For the past 8 weeks or so I have been deep in the weeds on writing a draft of the money book. I approach book projects different ways, but for this particular one, I decided to write very rough drafts of chapters first. I anticipate being done with these drafts in another week or so, and then the real work of editing will begin. I find it is much easier to shape and think about something when I have something to work with. You see the holes. This gives research and interviews a clearer target. When I was writing 168 Hours, I did two massive rounds of interviews. The second was largely done after the book was drafted. I felt like the second had such a higher hit rate than the first, but of course that was because I was steering those interviews toward filling in my holes!
Anyway, here is the current chapter outline for the money book. In my mind, I’ve been calling it Plenty: How to Buy Happiness, but that could change.
Intro: You have more money than you think. An overview of the book, opening with some material from the Morocco post I did in early January.
Chapter 1: What else could that ring buy? A framework for the mindful use of money, looking at the opportunity cost of all the things we spend money on. The title comes from the little known fact that the average $5000 engagement ring could pay for 100 nights of babysitting — which would actually make a better marriage? Asks the $10,000 question (how would you spend $10,000 if you knew it had to be memorable)
Chapter 2: The Freedom Fund. The retirement concept is massively oversold. A better reason to build wealth? To give yourself the freedom to find and do work you’d never want to retire from.
Chapter 3: How to Choose a Tax Bracket. The usual personal financial advice is that when you need more cash in your life, you have to cut your spending — one of the reasons coupons are perceived as so virtuous. But I’d argue that it’s often just as doable — and much more pleasant — to try to earn more than to cut back. There’s a limit to how much you can cut. At least in theory, there’s no limit to how much you can grow.
Chapter 4: Help Wanted. Where will the next American jobs come from? The same place they always have — new firms started by entrepreneurs. Centered on my trip to Detroit, this chapter talks about how jobs are created, and touches on happiness by pointing out that creating opportunities for other people is one of the best ways to use money. This is done easiest as a business owner, but we can all choose to use our money in ways that boost opportunities and job creation.
Chapter 5: Laughing at the Joneses. Reconsidering our relationships with our houses (and lawns) and our cars. Spending less on homes and cars creates a lot of space in a budget for things that bring more happiness — this chapter highlights the small house movement, the anti-home ownership movement, the trouble with cars.
Chapter 6: Laura’s Guide To Your Best Weekend Ever. We get the most bang for our buck by spending on experiences. How should we best go about doing this? Told through the lens of one 168 Hours reader who instituted a new “Groundhog Weekend” tradition — creating a weekend you’d love to experience again and again.
Chapter 7: The Marginal Cost of Kids. After 2 (the definite mode in American life) the marginal costs of children decline precipitously. This is for two reasons: economies of scale, and changing expectations. The question is, do those changed expectations matter?
Chapter 8: The Chicken Mystique. In tough times, people get interested in things like farming, foraging, swapping, etc. — all yanked back out of the Great Depression, but celebrated now as much for their green side. None of this actually saves money when you consider the opportunity cost of time, but often the reasons for raising chickens run much deeper, into personal fulfillment, connection with the earth, etc. Hence the “chicken mystique.”
Chapter 9: Microphilanthropy. Giving has gotten a lot more fun in recent years, with small donors able to choose their projects and ask for results. Witness the rise of Donors Choose, GlobalGiving, Modest Needs, etc. This trend raises real questions of efficiency and fairness, but I’d argue that ultimately, charity has to be about the giver to be sustainable.
Chapter 10: The Ziploc Bag. A chapter on the hedonic treadmill, and whether things that once brought us tons of pleasure (in my case, Ziploc bags) can continue to do so. Also, can children raised in fortunate circumstances learn to value money?
I’d love to hear your thoughts on all these.
One thing I didn’t mention in my email about the chicken mystique in regards to money- yes there is an opportunity cost of time/labor but there is also an “opportunity savings” of spending time doing a cheap hobby rather than shopping, going to the movies, etc. Similarly with hobbies like gardening. Maybe it’s not appealing to many to find your bliss cheaply, but when staying at home with little kids, my challenge is to fill a lot of time cheaply and semi-productively for my own sanity.
@Bridget- that’s an interesting point, and one I hadn’t thought of including. This is why I am workshopping these ideas!
On the marginal cost of kids — I confess I didn’t read all those Motherlode comments and someone probably already made this point. But maintaining full-time careers, especially demanding ones, becomes increasingly more difficult with each child, ESPECIALLY if you are a woman and you do all the childbearing. (Corporate attorney here, baby #2 on the way. Having more kids and staying on this career path is not a good option.)
@CM – the Motherlode people did point out that many people found it difficult to continue as 2-income families at 3 kids, but the funny part to me is that people differed on whether this was an expense or savings. I’d side with the people who think that a person leaving the workforce is an expense. Yes, you save on childcare but you lose out on earnings plus raises for those years and probably on a few additional years given the complications in re-entering the workforce. Of course, if the first kid is already in school by the time the 3rd arrives, the additional costs would not be the equivalent of a third daycare bill. Also, at least in my neck of the woods, many professionals switch over to a nanny at 2 kids, so that’s the big bump, not the third. The third would be a smaller added expense (albeit for more years).
In the balance of life, time, money and HEALTH are all important. When you consider time and money, you should consider health in the equation.
