Personal Finance Blog by Debit versus Credit

Scratch Beginnings

October 24, 2008 | Filed in: Friday Book Club | 3 comments

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It’s not every day that you get an opportunity to read and review a book before its publication.  You can imagine my delight when Adam Shepard, the author of Scratch Beginnings, contacted me and asked if I’d be interested in reading his book.  Now technically the book has been around for a couple of years now, as it was originally self-published, but now it’s been picked up by Collins to be published.  In fact since I’ve had the book it’s actually been published and you can now find it at your favorite bookstore or at Amazon.com.  You can also enter a contest that I’m holding where I’m giving away three signed copies of Scratch Beginnings.

Scratch Beginnings was a fun read.  It’s an Autobiography that sometimes makes you feel as if you are reading a journal.  For anyone who’s ever read their siblings or significant others journal you know how much fun this can be.  The plot is simple.  The author, Adam Shepard, is to undergo an experiment where he will move to a random city in the Southeast U.S. with nothing but $25 dollars, a sleeping bag, the clothes on his back and an extraordinarily strong will to succeed. His goal is to prove, or disprove, the notion that one can not rise above their situation. His secondary goals are to have $2,500 dollars in cash, a fully furnished apartment and a car that is in good working condition after the period of one year.

Criticism and Defense

The major criticism against this book is that the author is a white, educated male and therefore any such “experiments” are immediately flawed.  I think that we can safely brush aside the notion that just because Adam has a college degree the experiment is flawed.  He did a wonderful job of completely immersing himself in the experiment and never once did he reveal his formal education or any related qualifications while interacting with those around him.  It’d be foolish of me to pretend that white privilege is not in existence and that he had nothing to gain from being white, but I’m of the opinion that if it made any such difference it was not much at all.

The fact is that he was dedicated to his goals and he worked hard every single day to accomplish them.  Things weren’t ever easy for him, but he always pushed ahead knowing that he could make something out of himself no matter what life threw his way.

Wrapping it Up

What I enjoyed most about Scratch Beginnings was how real it seemed.  Of course being an Autobiography that’s how it’s supposed to be, but usually Autobiographies seem stuffy and often unrealistic.  Not Scratch Beginnings though.  Everything about this book screams reality, from the difficulties on the streets to the abrasive language often spoken by characters that you meet.  It likely won’t ever be listed on the NY Times Best Sellers list (due to its limited mass-market appeal), but you can be sure that it will be respected by all who read it for the sheer level of honesty and commitment that the author portrays.

Tags: Book Review, Friday Book Club, Homelessness, Poverty, Scratch Beginnings

The Automatic Millionaire: Chapter 8

August 22, 2008 | Filed in: Friday Book Club | 1 comment

Today’s Friday Book Club will feature Chapter 7 of The Automatic Millionaire and is entitled Make A Difference With Automatic Tithing.  In this short - and final - chapter David Bach makes an argument in favor of charitable giving.  We’ll start things off right again this week, with a quote (also quoted in The Automatic Millionaire) from Winston Churchill…

We make a living by what we earn - we make a life by what we give.

Before we go much further I have to admit that I’m a big proponent of charitable giving and philanthropy  (see Blog Action Day 2008: Poverty and A Charity I Recently Donated To).  I suppose this makes me a little biased toward this topic.  With that being said I’d like to get back to discussing the points that Mr. Bach is trying to get across in this chapter.

There Is More To Life Than Money

It’s true.  He said it.  In fact, he said exactly that.  There is more to life than money.  But… isn’t this book all about becoming a millionaire?  Isn’t the whole point that money is the ultimate?  Not exactly, at least not according to Mr. Bach (and I tend to agree).  As he points out in this book, “money will not give your life meaning.”  He instead points to the fact that by acquiring money we are allowing ourselves to feel something - acquiring money allows us to get things which may inspire a feeling within us.  Mr. Bach is under the impression that this same feeling can be acquired, but not so much by buying things with our money but rather by giving it away to those in need.  In fact he goes so far as to say that (essentially) we will feel the same feelings from starting to give tithes now that we will feel when we become millionaires.

