After being decidedly unimpressed with Quinn’s first book (mostly, I felt like it was bloated and overly detailed, meaning it went out of date quickly), I was somewhat hesitant to review another book by Quinn.
This time around, though, two things attracted me. First, the length – I felt like Quinn’s first book could have been quite good if it were a lot shorter, and this one is indeed shorter. Second, the title – how could I not be interested in a book entitled ?
This time around, does Quinn hit a home run (or at least a double) or does she strike out again? Let’s dig into this one and find out.
1. Getting Started
Getting started is the real key, isn’t it? With the huge array of financial options available to people – and all of the consumer goods easily available as well – it’s not surprising that people with busy lives often have a hard time getting started with a financial plan.
The good part is that if you get your financial plan set up correctly right off the bat, it’s not very hard to have it run automatically so you don’t have to worry about it again. For example, my debt repayment plan is basically automatic at this point – I have the online bill payments set up so that my debts steadily go down, and the only time I look at it is when a debt is actually paid off. The same is true for my investments – I only look at them once every few months to make the needed adjustments, though I do look at the balances of everything when evaluating my financial situation.
But what about the choices you need to make to come up with the plan and set it in place? Those choices are simple, too, once you break them down piece by piece.
2. Spending and Saving
Quinn offers a brilliant solution for people who have difficulty sticking to a traditional budget. Just set up things so that each week, some amount is deducted from your primary checking account into your savings account, preferably at a different institution, and maybe also set up a deduction into an investment account. Then just spend however you like from what’s left. She refers to this as automatic budgeting, and it’s basically what I’ve found works well for me.
Even more importantly, start doing this now, even if you have no idea how you might invest the money or even if you don’t know exactly how much you can afford to take out. Set up a lowball amount for withdrawal each week into some other account, then increase it later if you find out you can handle it. It’s more important to start doing this now than to do it later, because doing it now gives more time for compound interest to work in your favor, even if it’s just the 5% you might earn in an online savings account.
Don’t know where you should be putting your money? Quinn gives five musts that everyone should do, in this order:
1. For retirement, you must put 10 percent or 15 percent away.
2. You must reduce, then eliminate, credit card debt.
3. You must create a Cushion Fund.
4. If you have kids and expect to help with their college education, college savings come next.
5. Prepaying your mortgage comes last.
3. Wipe Out Your Debt
This chapter is basically a twenty page compression of Dave Ramsey’s Total Money Makeover. Basically, it boils down to committing a certain amount of extra cash to debt elimination each month, asking your creditors for lower interest rates, and then set it up so this debt repayment happens automatically through online bill pay services so you don’t have to think about it.
If you’re in a pretty intense debt situation, you might want to just go ahead and read The Total Money Makeover, but this is solid advice for people with a manageable debt load.
4. Your Safety Net
Quinn focuses on insurance here, and the information here is pretty concise and clear. She covers a number of insurance types, giving only a few pages to each one, and she doesn’t get bogged down in details. She basically states that generally a term life insurance policy is best for most, that long term disability insurance is useful if you have dependents, and that you really ought to have a will (at the very least).
Given that her at this topic was two hundred pages of muddling, overly detailed, and rapidly outdated material, this was really like a breath of fresh air.
5. Buying a House
This is a chapter I would have enjoyed reading about nine months ago. It’s a gentle, but information packed thirty page review of the process of buying a home, with a few brief notes on selling. The information here is pretty basic and can be found online rather easily if you search around – stuff on different kinds of mortgages and some good guidelines on how much you should borrow – but it’s collected and laid out very nicely here.
Quinn’s advice for home buyers is pretty conservative – don’t get anything but a fixed loan and if you can’t get one, spend some time getting your bills paid and building up some equity instead of forcing it. That’s good advice for anyone and rather prescient considering it was written before the subprime meltdown.
6. Paying for College
I thought this was the best written chapter in the entire book – if you’re considering saving for your child’s college education, this is a great read.
How much should you save? Quinn recommends saving 1/3 of the total expected cost of college. Easy enough – find the college you’d like your child to go to, find out how much one year costs, then adjust it for inflation (see how much it’s increased for that school over the last several years, then keep increasing it at that same rate until the time your child goes to college). Then figure four years of that cost, then divide it by three. There’s your target number.
How should you save it? Quinn makes it easy: use a 529. She explains it in detail, but basically says it’s the option for almost everyone.
7. Better Investing
Again, some nice and simple advice about how to invest, both in retirement accounts and otherwise. For retirement, Quinn basically says stick it in a Target Retirement fund, keep contributing, and just let it sit. Otherwise, buy a diversity of index funds, keep contributing, and just let them sit.
What’s in common? Make regular contributions and just let it sit. Quinn pretty strongly discourages investing in individual stocks, instead encouraging people to just buy managed funds and not worry about it. Good advice for busy people.
Buy or Don’t Buy?
Quinn’s writing is much better suited to this type of book – explaining basic strategies rather than tossing out mountains of detail. is readable and applicable – far, far better than her previous .
The advice is intended to be simple, however. If you’re looking for intense investment advice or you’re struggling under a very heavy debt load, the advice here isn’t going to be a tremendous help.
If you’re generally in solid financial shape but don’t have the time to really sit down and figure out how to kick your finances into high gear, is well worth reading.
Smart and Simple Financial Strategies for Busy People is the forty-seventh of fifty-two books in Money360’s series 52 Personal Finance Books in 52 Weeks.