Just finished David Bach’s Start Late, Finish Rich. At 42, I thought it would be a good intro to Bach’s many treatises on personal finance. I’ll come right out and say I highly recommend this book. It was full of great information, and took an optimistic, yet realistic tone. I’ll try to touch on some key points.

Yes, because you started late, you are going to have to work twice as hard to put away some cash for later, but there are ways to make it less painful. Look at your every day expenditures. Is there something simple you can do without? He calls this the “Latte Factor”, because so many of us spend a few bucks a day on fancy coffee. My personal Latte Factor is buying lunch and snacks, instead of bringing them from home. I can spend up to $12 a day on soda, breakfast, lunch, etc. I’ve cut that down to once or twice a week, and it’s making a big difference. Not to mention the fact that my own meals are more healthy and delicious than anything I can buy.

Credit cards: it’s the interest. Bach gives instructions on how you can call your credit card company and get them to lower yours, or how to transfer your balance to a card with a no-interest introductory offer, and make a big dent in the debt before fees and interest kick in. That last idea is a particular winner. Imagine you have $3000 credit card debt, at 18% interest. Your minimum payment is $50/month (always pay more than the minimum! But for this exercise, we’ll stick to it). At the end of the year, your debt is $2940. Yes, you’ve just been paying interest. On the other hand, if you transfer to a card that offers no interest for a year (and don’t forget to cancel that first card!), and make those same $50, at the end of the year your debt is reduced by an additional $540. Maybe it’s time to take a closer look at those ubiquitous credit card offers.

Don’t put off saving! Yes, it’s important to pay off debt, but you still need to pay yourself first while you are digging out. There are a couple of reasons for this. The first is psychological. Saving feels good. Seeing your savings grow is a huge motivator to continue improving your financial health. If you tell yourself you must pay off all your debt before you begin saving or investing, the road may seem impossibly long. Giving up does no one any good. The second reason is financial. My math-fu is weak, so I’m going to use an example from the book:

Let’s say you had $300 a month you could either save or use to pay down credit card debt–or both. Assuming a 10% annual return on your money, if you used it all to pay down credit card debt for 10 years and then, once the debt was paid off, started saving the full $300 a month for the next 20 years, you’d wind up with a nest egg worth $227,811. On the other hand, if you allocated just $150 a month to paying down your debt and at the same time started saving $150 a month, after 30 years you’d have no debt and $339.073. In other words, waiting 10 years to start saving would reduce the size of your potential nest egg by NEARLY A THIRD!

And these numbers become even more important as you have less time in which to save.

Buy a home. Bach talks extensively about not only why you should buy a home, but how you can get into that first home if you are a renter. This is something we realized a couple years ago, and we finally took the plunge last year. I can’t tell you how gratifying it is to be living somewhere that is an asset for us, instead of just throwing money to the wind every month.

There’s much, much more packed into Start Late, Finish Rich. If you’re in your thirties or beyond, I can’t recommend this book enough. It’s a great source of ideas and inspiration.