How To Tithe

David doesn’t mention it in his book but one way you could give back to those less fortunate would be to spread your wealth around locally.  Honestly an even more fulfilling way of giving back to your community is by offering your time, which can often be more valuable than your money.  However David doesn’t focus on these topics at all.  Instead he chooses to reference charitable organizations.

An important point that David makes is that it’s not good to just hand your money out to some random organization who claims to be a “charity.”  Instead you should research and make sure that the charity you are donating to doesn’t pocket half of it in “administrative costs.”  A good charity has admin costs of around 25% or maybe even less.  Any more than 50% in administrative costs and you probably shouldn’t take a second look.  The idea is to take advantage of the wealth of knowledge out there on the internet and use it to choose some good charities.  I’ll list three of the websites that David mentions in his book right now.

1. www.justgive.org
2. www.give.org
3. www.guidestar.org

These are fantastic resources to use to research charitable organizations.  If you have any questions at all please let me know.  I’d be more than happy to answer them for you, and if I don’t know I will find out.

Tags: Charitable Giving, Friday Book Club, Philanthropy

The Automatic Millionaire: Chapter 7

August 1, 2008 | Filed in: Friday Book Club | 1 comment

Today’s Friday Book Club will feature Chapter 7 of The Automatic Millionaire and is entitled The Automatic Debt-Free Lifestyle. In this chapter David Bach focuses on debt and lists several reasons why it is usually a bad thing to have and why wealthy people most often will not be in debt.  I really appreciate the first sentence that he starts the chapter out with and I’ll quote it here for you.  It’ll be a great way to start this week’s Friday Book Club.

For most of us, debt can be a trap that forces us to work longer than we should have to.

What a great statement.  I know from first-hand experience (and David says he does as well in this chapter) that debt can literally trap you in this meaningless cycle of minimum monthly payments on credit cards and living literally paycheck to paycheck sometimes being forced to use your credit card just to live which of course usually negates any payments you might have made on your credit card in said month.  It’s a terribly depressing cycle and one that’s not always easy to get out of.  This much is true and is a sad reality for a large number of people in the world.  In fact for us in the U.S. of A it’s almost a way of life.

The Average American Family’s Credit Card Debt: $8,400

How’s that for a depressing statistic?  According to David we American’s have half a trillion dollars in credit card debt, which works out to be that $8,400 average number.  The question is… why?  Are we living above our means or are we literally just unable to survive without using our plastic?  I’m sure that there are many who will agree with the first answer and many who will agree with the second.  I’m inclined to think both ways… after all I’ve been in the second cycle, but I also can’t say that I didn’t at one point deserve the debt that I got myself into by purchasing things I didn’t need and couldn’t afford.

“Operation No More Debt”

So what do we do about it, David asks.  How can we fix this and get ourselves out of debt?  He lists five steps here which I’ll outline for you.  Of course I’d recommend picking up a copy of this book yourselves so you can read the full details.  It really is a motivational read.  Anyway moving on, here are the five steps.

1. Stop Digging: In other words, don’t take your credit cards shopping with you.
2. Renegotiate the Interest Rate on Your Debt: Call up your creditors and ask for a lower rate - if they don’t respond positively then threaten to transfer your balances to someone who will.
3. Pay For The Past, Pay For The Future: Don’t just pay down your debt, but pay yourself as well by moving money into a savings account or retirement account.  This will keep your attitude positive when your debt doesn’t dissipate as quickly as you’d like it to.
4. DOLP Your Debt Out of Existence: In other words if you can’t consolidate your credit card debt into one place then make a list of which one to pay off first and pay them off one by one.
5. Now Make It Automatic: This one’s easy.  Set up your credit card payments to pay automatically so you won’t have any say on if you’re paying extra this month or not.

That’s it for this week’s Friday Book Club.  This chapter has been one of my favorites because it applies so clearly to so many people.  Debt is a big problem in the U.S. and something that really needs to be reevaluated.  Remember that The Automatic Millionaire is not someone who carries debt.  See you next week!

Tags: credit cards, Debt, Friday Book Club

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