By: Revanche

Dummies Books are useful after all

September 12, 2009

These are permutations of this question: How do you help others help themselves? Turns out, the answer can be quite simple: identify the appropriate resources and let them help themselves.

With the wealth of information and financial knowledge available online, I don’t buy financial advice books. There are a few “classics” or commonly discussed books that are constantly referenced, but they’re available at the library or through Paperback Swap, so it seems pointless for me to pay money for basic financial wisdom.

(Ramit would dispute this vehemently. But that’s not the point. The point is here, I’m agreeing with his premise that sometimes you should spend money to save money. Point also made on Consumerism Commentary’s podcast. So I guess you could read his post, listen to his commentary and skip this post. But you shouldn’t! Embarassing story ensues.)

This (perpetual and time-consuming) willingness to root for information, however, isn’t for everyone.

For those who are only interested in avoiding the biggest potholes but don’t yet know how to identify them, the exhortations of an exasperated PF blogger to “know your budget, understand your spending, run your numbers!” just doesn’t translate as constructive advice.

To fill that need, those black and yellow Guides for Dummies are good resources. I spent last weekend previewing the Mortgage for Dummies book because as an English major, I was skeptical of what seemed to be the Cliff Notes to money. The alternative, if the book didn’t pass muster, was to go dredge up more mortgage advice links and posts which weren’t terribly appealing in the first place. Plan B wasn’t looking too hot.

Happily, I was impressed at the concise and engaging writing. It wasn’t just my natural nerdiness and affinity for the material, either. After a few chapters, my non-blogger friend was moved to ask me questions about concepts raised in the book! Normally, this friend’s eyes sort of glaze over a bit when I start in on my really involved financial diatribes. You know, the “I’m watching football lalalaaaaa” kind of look?

For the record: I got to explain why people pay for points when shopping for a loan. In some situations, if you’re staying in the house long enough that your total interest paid is less than without paying for points (after factoring in the point cost) it’s worth it. That summary is pretty ok, but my original example didn’t clear things up, so I explained how I used the concept in a totally wrong and financially detrimental way.

When I bought my car *cringe* I made just about every mistake. I did negotiate and worked with the Fleet salesman instead of the floor salesman but that was about the only thing I did right.

Sensing blood, they presented a “pay for percentage” situation that only a total newb would fall for, and I did. *more cringe* They offered to knock a full percentage point off my interest rate, financed through a credit union they worked with, if I would pay an additional $1000 for GAP insurance. Since the car purchase was under duress (see Mistake #7) I wasn’t prepared for the cash expenditure, thus, easily freaked out about the prospect of having to make up the difference between my drive off the lot value and appraised value if anything happened to the car early on.

They preyed on my ignorance and created fear of a situation that actually isn’t impossible to bear. (Which is, btw, how most of them sell extended warranties and such.)

I should have considered the time horizon. The loan was written for 60 months even though I had no intention of taking that long. On the other hand, with all the financial turmoil at home, I also didn’t know how long I’d stay in that loan. Predictions would have been wild guesses. I signed the paperwork, went home, and privately committed to paying $500/month instead of $370. It was PIF in 3 years – that reduced one percent was not worth it. I don’t have the paperwork anymore, but roughly speaking, because I was dumb enough to roll that 1k into the loan, I paid 1k for the privilege of saving about $200. Yay me!

Back to the point: it’s good to know that there are smarter folks than I out there writing guides to help those who just don’t have the time for this kind of obsession. Simple writing is often the smartest writing.

There’s something to be learned there.

2 Responses to “Dummies Books are useful after all”

  1. “Sensing blood..”

    *laughing*

    Sorry. *cough*

    I read the Dummies series too.

    They’re great for doing your taxes each year as well, because it costs $20 or so, but it helps you navigate the lingo to figure out how to save money.

  2. Well, you charge that to experience. I did a lot of things too that I felt dumb with my decisions but the good thing about those situations is that I got challenged. Challenged to do the right thing next time. If you look at the brighter side, you are somehow lucky because you’ve been there and know already how the things work. So sad for others who haven’t got mistake like you’ve made because it is possible that the financial damage to them may be worst. And yeah, Dummies are nice too!

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