#alphamindset #why_didn't_they_teach_me_this_in_school #carysiegel

Cary Siegel went to an excellent high school and college, then graduated from a top business school with a finance concentration. Next, he learned what he ACTUALLY needed to know to manage his personal finances. Why Didn’t They Teach Me This in School? is the book he wrote to share his lessons learned, first with his five children, then with others.

Subtitled “99 Personal Money Management Principles to Live By,” Siegel’s book has become a best-selling graduation gift for good reason. It covers topics such as budgeting, spending, credit cards, investing, mortgages, insurance, and much more in plain English. It’s full of practical, real-world wisdom and tips that, unfortunately, you probably didn’t learn in school either!

After my son received a thoughtful pre-graduation gift of Cary Siegel’s book as a college student, I read the book and jotted down some additional thoughts, which are made public here. After helping people in all 50 states with their personal finances for the last 30+ years using Prosperity Economics philosophy, these distinctions may provide a different perspective.

Siegel says in the “Caveat to All” at the start of the book, “This is one man’s perspective that he is giving to his children… Hopefully, it will help others think about their own personal money management.” And with that, I’ll contribute my own perspective, shared with my son and now beyond, in the hopes that my distinctions added to Siegel’s will provide extra value to an already worthwhile personal finance primer.

First off, Principle 8: “Spend Just One Hour Each Week Learning about Personal Finance,” is very astute guidance. Even if you are of the camp that thinks “money does not matter,” in order to live on this earth, we do use money and so we might as well learn a bit about it. Furthermore, you’ll want to be a lifelong learner and this is a great subject to start with.

However, I disagree with Principle 36, “It’s OK to Overpay the IRS Over the Course of a Year.” This is giving the United States government an interest-free loan for 18 months! You overpay in January of 2018, you don’t see that refund until after April 2019. It is SO much more efficient to work with the human resource department of your employer to get your withholdings as close as possible to what you actually owe. Or if you are an entrepreneur and paying taxes quarterly, work with your bookkeeper or CPA to estimate your taxes.

Siegel calls it “forced savings,” but overpaying the IRS is a poor substitute for actually saving. Personally, I’d rather keep my money working for me and building my savings, knowing I’ll have to pay some taxes once I file my return!

I also philosophically disagree with Principle 41, “Negotiate Everything.” I’ve learned there are two perspectives one can have in life: Scarcity and Abundance. If you “leave some money on the table” with an abundant attitude in your dealings with businesses, there tends to be more good that comes from that type of relationship than forcing every last penny out of every relationship in a scarcity-minded approach.

Siegel suggests it’s worth it to “look cheap” or “feel rude” if it saves you a lot of money over a lifetime, but I suggest that when you behave cheaply or rudely, it causes losses in other areas that you can’t measure. (Although it’s one thing to negotiate a used car and quite another to negotiate “everything.”)

Principle 43, “Debt Is Bad” forgets the financial fact that your own money has a cost. This principle which is closely related to Principle 50, “Understand the Time Value of Money,” is often forgotten in personal finance discussions. Siegel wisely included Principle 50, and while I agree debt (especially unsecured debt like credit cards) can be bad, it is important to understand and measure your opportunity cost! Should you rent forever to avoid a mortgage or walk three hours a day to avoid a car loan?
We must analyze each financial decision such as the decision to take on debt by looking at the alternative. Test the assumption that “Debt is bad” with the question, “Compared to what?” For example, if you have a safe investment that pays you 7% and you can get a car loan that costs you 3% and you have $25,000 to work with, you are much better putting the money into the investment and taking out the car loan. Workbook question: What is the spread and what is the profit on the above scenario? (Hint, you’ll need a financial calculator to figure it out.)
We must analyze each financial decision such as the decision to take on debt by looking at the alternative.
No.https://youtu.be/gITefglrIfo