Working in the Shadows by Gabriel Thompson

This is a book written by a privileged middle class person who never had to do back breaking, mind numbing work. He worked at various entry level jobs and seemed surprised at the physical requirements, endurance, mental challenges and skills/dexterity that were needed. Welcome to the working class world.

The thing is, I know too well is that a lot of people get caught up in surviving and are unable for various reasons to take the necessary steps to learn advanced skills and knowledge to raise themselves or their children out of this type of work and into a better situation. A high school education is not a good preparation for the current working environment. I would say it's more geared to maybe prepare kids for college. You need to continue your education either formally or informally. That's all I will say.

The Millionaire Maker by Loral Langemeier

I like this book a lot and recommend it. This book teaches you how to build your wealth by first knowing where you are and where you want to go. Discusses the wealth cycle and how to participate in it where ever you are in your financial life.

To find out where you are you have to determine

• monthly income (gap analysis, financial baseline, entities, conditioning)
  
• monthly expenditures (gap analysis, financial baseline, forecasting)
  
• assets (gap analysis, financial baseline, assets)
  
• liabilities (gap analysis, financial baseline, debt management)
• what else (gap analysis, financial baseline)
• what do you want (gap analysis, freedom day)
  
• what skills do you use to make money (gap analysis, cash machine, teamwork)
• are you willing to create and execute the wealth cycle process. (gap analysis, leadership)

The wealth cycle consists of 3 main areas, sequencing within the areas depends on your situation.

• Gap analysis, Financial Baseline, Freedom Day
• Assets, cash machine, entities, forecasting, debt management, wealth account
• Teamwork, conditioning, leadership

In order to activate and sustain the wealth cycle mechanism you must

• Put a portion of your earnings into a "wealth building account"
• Invest the above money after due diligence based on your visions & values
  
• Reinvest the earnings
• set up entities to protect these assets
• maximize tax strategies
• create a cash machine, a business, to make more money of which a portion goes into the wealth building account. This cash machine uses a known skill set to allow you learn business skills which you can then apply in any arena

She also discusses a credit card debt elimination plan that I've seen other places.

Financial freedom day is when you achieve your following goals:

• desired monthly cash flow
• desired net worth
• Specific date you want this to occur

She recommends the team approach

I also read two of her other books which go into more detail:

• Cash machine for life
• Guide to wealth cycle investing
  

Your Money Ratios, 8 Simple Tools for Financial Security by Charles Farrell, J.D., LL.M.

This book details a savings strategy to help you progress from your early years as a laborer to your retirement years as a capitalist where you live off the income from your savings.

Starting at age 25 and ending at age 65 he specifies what your ratios should be in the following areas based on age 65 & 80% income replacement.

• Capital to income ratio
• Savings ratio (He recommends saving 12-15% of your income, using 401k, then IRA, then taxable investment account.)
  
• Mortgage debt to income ratio (Own an affordable home in an affordable area. Use a fixed mortgage. Pay off your home mortgage before you retire so you have a cheap place to live.)
  
• Education debt to average income ratio (don't incur an education debt of more than 75% of your next 10 years predicted income. Parents fund your retirement before funding your kids education. Can always gift the money to them later.)
  
• Investments split between stocks & bonds
• Disability insurance as % of monthly income
• Life insurance to income ratio
• Projected income to LTC (Long term care costs) (start looking for LTC insurance at age 55)
  

These ratios could help you manage the what he calls the 4 core areas of personal finance; Savings, Debt, Investments and Insurance.

He believes that Social Security will exist in some form but with changes. The sooner the changes are made the less painful they may be. Need to be fair and not penalize high earners. You should get out what you put in or otherwise it is a welfare program.

Discusses good debt such as for house & education versus bad debt such as car loans and credit cards. Credit card debt causes you to pre-spend income not yet earned and at a higher cost due to interest.

He uses stocks such as an S&P index fund to help grow your savings and bonds such as US treasurer to maintain your savings. Need the combination to keep up with inflation and taxes yet not lose everything when the stock market dips. He notes that the stock market cannot be predicted by mathematical models because humans are not rational based on history. He has plan A- stocks, plan B-bonds, plan C-dividends from stocks and plan D is dollar averaging since you investing the same amount over time instead of on how the market is performing. Ignore Wall Street. Manage the investing risk by being balanced and patient.

Look for the following in a financial advisor; technical competence, independence & strong ethics. An independent third party custodian should hold your investments, not your advisor.