Die Broke: A Radical Four-Part Financial Plan (by Stephan Pollan)

 

This book was recommended to me by a friend over lunch one day.  When he told me the title, I had the same reaction you probably did – Why would I want to be broke right until the time I die?

 

But don’t jump to conclusions – the book isn’t about living broke, its about living well, by avoiding the trap of scrimping and saving to pass on an estate to your children after you die. 

 

Here are the four rules Pollan promulgates: Quit your job, pay cash, don’t retire, and die broke.

 

Quit your job means quit expecting a company to look out for your best interests in return for your loyalty as an employee. Realize that you must maximize your own lifestyle, not expect your employer to do so.  That doesn’t necessarily mean handing in your resignation, but it might mean that you quit knocking yourself out to climb the corporate ladder, and figure out what it really is you want out of life, and how to go about getting it.  It might mean finding a job that will help you build wealth faster, or simply limiting how much time you put into your current job to make more time for other things that are important to you.

 

One way to increase your wealth is to spend less.  Pollan suggests you would spend a lot less if you start paying cash for everything.  Cut up all but one of your credit cards, and put that one in a safe place, only to be used for true emergencies.  Then, cut up your ATM and debit cards also.  When you get paid, go to a real bank, to a live teller, and get out the amount of cash you have budgeted for the next 2 weeks (or however long it is until your next payday).  When the cash is gone, quit spending!  The harder you make it to spend your money, the less you will spend.

 

Then Pollan talks about retirement.  Why should we quit working at age 65 and expect to live the rest of our lives on what we have saved until then?  Quit planning on retiring at age 65, especially if you are doing work you enjoy.  This concept alone took a huge weight off my 50-something shoulders. 

 

What do you do when you can’t work anymore?  How do you make sure you don’t outlive your money?  How do you make sure you have an estate left to pass on to your children when you die?   Well, Pollan rejects the idea that you should plan on passing an estate to your children after your death.  When you get to the age of 65 or 70 or 75, he suggests, take the wealth you have acquired and use it to transfer the risk of outliving your wealth to an insurance company, through a reverse mortgage on your house and a joint annuity on the life of you and your spouse.  Having provided for a monthly income that will meet your needs and sustain you until the time of your death, take the rest of your savings (if there are any left) and pass them on to your heirs while you are alive and you can enjoy sharing it with them!

 

Pollan’s book made me rethink a lot of my ideas about work and about retirement planning. It took a huge psychological load off my shoulders, and showed me concrete things I can do now to enjoy life more now and for the rest of my life.  

 

 

 

The Four Hour Work Week: Escape 9-5, Live Anywhere, and Join the New Rich (by Timothy Ferriss)

 

Why wait until you are too old to enjoy it to retire and travel the world? That’s the theme of The Four Hour Work Week, recommended to me by the same friend who recommended Die Broke.

 

In this book, Ferriss relates how he went from working 15 hours a day, 6 or 7 days a week, to maintain his internet business, to working just 4 hours a week, while growing his business and traveling around the world.  Rather than waiting until he is burned out from working 50 weeks a year for 40 or more years to retire and enjoy life, Ferriss shows how he has arranged his life so he can take one month of “mini-retirement” for every two months he works.

 

Did you know that the average worker spends 24% of his time just switching from one task to another?  Ferriss teaches you how to control interruptions, how to reduce the amount of time you spend responding to email and voice mail – in short, how to get your job done in much less time.  He also teaches you techniques for safeguarding your time, so that the time you just freed up by doing your job in half the time, doesn’t simply result in your boss giving you more to do.

 

And what does he suggest you do with that time you have freed up?  One option is to begin an online business.  This book is packed with concrete information on how to set up an online business, including some very innovative and original (at least to me) ways of creating an income-producing business that doesn’t depend on your babysitting it every day.  Ferriss teaches you how he uses virtual private assistants and outsourcing to leverage his time. 

 

I highly recommend this book for anyone who is serious about taking control of their life.  Read this one after reading Die Broke – if it doesn’t change the way you think about retirement and financial planning, then I venture to suggest you’re already dead, you just haven’t realized it yet!