1) How does one manage health insurance costs? How does one account for the possibility of high medical bills/disability? This, to me, is the most compelling argument for remaining a 2 income family. Self-employed people often have insurance with a $10k deductible- what if you have a child with asthma who hits that every year or for whom you can’t purchase insurance? What if you have to go outside your insurance network for care?
2) Retirement often is not a choice. Either one cannot work due to disability or due to employer age discrimination. What is the likelihood of this? How does it vary by profession? Dentists and tradespeople, like plumbers, often have back/knee problems by 50 that prohibit them from working in their fields.
In summary, I’d like to see this book address what to do about the bad things that happen in life (and their probabilities) than assume it’s all about choices.
@Twin Mom – tackling the problems of the American health insurance system is going to be outside the scope of the book, otherwise it would just be a book on that. Though probably worth a mention at some point. I’d agree with you that having a safety net is a good reason for remaining a 2-income family. And lots of families do have one person have the “stable” job while the other tries something entrepreneurial, precisely for the health insurance. Back when I was paying for an individual policy, I just had to build it in to the cost of living. And yes, it pretty much sucked. As for the retirement issue, employer discrimination is definitely an issue, though there are some interesting policy ideas out there on combating that (I wrote about one recently in USA Today). And since senior citizens qualify for Medicare, that removes one of the obstacles to trying something entrepreneurial that younger people face. I like the work that Civic Ventures is doing in encouraging “encore careers” — just because you can’t stand all day and do procedures doesn’t mean you can’t do something economically viable. In the case of a dentist, there are options like teaching, consulting to an oral care company or an insurance company doing dental coverage, etc.
It sounds like a breath of fresh air versus the standard “frugalista” approach to managing money. There are many corners of the web where it’s pretty much a competition to see who can out-frugal the other, and it’s kind of pathetic. It’s a different stripe of the “high earner” versus “wealthy” difference that’s very well explained in “The Millionaire Next Door”.
I find J.D. Roth (Get Rich Slowly) and Dave Ramsey (Total Money Makeover, among others) and Ramit Sethi (I Will Teach You To Be Rich) to have money philosophies that seem to go in line with this book. I really can’t stand the whole “Tightwad Gazette” approach to life.
@Jason – I hope it will be a breath of fresh air. I like J.D. Roth’s stuff. Dave Ramsey is fascinating, and has certainly found a market. I intend to stay far away from the concept of getting out of debt and budgeting. It’s not something I have any expertise in, so I more want people to think broadly about money.
Thanks. I especially like the part about thinking about wedding and engagement expenses rationally. Money is one of the toughest things that married couples deal with, so why not figure stuff out from the start? The ring, the wedding itself and the honeymoon are three items where the value of each should be carefully considered by the couple, especially with respect to their immediate future. Starting married life with tens of thousands of dollars in debt is not a strong starting point for a lifetime venture!
I like the title “Plenty” but the subtitled turns me off, although I can’t put my finger on exactly why or suggest an alternative. Sorry.
I like the chapter title “laughing at the jones” because it sounds like in this book you’ll be reminding people they do have a choice about how they spend their money (just as how in 168 hours you said we have a choice about how we spend time and that saying we don’t have time isn’t accurate).
@Laura-I agree with Alissa. There’s something about the expression of ‘buying’ happiness that doesn’t appeal to me. Maybe—Plenty:There’s Enough for Everyone; or Your Future, Your Way; or Plenty: You CAN Have it All.
One more thing about the double careers — I know your book is about money, but I actually like and value my career, and my husband likes and values his. Neither of us wants to stay home with the kids full-time. For us, even leaving aside the cost of daycare, more kids means more commitments (including time spent dealing with childcare), more sick days, more unpredictability, more years when we’re (to be frank) not giving our careers our all because we’re more focused on our family. We think this is totally worth it for the two kids we’ve always wanted, but for us I feel the marginal non-economic cost of more kids is significant.
My husband is a minister, and I’m an OT (part time). We are not wealthy, but live frugally and have recently paid off all our debt. I suppose our 5 kids could be considered raised in “affluent circumstances”.
We are teaching our kids the value of money. The little ones have the Dave Ramsey “Junior Banks” with give, save and spend sections. We talk deliberately about money and why we don’t go on expensive vacations. We encourage them give some of their earned money to church. My oldest son recently brought his cash to Walmart to get a video game controller, and decided he’d rather not spend ALL his money on 1 thing.
I don’t expect that they grasp it all, but I believe that this foundation will help them understand the value of money.
The topics sound interesting, but I’m not sure about the flow of the chapters. In particular, the Help Wanted chapter seems out of place, but I might rearrange some of the others as well. It seems like there are two big messages that you’re giving — that experiences are more satisfying than things, and that you should focus on the big issues (what you do for a living, where you live, how many kids you have) and less on saving small amounts.
The last chapter about kids learning the value of money, I find it to be the simplest concept to get across but our society seems to “give” to our children than to teach our children. Whether a family is rich or poor a child learns the value of money by working for it, the sweat of the brow teaches value, not education (but studying hard is sweat of the brow)or learning compound interest. The last 20 – 25 years of good living have changed our attitude towards work and money.
I’m a carpenter that can’t find a helper with a good work ethic and on the job there are hardly any people younger than 30.
Many kids have their college paid for by their parents, and many do miserable their 1st year only to spend the next 3-4 years trying to get their GPA up.
You need to know sacrifice to understand value.