Die Broke

Stephen M. Pollan

This is a great book. But it doesn't contain enough material to justify all the pages residing between its covers. The material is wonderful; it's just that it's pretty simple and Pollan gets a bit repetitive.

Die Broke proposes that we forget the idea of spending our whole lives saving and investing with the idea of idyllic retirement on a beach somewhere. Instead, the author encourages a simple lifestyle today with prudent (though aggressive) investing for the future. With this plan, one can expect to work through the retirement years, though at a much lower salary and fewer hours. As cash needs outpace income, assets can be converted to annuities.

Along the way, money that might normally be left to children and grandchildren at death can be given to them at key points of need. This way, the gift can be enjoyed by both the giver and the child instead of being a painful reminder that no amount of inheritance can replace the loss of a parent or grandparent.

The key principles taught in the book are:

1. Quit Today. That is, consider your present job a stepping stone to greater earning potential at your next job. Your employer has no undying loyalty to you; you should have no undying loyalty to him or her. While I agree with the idea (that is, don't get stuck somewhere you don't necessarily enjoy when you could be earning more and being happier somewhere else), I don't agree fully with the attitude. I believe that I should do my best where I'm working and have enough commitment to the company that I don't become viewed as being disposable.

2. Pay Cash. The author believes we spend too much money on stuff that really doesn't bring us any happiness. And unfortunately we tend to spend money we don't have to get it. The result is a bunch of rusting computers, cars and stereo equipment and a mountain of consumer debt. The author goes too far, however, in recommending that we get rid of our ATM cards and go back to standing in line at the bank for cash (to teach us the value of cash). I think you can get into the practice of paying off your credit cards every month and tracking your bank balance without this much inconvenience.

3. Don't Retire. Retirement was invented for a past generation and doesn't make sense for us. A lot of people fall for the retirement myth and end up bored and depressed. You'll end up working to keep your mind sharp anyway. So don't spend your life building up this pile of money as if you're going to live off of it starting at age 65 or sooner. (He also points out that the retirement age of 65 was set at a time when people seldom lived beyond that age!)

4. Die Broke. Use your money while you're alive. Building up a pile of money to pass on to your kids is built on the mistaken notion that money has value in and of itself. The reality is that money is a tool; a means to an end. Use it while you can appreciate it. Plus, giving a pile of money to your kids can ruin them.

The best quote in the book is, "The last check you write should be to the undertaker - and it should bounce!"

I don't read a lot of financial self-help books. From the reviews at Amazon.com it looks like those who read a lot of these books find this information self-evident. But if you haven't really thought much about retirement and estate planning -- just worried about it -- you will probably find this book helpful.