The 10 Commandments of Money: Survive and Thrive in the New Economy, now available in paperback, is online financial guru Liz Weston’s guide to building economic security in today’s post real estate bubble environment. It acknowledges that we live in a new world where what had been standard financial advice in the past is no longer valid and gives commonsense advice about the strategies and actions that offer the best opportunity for the good life.
Her advice seems practical, although it isn’t necessarily simple. More often than not it involves either a lot of homework for the individual or the help of a professional. Still, there are steps an ordinary person can take and, if one is willing to put in the time and the effort, Weston’s “10 Commandments” would appear to offer readers a good shot at building and preserving the kind of nest egg that is part and parcel of the American dream.
After a short introduction in which she points out the failures of the past, the book is divided into ten chapters, each explaining in some detail the best way to handle finances as we move forward. Her advice isn’t necessarily original, rather it is often a compendium of strategies she has collected and sometimes modified from a variety of sources. So for example, in the first chapter where she discusses creating a budget that will work in the “real world,” she uses as her base the work of Harvard University’s Elizabeth Warren. Later when she talks about buying and selling real estate, she refers to the work of Ilyce Glink. She is always careful to acknowledge the sources of her ideas both in individual chapters and in an appendix which points to them and others for further study.
Among the topics she discusses are budgeting, credit, retirement, insurance, and education. She introduces each chapter with a statement about what had been conventional wisdom, a statement about how that wisdom had changed during the bubble economy, and what the new rules should be. On debt, for example, the old rule: “All debt is bad. Pay it off as fast as possible.” During the bubble: there is no need to worry about paying off debt; there are better things you can do with your money. The new commandment: pay off bad debt, use good debt. Her basic thesis is that when debt is inescapable, as it seems to be for most of us, it is important to recognize that not all debt is equal. Some debts are more expensive than others. Some debts come with more dire consequences for failure to make payments. Common sense then dictates which debts to pay off as quickly as possible and which to keep in abeyance.
This is the kind of practical wisdom she dispenses throughout the book. She points out the importance of early retirement saving by illustrating how contributions appreciate over the years. She explains the importance of higher education, but points out that it is not necessary to buy more education than you need to meet your goals. She guides readers through the morass of student loans, bankruptcy laws, mortgage options, insurance, and even cell phone plans. Although at times she seems to be repeating herself, since there is a good deal of overlap in some of the chapters, her writing is always clear and easy to understand.
Each chapter ends with a list of actions readers can take to implement their goals, although some of her advice seems easier to follow than others. “Exhaust federal student loans before seeking private education loans,” she advises at the end of the chapter of education. She has already explained the advantages of federal loans in the meat of the chapter, so it is absolutely clear why she makes this recommendation. On the other hand after explaining about the necessity for communication in her chapter about marriage, she points out that when conflicts arise, it is the problem that needs to be attacked, not the marriage partner. Good advice, although sometimes human nature gets in the way.
Of course, in the end, there are no rules that will work for everyone. Generalizations are dangerous. Individuals must evaluate each and every one of these commandments and apply them with care to their own particular situation. Besides, as this book demonstrates, yesterday’s truisms may turn out to be today’s fallacies.