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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.

My Amazon Kindle: A Eulogy

By Frugaling 12 Comments

Amazon Kindle Broken Photo Ereader — My Amazon Kindle is broken…

From drooling wimp to reading aficionado

I don’t think I read one required book cover-to-cover in all of high school (sorry, teachers!). I didn’t enjoy reading, much to my mom’s dismay. Spark and Cliff notes eliminated the “need” to dig through the deeper meanings with tomes like Homer’s The Odyssey. I skated through high school, inspired by my brief overviews and a charismatic charm that filled in the missing plot gaps. It mostly worked.

In college, reading for enjoyment actually clicked. My grades improved and I found extra time to catch up on what I had missed. There was a simple equation: Read more to write better. Suddenly this drool-inducing, boredom-ensuing activity became relaxing and rewarding. I saw the value of it all.

A 21st century device for an age-old pastime

The transition from book avoider to avid reader was cemented by the purchase of an Amazon Kindle in college. As a nerd, geek, and all-around techie, the Kindle was the perfect blend of generations – reading power in the 21st century. When the slimmer, sleeker 3rd generation device launched, I purchased one immediately. It’s been with me ever since.

From Costa Rica to New York City, it was always with me. I chucked it onto the kitchen table, stuffed it into my backpack, and spilled a glass of orange juice into the keys. Frankly, I treated it like another paper-based book. Despite my harassment, the Kindle followed suit and kept up with my travels. Now, around four years of age (about 40 in tech years), I regret to inform you that it’s died.

When I got to school today, it refused to turn on. I followed a number of troubleshooting guides, too – no luck. There was nothing I could do, as the screen simply wouldn’t wake up or change pictures.

This shouldn’t be my gut reaction…

You might wonder why I’m writing about an inanimate object, when I aspire and espouse for a minimalist and anti-materialist lifestyle. Thanks for keeping me honest, readers! The real reason is that the loss of one object often begets a question: What’s next?

What should I get? What will be a frugal upgrade? Should I even buy another? How about a tablet, instead? What’s my price range?

Despite the eulogy, it’s felt more like an inconvenience on the way to an upgrade – another lifestyle inflation. The rapid replaceability swept the feelings of loss quickly under the rug. As I work to right my budgetary problems, this seems like room for error. The immediate reaction to buy another something – better and possibly more expensive – speaks to a disrespect for the exchange of money.

In the past, my gut reaction would be to purchase that next new device. Instead, I’m going to wait and make a frugal, informed decision that feeds my desire to read and fuels my budget. That is what’s next for me.

When you break something, what’s your gut reaction? Have you ever immediately purchased a new item to replace the broken? Or, do you take time before buying another?

Why Are College Textbooks So Expensive In The Google Age?

By Frugaling 13 Comments

College Textbooks price problem — *Photo: xshamethestrongx/flickr*

We live in the greatest information age ever. Bandwidth, storage, data, smartphones, and computers are cheap! With a carrier contract, you can have your first Android or iOS phone for free. For as little as $200, you can buy your first computer – brand new. These devices used to be expensive and less powerful – a luxury for the wealthy, subject of study in academia, or business tool.

The decline in prices is largely attributable to Moore’s Law, which asserts that the number of transistors on circuits doubles approximately every 2 years. These advances have contributed to the accessible age for information – spanning vast income demographics and socioeconomic factors. Unfortunately, college textbooks haven’t seen these progressive declines that could attract larger audiences.

Information Is Stuck Inside A College Textbook

Major publishers of textbooks (i.e., Pearson, McGraw-Hill, and Reed Elsevier) have long held dominant control of the industry. Despite vast sums of encyclopedic information moving to free sites like Wikipedia, these publishers have courted the strongest academics to publish on their platforms. With this control and profit model come crushing prices for students.

Academics, largely coming from older generations – before the popularization of the Internet – are content with this publication model (or, they must be if they keep hawking them at the beginning of every semester). When they are recruited to write for these publishers, their knowledge is condensed, controlled, and synthesized. Unlike the Internet’s anarchic flow, an elite few choose what is shared.

Most businesses follow free market principles of supply and demand, but the textbook industry doesn’t follow those same rules. Their supply is infinite and their demand is solely based on their marketing tactics to professors, and the network that professors have with authors. In turn, this stifles competition for pricing – making every book unique and “worth” a premium price.

New College Textbooks Are A Small Fortune To Buy, Make

Publishers use rich text, color, paper, and often publish in hardcover. All of these materials are beyond necessary and contradictory to the principles of progress that are present in this information/Google age. The quality materials give even more reason for publishers to charge more for the college textbooks, but oftentimes you won’t ever reference the book again.

If you are unlucky enough to buy a textbook during an edition update cycle, your $200+ purchase price may lead to an abysmal resale value. New editions are constantly released, usually with minor changes that are imperceptible to the casual reader. This forces students to buy newer and newer texts, and professors are encouraged to hawk these latest editions because they are given free instructor copies. Effectively, this artificially manipulates the supply for certain level textbooks.

When new textbooks come to market, they can easily fetch nearly $200 or more. That’s 1000% more than most popular hardcover novels at Amazon.com. While the Internet has made for more free stuff than ever, textbooks seem to be stuck in the three-decimal price range. Technological advances seem to be overlooked when it comes to price considerations.

Google Search Economics Answers — *Google, What’s Economics? (Click to enlarge)*

Online, Electronic Platforms Were Supposed To Bring Price Declines

Despite the significant, onerous budgetary demands that these expensive college textbooks place on students, professors seem happy to assign them as “required” for the course. Every class I’m taking this semester emphasizes the need for certain textbooks. It seems like professors willingly participate in this complicated price fixing.

While technologies have improved, the prices of textbooks haven’t fallen. Moreover, even though ebooks and online books are becoming more popular, they are usually the same price or a smidgen cheaper than their concrete brethren. Unfortunately, this small price decline (sometimes) does not account for the fact that the digital textbooks cannot be resold. By purchasing an online book, you are limited to that world and restricted from recouping some of your losses.

A Plan Of Action Going Forward

This semester I refuse to buy a single college textbook. It’s not that I believe we should abolish them, but make them more accessible. Even though I won’t purchase one this semester, I use every campus resource I have to get access to them. Thankfully, as part of the Big 10 system, I can request books from every library within the network.

Next time a professor says a college textbook is required for ask, it’s worth asking them:

Did you get a free instructor copy of the text?
Why are you promoting this particular text and edition?
Are there any free methods (i.e., Wikipedia, online editions) to getting access to this information?
Would you buy this textbook if you were taking this class?
Will we actually reference from this throughout the semester?

3 Books To Unleash The Financial Guru In You

1. Confessions of a Street Addict by Jim Cramer