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What do you think of the "Die Broke" philosophy of personal finance?

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What do you think of the "Die Broke" philosophy of personal finance?

Old 07-17-06, 10:37 AM
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What do you think of the "Die Broke" philosophy of personal finance?

Please don't tell me this should go under book reviews. I've seen a number of references to Dave Ramsey's personal finance advice here and thought it might be interesting to get people's opinions on another author's ideas.

http://www.thirdage.com/money/personal/diebroke/

The book is called "Die Broke" and was written by Stephen Pollan and Mark Levine.

I'm not soliciting opinions on the book -- just on the ideas.

Here's the "Die Broke" philosophy in a nutshell:

1. Quit Today: Meaning not to literally quit your job, but to stop thinking of yourself as an employee and start thinking of yourself as a free agent. Don't be a company loyalist -- always keep your resume updated and be ready to seek a better opportunity if one arises.

2. Pay Cash: Only borrow for house and car purchases. Get rid of credit cards, don't use ATMs, pay cash as much as possible.

3. Don't Retire: Retirement is an outmoded concept that only worked for one generation -- basically, the baby boomers' parents -- and now that there will not be enough workers to keep Social Security afloat, the idea of retiring at 65 should become a thing of the past. Instead, people should plan to work for as long as possible, perhaps part-time in their later years, retiring only when they are physically unable to continue working.

4. Die Broke: Rather than being focused on leaving an inheritance for children, people should use their money to make their own lives better while they are here.

The reviews at amazon.com are mixed. Some seem to think this book is nothing but an apologia for people who haven't bothered with retirement saving, but I can't agree. I saw my dad retire at 56 (forced to by company downsizing) and while I'm glad he was there to care for my mother in her final years, I know he would have wanted to work for at least 10-15 more years than he did. My favorite uncle still works full-time at 71 and has no plans to retire even though he's financially comfortable. Another uncle who’s 74 retired at 65, but eventually took a job at WalMart just so he won’t be bored out of his mind (he was also worried about running out of money). In my last relationship, my “in-laws” retired in their early 60s from lucrative union jobs and since they had the money to travel, they did; but now that they’re approaching their 80s and ‘get around’ less, they basically sit around watching TV all the time. What a way to spend 20 years of your life … no thanks.

I'm saving as much as I can manage in my 403(b) (the nonprofit version of a 401(k)), but I doubt it will ever be enough to retire comfortably anyway. If I were making great money and planned to travel a lot (and could afford to), I guess I could see retiring, but as it is I’m probably going to be fighting my cats for their kibble unless I wait a good long time. This seems to me an issue that’s colored by what kind of work people do and how much they earn, but I could be wrong.

Any thoughts?
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Old 07-17-06, 10:43 AM
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a friend of mine liked this book. I agree with much of it.

Some of the most miserable people I know have tons of money saved.
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Old 07-17-06, 10:45 AM
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Originally Posted by Vibiana

2. Pay Cash: Only borrow for house and car purchases. Get rid of credit cards, don't use ATMs, pay cash as much as possible.

I don't get it. I use ATMs for cash. How do I pay cash and not use ATMs? Am I to carry around all the cash I own in a briefcase?
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Old 07-17-06, 10:46 AM
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Originally Posted by Lunatikk
I don't get it. I use ATMs for cash. How do I pay cash and not use ATMs? Am I to carry around all the cash I own in a briefcase?
The idea of not using ATM cards is to help you ration your cash. If you have access to your cash through ATMs, you are more likely to run through it faster.
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Old 07-17-06, 10:46 AM
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Originally Posted by Lunatikk
I don't get it. I use ATMs for cash. How do I pay cash and not use ATMs? Am I to carry around all the cash I own in a briefcase?
noo do what the mafia boss does: Take about an inch or two of money out with you every day. Stash the suitcase at home in the oven.
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Old 07-17-06, 10:47 AM
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Originally Posted by Lunatikk
I don't get it. I use ATMs for cash. How do I pay cash and not use ATMs? Am I to carry around all the cash I own in a briefcase?
We used to go to these things called "tellers" with little slips of paper that acted as requests for money. Just make sure to use the slips provided by your bank. Otherwise, they'll think you're robbing the place.
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Old 07-17-06, 10:48 AM
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1. Agreed. Most companies are not loyal to their employees anymore, so the adverse is to be expected as well.

