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10 of 10 people found the following review helpful
on January 27, 2010
I found this book to be really helpful in terms of setting some reasonable goals for myself while coming out of my own "era of overspending". Well-written and often humorous, the author manages to convey the importance of saving without being a bore or being unrealistic about what's possible today. While I certainly don't find myself in ideal financial shape right now, the ratios have provided me with great goals to work toward, and helped me be conscious of where my money goes and what I'd like (and will need) it to be able to do for me later.
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4 of 4 people found the following review helpful
on February 19, 2010
Kudos to the writer for making it so clear and within everyone's reach to be successful with finances. As more people read this work, we will slowly resolve the problem of financial dependency so pervasive in society today. This work should be found in the self-help area of bookstores. It is an easy read and a definite entry point for everyone seeking basic financial awareness.

Mr. Farrell offers a very clear explanation of how everyone should address financial issues. If more people had read this book prior to the phenomenal crisis we currently endure, none would have lost their homes, their cars, or their job. Private industry and banks would not have fired anyone, instead they would still be hiring more workers. We would remain the pillar of financial strength that irresponsible behavior destroyed.

The author's argument places the financial responsibility for our future needs squarely on each of us. He provides the reader with a blueprint for the meeting of long-term financial goals. His philosphical position is almost a Libertarian argument--except for the acceptance of Social Security as a pillar of virtue, which most Libertarians would argue against, especially in light of the abuses perpetrated by the ever-increasing waves of pillagers in Congress. Nonetheless, his suggested cures for the ills of the system as we face them today are sensible and should be heeded with immediacy.

The work is well conceived, albeit a tad repetitive at times, yet understandably so; most individuals tend to forget from one minute to the next the importance of thoughtful financial planning and a strict adherence to a plan. It all revolves around the notion of becoming a capitalist who lives by lending money to others instead of remaining a laborer forever who must do some type of work to live from its wages. It addresses the most salient points for financial solvency at any age: education, home ownership, credit card debt, and transportation, all within the money ratios that are the focus of his work.

"Charlie," as he often refers to himself in the book, provides a clear path to the financial success that most careful planners would dream to accomplish as they traverse across the different stages of life. The goal in the end is to target funds for retirement, when most expect to kick back and enjoy a better and more relaxing lifestyle, free of FICA contributions and lower taxation in general. Sacrifices and difficult decisions must be made along the way; but in the end, the work's solutions are fruitful and conducive to a successful outcome. If carefully adhered to individually with rigor and stalwart determination, the book's premises will result in a self-reliant retirement plan that would benefit more than the individual and his family.
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12 of 15 people found the following review helpful
on December 30, 2009
For years I have struggled to figure out what my family should be doing with our finances. I knew I wanted to be able to retire with a decent lifestyle, but had no idea how to do it. The primary reason I struggled is because of my deep distain for anything having to do with numbers. It all just seemed too difficult for me. When I read this book, it all became clear to me. Everything is laid out in clear and simple terms in a way that even a financial dim-wit like me can understand. Unfortunately for me, I read this book about 20 years too late! The good news is that I still have some time to get back on track, and I can't feel too guilty, because the book just came out. I highly recommend this book to anyone who wants a clear and simple formula for planning for retirement. I would also recommend that you give this book as a graduation gift to anyone you care about who is graduating from college! Having this book then would have made a big difference in my financial future.
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4 of 4 people found the following review helpful
on April 13, 2010
Gives 8 simple ratios to guide your entire financial life, with sensible explanation of what they are, why they matter, what they should be as you get older, and common sense suggestions for doing them. It is all the common advice gathered into one integrated, comprehensive table of four investing ratios and four insurance ratios. The explanations and advice help keep turn those standard dictates into meaningful, motivating messages and help to explain how things can go wrong. (Pointing out that real estate cannot go up faster than salaries to pay mortgage should have always been obvious.) With the goal of being financially independant and yet protecting against catastrophe it leads you from how much school loans is enough or too much, thru working years of savings rate and mortgage paydown with disability and life insurance, to your golden years and the kinds of health insurance and long-term care insurance.

Contents:
Introductionn - A Simple, New Perspective
1. The Capital to Income Ratio
2. The Savings Ratio
3. Social Security
4. Where to Save Your Money
5. The Debt Ratios
6. The Investment Ratio
7. Stocks and Bonds
8. Ignoring Wad Street
9. The Disability Insurance Ratio
10. The Life Insurance Ratio
11. The Long-Term Care Insurance Ratio
12. Health Insurance
13. Getting Professional Health
14. Putting It All Together
Appendix - Special Situations
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4 of 5 people found the following review helpful
VINE VOICEon June 29, 2011
Finally, someone in the know has given me an idea of when I can retire and how much I'll need to do so. Charles Farrell gives a lot more guidance than the usual "max out your 401(k) contributions and diversify your investments so you can retire comfortably at some unspecified age." The first ratio he introduces is the capital to income ratio, which basically quantifies how much money you should have saved (401(k), savings and checking accounts, brokerage accounts, etc. [excluding house and cars]) at a given age and salary in order to retire at 65 on 80% of your income. That one ratio alone is worth the price of the book.

