A Rock Solid Read, And Quite Possibly the World's Only Personal Finance "Beach Book"

I was recently sent the revised edition of Beth Kobliner's Get a Financial Life. Since I created this blog purely for the pleasure of writing about finance and don't accept advertising, I have zero pressure to promote. (I do that enough in my day job running a marketing communications firm.)

If there was ever a work about personal finance that could be described as a "beach book", Get a Financial Life would be it. Beth's style is zippy (my definition of to the point and fun), easy to follow and free of the financial jargon that puts even the most devoted LMF4HMW readers to sleep. This is not to say that Beth is talking down to her readers -- she well navigates the fine line of providing great explanations for key financial terms and avoiding unnecessary diatribes. From budgeting to mortgages and investing to insurances, Beth well covers all of the financial bases. And it's a fun read.

Get a Financial Life is about "personal finance in your twenties and thirties". It certainly puts Gen X and Y on a great track; however, it's also applicable to those who've been around the block a few more times. First, it covers health insurance immediately, which many personal finance books omit or cover after most readers have fallen asleep never to return again. We all need health insurance -- perhaps not the same type, but baseline high deductible coverage is crucial. Health insurance is a financial issue because without it, even your best efforts can be wiped out with a single emergency or severe illness.

Other highlights include actionable advice, crib notes and financial cram sessions. Many books tell you what you should do, but don't offer a road map regarding how. Beth does this very well, and by implementing her suggestions, you can easily pay for the cost of the book and save yourself some serious money. For example, she writes about negotiating better loan and credit card rates (yes, you can do this -- it will be the subject of an upcoming post). And provides financial work sheets like the monthly statement so that you can better understand the in- and outflows of your money.

The "crib notes" are another favorite: chapter one provides an overview of the most important items and allows those perhaps wary of financial reading to be drawn in. (I know I'm biased given my finance "hobby", but anyone who puts the book down after page 11 is really doing herself a disservice.) These crib notes continue in the form of "financial cramming", or summaries of the key points at the end of each chapter. I recommend reading the book actively, and using these cramming bullet points as check-lists (see my December 2008 posting about "Fail to Plan...) as you progress along your road to financial security.

If I had to choose an absolute pinnacle, it would be Beth's explanation and recommendation of index funds (check out my March 2008 posting professing love for them). They're cheaper (you're paying a lower expense ratio given passive management) and over time, tend to perform better than actively managed funds. She talks about finding the "index fund religion" (maybe that's why I like them so much -- they're downright spiritual in their simplicity) and puts it best when she proclaims, "The bottom line: Go with index funds."

The only area of the book I would debate is the discussion of risk and dealing with fear of loss in a 401(k). Beth acknowledges that it's "easy to panic" in a bad market with investment losses, and that timing is tough (if not impossible -- hence my borrowed saying, time in the market; not timing the market). This is true. But she offers that a reader who "feel(s) like" she's taking "too much risk... can shift to money market funds".

Moving money out of fear is not the best strategy. Doing so is basically like trying to time the market -- you think it will get worse, so you pull out. This locks in your losses, and suggests that you'll know when to re-enter. Then you're risking missing out on gains. And so an all too common mistake happens again: "Sell high; buy low". So I revert to my prior postings about hangin' tough, investing like a distance runner, making risk your BFF and most importantly, having a strategy, not a reaction based on feelings.

The above being said, Get a Financial Life is a must read for LMF4HMW readers and their male counterparts. In fact, the only people who shouldn't read it are: 1) boys who've stood you up on dates or not called when they said they would; and 2) the guy who dated me while hiding a fiancée in an emerging market.

Pair this read with an equally zippy, crisp and fun Sauvignon Blanc or Albariño. I like the Martin Codax which is easy to find (imported by Gallo) and light on Beth's budget worksheet at around $13. Both the book and the vino will be a treat oceanside!