2. Agree with the borrowing part. Car and mortgage debt is the only debt I plan to have the rest of my life. Not sure why they say no-ATM's yet only want you to spend cash. Those 2 kind of go hand in hand.

3. I would retire at 40 if I could. Seems most in my generation are looking forward to retire as early as possible.

4. Mixed feelings. I think you should enjoy what you have, but spending for the sake of spending and not leaving anything for your kids is kind of silly. I know I will appreciate what my parents have left for me when they are gone and I am old enough to know what to do with it and not blow it like a teenager might do if they inherited money.
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Old 07-17-06, 10:49 AM
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Originally Posted by Tracer Bullet
We used to go to these things called "tellers" with little slips of paper that acted as requests for money. Just make sure to use the slips provided by your bank. Otherwise, they'll think you're robbing the place.
Yeah who has time to go to a bank every time you need a little cash.
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Old 07-17-06, 10:50 AM
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I plan to retire with enough money to do what I want. That seems preferable to working forever.
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Old 07-17-06, 10:55 AM
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Originally Posted by kvrdave
I plan to retire with enough money to do what I want. That seems preferable to working forever.
Thats an old world mentality

See the trick is to find a way to get paid for doing what you want instead.

Ive managed to get pretty close to that so far.
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Old 07-17-06, 10:55 AM
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I hate the idea of working until I die. I plan to relax and do what I want while I can still enjoy it (i.e. physically able)
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Old 07-17-06, 10:56 AM
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Originally Posted by Lunatikk
Yeah who has time to go to a bank every time you need a little cash.
Retired people

PARADOX!!!!
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Old 07-17-06, 10:58 AM
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1. Good suggestion, although not really earth-shattering.

2. This is one of those "Personal Finance for Morans" suggestions. If you find yourself incapable or managing your money to a budget or paying off your credit cards monthly, then sure, get rid of them. If you can manage your money, credit cards are a convenient way to float 30 days of expenses cost-free. You can even use cards that have rewards or rebates to lower your total expenses.

3. Okay, sure. I don't see how this is a personal finance suggestion, though. Plan to work? Are they suggesting you shouldn't bother saving for retirement? For what purpose?

4. Okay, sure. That's a matter of personal values, however. By the same logic people shouldn't save for their children's college tuition. How is that a personal finance suggestion?
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Old 07-17-06, 10:59 AM
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1. As a freelancer I'm all over the place any way and changing my work outlook on an ongoing basis, so I guess I live by this one at this point.

2. I have a spreadsheet that always tells me how much "real" money I actually have after all debt and bills are paid off. I pay off my credit cards in full every month. I guess this is almost like paying cash (I have money before I spend it) but not to the extreme nature they suggest. I like my method better as I find cash even easier to spend, as oposed to using a credit card and manually entering it into my spreadsheet and being able to review where my money actually goes.

3. I'll retire when I'm good and ready, but you can bet I'll always have my hands in something any way. So I agree to an extent, though I would say "have an active retirement" that includes working where you ought to be working.

4. Yeah, I doubt I'll ever embrace the "die broke" philosophy. I'd sooner go for "live broke" than "die broke."

To sum things up: Sorry, Stephen Pollan and Mark Levine... while I appreciate your thoughts, I think I can figure this one out on my own.
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Old 07-17-06, 10:59 AM
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When you retire (in the traditional sense) you slow down and stop laboring. This subconsciously prepares the body to die.

There are statistics that show most people die shortly after retirement most likely because of that reason.
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Old 07-17-06, 11:03 AM
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Originally Posted by Duran
1. Good suggestion, although not really earth-shattering.

2. This is one of those "Personal Finance for Morans" suggestions. If you find yourself incapable or managing your money to a budget or paying off your credit cards monthly, then sure, get rid of them. If you can manage your money, credit cards are a convenient way to float 30 days of expenses cost-free. You can even use cards that have rewards or rebates to lower your total expenses.

3. Okay, sure. I don't see how this is a personal finance suggestion, though. Plan to work? Are they suggesting you shouldn't bother saving for retirement? For what purpose?