He then goes on to discuss savings, debt, investment and just about everything else you'll need to know to save enough for retirement. He actually tells you to spend as little as possible on a car because, even though it's necessary for you to have in order to generate income, it also ends up worthless after ten years (generally speaking). He has essentially the same advice for housing: buy only what you need rather than a McMansion.

Since I read quite a few business and investment books, some of the material (stock and bond investments, for example) covered very familiar ground, but there's nothing wrong with a little refresher now and then.

Thank you, Charles Farrell, for writing this book.

Highly recommended.

(Note: you can take the capital to income ratio (CIR) data he provides--which is only in five-year increments--and type it into Excel, then plot it, then calculate the equation for the CIR so that you can come up with numbers based on your exact age. Instead of that, you can go to yourmoneyratios.com, input the code he provides in the book and use the web tool.)
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1 of 1 people found the following review helpful
on February 27, 2012
Published at [...]

I'm always on the lookout for great books on financial planning and investing. There are literally thousands of books on these two topics and that makes it hard for many people to figure out where to start.

I recently read Your Money Ratios: 8 Simple Tools for Financial Security by Charles Farrell and think that this is one of the best books on financial planning that I've ever read. If you don't feel confident in how much you should be saving, can afford to spend on housing and other financial planning decisions, start by reading this book.

Before I continue, I do want to make an important point: This is a book about financial planning, not a book about investing. To further explain: financial planning is about figuring out the "big picture" issues, including how much you need to save and invest. Investing is about what you do with the money that you save. Obviously, these two topics are closely related and you cannot discuss financial planning without some reference to investing. That said, this book does not really discuss investing, beyond the assertion that a good baseline asset allocation (without knowing anything about a specific person's risk tolerance, wealth level, etc.) is probably 50% equities and 50% in fixed income (bonds).
Simple-to-Follow Financial Ratios

There are no hard and fast rules for financial planning, which is part of what makes planning so hard for most individuals. What Mr. Farrell has done with his book, however, is to bring together some solid and simple rules-of-thumb for planning and related these in terms of simple ratios. His overarching point is that a great deal of financial success is determined by some very simple ratios. While there is no way to"prove" that these are correct, Mr. Farrell is drawing on his years of experience and his estimates are consistent with the best research that I've seen.

For a very quick run through of one "big picture" concept, take a look at the book's online retirement calculator where readers can enter a few numbers to get an assessment of how well they are doing in saving for retirement. To really understand the ratios in the calculator, however, you will need to read the book.
Staying Financially "Fit"

Farrell emphasizes that his approach, based on a substantial number of simplifying assumptions, is an estimate. He draws a particularly apt metaphor to the Body Mass Index (BMI).The BMI is a simple ratio of height to weight and is used to provide a very simple metric of whether a person is overweight or not. Yes, the BMI is far from perfect. For example, I know some athletes who have so much muscle that they are rated as "overweight" on the BMI. However, the BMI is simple approach to getting a fast estimate on whether someone is overweight or not.

Farrell's approach is the same idea, just for your financial "health."
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2 of 2 people found the following review helpful
on December 9, 2010
I've read a ton of finance books and this ties for the best of all time. The 8 tools are understandable, practical and realistic. Farrell writes in clear, concise way that's helpful, unbiased, and witty at times. I bought 2 more copies for family members.
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1 of 1 people found the following review helpful
on March 8, 2010
Your Money Ratio$ has helped me to assess my financial positioning and has been instrumental in helping me determine any necessary adjustments for long term financial success. Mr. Farrell writes in a straight forward, easy to understand style that allows the part-time retirement investor to concentrate on what really matters (long term growth) instead of the get rich quick stories. Mr. Farrell also avoids the all too common technique of scarring the reader into thinking his or her financial sky is falling. Most helpful were the portions of the book dealing with insurance. This book is a must have for the average investor.
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3 of 4 people found the following review helpful
on January 27, 2010
Most people know that they are supposed to save for retirement, but this book actually lets you check if you are on track. It gives simple formulas that let you figure out if you will be able to retire when you want to and what percentage of your income you will be able live on in retirement. It taught me two important things that I need to do now to make sure I will be able to retire. I didn't realize how important disability insurance is, considering 1 in 8 people will need it. I also wish I had read his section on investment allocation before the recession started.
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1 of 1 people found the following review helpful
on January 18, 2012
I've read over 20 personal finance books in the past 2 years and this one is in my top 5. The author presents the topics logically (without boring you) and then provides tables (ratios) so you can see how you're doing based on your age. His investment advice for those in their 20s and 30s is the most conservative I've seen in any book, but he justifies it well. I plan on calculating my ratios once a year to stay on track. Good stuff.
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