This post is by staff writer Honey Smith.
There are many personal finance books out there, useful to people in all stages of personal finance. I have a lot to learn before reaching financial independence, and the editorial elves thought it would be useful if I shared some of what I learn with you. So for the foreseeable future, I will be reviewing one PF-related book per month. My first review was of “All Your Worth.”
This month, I’m reviewing “Debt is Slavery: and 9 Other Things I Wish My Dad Had Taught Me About Money” by Michael Mihalik (no relation to Joe Mihalic, author of “No More Harvard Debt“). Like “All Your Worth,” J.D. originally reviewed “Debt is Slavery” on GRS here. (Persnickety copyediting note from Ellen: We are lowercasing “is” in the title because that’s how it is styled on the book. But the rule is that verbs in titles are capitalized — even if it’s a two-letter verb.)
Next time, I’ll review something that’s never been covered on GRS. But I think I bought this book after I read J.D.’s original review and never actually read it myself. I wanted to rectify that situation. Additionally, like “All Your Worth,” I wanted to see whether the book was as useful today as when J.D. originally reviewed it.
Philosophy behind the book
Like many with an interest in personal finance (including J.D.), Mihalik made financial mistakes when he was younger. By the time he woke up and smelled the coffee finances at age 24, he owed over $27,000 but was only making $28,500 per year.
He wrote this book mainly because he wasn’t satisfied with the other resources that were available when he began his debt-payoff journey. Many books were really long, and he wanted to get started right away — not slog through an encyclopedia.
Additionally, he felt that many of the books on personal finance were just advertising. One of the 10 things he wished his dad had taught him was “Don’t let advertising brainwash you.” As a result, he wondered if he could trust authors who were trying to promote their other products.
As a result, “Debt is Slavery” is short. At 120 pages or so, it can be read in an afternoon. Additionally, Mihalik didn’t try to create a name/brand within the PF industry. He wrote this book and then faded from the limelight. While I do think there’s a place for established names, Mihalik successfully establishes his credibility as someone who’s not out to part you from your money.
What I didn’t like
There were a few things I didn’t like about the book. First, while I empathize with the fact that his father died while he was young, I wondered where his mother factored in all this. He suggests that if he had only had a mentor/teacher during his early adult years, then he might not have ended up in financial trouble. Was his mom a negative example and he just doesn’t want to throw her under the bus? Did it never occur to him to seek her help? This hole in the narrative frustrated me.
Second, he was a bit obsessed with Stuff. The most notable example of this is that he kept bringing up boats as items that are expensive to own and that could/should be sold if you are starting a debt-payoff journey. While I can’t deny the truth of that, I also wonder how many people have boats lying around. Maybe I have a hard time relating because my debt was for education, not stuff.
Third, his description of his accomplishment was a bit misleading. He says he paid off all his debt except his car loan in just over a year. Since his car loan accounted for $13,000 of his total debt, he only really paid off half his debt in a year. Obviously that’s still impressive. But why did he keep that car loan? When did he finally pay it off?
There is a section on his car-buying philosophy. However, it’s about 70 pages after he mentions not paying his car loan back right away. The very first question he suggests asking of someone who is trying to give you advice is “has he done what he is teaching?” Since he doesn’t connect his car-buying section back to his own debt-payoff story, it’s hard to tell what the answer to that question is here.
Things I loved
Although Mihalik lists 10 things he wishes his dad would have taught him, the ideas that debt is slavery and that money is time are the big takeaways. The first thing that I really loved about this book was the idea that you should think of the price of something not in terms of dollars, but in terms of how long it took you to earn those dollars.
For example, you wouldn’t say to yourself, “That book costs $25.” Instead, you’d say, “That book costs two hours at work.” That gives you an additional criterion to determine whether something is worth the price to you. If the book costs two hours of my life but will take me 50 hours to read, that’s a pretty good value. A DVD, on the other hand, might cost the same two hours of my life to buy, but only take two hours to watch. Now I know where my money’s going!
I really liked his chapter on controlling your money and planning your finances, largely because the method he uses is very similar to mine. His debt-payoff method is also solid advice, though it’s essentially the debt snowball method.
However, he doesn’t simply have you add up your income and expenses for the month. While that’s the first step, he also asks you to plan with a calendar and note when your paychecks arrive and when your payments are due. That way you can adjust due dates if necessary and make sure there aren’t times in the month where you’re in the red. Especially if you’re at the beginning of your personal finance journey and every dollar counts, this can be vital.
Who should read “Debt Is Slavery”
If you’ve been reading GRS for awhile now, you’ve probably already been exposed to most of the ideas in Mihalik’s book. However, if you’re a new reader and want to get a complete overview of sound PF philosophy, “Debt is Slavery” is a solid choice. Better still, if you know someone who is just getting interested in paying off their debts, this is a great recommendation.
Similarly, if you’ve got children who are grown up and leaving the nest, tuck this into their suitcase. Since the author was so young when he accumulated his debt, his stories about why he wanted to be “cool” would resonate with the college-aged. If your kids are recent graduates with some debt, the fact that Mihalik paid his debt off on such a low entry-level salary would be really motivational and show just how much is possible if you’re determined.
Have you read “Debt is Slavery”? What did you think? What other books would you like to see reviewed on GRS?