The Wealthy Barber Returns

I read David Chilton’s first book “The Wealthy Barber” several years ago and I loved his story with the simple message that you must pay yourself first. YOU ABSOLUTELY MUST SAVE 10% OF WHAT YOU EARN - it must be a priority and be the first thing you do when you get paid.

Mr. Chilton’s second book “The Wealthy Barber Returns” is now out and I just finished reading it and it is very good. I found it very informative and I love the humor he injects into this serious financial subject. He starts out by saying that the reason it is so difficult to save is because no one really wants you to which is very true. Almost everyone wants you to spend as much as possible. Your kids, your friends who have weddings in Mexico (remember when everyone’s reception was in a community hall?)” and even real estate agents and mortgage brokers will always ask you how much you qualify for, as if that should determine how much house you buy.

One of the biggest threats to our financial well being is the easy access to lines of credit which are secured by our homes. It undermines our finances as we continue to spend and will never get our home paid off. This becomes an issue later when we start to contemplate working less which we won’t be able to afford, as we now have to pay off the line of credit when we sell the house.

He continues to say that “we want what we already have” but now newer, bigger and fancier which means we will never be satisfied – think houses, cars, appliances, televisions.

Keeping up with the Joneses used to mean that everyone in the same neighborhood wanted the same things. Nowadays friendships are less likely to be anchored in neighborhoods as your friends come from a larger circle like the gym, work, kids school etc. We’re now exposed to the spending habits of people across a much wider income range. We hitch rides in their fancy cars, we marvel at their exotic vacations and are in awe of their son's new $500 hockey stick. It’s hard to overstate the impact that our ‘reference group’ have on our spending decisions. Their lifestyles intoxicate us and with easy credit available it leads us to act richer than we are.

Mr. Chilton suggests that “it’s cheaper to drag your friends down to your level than for you to raise to theirs”. Try saying “I can’t afford it” more often and you might find your friends quickly agreeing that they can’t either!