‘Buy This, not that’ book review
Buy This, Not That is a very, very good book. Sam Dogen (aka Financial Samurai) has been around for a long time, and Buy This, Not That is a bit of a magnum opus. It is a wide-ranging personal finance guide, covering personal finance best practices, retirement planning, investing tips, career stuff, and even philosophical explorations of money, retirement, and career (righteous).
In short, Buy This, Not That is a very good book. You should buy Buy This, Not That and read it in one go, or over time (using it as a reference point) or perhaps even read it yearly as a check-in on your personal finance practices. I’ll get into some major insights from the book in a moment.
One of my favorite things about Buy This, Not That — and about Sam’s writing generally — is that he steers clear of sanctimony and doesn’t act like his shit don’t stink. Many personal finance and investing books seek first and foremost to emphasize how smart the author is. Often, they don’t tell you anything of any value, it’s just a series of self-aggrandizing stories. In Buy This, Not That, Dogen doesn’t just give sage advice, he writes about his own mistakes and takes a very shame-free approach to offering practical guidance. The book is avowedly for any age and any level of income, not just for those making an obscene salary or those who have already amassed a huge portfolio. It’s really a book about mindset.
The biggest takeaway from Buy This, Not That: be honest with yourself about money. Understand your buying power and your expenses and don’t be in denial. Make a plan, and don’t beat yourself up too much if you stray from it.
Dogen provides a few easy rules of the road based on math that appears quite simple when you consider it. E.g., achieve net worth of 20X your average annual income. This way your expected annual income from relatively conservative investments will cover cost of living, even if there is a prolonged down-market during your retirement years.
Buy This, Not That — Major Insights.
There’s quite a bit in here, so of course I’m not going to do the book justice. It is a broadly applicable guide, so almost anyone who isn’t already filthy rich is going to benefit from reading it.
That said, here are some key insights from the book Buy This, Not That by Sam Dogen:
Focus on Financial Freedom, Not Just Wealth Accumulation: Dogen emphasizes the importance of achieving financial freedom rather than just building wealth for wealth’s sake. He encourages readers to define what financial independence means to them personally.
Prioritize Experiences Over Material Goods: The book suggests that spending on experiences, such as travel and personal development, often provides more lasting value and happiness compared to spending on material possessions.
Invest in Real Estate Early: Dogen advocates for real estate as a crucial component of a diversified investment portfolio, highlighting its potential to build long-term wealth through appreciation and passive income.
Maximize Tax-Efficient Investments: The author advises readers to focus on tax-efficient investment vehicles, such as retirement accounts (401(k)s, IRAs) and municipal bonds, to reduce tax liability and grow wealth faster.
Balance Between Spending and Saving: Rather than extreme frugality, Dogen recommends a balanced approach where you enjoy life while saving and investing wisely. He advocates for thoughtful spending that aligns with personal goals.
Job Stability and Passive Income: Dogen discusses the importance of maintaining job stability while also creating multiple streams of passive income to reduce reliance on a single income source.
Consider Your Career as an Investment: The book encourages readers to treat their careers like investments, strategically improving skills, networking, and switching roles if necessary to maximize income and job satisfaction.
Avoid Lifestyle Inflation: Dogen warns against increasing lifestyle expenses as income grows, advocating instead for maintaining a modest lifestyle and channeling surplus income into investments.
Wealth is a Means, Not an End: The core message is that wealth should be viewed as a tool to achieve life goals and provide security rather than an ultimate objective.
Optimize Housing and Transportation Costs: Since housing and transportation are often the largest expenses, Dogen recommends optimizing these costs to free up more money for investments and experiences.
Righteous Money wholeheartedly recommends Buy This, Not That
Righteous Rating: 5.0/5.0
The Case for “Non-Pre-Tax” Investments
Financial Samurai also makes an interesting case for investments outside of the mainstream, sometimes called “alternative investments.” Basically the idea is that you need investments that will pay you over time, outside of the ebb and flow of the stock market. Tax-advantaged vehicles like 401Ks and Roth IRAs serve a purpose, but they won’t help you to get to type of passive cash flow that can bring early retirement.
Dogen specifically keys in on real estate (e.g. the type of passive real estate investing EquityMultiple and Groundfloor offer).