Friday, September 3, 2010

Weekend Reading: The Money Book

The Money Book for Freelancers, Part-timers, and the Self-Employed
By Joseph D'Agnese and Denise Kiernan
Three Rivers Press, 2010

Basically, according to the title, this is a book for someone exactly like me i.e. a gal who works part-time and freelances. Why is it that I feel like this one didn't really speak to me and mostly made me terrified of the notion of living as a freelancer? I've never been so glad to have some (small) regular income as when I was reading this book. That's not to say that there's not a ton of good advice in here, but it seriously left me spooked. I don't do well with uncertainty.

This book is a very good foundation builder for someone who lives on an unreliable income and/or may have personal debt. The advice is solid, and is the same as advice I've both heard before and given before. It's written in an authoritative yet entertaining way that doesn't take itself too seriously (I do like that...). Because I don't have credit card debt and have heard a lot of this advice before, it didn't pertain to me as much as I hoped, but I certainly did learn some things.

Best Takeaways:

When it comes to money, you have to be brutally honest with yourself.
It's always good to re-remind yourself of this because no matter how saintly you think your spending habits are, there's always a chance that you could opt to ignore the purchase of that item you love the look of and hate the price of. Remember my recent foray into near credit card disaster just because I didn't like the look of my balance and wasn't being as thorough as usual? The authors advocate making a list of all debts and expenses to help you better understand your financial situation and assign some numbers to things. I agree with them.

Spending Identity Statement.
This is interesting. A spending identity statement comes after you've taken a good hard look at your income, assets and expenses, and it functions like a check to keep you in line.

Sample Statement: My name is Jane. As of this date, I have earned $xxxx.xx doing this job. My monthly fixed expenses are $xxx.xx. Based on my income, my monthly discretionary income is $xxx.xx....
Then you assign values to areas where you're likely to do your discretionary spending i.e. eating out, shoes, etc. It's a contract with yourself, and not a bad idea at all.

Debt=Dreams Deferred.
Not really much to add to that statement except a hearty "well said!" Tempting though it may be to keep up with the Joneses, the more things you own, the less freedom you have to do things in the future. Living on credit is far too common and accepted a practice today, and as we've learned over the course of the recent (ongoing) financial crisis, it's not helping anyone. Use money you have to buy things you need.

Change your "I deserve" language.
People say that they deserve things all too frequently these days--in all different ways. "I ran for 30 minutes, so I deserve an ice cream sundae;" I was really good about spending all week so I deserve to go shopping tonight;" "I had a hard week, I deserve a spa treatment." I'm all about rewarding yourself for good behavior, but if you go running for 30 minutes as part of your diet, don't you deserve to lose weight? Or if you're really good about spending, don't you instead deserve a low balance or no balance on your credit card? It's a subtle shift, but it does make a huge difference. Instead of wanting stuff, take pleasure in your savings balance and your zero credit card balance. I think it's even more fun because you don't have to find a place to store new purchases.

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