The Three-Legged Stool of FI Knowledge

The two avid readers of this blog site (my parents —  Grumpus Maternus and Grumpus Paternus) might recall a mention in a previous post of my three-legged stool of financial independence (FI) knowledge.  They might also recall that I built that stable platform of knowledge through blogs, books, and podcasts. In the first leg, I discussed financial independence blogs.  In this post, I review financial independence books.

Form, function, and finances

I specifically review three books, two booklets, and one chapter that when taken together would allow a person to plot a course to FI.  The beauty with this list is that it includes a book for each stage in that journey.  From those simply needing the motivation to start, to those ready to write retirement plans, create spreadsheets, and make investment moves; there is a little bit of something in here for everyone.

Patronize your local library

Also, I encourage you to look in a library for these financial independence books as opposed to simply purchasing based on my recommendation.  I only include mention of Amazon Kindle below as alternative method to find these books for “free” if you are already a Kindle user and Prime member.  Enjoy and let me hear your feedback on this or any other topics you might be interested in.

Book One: The Millionaire Next Door

The Millionaire Next Door: The Surprising Secrets of America’s Wealthy By Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D.

Let’s face it, you and I have been conditioned to think of millionaires in terms of the conspicuous consumption we’ve seen from movie, music, and sports stars.  Turns out that image is dead wrong.  The majority of American millionaires live well within their means, engage in little to any conspicuous consumption, and are Prodigious Accumulators of Wealth (PAWs).  So if you are looking for inspiration to live below your means, save money, and invest, this is the book for you.  Although roughly 20 years old, it is a seminal work that remains as relevant today as it ever did.  Topics range from the types of homes the majority of American millionaire’s live in, to the cars they purchase, the ways they save money, and how they are able to successfully pass their knowledge (and money) onto their children.

My other three cars are Mercs

This book was so successful it inspired an entire follow-on series of books from Dr. Stanley, but none of them capture the significance quite like the original.  This book should be available in your local library.  Kindle Fire users with Prime membership are able to read it for free through the one free book a month offer.  Kindle Unlimited subscribers can access it as part of your monthly subscription.  Dr. Stanley, unfortunately, died in 2015, but his daughter apparently carries on his work and maintains his legacy at http://www.thomasjstanley.com/.

Book Two: The Simple Path to Wealth

The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life by JL Collins.

This book is the best book on personal finance, investing, and financial independence I’ve read — and “No” it is not the only book on those subjects I’ve read either. I originally heard Mr. Collins interviewed by Farnoosh Torabi on her “So Money” podcast in the summer of 2016. I was intrigued by what Mr. Collins had to say, so I checked out his website (which I emailed you all about previously) to take a look at some of his blog posts. The quality of the posts prompted me to download his book. It proved to be a great decision as the book helped me completely reconfigure my entire outlook for retirement. It also helped me to tweak many aspects of my investment strategy.

Mr. Collins originally wrote the blog posts on which this book is based on letters to his daughter in college, who was a financial layman.  Thus, you need not be money wise whatsoever to understand the concepts in this book.  Even if you are particularly well versed in personal finance and index investing The Simple Path To Wealth is written in such clear and engaging language that I would recommend you read it.

In the past few months, I’ve returned to The Simple Path To Wealth again and again to re-read sections. I only wish is that such a book existed 20 years ago… This book has enjoyed so much success that I believe you will be able to find it at your local library.  It is available for “free” to both Kindle Unlimited subscribers and Kindle Fire users with Prime.  Alternately many, if not all, the chapters in this book are built from JL Collins’ blog posts.  So if you’ve read all the blog posts, you’ve read the book.

Book Three: Can I Retire Yet?

Can I Retire Yet?: How to Make the Biggest Financial Decision of the Rest of Your Life by Darrow Kirkpatrick

This is a great book if you are ready to get down to the nuts and bolts of either early or regular retirement planning. On his website, Mr. Kirkpatrick points out that this book is not meant for people just starting their financial journey (check out his other book, Retiring Sooner, if that is you). Rather it is meant for those far enough into their journey where retirement is a real consideration. Not sure if that is you?  Don’t worry he shows you how to figure that question out almost right away.  From there he walks you through a thorough consideration of all the other details involved in achieving FI and retirement.  Mr. Kirkpatrick keeps this book engaging from beginning to end by relating his own experiences from life and early retirement.  He never gets too heavy into the math but does use it to emphasize points when necessary.

The plain and accessible language of the book reminded me of The Simple Path to Wealth, although Mr. Kirkpatrick takes different views on issues like annuities than his friend JL Collins, so you are not simply repeating the lessons learned in The Simple Path.  Much like The Simple Path, I now consider this book one of my essential references.  This book showed me how to get serious with my retirement planning, and as a result, I was able to build a functional retirement plan.

I would like to think this book is available in your local library, so take a look first before purchasing outright.  It is also available for “free” to both Kindle Unlimited subscribers and Kindle Fire users with Prime.  Just like JL Collins, much of the same information in Mr. Kirkpatrick’s book also resides on his blog site, if you want to save money.  However, Mr. Kirkpatrick is far more prolific than his friend, so the book provides a great one-stop shop for all the major issues without having to comb through his 100+ blog posts.

Two Booklets by DJ Whiteside

Early Retirement Solutions: How Much Money Do I Really Need to Retire & Achieve Financial Independence?  and Retire Sooner!: How to Optimize Your Plan to Achieve Financial Freedom by DJ Whiteside

I realize there are two titles listed above, but since they are both short booklets I lumped them together in one review.  These booklets are written for the person ready to write their retirement plan.  Although they touch upon many of same issues as The Simple Path and Can I Retire Yet? they sacrifice depth on numerous topics in order to show you how to produce a retirement plan in about 100 pages.

If you are an investment or personal finance novice, do not start with these booklets.  Conversely, I recommend starting with these booklets to people who feel advanced enough in their personal finances and retirement knowledge, and want to get straight to the heart of the matter  — that is making the calculations about if/when you can retire.  Personally, I had read Millionaire, Path and Can I; and had already started to build my retirement plan; prior to discovering these two booklets.

I was glad I read them when I did though because they prompted me to build spreadsheets and actually calculate my percentages of success using several high power retirement calculators.  I highly doubt these booklets will be in your local library.  They are available for “free” to both Kindle Unlimited subscribers and Kindle Fire users with Prime.   DJ Whiteside also has a blog, but there does not seem to be nearly as much overlap between his booklets and blog posts as JL Collins or Darrow Kirkpatrick.

One Chapter

The Signal and the Noise: Why So Many Predictions Fail — But Some Don’t by Nate Silver.

This book is a great overall read, and I highly encourage you to read it because it may change the entire way you think … about everything. However, only the chapter on the futile attempts to beat the stock market averages pertains to personal finances.  That chapter was the straw that broke the proverbial camel’s back and inspired me to take action.  After reading it, I kindly let my financial planner go, took control of my investments, and never looked back. You’ll understand why if you read it.