The Best Damn Finance Book I’ve Ever Read

First, a little about me and my website:

• I paid off $32,000 in student loans in a year.
• Paid off our $280k mortgage in 6 years.
• Flipped several houses in Washington D.C. to help me build income for real estate investing.
• Purchased twenty rental properties with cash.

My website is all about helping others to get out of debt and create passive income from real estate.

But you can not mess with real estate until your finances are straight.  You gotta go get Jim’s book! (or at least read his website)

“Spend less than you earn–invest the surplus–avoid debt”

The central theme of Jim’s website and book.

It’s hard to believe the Path to Wealth can be this simple.

But in his book, you’ll see it is.

I got to admit. I love this book! My review is going to sound a little over the top, but it’s a damn good book!

I’ve been big into finance and real estate books my whole life. I’ve read them all.

Ok, way more than this!

About a year ago, I stumbled across financial independence and early retirement websites and it opened up an entire new world to me!

I began seeking out all the top blogs in this field, and one that kept coming up was jlcollins.com.

To put it bluntly, his Stock Series was the most comprehensive explanation of investments I have ever read. There is so much noise and confusion out there in the finance world, and he slices right through it and tells you what’s really important.

He makes it easy to understand the complex world of money. His approach to investment is so simple, it’s alarming!

I followed his blog closely and eagerly awaited new posts.

When he sent out an email explaining he was writing a book and soliciting help from his readers for proofreading, I jumped at the chance!!

The only reason I volunteered was because I wanted to read the book ASAP!!!

As luck would have it, I was selected to be a proofreader, and had the opportunity to read the book before publication. (Actually, I’ve read it about 20 times. Occupational hazard!)

The book is exactly what I was hoping it would be.

All the great content from the Stock Series.

And more.

Whenever friends or family ask me for financial advice, I would tell them to start by reading Jim’s blog. Now I’ll get them this book. I just bought it for my brother and sister.

He writes in his folsky, down-to-earth tone that has made him a legend in the FI blogging community.

Most importantly, what surprised me about this book is how comprehensive it is. It covers almost every aspect of money throughout all stages of life.

This book covers you from high school until the day you die!

Most books specialize in one thing.

Take Dave Ramsey’s Total Money Makeover.

This is a book on getting rid of debt.

Once you’ve followed the advice and your debt it gone, the book really doesn’t say much else.

Simple Path covers debt in a chapter.

Jim explains brilliantly how bad debt is. He explains the need to change the way we think about debt. He clearly lays out how to get rid of it.

IMHO, it’s far more straightforward and useful than Mr. Ramsey’s book.

I have always been a HUGE fan of Total Money Makeover.

It’s just Jim’s book is better.

He covers how to build and grow wealth. He explains in detail stocks, and many other kinds of investments and warns against timing the market and using financial advisors or mutual fund companies. He warns you about being conned.

Jim tells you everything you’ll ever need to know about retirement and non-retirement accounts, how to fund them, when to use them, when and how to withdrawal from them in your retirement years. He covers required minimum distributions.

He explains the importance of tax consequences to your portfolio and how to navigate those waters.

He even shows you the best way to set up a charitable trust.

And I’m just scratching the surface.

It’s everything but the kitchen sink.

And it is the best all-in-one financial guide I’ve seen.

And that’s saying a lot.

That’s the gist. If you want a more detailed look, keep reading…

Jim explains that saving and investing well is not about retiring early, but about the freedom and options that having enough money to do so brings.

He proclaims becoming wealthy requires you to dramatically adjust your lifestyle!

Usually, authors don’t come out and say the uncomfortable truth that it takes work and real change.

Typically, some authors or bloggers offer “tricks” or shortcuts to wealth. But those don’t work. What he says does.

Better than anything else out there.

I know this from looking for the real answers over the last 20 years.

He has the real answers and speaks the truth about money.

The truth is, we have to make big changes to be wealthy.

Jim’s approach to houses is one that I whole-heartedly agree with, and more people need to understand this.

He tells us…

Houses are an expensive indulgence, not an investment!

YES!! THIS IS EXACTLY WHAT I KEEP TELLING EVERYONE!!! (But obviously not as well as Jim)

Realtors and banks don’t always have your financial independence in mind when they push you to buy the biggest house you can afford. It’s a HUUUGGGEE drag on your ability to get ahead. It’s debt. Debt sucks.

He debunks the myth of the American dream of homeownership as “good debt”.

(Read my article on Should I Buy a House or Rent?)

I won’t rehash it here. Read it yourself.

The book warns of the dangers of student loans and again, suggests that they also are not good debt!!

          How can he say that!! That’s good debt!!!!!

