Financial book for 20 year old son

[A_Princess'_Daddy]

In fact there is a growing back lash on Dave from many in the investment world because they feel his advice borders on dangerous.

I totally agree with Crisi, op said her son is just starting out. So IMO what he needs to learn is how to use the tool of debt properly.

He needs to learn how to qualify for mortgages, how apr works, what are the traps to financing. He can't learn that imo if he follows the advice that all debt is bad. If my sons have a student loan, I want him to understand the cost of that money. Telling him that student loans are horrible ain't gonna help him.

A princess Daddy said it best. except I would change it to "money". Money is neither inherently good or evil. It is how you handle it. I want my kids to learn how to handle debt, how to invest money, how to save and spend. The same way I wanted them to learn how to drive a car.
I want them to learn how to drive safely, not the lesson that the way to stay safe is to not drive.

edited to add: I am neither a Dave Ramsey supporter or detractor. by the grace of god I've never needed his services. I think he is a good motivational person but in no way qualified to be a financial planner or investor. I totally applaud him for those he has helped.

Completely agree with this, I was merely responding to the poster on the subject of debt.

This is part of why I recommend the book Rich Dad, Poor Dad. It's by no means a perfect book, either, but it addresses the larger issues of what money, risk, assets, liability, leverage, equity, etc. mean in the context of a complete financial life. As one of my first accounting professors taught me, it's called a balance sheet for a reason.

 

[crisi]

Which is exactly why Dave Ramsey is so dangerous, in my opinion. Debt is neither inherently good nor bad. It is a tool, only, and like any tool it can be used for good things or bad. Most specifically, debt is a lever (which is where the term leverage comes from when it comes to finance) that can make things possible, but a person needs to know whether the thing they are leveraging is positive or negative. To not understand that, in my opinion, is deeply dangerous and creates a completely one-sided understanding of personal finance.

A real life example of leverage. I have a mortgage on my house. Right now it about $75,000 in debt. I paid year to date around $2900 in interest. Being in a high tax bracket, I'll get 32% of that from the federal government (and a little back from the state), meaning I'm out of pocket $1970 (or so).

I have it invested in a variety of dividend paying stocks that I buy when the dividend is around 5% (or higher) -mostly utility and energy companies, nothing really sexy - its a little old man portfolio - it doesn't tend to go up, it doesn't tend to go down, it just sits and acts as a little money machine (although due to timing, it actually has appreciated - yeah recession and lackluster recovery?). So on $75k, I make $3750 in dividends - not gains, just dividends. I net out at about $1780 a year in my pocket by using leverage. It isn't huge money, but its more money than I make doing surveys (which I also do a little of) - for WAY less effort or time. And I have $75k worth of assets to draw on if I need them, without running to the bank and taking out a mortgage on my house - its already taken out.

Ramsey would have me pay off my mortgage and forgo $1780 a year worth of free money. Because "debt is bad."

For a while we were mortgage free, it was nice to have the cash flow. But when we needed a second mortgage to buy a home for my brother in law, and then sold the house we bought when he passed on, I couldn't pass up the "historically low interest rates." Not when good companies are handing out 5% dividends.

 

[mom4graceandlogan]

Anything by Clark Howard. I began listening to him at 19 while in college in atlanta 20 years ago. He has a show on CNN headline news, www.clarkhoward.com, and many national radio syndicates. Dave Ramsey would have scared the hell out of me at 20 and put a negative taste in my mouth although I do know he helps many get out of debt and I like listening to Dave sometimes but to me that is too much for a 20 year old. I would have tuned him out. Clark Howard is a positive, good energy kind of inspiration. He will teach to avoid debt, when debt is appropriate and most important, he constantly talks about investing at a young age and teaching your kids about money. Clark even tells you to buy his book used or get it from the library, even though he won't make anything. And he will never ever accept a paid advertising job. Very unlike Dave Ramsey. He also never ever ever scolds a guest for a terrible decision, he only tries to help them move forward. He is really great and has great books, very easy reads. Check him out at clarkhoward.com. He is like your nerdy, super smart, funny uncle that you can't help but like. He does tremendous charity work and is very loved by much of atlanta.

 

[SuzanneSLO]

I really like Jonathan Clement's book: The Little Book of Mainstreet Money, 21 Simple Truths that Help Real People Make Real Money. He wrote a personal finance column for the WSJ for years. In Clements's usual style, it's easy to read, understandable, and helpful.

Some of my favorite truths from his book: Even the best investors need to be great savers and Aiming for average is the only sure way to win [in financial ivestments].

-- Suzanne

 

[eliza61]

A real life example of leverage. I have a mortgage on my house. Right now it about $75,000 in debt. I paid year to date around $2900 in interest. Being in a high tax bracket, I'll get 32% of that from the federal government (and a little back from the state), meaning I'm out of pocket $1970 (or so).

I have it invested in a variety of dividend paying stocks that I buy when the dividend is around 5% (or higher) -mostly utility and energy companies, nothing really sexy - its a little old man portfolio - it doesn't tend to go up, it doesn't tend to go down, it just sits and acts as a little money machine (although due to timing, it actually has appreciated - yeah recession and lackluster recovery?). So on $75k, I make $3750 in dividends - not gains, just dividends. I net out at about $1780 a year in my pocket by using leverage. It isn't huge money, but its more money than I make doing surveys (which I also do a little of) - for WAY less effort or time. And I have $75k worth of assets to draw on if I need them, without running to the bank and taking out a mortgage on my house - its already taken out.

Ramsey would have me pay off my mortgage and forgo $1780 a year worth of free money. Because "debt is bad."

For a while we were mortgage free, it was nice to have the cash flow. But when we needed a second mortgage to buy a home for my brother in law, and then sold the house we bought when he passed on, I couldn't pass up the "historically low interest rates." Not when good companies are handing out 5% dividends.

And that's the stuff I want my kids to learn. How to use financial tools to get the best deals and make sound decisions, not how to be afraid of money.

I'm moving back to Philly in two months, downsizing. I could liquidate some of my assets and purchase the new house with cash but this year my assets are hovering around 12% profit,(and I'm conservative because I think the year to date is around 19%) not about to do that with cheap money available. I got a mortgage for 4.12%. very easy principal, tax deductible interest and preserving my capital.

I guess it's what's in everyone's comfort zone. my goal is to do every thing possible to increase my net worth over the next 6 years before I retire. If that means using debt to do so, I'm comfortable with that.

LOL of course next year the dow might tank and I'll be eating these words of wisdom.

 

[sunshinecruise]

Wow, Thank you for all of the replies. He did read "Rich Dad, Poor Dad". I think that started him thinking about how he wants to handle his finances. He does not have any student loans yet (he is attending the local community college) but he may have student loans in his future.
I did see a list from Kiplinger's that recommended "The Wealthy Barber" and "Get a Financial Life: Personal Finance in Your Twenties and Thirties" by Beth Kobliner. I will look at those on Amazon as well as some of the other books mentioned here.
Taking a Dave Ramsey class might be interesting, but I don't think he will have time to do that between his classes and working.
Thanks again for all of the information.

 

[crisi]

LOL of course next year the dow might tank and I'll be eating these words of wisdom.

But you have six years for it to recover. You just might want to make sure you have a few years worth of mortgage payments set aside in cash (CDs, Treasury Bonds, whatever pays a little interest) as you near retirement if the house isn't going to be paid off. But next year, if it crashes next year, there is time for recovery before retirement.