, I heard the whisper of change – a private bidder on public lands.

Then, a resolution quickly swept over the university apartment system. New buildings, contractors, and contracts would be drawn. The private company would revitalize this community with opportunity, design, and (supposedly) affordability. Tenants would see a brightened exterior and feature-filled interior. The costs would unfortunately need to increase, but we were assured they’d be manageable.

Something seemed askew about allowing private bidders onto public, university property, but the messages seemed positive. A few months later I found out the price: $875 per month for a one bedroom. In other words, more than 100% what I paid when I first moved!

Despite balling on a budget, I resigned to the fact that my 60-70 hour workweek wouldn’t enable me to tour many places. I would accept whatever they required. I signed a lease last year, much to my dismay and confusion. How could the university charge $875 per month for student housing?

Wake Up And Smell The Budget

Even though the price of rent was steep, I relished my independence, at the expense of my budget. I wanted to be frugal, but not that frugal. This new rent would decimate everything I worked towards over the last 10 months. I balanced my budget and created a tiny surplus for each month. But paying $875 a month would mean losing about $3000-4000 per year, plus student loans with at least 6.8% interest APR. I can’t even calculate the true cost of this decision.

Over the course of this semester, I’ve been working hard at not working. Essentially, I reached burnout, and to counteract these notoriously awful feelings, I decided to spend more time going out with people. Being able to socialize and meet new people has been one of the best experiences of my life. It’s kept me sane amidst my crazy-busy life.

Thankfully, meeting people also meant finding those in similar situations: looking for roommates. Over time I found someone that was excited about living together and could afford to split a two-bedroom apartment. The mental math was easy: rent would be $550 per month.

The challenge for me was realizing my prejudices towards having roommates. In the end, I realized that opting for the expensive rent was a cop-out to finding a roommate and managing my delicate budget. The reality was that I didn’t have independence until I was free from debt. I’m looking forward to having a new roommate, paying off even more student loan debt, and freeing myself from the burden of an unbalanced budget.

What have you done to save on rent, housing, etc.? What do you think about living with roommates? Any recommendations for me?

3 Books To Unleash The Financial Guru In You

1. Confessions of a Street Addict by Jim Cramer