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Book review: 'Living Rich by Spending Smart'

Who should read it
Anyone who needs help living within their means can gain some ideas from this entertaining, easy-to-read book.

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Synopsis
In "Living Rich by Spending Smart," author Gregory Karp tells us that the truth is, money and life are about choices and priorities. Do you want to spend money (or live life) without thinking, or do you want to use your money (your life) as a tool to buy the things you really care about? In this age of instant gratification, it's easy to be sidetracked by attempts to separate you from your money. Karp reminds us that taking time to have a plan is time well-spent.

Karp starts out with the basics, his "FIT" program of spending, which stands for food, insurance and telecommunications. By managing spending on these three items, Karp estimates most people can save $1,000 a year.

Specifics include:
Stockpiling groceries by buying items that are on sale, rather than what you need. It can save the average family 20 percent on grocery bills.
Buying only term life insurance and how to "refinance" if you've made a mistake and bought some other type of life insurance.
Examining your phone and cable bills to determine your actual calling and watching pattern, and then buying the services you actually use, rather than whatever "bundle" the provider promotes.

From there, Karp goes on to point out the worst wastes of money, including extended warranties, lottery tickets, cigarettes, bottled water and vacation time shares. In each of these categories, he uses simple math to show the exorbitant costs of these choices.

Strong/weak points
Karp also points out psychological research that helps consumers understand what forces impel them to spend.

Book review
"Living Rich by Spending Smart"
 
 
 

For example, did you know that simply touching an item that you are considering buying increases the chance that you will purchase it? Shopping in crowded malls will almost always ensure that you succumb to impulse spending. That's why Karp recommends online shopping, to avoid touching the items. Online shopping allows you to do some instant comparison shopping, to ensure you get a good price.

Even though Karp's wisdom is aimed at the novice, his writing is entertaining and honest, so even those who may have already adopted his approaches will get a chuckle from some of his points. If nothing else, you can pat yourself on the back for making good choices.

Takeaway
"Living Rich by Spending Smart" is a great guide for anyone interested in living a "rich" life with a middle-class salary.

Bankrate.com's corrections policy
-- Posted: March 4, 2008
 
 
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