This past week, while I was traveling in Austin, to look at apartments, I used the time to get the book read. The time on the plan, even though short jaunts was time for me to relax and just enjoy a good book.
Which I can say, that I really did enjoy from the very first paragraph. That first paragraph said in just a few words, what I have been saying on this blog since its first inception.
Although the idea of selling high-end merchandise to middle and upper-middle income people has been around for some time, Madison Avenue and it's marketing gurus have managed to foist the idea that everyone deserves everything imaginable. All that they have to do is carry the right card. The card magically provides the want-to-be rich with spending power; and suggest that they are independent, virle, sexy and just plain cool. Spending power relies on nothing more then using credit to buy whatever you want. Hyping the idea of spending power simply encourages you to buy higher-end goods and services than you need.
We all should know, and regular readers do know that I think Madison Avenue, not to mention the attitudes of most Americans, is ludicrous. In fact the second paragraph stated,
The credit industry has created a false reality.
The thing is, it's trying to keep up with the Jones'. A very dangerous practice particularly if you can't afford it. As Thomas Jefferson said,
Never spend your money before you have earned it.
Good advice from this countries third President, advice I wish even our leaders in today's Washington would heed. But, lets not get into politics here today. This book focuses on Economics, but personal economics, rather then national or international. Although in some ways, the lines between the three blur. As the author states, every dollar you earn is an allocatable resource that you must decide how to spend (or save).
As such, he goes through the various aspects of your personal economics. He covers everything from Basic Economics (part 1) to Debt (part 2) to Taxes (part 3) to the Basics of Real Estate (part 4) and Investments (part 5).
He seems to teach a lot of the same ideas as Dave Ramsey, except for on glaring exception. That being on the issue of credit cards, Eaton tells his readers, simply to refuse to carry a balance on credit cards. I'm sorry but that seems to go against the Thomas Jefferson quote (cited above) that he (Eaton) placed in the beginning of Chapter 1, of his book. If you are paying with credit, instead of saved money, then you are spending it before you earn it, even if you pay it off at the end of the month.
However, the rest of his message seems to very close to Dave Ramsey and John Cummuta, who tell us to cut up our credit cards and get rid of debt.
- Start Tax Advantaged Retirement Accounts Now (40k, 403b, Thrift Savings plan, etc).
- Buy a moderate Home.
- Refuse to carry a balance on credit cards.
- Accelerate and pay off student Loan Debt Early.
- Purchase additional Investment Assets.
The book (Personal Capital:Foundational Concepts of Capitalism by J. L. Eaton) was very interesting and one that I will certainly be reading again. I encourage each and everyone of you reading my words to read this book and apply it to your financial lives.
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go ahead share your thoughts with me now, my ears are open. I'm always eager to hear what you think.
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