Well, good debt shouldn’t put a massive burden on your financial future, survive bankruptcy, be able to garnish your social security, and follow you to the grave!!

          How bout that F-you money section!?!?!

I really dig the concept of F-you money and his approach to it.

It is my favorite jlcollins.com post.

Jim talks about having a job when he was younger in life, and wanting to take a vacation to see the world a little. He asked for the time off, and his boss said no. He had some F-you money saved up, so he decided to quit and go on his trip anyway.

HELL YEAH!!

A surprising thing happened.

His boss urged him to stay, and gave him the time off anyway.

He also negotiated a decent amount of yearly vacation time.

Without the F-you money in the bank, most of us wouldn’t have the balls to quit, and would miss out on life’s greatest adventures.

He lives life on his terms, and his life is richer because of it. I want to emulate that.

I want to explain the concept F-you money to my kids, but I’ll have to find another way to phrase it to an 11 and 7 year old.

          Daddy, What does the F stand for?

(Forget you money?) Doesn’t have the same ring to it.

Jim devotes a chapter to “How to Think about Money.”

I’ll quote him here:

“It’s not hard. Stop thinking about what your money can buy. Start thinking about what your money can earn. And then think about what the money it earns can earn.”

Pretty sobering stuff.

I wish I could write nuggets of wisdom like that. The book is full of them.

He has a great section that basically says no one can beat the market consistently, and he makes the point quite well. There is lots of data and logical reasoning to back it up.

He warns against financial advisors and where their motivation and incentives lie.

            How dare he!!!   I used to be one!!!!!!!!!!!!

I worked at Fidelity Investments before I joined the military.

Nothing against Fidelity, it’s a great company, there aren’t much better out there.

Fidelity, however, and several other large financial institutions out there make most of their money by selling complicated investments that charge unnecessarily high fees.

Are these companies going to pick the investments that are best for us, or the best commission for them?

That’s an easy question to answer.

Jim covers this in the book. He talks about how the “experts” can’t beat the market, but make billions convincing us they might.

By the way, if the experts can’ t beat the market, I don’t know what makes us think we can.

Jim puts it best. “Breeding unicorns is more likely.”

He talks about the fool’s errand of trying to get out of the market when it’s falling, and getting back in before it shoots back up. It’s almost impossible to do. Even for the “experts”.

He shares a personal story where he “caved” and sold near the bottom when the market was dropping, then waited until it went past it’s previous high to get back in.

Whoops.

But he said it taught him a valuable lesson, and the experience helped him through future downturns.

The book goes on to list every major market crash and correction, and shows how the market always comes back. He clearly illustrates the smart move is to let it ride, not to panic and sell.

I myself caved and sold in 2008. You can save a fortune by learning from our mistakes. Trust in history. Buy and hold.

He clearly explains the wisdom of Jack Bogle, Vanguard, and low-fee index funds.

This is the key to his simple, yet effective investment strategy.

I’ve seen many a blogger try to explain why index fund are superior to “top” mutual funds, investment advisors, and diversification. He explains it in this book better than anywhere else I’ve found.

His comparison of the stock market to a glass of beer is something that will stick with you. Again, I won’t ruin it by explaining it. I’ll just say:

Read my post on what beer teaches us about money

The book will explain what that means.

He has a chapter near the end of the book called Tales from the South Pacific.

It’s my favorite part of the book. He shares a few examples of people he has encountered who are living life on their own terms.

One example is of a young couple that spends a good portion of every year sailing from the U.S. to Tahiti and then bumming around the islands.

It’s clear you must invest well and have some F-you money to make this possible.

          Enough about how great it is!!!  It can’t be that awesome?!?

          Tell me something you don’t like about this book!

Ok! Ok! Calm down!

No mention of rental properties as investments.

He probably doesn’t mention it because it’s not simple. It’s complicated.

At first.

Or maybe because lots of people get in trouble with real estate, and not so much with index funds.

I would have liked to seen some sort of explanation showing why it’s not included in the book. (Especially since I’m a real estate blogger!!!)

Personally, I have a deep love of real estate and insist it have a place in my portfolio.

I have a large passive income that comes from several rental properties that I own debt-free.

I’ll admit, it’s not as simple as index funds.

But I have done very well with it.

And I think anyone can.

It will continue to be the centerpiece of my investment portfolio.

And anyone willing to listen can learn how I do it.

So there is my two cents.  Go order the book.

Some good books I just rent from the library.  But this book needs to be on the shelf at home.

It’s a keeper.

Rich on Money

Wanna see how I built a large portfolio of paid off properties?

Read my Complete Guide to Real Estate Investing.