6 Books That You Need to Read

The following is a list of the 6 books that have influenced me the most in my life.  There are no books on economic theory on this list.  The Bible is not on the list, but it would be #1 if it was.  As a Christian, the fact that the Bible is the most important book you can read is implied.

1. Die Broke by Stephen M. Pollan (1997)

Die Broke

This is the book that really changed my outlook on how I want to live my life.  The book is divided into two sections: The Die Broke Philosophy and Putting Theory Into Practice.

The Die Broke Philosophy is that the old rules no longer apply, so you shouldn’t bother following them.  In fact, following the old rules will cause you to waste your life doing things that you aren’t interested in.  These old rules are:

  • Work hard at the same job until you retire.
  • Real estate is a great investment.
  • Credit is abundant and a great tool for getting what you want.
  • Retirement at or before age 65 is both desirable and possible.

The facts are that jobs are now temporary; real estate isn’t the path to wealth and financial security that it once was; the use of credit can destroy you financially; and retirement is now impossible.

Mr. Pollan’s recommendations?

  1. Quit Today.  Your employers now see you as a liability, not an asset.  You need to change your mindset from that of an employee to that of a free agent, just as professional athletes do.
  2. Pay Cash.  Buying things on credit can lead to financial ruin.  So just don’t do it.
  3. Don’t Retire.  Retirement isn’t worth it.  In fact, scientists have found that retirement can kill you.  With the state of the federal government’s finances, the destruction of the housing market and the corresponding drop in the value of people’s homes houses, and the implementation of the Patient Protection and Affordable Care Act, you aren’t going to be able to retire the way your parent and grandparents did anyway.  So don’t bother planning to retire.
  4. Die Broke.  This may sound horrible.  After all, in the Bible we read that “A good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous.” (Proverbs 13:22).  Researchers (like Thomas Stanley below) have found evidence that leaving a large inheritance can destroy your family.  I have seen it happen to acquaintances and to my family as well.  Leaving a large sum of money to your children and grandchildren can degrade their work ethic as well.

The section of the book titled Putting Theory Into Practice is structured as a glossary of topics ranging from accountants to wills.  The content in this section includes recommendations on how to structure your financial affairs to follow the Die Broke Philosophy.

2. The Millionaire Mind by Thomas J. Stanley (2000)

The Millionaire Mind

Dr. Thomas J. Stanley is a former professor of marketing.  His main area of research was analyzing how the affluent differ from those who are not affluent.  The Millionaire Mind presents a summary of his research, and explores how millionaires think and act differently than non-millionaires.  Dr. Stanley presents his statistical analysis of factors that contribute to financial success.  The results are surprising, in that the data shows that there is a big difference between the popular idea of how millionaires act and how they actually live.  Here are a few examples:

  • Most millionaires are not 4.0 GPA college graduates.
  • Most millionaires are self-employed and own their own businesses.
  • Most millionaires don’t live in large, palatial palaces.  They pick a modest house in a good section of town.
  • The average millionaire drives a Ford F150 pickup.  If they have a car, it is more likely to be a Toyota or Honda than a Mercedes or BMW.
  • Most millionaires don’t choose a spouse based on looks or how much money they have (or will inherit).
  • Most millionaires eat out at such ritzy restaurants as McDonalds or Burger King.  They aren’t eating caviar and pate’ and drinking champagne every day.

In my opinion, the section on the economic productivity of marriage and the importance of choosing the right spouse are indispensable.  It’s not easy to become a millionaire, , but this book gives you real world examples of how others have gotten there.  And no, it wasn’t by winning the lottery.

3. Investment Biker (1994) and 4. Adventure Capitalist (2003) by Jim Rogers

Investment Biker

Adventure Capitalist

Technically, there are 2 books.  But they are two parts of the same story: Jim Rogers travels around the world, first on a motorcycle and later in a custom-built Mercedes, in order to check out the investment opportunities in other countries.

