100% Practical, 100% Specific Financial Advice Everyone Can Use: Exactly What to Do and Exactly How to Do It100% Practical, 100% Specific Financial Advice Everyone Can Use: Exactly What to Do and Exactly How to Do It
“Greg Karp makes managing your money as easy as 1-2-3. He offers sensible, time-tested advice to help you make smart decisions and get your finances on track.”
— Liz Pulliam Weston, “The most-read personal finance columnist on the Internet” (Nielsen//NetRatings),
author of Easy Money, Your Credit Score, and Deal with Your Debt
“I love this book. Greg’s simple strategies push you to be smart with your dough and act right away.”
—Clark Howard, The Clark Howard Show
“Within one hour of picking up The 1-2-3 Money Plan, I already had a list of easy next steps to save on several of our household expenses.”
—Stephanie Nelson, founder of CouponMom.com
“Greg Karp really knows his stuff, and he lays it out in plain language that will help anyone save money and get financially fit.”
— Jeff Yeager, author of The Ultimate Cheapskate’s Road Map to True Riches
“The money you spend on this book should easily be recouped by the time you’re only several pages into it!”
— Russell Wild, financial advisor, author of Exchange-Traded Funds for Dummies,
Bond Investing for Dummies, and Index Investing for Dummies
“Greg Karp is a lifesaver for people worried about stretching their dollars in a tough economy. He’s no Scrooge. Rather, he nudges you into sound decisions and smart spending.”
— Gail MarksJarvis, Chicago Tribune personal finance columnist, author of Saving
for Retirement Without Living Like a Pauper or Winning the Lottery
“Today everyone is looking for a quick answer to their financial problems. In The 1-2-3 Money Plan, Greg Karp has created an excellent resource. It’s well organized and full of great ideas. But, most importantly, it’s written in a language that the average consumer can understand and apply. Many people will thank Greg for helping them survive financially tough times.”
—Gary Foreman, editor The DollarStretcher Web site, stretcher.com
Introduction
Telling It Straight
This book is, admittedly, a low-tech device. But it’s meant to offer advantages you find in a high-tech GPS navigation system for your vehicle and an iPod audio player.
In navigating money and spending issues, especially in these challenging economic times, I hope you’ll find this book as helpful and succinct as a GPS device that gives driving directions in an unfamiliar region. And in simplicity, it’s meant to be as easy to use as the ubiquitous iPod music player.
Fortunately, you don’t have to be a gadget lover to use it.
Getting from Here to There
I like my GPS navigation system, a Garmin Nuvi. I suggest you buy one, after you get your money life in order and are spending your money smarter every day.
No. It doesn’t have to be that brand or model of GPS navigator. There are many good ones—ones with different features and less-expensive ones that still get the job done. But, the Garmin Nuvi is a very good line of GPS systems for nearly everybody. And if you drive often in unfamiliar areas, you should buy one.
This brief suggestion is indicative of this book. I intend to give you very specific advice about spending and handling money.
“Garmin,” as I unimaginatively named my GPS system, tells me, turn by turn, how to get from where I am now to where I want to go. I don’t mean that it lists directions and a map on a screen. While I’m driving, a voice inside the small box mounted on my dashboard speaks directions and road names—albeit, sometimes with butchered pronunciations.
Garmin doesn’t care where I started, even if I’m lost to begin with. And it doesn’t always give me the absolute-best route to where I’m going. But Garmin gets me where I’m going, almost every time.
Garmin also provides me peace of mind. While driving in unfamiliar areas with confusing traffic patterns, I don’t care that Garmin isn’t providing the absolute-best directions—directions that might get me to my destination two minutes sooner. I care that it gives me clear, understandable directions and gets me where I’m going safely.
In an unfortunate parallel world, Garmin might have a fatal flaw. It might have a Shakespearean Hamlet complex, contemplating “To be or not to be.” It would be much less useful.
What if at every intersection it spoke something like, “Turn left on Maple Street...or go two blocks and turn left on Main Street...or, if you’re in a hurry, avoid the upcoming busy intersection and cut through the Cherry Blossom housing development on the left...or if this is rush hour, make a U-turn and take the on-ramp to the bypass”?
Huh? Driving at 40 miles per hour and with little time to make a decision, directions that offer every route would be nearly useless. How am I to choose the best route of those given? “Garmin, that’s what I paid you to do!”
And so it is with financial advice.
Consumers view many financial books as they would the indecisive GPS navigator. The books typically provide a confusing array of money advice that covers every possible situation. Advice is rendered nearly useless because the consumer has to make several complicated decisions he or she feels ill-equipped to make. The reader ends up needing advice in order to take the advice.
Sometimes, you just need a Garmin to tell you what to do. This book intends to be your Garmin in navigating money issues, so you can get where you want to go, with as little confusion as possible.
If I may stretch the metaphor one last time: When I’m driving and I disobey Garmin—refusing to “turn left” or “take the ramp on the right” as instructed—Garmin simply recalculates new directions for me based on where I am now. You see, though Garmin is giving me specific advice, I retain the right to choose my own way.
And so it is with this book. University of Chicago professor Richard Thaler, the father of the study of behavioral economics, calls it libertarian paternalism. Basically, it means that leaders can use what we know about consumer behavior to get people to do the right things for themselves. So, in this book, I will nudge you in a direction that is likely to be good for you. That’s the paternal part. But, of course, you retain the free will to modify or disregard the advice and choose a different direction. That’s the libertarian part.
This book does not restrict your freedom to choose. Nor does it advocate blindly following advice without understanding it. You have the power to customize the advice to your own life. The benefit of the book is providing you with a framework for making decisions, and at the very least, showing you what a good decision looks like.
Simple as an iPod
If you want to discuss simplicity, it’s hard not to talk about Apple’s iPod digital music player. This handheld device allows you to move music, audiobooks, and even movies and TV shows from your computer to the device for on-the-go listening and viewing.
Arguably, it is not the absolute-best music player on the market. Others offer more features and even better audio quality, some reviewers claim. Many are less expensive. But none is easier to use. And for that reason, the iPod blows away the competition in sales. And for that reason, I recommend you buy an iPod if you’re interested in taking your audio and video with you.
My in-laws wanted a digital music player. Know- ing I’m a gadget guy, they asked me what I would recommend.
In my mind, answering this question is complicated calculus. That’s because I’m aware of the many offerings among music players. I know the iPod’s strengths and shortcomings. I could have given them a dissertation on all the available models of music players and all the possible features they could get. After hearing all that, my in-laws’ minds would surely be swimming with a slew of seemingly disconnected facts and considerations. They would have to make a long series of complicated prerequisite decisions just to make the one decision they cared about: buying a music player.
In answering their question, the lengthy dissertation played inside my head, but what I said was this: “Get an iPod. It’s the easiest to use. You’ll love it.”
And they do.
Easy Is Hard
This might be at once the most controversial and most helpful money book you have ever read.
Why?
Because I’m going to give you very specific advice on what to do to handle your money better and improve your spending habits. I’m going to name names and tell it straight.
For example, I’ll tell you to invest in index mutual funds. If you’re having trouble choosing a comp...
