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Our recruiting book is due Monday, so Friday Entrepreneurs is on a break today and I am hating life. (To see a full list of all the Friday Entrepreneurs, click here.)

Here are some links that I stumbled across this week. Check them out:

Compulsive Buying Not Just For Women. A lot of interesting findings in here. For example, about 5.8% of respondents suffer from a shopping addiction (see the article for their description). That means there are roughly equal numbers of men and women suffer from the symptoms (5.5% of men, 6% of women), yet women seek help overwhelmingly more often than men–leading us to casually infer that women are the ones who have all the shopping problems. Still, I want to scream at one of the girls I know who buys $450 shoes like they’re Tootsie Rolls.

Skip the Coffee? What’s Money For, Anyway? The author, NYT reporter John Schwartz, points out that he actually enjoys his coffee every day–even though every personal-finance columnist seems to disagree with him. “Buy the damned coffee, if it makes you happy,” he says. I agree with spending on things you love, and I also agree that you won’t get rich from simply saving a few bucks here and there. But if you do spend on something, you should know exactly how much it’s costing you over the long-term. We’ve all heard how saving on lattes can end up being worth $300,000 later on, etc. If it’s worth it to you, okay. Most people never take the step of figuring it out, and end up in the same place as everyone else. Ordinary actions = ordinary results.

JLP’s blog, AllFinancialMatters, turns 2 years old today. I’m trying to do a better job of linking to other things I read, and JLP’s blog is one of them. Congratulations on 2 years.

A perpetual scholarship to Northwestern for $100. Richard Rounsavell bought the scholarship–in 1866. “With it, he was granted free tuition for himself, his sons — and all of his descendants accepted to Northwestern.”

Beware of the “Growth Trap”. “…investors still must be cautious because the fastest growing countries are often the worst investments. Case in point: China. For most of the past decade its stocks have delivered horrible returns although the country’s economic growth is second to none. Why does this happen? Because the fastest growers often carry the steepest price tags. Investors’ impulse to ignore price and “go for growth” turns out to be a costly mistake.” I did not know this.

WSJ columnist Jonathan Clements pans Richard Kiyosaki’s and Donald Trump’s new book, “Why We Want You to Be Rich.” Ohh, man. Update: See my review of Kiyosaki’s earlier book, Rich Dad, Poor Dad.

Ok, more to come next week. If you have any interesting articles you’ve seen lately, let me know by posting a comment.

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16 Comments

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  1. About the coffee- it’s not a binary choice – coffee or no coffee. I drink good coffee every morning, that I make at my house. It’s expensive coffee, but it’s still a lot cheaper than Starbucks-brewed.

  2. I read that review about Trump and Kiyosaki’s book the other day. I hate them. I’m glad the WSJ called them out on their shitty book. I’ll save everyone some money if they were thinking about buying that book with this quick summary. “Buy Real Estate, anything else is for losers, and you’re not a loser, be a winner like us!” Done.

  3. I too feel their advice is not for everyone. It is not wise to give up everything and take risky steps just because they say that is the way to make money.

  4. Well, I don’t really know how much they preach about real estate in this book but I still think Kiyosaki’s “Rich Dad, Poor Dad” was good.

  5. Good luck on the recruiting book.
    I’m in edit mode myself.
    The agent loved it but wanted me to cut 40 pages.
    Ouch

  6. Kiyosaki is great for motivation but I have my doubts that the guy’s story (and hence his advice) is real. He’s definitely rich by now even just off his book sales.

    He has a great way of defining financial freedom and a few other things.

    By the way, I just got Amway’ed (now Quixtar) this weekend … Kiyosaki is one of the Amway gods … those people quote his books like the bible.

  7. In regards to the coffee, as Dan has already mentioned, The Latte Factor doesn’t say we need to give up coffee. It merely questions the wisdom of spending $5 at Starbucks every day compared to spending $0.50 at home.

    In regards to Trump/Kiyosaki, gah! I don’t have much to say about Trump but I’ve never really liked Kiyosaki. His books can provide some good motivation, but it’s short on actual advice. Starting your own business can be a good idea but it’s not everyone’s cup of tea.

    It’s true that mutual funds won’t likely make you super rich (a billionaire) but you can certainly become rich with wise spending and investing.