Mr. Rogers was raised in Demopolis, Alabama.  He began his entrepreneurial pursuits when he was 5 years old.  Through hard work, he was able to get scholarships to both Yale and Oxford University, where he studied economics and philosophy.  Mr. Rogers later went to work began working for George Soros in 1968 as the junior partner of the Quantum Fund.  He retired in 1980, a billionaire at the age of 37.

These books offer the reader insights into both the different cultures that Rogers travels through, as well as Rogers’ observations on how well the economies he passes through work or don’t work.  These books provide the reader with real-world proof that free markets are superior to planned economies.  Investment Biker follows Rogers as he gets robbed by his personal assistant, while in Adventure Capitalist Jim deals with the death of his father and marries his traveling companion.

5. Rich Dad, Poor Dad by Robert Kiyosaki (1997)

Rich Dad, Poor Dad

This book is written as a series of stories about Mr. Kiyosaki’s life when he was a child growing up.  He tells how he had 2 dads: the father of his best friend (Rich Dad) and his own dad (Poor Dad).  Rich Dad was a businessman, while Poor Dad was an academic and a government bureaucrat.

Mr. Kiyosaki uses his stories to illustrate the different mindset of his Rich Dad and his Poor Dad.  Poor Dad wants him to go to school and get a good job (the common wisdom), while Rich Dad wants him to start his own business (the Die Broke plan).

These stories also help Mr. Kiyosaki explain ‘financial literacy’ and how to manage money.  He stresses the concepts of assets, liabilities, and cash flow.  He also discusses Financial IQ: understanding accounting, investing, markets, and the law as it pertains to income and taxation.

The one area where I disagree with Mr. Kiyosaki is with his recommendation that readers become involved in Multi-Level Marketing/Network Marketing.  These terms are code words designed to obscure the reality that many of these marketing programs are nothing more than pyramid schemes.

One of Mr. Kiyosaki’s companies filed for bankruptcy in 2012.  According to the linked website,

The company had been weighed down by a lawsuit filed by Learning Annex, one of Kiyosaki’s earliest backers who had helped arrange his public speaking events earlier on, Forbes reported.

Mike Sullivan, CEO of Kiyosaki’s Rich Dad Co., told the Post, “The dealings we had with Learning Annex were with a company that hasn’t been in business for a number of years . . . I am not surprised Learning Annex is upset and angry, the money doesn’t exist in that company, and we can’t bring money out of the group.

“Robert and [wife] Kim are not paying out of personal assets. We have a few million dollars in this company, but not 16 or 20. I can’t do anything about a $20 million judgment . . . We got hit for what we think is a completely outlandish figure.”

Rich Global LLC’s liabilities are nearly $26 million with assets of $1.8 million, according to its bankruptcy filing. Its biggest creditor is the Learning Annex due to its $23.7 million legal claim.

6. The 4-hour Workweek by Tim Ferriss (2007)

the-4-hour-work-week-300x300

A fantastic book that describes how you can outsource almost everything you do and cut your working hours to the bare minimum.  Unfortunately, this will only work if you are Tim Ferriss (the scion of an elite, wealthy family.  Mr. Ferriss was educated at a boarding school and later received his bachelors degree from Princeton University).  Still, there are some very good recommendations in the book.

The 4-hour Workweek focuses on setting up a business that will generate income automatically.  The recommendations on how to do online research about the demand for your product are invaluable.  Mr. Ferriss also provides a long list of websites that are useful for setting up your business and website.

One warning: don’t actually expect to cut your workweek to 4 hours or less (unless you’re rich).  It is more likely that the number of hours you work will increase, at least until your business takes off.

Conclusion

Reading these 6 books opened my mind to the possibility of escaping the world of cubicles and Office Space co-workers.  If you read them all, a few common themes emerge:

  • The old ways are gone.  The only one you can count on in the working world is yourself.
  • Retirement is a myth.
  • The best way to become wealthy is to start and run your own business.
  • You should work to minimize your living expenses.  Most of the things you buy are not necessary, and will impede your efforts to become independent and wealthy.

Read one of them, some of them, or all of them.  They may change your outlook too.

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Categories: Conspicuous Consumption, Debt, Good News Everyone!, Not Economics

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