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Review: Money Girl's Smart Moves to Grow Rich by Laura D. Adams

Money Girl's Smart Moves to Grow RichMoney Girl's Smart Moves to Grow Rich by Laura D. Adams
My rating: 4 of 5 stars

This straightforward guide to basic personal finance covers money management, debt, investing, retirement, real estate, paying for education, and taxes. Each topic includes an explanation of key concepts and practical advice. I liked Adams’ emphasis on automating as much as possible for efficiency and avoiding emotional influence. I read this book because I’ve been a longtime fan of Adams’ Money Girl podcast.

I wish there was more advice on asset allocation and building a portfolio. Adams simply recommends using target date funds, and gives a few general tips such as setting your stock allocation to 100 minus your age.

Insurance
Consider using an HDHP and HSA for health insurance.
Get a term life insurance policy worth 10 times your income.

Debt
Make loan payments biweekly instead of monthly to accelerate repayment.
Investing vs. paying off debt: invest when after-tax investing returns are higher than after-tax interest rate on debt.

Investing
Use target date funds, or model your portfolio after them.
Percentage of stock in portfolio: roughly 100 minus your age.

Time horizons
1 year: cash (savings, money market, checking)
2-10 years: cash, bonds, stocks (CDs, 529s, Coverdells, brokerage accounts)
10+ years: bonds, stocks, real estate, commodities (retirement accounts, 529s, Coverdells, brokerage accounts)

Self-employed retirement plans
• Keogh: complicated but flexible. High contribution limits.
• SIMPLE IRA or 401(k): simple, low cost. Must have earned $5000 minimum in prior year. Low contribution limits.
• SEP: simple, low cost. High contribution limits. No Roth option.
• Individual, Solo, or Self-Employed 401(k): more complex and costly. High contribution limits. Traditional or Roth 401(k) options.

Real estate & mortgages
Don’t buy a house unless you can keep it for at least 5 years.
Benefits of renting over buying: avoid property maintenance, repairs, insurance, property taxes.
Benefits of buying over renting: lower long-term cost of ownership, appreciation, tax deductions.
To know if you should pay points on a mortgage, take the difference between the monthly payments with and without points, and divide it into the points charged. That gives the break-even point in months.

Paying for education
Coverdells can be used for kindergarten through graduate school.
529s are better for college; no contribution limit, more flexible.

Miscellaneous personal finance tips
Microwaves use 30% less energy than ovens.
Keep vehicles as long as possible.
If married, filing jointly usually results in lower taxes than filing separately.

View all my reviews

Comments

Laura Adams said…
Hi, Chad - Thanks so much for reviewing my book and being a Money Girl podcast listener!

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