Jill Schlesinger, who used to work on Wall Street, now serves as a CBS News Business Analyst. Schlesinger knows her stuff as The Dumb Things Smart People Do With Their Money proves. Schlesinger addresses all the common financial pitfalls and problems people face. In her first chapter, “You Buy Financial Products That You Don’t Understand,” Schlesinger shows how plenty of Senior Citizens get ripped off by Reverse Mortgages and sketchy annuity schemes. The sales people baffle their potential clients with bullshit and then fleece them of their money for years!
I appreciated the Appendix: “Thirteen Smart Things Smart People Should Do.” The first smart thing is to read this book! GRADE: A
TABLE OF CONTENTS:
Author’s Note ix
Introduction xi
DUMB THING #1: You buy financial products that you don’t understand 3
DUMB THING #2: You take financial advice from the wrong people 21
DUMB THING #3: You make money more important than it is 39
DUMB THING #4: You take on too much college debt 58
DUMB THING #5: You buy a house when you should rent 80
DUMB THING #6: You take on too much risk 96
DUMB THING #7: You fail to protect your identity. 112
DUMB THING #8: You indulge too much during your early retirement years 125
DUMB THING #9: You saddle your kids with your own money issues 146
DUMB THING #10: You don’t plan for the care of your aging parents. 163
DUMB THING #11: You buy the wrong kinds of insurance, or none at all 182
DUMB THING #12: You don’t have a will 199
DUMB THING #13: You try to “time” the market 217
Appendix: Thirteen smart things smart people should do 233
Acknowledgments 237
Notes 239
Index 249
If I ever get any money to do stupid things with, I’ll check this out.
Dan, what about that big Tax Refund?
YOU DON’T HAVE A WILL! This is my particular soapbox and I tell everyone I know to make sure they have a legal will. I had a coworker who would say variations of “I’m not going to die” (well, buddy, you’ll be the first) and “I don’t have anything to leave” (he did). He died of a heart attack and his estate had to go through probate; his wife ended up moving in with their daughter and her family. I bang the drum on this one: have a will do that your assets go to who you want them to go to and so that your heirs will be protected from a long, drawn out probate.
I also advise everyone to have at least enough life insurance to cover your own funeral, plus have a living will for end-of-life decisions. None of us is getting any younger.
And on that cheery note, I’ll see myself out.
Deb, you are so right! Lawyers love it when people die without a will. Probate is never quick and the legal fees can skyrocket–especially if family members “contest” the Court’s division of the assets. All this costly confusion could be avoided by a will. When I worked for General Motors, their GM Legal Services would draw up a will for workers for FREE! Yet most workers at the GM Powertrain Plant never used that service.
Deb, not true. You are getting younger!
Hmm, reverse mortgage. Where have I heard that one?
We did investigate buying vs. renting, and it confirmed our inclination that renting was better for us.
We did indulge ourselves the year after Jackie retired, but always carefully. We started slowly – Atlantic City, then Washington, then Boston, then Niagara Falls (and North Tonawanda!), then Arizona for my father’s 80th birthday party, then Vegas to see Dave Barry at the AARP Convention (!), back to D. C. again, and closing out the year with Christmas in New Orleans. In January we drove to Florida for the first time (including Key West and Orlando), in April it was Las Vegas again and a trip to the Grand Canyon. Once we discovered that with all that travel, it hadn’t taken down our total AT ALL, we knew we were doing it right, and were able to go back to Washington, Boston, and Las Vegas, plus London in November.
We know people (as George does) who are clueless about money, don’t plan at all, spend too much, and end up needing to get another job to supplement their inadequate Social Security payments.
Jeff, the heartbreaking aspects of dealing with some of my former students was that they had no concept of saving. All they knew was spend, spend, spend. Of course, I taught MARKETING so I completely understand how they were brainwashed by billions of dollars of commercials and ads to buy something as soon as they got paid.
We know several former teachers who retired at 55 and blew through a lot of their money. Now, they’re approaching 70 and their fixed incomes can cover their expenses. I foresee a lot of poverty among older Americans in the years ahead.
Thank you, Jeff. If only my hip and my hair agreed!
I’ll also add: Make sure you update your will and life insurance policies after major life events. One of my cousin’s inherited his ex-wife’s estate and was the beneficiary of her life insurance policy because she (the ex-wife) had failed to update her important paperwork after the divorce. My cousin (who was remarried and living in another state by this time) used the unanticipated largesse to buy a house. As you can imagine, his ex-wife’s family was furious, but she never had updated her papers.
Sweet! I’d have been pissed too.
Jackie says we did go a little overboard that first year as we also bought a (used) car, but within a few months we were back on track. We have received inheritances from both sets of parents since, and her parents’ inheritance more than made up for what we spent that first year.
Jeff, Jill Schlesinger devotes a whole chapter in THE DUMB THINGS SMART PEOPLE DO WITH THEIR MONEY to the rent vs. own decision on housing. Diane’s best friend, who suffered that stroke around Thanksgiving and whose husband suffers from Parkinson’s, decided to sell their present house and build a custom “patio house.” I suggested they think about renting or buying a condo instead of shelling out a lot of money for new house. “But a lot of apartments and condos don’t allow dogs,” was their answer. So this couple is burning through their savings for this new house when they’ll probably need to move to an Assisted Living facility in five or six years. And that will cost mucho dinero!
Deb, when we had our wills drawn up, our attorney also provided Health Care proxies so if Diane and I were incapacitated, Patrick and Katie could make medical decisions for us. We know families split by medical decisions some or all the sons and daughters didn’t agree with. We’ve talked with Patrick and Katie so they know our wishes.
While others were taking luxurious vacations and traveling the world, I socked it away. I had savings, retirement, annuities (which are paying off handsomely now) and equity in a home. That all combined for a comfortable retirement. We track, with our financial planner, our “burn through”, and we’re doing just fine. We have a Family Estate Plan and living wills, everything is laid out: who get what and when in succession order. We don’t spend a lot, don’t buy a lot except necessities, are comfortable.
Rick, you and Barbara obviously handled your financial planning The Right Way. But, sadly, you’re the exception. As we saw during the Government Shutdown, many people live paycheck-to-paycheck and have little savings.
If I had wealth I’d worry! Poverty has its upside!
Bob, “You can’t be too rich or too thin” as Wallis Simpson said. She’s the American heiress for whom Great Britain’s King Edward abdicated his throne in 1936.
Oh, and one dumb thing I WON’T do is waste my money on books like this!
Bob, that’s what libraries are for.
Books like this–and there are dozens coming out every month, it seems–aren’t of use to me, even for free! Diet books, self-help books, financial advice books–just so much malarkey as far as I’m concerned! If they were any good we’d all be slim, well-adjusted, and wealthy!
Bob, you’re right: we’d all be slim, well-adjusted, and wealth…if we just took the Right Advice!