YNAB You Need A Budget

[pksublime]

Once you've got your book and started reading it, voice your thoughts here.

[Abby]

Chapter 1 got me considering whether I should be more aggressive in paying off my credit card debt. I have a balance on only one card, but it is a large balance. I have managed to cut the amount I owe in half. I make fairly large payments, but not to the point that I make any sacrifices. The interest rate is relatively low, so I haven't been that bothered by it. I'm intrigued by references to some upcoming discussions on where to get the money to pay off credit card debt.

The book is a six week action plan and each week you are given specific actions to complete. I especially like that aspect. Have I done the week one actions yet? Well, no, but I plan to get started.

I have to say that I hate the title of the book and it's only made worse by the garish color of the cover. I even folded the cover back when in the car with my husband--too embarrassed to let anyone see I'm reading it. It won't be making any trips to the office with me. Based upon the appearance alone, I never would have bought the book if it wasn't for the book club. Anyone else have that reaction? As I read it, however, it seems to be more substantial than its cheap style would suggest. You've probably heard much of Chapter 1 elsewhere, but it's still good advice.

[mbowling]

I have to say that I hate the title of the book and it's only made worse by the garish color of the cover.

I completely agree about the title. It would have been much better with a title like "I Will Teach You Better Money Management".

My purpose in reading this book is to learn something new about personal finance. Let's see if I am succeeding.

Chapter one is titled "Optimize Your Credit Cards". Oh no, I'm already worried. First of all, I'm a very light credit card user. Second, I'm a long-time Dave Ramsey fan. So you can see where I have a problem with the words "Optimize" and "Credit Cards" used in the same sentence. But don't worry, I didn't hold an exorcism and burn the book.

One of the first things discussed was the advantages of using credit cards. Some of these advantages are rental car insurance, extended warranties on purchases and trip-cancellation insurance. I do use my credit card when renting a car or making a large purchase. Yes I know, I'm a Dave Ramsey listener and I have a credit card in my wallet. I'm a fan not a fanatic. I wasn't aware of trip-cancellation insurance being a benefit with a credit card. I'll have to check on this. If true, I've already learned something new about personal finance. Excellent.

Credit scores were also covered. I did learn something in this section of the chapter. The author explains exactly what your credit score is based on. The largest percentage, 35%, is based on your payment history. I never fully understood exactly what was factored in to a credit score, but now I know. The author also explains how to raise your score using credit cards. I've always had the opinion that you need a good credit score if you want more credit. A mortgage is more than enough credit for me. I have no plans to get any loans in the foreseeable future so I probably won't use the information about raising your credit score with credit cards. The author did explain how a high credit score is an advantage when obtaining a mortgage. A high credit score will allow you to get a lower interest rate.

The last section of the chapter was devoted to reducing credit card debt. Thankfully, I don't have any credit card debt so I just skimmed over this section.

In summary, I can definitely see where the book is targeted to the under 35 crowd. There is a lot of basic information about credit cards. I already knew most of the material but it would be a good resource for someone in their 20's and just beginning to use credit cards.

Did I succeed in learning something new about personal finance in chapter one? Yes, I did. Not a lot but a few tidbits of information.

I'm now ready for chapter two, but I'm already worried. In the table of contents one of the subtitles of chapter two is "Why old people are afraid of online banks". I'm trying not to be offended. This old person (47) has one traditional bank account and two online bank accounts. This old person also has no credit card debt, no car loan and a comfortable savings account. But let's read on.

[wandafreely]

Although I'm an "oldie" (66 and counting ), I had absolutely no problem with the garish color/font size on the front and back covers nor with Ramit's irreverent writing style. First: you can't judge a book by its cover. Second: His style is pitch perfect for his intended audience (and it's how I frequently write as well when someone asks me for advice!)

I'm pretty savvy about financial stuff and have been aggressively paying down my last card with a balance using Dave Ramsey's "snowball" approach. That being said, I learned/better understood several things in Chapter 1:

that you're entitled to a free credit report from all 3 credit bureaus every year
the differences between how FICO and credit reports are created (table on page 15 is priceless)
why cash-back cards are not as good a deal as they may at first appear (pg 20-21)
negotiating down the APR (never thought that was possible to do)

One correction that I'll communicate to Ramit directly, is that when I ordered my credit report from http://www.annual%20credit%20report.com, I was given the opportunity to purchase my FICO credit score for $7.95, which is approximately a 47% savings over the vendor he recommends in the chart on page 15.

Looking forward to Chapter 2!!!

[pipercat]

Well, this isn't just about Chapter 1, more of an overall review since I've finished the book.

I feel like, for the target audience of young professionals, it is probably very informative. I love the topic of personal finance, and have read many many books on the subject. This book really didn't teach me anything that I didn't already know, and there were some parts that felt sort of risky to me. Specifically, endorsing the practice of putting all expenses on a rewards credit card for the added "security" and the airline miles. I am quite certain that this practice works for lots of people, and he does warn readers not to carry a balance, but I'm just as certain that my own similar attitude contributed to the giant debt I have now. There were several times when I just wished I had something better to read before bed. If I did, I wouldn't have finished this book.

By the end, though, I (sort of) changed my mind. His investing advice was certainly interesting, and I had to stop myself from opening an account at Charles Schwab just to start investing my $100 per month in a "Lifecycle" account. I had to remind myself that my financial plan is to get out of debt first (ala Dave Ramsey with YNAB support) and that he wasn't necessarily talking to me.

[Tanikova]

I understand in theory his idea about using a rewards card for all expenses... but someone I know did this... paid it off religiously every month and when it came time to refinance their mortgage, their FICO score was lower then expected and the reason was because they consistenly had high balances on the cards.... never mind that they were always paid off without accruing any interest

[llambe]

I understand in theory his idea about using a rewards card for all expenses... but someone I know did this... paid it off religiously every month and when it came time to refinance their mortgage, their FICO score was lower then expected and the reason was because they consistenly had high balances on the cards.... never mind that they were always paid off without accruing any interest

I've been doing this for a long time plus using only a few cards until I read about the FICO score hit. Since we're planning on refinancing in the Fall (waiting due to early refi penalty) I've started paying off the credit cards as I go (every two weeks) instead of waiting. Interest rates are low enough that I'm not losing out by doing that anyway. Another way around it though is to have enough credit on all your cards so as to keep your monthly spending below 10% of your available credit. It's too bad the FICO score is set up such that you have to "play the game" just right to get a good one, and if you don't know the rules you're out of luck.

LL