Buy This, Not That: How to Spend Your Way to Wealth and Freedom offers a straightforward take on how to make the most out of your earning potential, while on your path to financial freedom. Throughout the book, you’ll find thought-provoking financial tidbits that might help you change the way you approach money.
Author Sam Dogen, also known as The Financial Samurai, offers financial rules to live by that can help you understand more about your own finances. The book includes a robust collection of charts to help you visualize how these rules impact your finances.
- A book about optimizing your financial choices
- It finds the intersection of both personal finance and your own life choices
- From the author of the Financial Samurai website
What’s Buy This, Not That All About?
In addition to practical personal finance advice, the book looks at how these choices might interact with other life ambitions. For example, you’ll find lots of food for thought around having kids, pursuing your passions, and more.
Let’s take a closer look at what each chapter covers.
Find Your Happiness Equation
Without a destination in mind, it can be difficult to make the choices that push you closer to financial independence. Dogen starts by walking you through your best life.
He offers some new ideas for building the right FIRE number for you. In some cases, 20x your income might be a more appropriate target than 25x expenses.
The chapter encourages you to think big and consider probabilities when working out your personal finance goals. At the end of the chapter, you’ll find a list of action items to help you move forward.
Do The Math And The Plan Will Come
As with most helpful books about personal finance, this book dives into the numbers of meeting your financial goals. In this case, you’ll find extensive information on how to build out an appropriate goal for FIRE based on your risk tolerance.
Dogen frames the question of risk tolerance in an interesting way. Instead of thinking about risk tolerance as a nebulous thing, he breaks it down based on your willingness to return to work.
The chapter offers a numbers-heavy look at building out your FIRE number goals. And you’ll find plenty of examples throughout.
Get The Cash, Put It To Work
After the serious goal-setting strategies outlined in the first two chapters, Dogen dives into the different ways to make your goals a reality.
He starts by giving an overview of how much you might want to save, as a percentage of your income. And then, he outlines the best eight passive income investment opportunities. A closer look at each through a detailed ranking system can help you decide which is right for you.
Master Your Debt
Understanding how debt impacts your financial future is an important part in building it. Throughout this chapter, you’ll find ways to assess the risk of debt. Plus, helpful formulas on how to prioritize debt repayment.
Follow A Proper Allocation Model
This chapter starts to get into the nuts and bolts of building out an appropriate investment strategy to move towards financial independence.
You’ll find a detailed breakdown of different options based on your risk tolerance. Additionally, it provides a closer look at how the average American’s net worth stacks up.
Optimize Your Investments
One big question you might have about your investment strategy is whether to prioritize a tax-advantaged or taxable brokerage account. Dogen details both options and provides a recommendation in the order of operations for an optimized portfolio.
The chapter explores the advantages of growth stocks vs dividend stocks and whether or not angel investing makes sense for an well-rounded portfolio.
Understand Real Estate Fundamentals
Real estate may cross your path in one way or another, but the choice between buying and renting is hotly debated. Dogen takes a close look at the advantages and disadvantages of both buying and renting.
If you opt for buying, he outlines financial rules to follow on your first home purchase. The rules can help you buy a home without getting weighed down by the mortgage too much. The money rules for homeownership are also useful to determine if you can comfortably afford to move forward.
Choose Where To Live For Maximum Wealth Potential
The debate between high cost of living areas and low cost of living areas rages on in the financial independence community. When entering this chapter, have an open mind so you can try to understand both pros and cons perspectives for both.
This chapter encourages you to consider moving to an area with a job offer and walks through when is the best time to lock in property ownership with your first home. Dogen explores the questions to consider when selecting a primary residence.
Go Long On Real Estate
In this chapter, Dogen outlines the advantages and disadvantages of real estate investing. He covers physical real estate, REITs, and vacation properties.
If you are interested in purchasing individual properties, you’ll appreciate the guidance on how to evaluate a rental property deal.
Think Strategically About Your Career
On the path to financial independence, you’ll need enough income to save a substantial amount of money. Dogen discusses how to make the most of your earning potential.
A few tips include:
Building a valuable skill
Considering job offers at different companies
Looking for pensions
Evaluating the potential value of start-up employers
If you specifically want to grow your income through a traditional job, this is a useful chapter.
Make Your Money And Then Make Your Exit
Exiting the world of required work is the goal of most pursuing financial independence. But how you make your exit matters.
Dogen explores some of the reasons to leave your job, such as parenting responsibilities. Plus, he gives a quick look at why you should consider negotiating a severance instead of simply quitting.
Get Your Side Hustle On
Building a side hustle is one way to transform your financial future. Even if you have a lucrative day job, building a side hustle could help you achieve the ambitious savings goals you have in mind.
Dogen offers some encouraging tips on how to start a side hustle. Plus, a realistic look about when you might decide to trade in your day job for a successful side hustle.
Invest In Education
Education costs can add up quickly. Throughout the chapter, Dogen recommends taking your education very seriously—both for yourself and your kids. But he offers a way to run the numbers before moving forward with a private education.
If you are grappling with education decisions and costs, you’ll find a lot to think about in this chapter.
Nurture Your Love
Pursuing financial independence doesn’t exist in a vacuum.
For some, this means finding a partner. But the reality is that there are some financial costs tied up in your choice of a partner.
Another big decision is whether or not to have kids. And if you want to have kids, when is the best time to have them?
Dogen works through some of the practical money matters behind these major life choices. With this food for thought, you can focus on making the optimal choices for your life as a whole.
Live Like A Financial Samurai
In this final chapter, Dogen shares wisdom on how to make the most of life on your journey to financial freedom. He offers tips on things like keeping your wealth under the radar and determining the true cost of doing your own household chores.
Chock full of helpful advice, this chapter ends the book on an encouraging note.
About Sam Dogen
Sam Dogen is the man behind Financial Samurai, a popular personal finance website. He started the website in 2009 to share his thoughts on the global financial crisis.
Since then, Financial Samurai has been at the forefront of the financial independence (FIRE) movement. After launching this book, it has become a Wall Street Journal Bestseller.
Who Should Read Buy This, Not That?
Buy This, Not That is a helpful read for anyone trying to make optimized decisions on their path to financial freedom. Dogen covers a wide range of topics that can impact your financial goals for years to come.
You’ll learn about everything from how much you should spend on housing to strategies for increasing your income. Plus, there are more personal topics along the way, like the finances of marriage and the cost of private education.
Ultimately, approaching Buy This, Not That with an open mind will ensure you get the most out of this engaging read.
Overall, the focus of Buy This, Not That is a compelling look at a wide range of potential financial decisions. Throughout the book, you’ll receive advice on how to make the optimal decision for your life and finances.
But sometimes, the guidelines outlined in this book will seem a bit stringent. If you aren’t prepared to make unconventional choices in your pursuit of financial independence, then this book might not be the right fit for you.
The book included 336 pages of knowledge. If you are looking for a place to gain more a valuable perspective behind major financial decisions, Buy This, Not That is a great place to start.
Editor: Claire Tak
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