  8. The point of the Latte Factor is, as Ramit mentioned, that you choose not between $5 and $0.50, but between a coffee and $300,000 in 30 years. If you want $300K one way to do it is to save the price of a latte a day in the stock market.

  9. I thought Rich Dad, Poor Dad was an interesting read. basically, it is a philisophical book about investments and risk taking in my opinion.

    The problem with people like Kyosaki is they are salespeople first. The first book tries to get you to spend money on the second book, and the investing courses, and the games, and to start visiting the website. Its the ultimate brand building book.

    I once attended a free info session for a property investment group out of Toronto, and it was the same crap. They give you some basic information and ideas, but they are just trying to sell you on their $1600, 3-day course. The course just tries to sell you on their mentorship program, etc…

    Its a great scheme, and if done well, all the motivational crap really lures people in.

  10. $450 shoes? I know someone who pays $450/month for his mortgage. Are her shoes made of vintage condos?

    I think there’s a larger rule with the coffee thing: you should never buy a luxury consumable that you just gulp unconsciously or without enjoyment. It’s a call to become an intelligent connoisseur rather than a hording consumer. (Think about what satisfies your chocolate craving more 2 squares of Chocovic Ocumare or 10 Hershey bars.) In the end you’ll probably save both money and your health–which will save you more money.

    It’s also not about becoming rich. It’s about showing people how to float on the money/income that they have.

  11. Kyosaki is a good motivator and has some good ideas. But like any ideas you must do your research. I’ve found real estate to be a mixed bag. Yes, you can buy rental property if you have enough of a down payment to avoid PMI and a higher interest rate. And it will pay the mortgage if you can find “decent” renters for the rent that the area will support. Not sure I agree with his outlook on mutual funds yet but due to his comments I’m beginning to research what I have.

  12. Hey, I like your blog (so far, heh). But you’re suprised by the “Growth Trap”? I’m no financier, but I know that if I even ran my household by the principle of “ignore price & go for growth”, I’d be capital-S screwed.

  13. What are you people talking about? $5 a day, for 365 days a year for 30 years still comes out to just under $55k. Anyway, who would even drink $5 cups of latte every single day for 30 years? No one. That’s ridiculous! In fact, most people probably wouldn’t spend more than $1200 a year on coffee. You could save a lot of money by not buying a lot of things: haircuts, clothing, vacations, dining out, alcohol, etc…, but the point is to LIVE and be happy, not plan your finances to the penny for 30 years. Jesus!

  14. Glad to find some comments on Kyosaki’s books– I have read a number of them (though NOT the new one with Trump), and have some thoughts…

    The GOOD: his book changed my thinking on “financial freedom”, for sure– I have an extremely well-paid job, but now realize that I’m “free” to go to work every day like most other people… his book certainly got me to begin investing while I’m still young (late 30′s). So I give it an ‘A’ for motivation.

    The Not so good– Kyosaki pitches real estate very, very hard, (for tax advantages and other reasons). Yet if you read through enough of his books he eventually admits that being a landlord isn’t exactly a “plum” job, until you can hire a full-time property manager… which requires a LOT of rental income. More generally, he pitches the vague notion that “jobs are for losers” continually, and that “everyone can be a Bill Gates/Michael Dell/etc.”. This seems to fail the most basic logic test (for instance, in Gate’s case, there were 50,000+ people working on Windows Vista alone… how could he be where he is if someone didn’t have a “job”?!)

    The UGLY: he outright contradicts himself at times; specifically, in one book he says that his ‘Rich’ Dad was “very religious”, and in another, that the ‘Rich’ Dad was “not religious”… this may be why some think the whole “Rich Dad” thing is fiction.

  15. Kara,

    Love your post!

    Have you ever heard about something called the “time value of money”? Most people never have. It’s not something covered in most areas of study.

    It’s not just 30 times $1825. I once thought that too. $1825 each year (future value of an annuity table using 5%) grows into $121,250 in 30 years. (link below)

    The $5 per day can be anything… wasting electricity or whatever. The point these guys are driving at is what little avoidable expenses can add up to over a lifetime.

    I saved little amounts over 30 years of work taking lunches etc, retired and bought a sailboat with the money I saved.

    Different people have different definitions of living and being happy.

    Hope this helps somewhat.

    CM

    http://learningforlife.fsu.edu/course/fp101/FutureValueAnnuity.htm

  16. Miller put an inanimate 5 months pregnant toy. Following her shirt to relax her ass literally.