Review – Your Money Ratios

your-money-ratios-198x300I was given a copy of Your Money Ratios by Charles Farrell and asked to provide my thoughts on the book. I would like to first state that I was not asked to provide positive feedback on the book, just my honest opinion of the material and how it was presented. I am also going to be giving this book away to one lucky reader so be sure to read on to figure out how to enter the give away.

General Overview

Your Money Ratios seeks to provide the reader with a method for determining:

  1. How much they should be saving,
  2. How much they should already have saved,
  3. How much debt they can carry,
  4. How you should invest your savings, and
  5. What type of insurance you need.

The determination is made using ratios defined by the author such as the savings ratio which states you should be saving 12% of your annual income from ages 25-45 and 15% of your annual income from 45-65. Based on the book I should be saving at least 12% of my income every year (Which I am). Similar type ratios are set for each of the 5 areas listed above. Some of the areas, such as insurance, include multiple ratios.

What I liked

It is an interesting take on how to calculate the “necessary” goals in obtaining financial security. It clearly outlines what the author feels are the pertinent ratios and presents them in ways people can easily understand. Each section is targeted at a specific goal and doesn’t wander as much as some other books do. This makes the entire learning experience easier and moderately less confusing.

What I didn’t like

There is a heavy reliance on Social Security as a retirement income stream. While I don’t disagree with the facts he states regarding social security, it isn’t a guaranteed benefit and can be given at taken away at the whim of congress. I don’t really feel like I learned a lot from reading the book, it takes a lot of the regular principles of personal finance and packages them in a gimmicky box, the contents are still the same. To the authors credit he did a good job of explaining his ratios and someone just starting out could certainly learn a lot from a reference like this.

About the Author

Charles J. Farrell, J.D., LL.M. works for Northstar Investment advisers and writes a column for the CBS Moneywatch site. Prior to being an investment advisor he was a Tax Attorney which is how he picked up those fancy letters after his name. J.D. = Juris Doctor or Doctorate of Law and LL.M. is a Masters in Law.

Overall Conclusion

Overall the book wasn’t bad, it took concepts that are prevalent in most personal finance books and tried to apply some form of  “logic” to how they should be applied. If you are a numbers kind of persons it can certainly help you out to have these ratios to base your decisions on. One word of caution I like to give is to not rely solely on one resource to make all of you decisions. Just like noone should come here as their one stop shop for all things personal finance you shouldn’t rely on just one book. This may be a good compliment to your collection, especially if you collection is still in its infancy.

Win The BOOK!

We are giving away our copy of the book to one luck reader.

There are two ways to enter to win a free copy of the book “Your Money Ratios”

  1. Leave a comment on this post telling me how you plan to improve this year on one of the Five Main elements listed in the overview.
  2. Tweet the following notice about this giveaway on Twitter:  I Just entered to win the book “Your Money Ratios” via @suburbandollar #sdymrbk http://bit.ly/sdymrbk

The Fine Print

This giveaway is open to U.S. Residents only sorry to my international readers but the book is kind of heavy. You get one entry and one entry only for each of the methods allowed. This makes for a maximum of two entries if you both leave a comment and tweet about the giveaway. If you tweet about it 6 times, I will appreciate it but you only get one entry. You must follow me on twitter so I can DM you if you win or use a valid email address when posting a comment. If I can’t get a hold of you, you  don’t win. The winner will be selected on Sunday January 10, 2010 via random number generation on Random.org.

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UPDATED 01/10/2010 – The winner has been chosen @liverealnow won by random selection and will be contacted shortly to receive their book.

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{ 6 comments }

1 AB January 5, 2010 at 10:17 am

It sounds interesting. I am very close to have my emergency fund where I want it to be and then I plan on increasing my saving to 15+% even though I’m not 45. 🙂 I’m quite sure we’re behind on “How much they should already have saved” so that extra savings should help catch up!

2 Red January 5, 2010 at 3:53 pm

Before 2010 began, I wasn’t saving anything! I had just finished paying off my credit card debt during summer 2009 ($3,500), and I had just switched to a part-time job while finishing school. During 2010, I’m going to up my saving to $30 a month. Not much by any means but it’s better than nothing until I graduate. I’m also devoting $200 each month to repaying a personal loan and my student loan interest. I’m trying to use 2010 to get ahead of the game on debt repayment while I have job security. Who knows what will happen after graduation? 🙂

3 Lisa Munley January 5, 2010 at 4:18 pm

Hi Kyle! Hey you don’t have to spend your hard earned money shipping the book to your winner! The publisher is happy to do that for you (still US/Canada only though!)

Thanks so much for the time and effort that went into reading and reviewing Your Money Ratios! It is very much appreciated!

4 morgan January 6, 2010 at 3:07 pm

This year (well, this month!) I plan on paying off my car loan.. IN FULL! By doing this, I’m saving about $50 a month in interest and am going to instead, put all the “car payment money” directly into savings where it can GROW and gain that interest that I would have been paying on the car – and more! I’m so excited!

5 Financial Samurai January 6, 2010 at 11:41 pm

Hola Kyle – I thoroughly enjoyed the book, and believe it has the potential to be a best seller in our space. I loved his tone and attitude. Thanks for your perspective of the review. If I win, I’ll be sure to give the copy to the local library so that many people can read it. I really believe in this book!

Best, Sam

6 Bucksome January 8, 2010 at 8:21 am

I’m still in the debt repayment mode so will be working on that element this year. My debt-free date is in 2011 so will need to know how to invest and save!

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