4. Okay, sure. That's a matter of personal values, however. By the same logic people shouldn't save for their children's college tuition. How is that a personal finance suggestion?

WRT #2 & 3:

The way I'm interpreting the book, the author believes that by paying cash for everything, you will be more prudent in your spending. I guess his philosophy is that if you're going to pay off your cards every month anyway, you might as well pay cash? I don't know.

Also, he isn't saying NOT to save for retirement -- in fact, he advises investing the maximum allowable amount in mutual funds and an annuity so that when you get "up there" in age, you don't have to work full time. He just doesn't think people should plan to retire at 65.
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Old 07-17-06, 11:05 AM
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Originally Posted by Save Ferris
Thats an old world mentality

See the trick is to find a way to get paid for doing what you want instead.

Ive managed to get pretty close to that so far.
That's one trick, and I agree and do the same. However, I think a preferable trick to find investments that replace your income by the time you want to retire. You can still work if you enjoy it, but you can also do whatever you want as your income is secure.
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Old 07-17-06, 11:10 AM
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Vibiana

2. Pay Cash: Only borrow for house and car purchases. Get rid of credit cards, don't use ATMs, pay cash as much as possible.
Idiotic. Truly. Not only do credit cards offer incentives that equate to FREE MONEY, but you need good credit to "borrow for house and car purchases" or at least to get decent rates. Paying cash for everything is just wasting money.

Vibiana

4. Die Broke: Rather than being focused on leaving an inheritance for children, people should use their money to make their own lives better while they are here.
Selfish and short-sighted. My parents had an inheritance they never used. I have an inheritance I'll never use, and so will my children. A financial "safety net" is one of the best gifts you can give to the next generation. I have the freedom to do countless things and the opportunities to make MORE MONEY because I have a safety net I'll never need. It takes money to make money, and the closer you are to "just getting by", the more difficult it is to create wealth. An inheritance is not just extra money; it is empowerment to increase your personal wealth independent of that inheritance. I'll take the one I received, add to it, and pass it down the line, taking comfort that not only am I helping the next generation as I was helped before, but that I improved my own life substantially just from having that unused safety net. It's win-win(-win).

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Old 07-17-06, 11:12 AM
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Originally Posted by kvrdave
You can still work if you enjoy it, but you can also do whatever you want as your income is secure.
I guess it depends on what 'whatever you want' means.
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Old 07-17-06, 11:14 AM
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Vacation whenever you want. Buy a new car every two years and not worry about it, etc.
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Old 07-17-06, 11:19 AM
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There is more to life than working/earning money.

I can't wait to retire, and I like das, I plan on leaving a nice inheritance to my children. My dad OTOH wants to die broke. He wants to make sure he spends his last penny the day he dies.

To each his own, but I like having a large savings/low bills because, like das with his inheritance, to me it gives me the freedom from finance stress.
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Old 07-17-06, 11:20 AM
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To sum things up: Sorry, Stephen Pollan and Mark Levine... while I appreciate your thoughts, I think I can figure this one out on my own.
Books like these aren't for people like you.

I'm thinking of writing my own self-help book that covers both financial advice and weight loss. It's called, Don't Buy Shit You Can't Afford, and Stop Eating So Much Fucking Food: 2 Steps to a Better You. It's mostly pictures.

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Old 07-17-06, 11:20 AM
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Originally Posted by das Monkey
Selfish and short-sighted. My parents had an inheritance they never used. I have an inheritance I'll never use, and so will my children.
Money you never use is money lost. I can have a bajillion dollars in a swiss bank account and for what? So in case the company fires me I can 'borrow from it' to pay my mortgage??

sometimes maintaining a 'safety net' is more trouble than its worth. Maybe its better to be self made and not need a net than to try to eliminate all financial suffering from your life. Because eventually down the line, some Das Monkey heir will have no idea what the value of a buck is--because theres a safety net.
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Old 07-17-06, 11:21 AM
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I like das
Aww ... I like you too.

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Old 07-17-06, 11:24 AM
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Originally Posted by Save Ferris
Money you never use is money lost. I can have a bajillion dollars in a swiss bank account and for what? So in case the company fires me I can 'borrow from it' to pay my mortgage??
Money never used can buy security.
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