A Three Part Review
Jim Dahle graciously sent us copies of his new book “Financial Boot Camp”. Many of you know Jim Dahle from his original book “The White Coat Investor” and from all of the work he does with his website. It is not an exaggeration to say the Jim Dahle is the biggest name in physician personal finance. We read his new book and we want to share some of our thoughts about the book and about personal finance in general. So this is a combination of a review and additional information/commentary. We’ll list the main topics, organized by chapter, and try to rip his book to shreds provide corroborating or alternative opinions.
We’re going to spread our review out over three posts. Here’s part 1!
Our Overall Take
Simply put, the book is good and it is a quick read. And you should buy it (or borrow it). It nicely summarizes the important basics, which (if followed) will put you ahead of most of your peers. Each chapter is concluded with a list of action items, which is a major strength. These help to simplify seeming complicated topics into concrete steps. We also like that the book advocates for a written plan to achieve your financial goals, whatever those goals may be. Goals and plans in writing will always have more power than nebulous financial goals or dreams in your head.
Does this book bring any new information or have information that you couldn’t find elsewhere? Not really. But it does do a good job of organizing information into a single resource. You could instead choose to sign-up for his newsletter and get much of the same information in the book emailed to you over the course of 12 weeks. In fact, that is what the book is based off, a set of 12 emails Jim Dahle had composed to be a financial primer or ‘boot camp’. We prefer to sit and read a physical book compared to reading online, but we might opt for a few free emails over paying for a book that has the similar information, except with additional reader’s anecdotes (which you are going to find either distracting or informative, depending on your personality).
Why You Won’t Read This Book
Despite our recommendation, will you pick up this book? Will you read it? Probably not. Why not? Jim explains why, and we agree. In his discussion of paying for a financial planner (Step 8) he divides people into three groups. Simplified and also mixing in our take, 10% of people love learning and reading about finance, and this book will be basic for them so they don’t need it or will read it for fun and not education. 80% of people dislike this stuff, find it stressful, and would rather ignore it or outsource it via paying for financial planning. The cost of financial planners is often steep (usually because most will charge you based on a percentage of your investments rather than a flat fee or hourly), but this group may not mind paying or won’t do the math to learn how much such planning really costs them over time. So who’s left? The 10% who are willing/able to take some time and self-educate. Let’s face it, if you can pass Step 1 of your licensing exams, you are certainly capable of learning enough about personal finance to manage your own money. It takes far less time than you may think, and most of it is EASY.
If you are reading this review, you are likely already in that last 10%. But if you are in the 80% group, in the time it took you to read this far you could have gotten through his first two chapters. However, as long as you are here, don’t stop reading! We have some useful additional information or advice not found in the book.
Note About Financial Advice
We want to echo what Jim says about financial ‘advisors’ and financial salespeople: you need to understand how they get paid to understand where their incentives are pushing them. Even if you do end up paying for financial help, you need to understand the basics of personal finance and investing, and also understand how financial professionals get paid and whether that influences their advice. He does a good job explaining this in the book and we agree that it is something that shouldn’t be overlooked. But we would also repeat the same for everything you read about finances regardless of the medium: how is any particular book or website or blog post making money and does that affect what is written? The book regularly directs readers to the advertisers on his website. Does that influence his advice? What about Doctored Money? What are our motives, incentives, conflicts? There are always conflicts of interest, and you should be on the lookout for these with respect to any financial advice offered to you.
Now that we got all of that intro information off our shoulders, let’s dive in the each chapter. The first few chapters are included below and the in subsequent posts we will break down the rest. Enjoy!
Step 1 - Disability Insurance
This is a general introduction to disability insurance, with explanations of the various options (aka ‘riders’) available. We have our own lengthy FAQ on Disability Insurance that we are quite proud of and is essentially a book chapter of its own. We encourage you to read it as a free companion to the information in this book. We agree with most of the advice in the book, which includes buying your own private policy, and buying it as early as possible. But we disagree with his suggested “elimination period”.
The elimination or waiting period is the time between the start of your disability and the first payment. Common options are 30, 90, 180, and 365 days. The book recommends 90 days, but we suggest an 180 day elimination policy. A longer elimination period is cheaper. Statistically, you will NOT be disabled (although, you DO need a policy). And thus, saving a couple hundred dollars a year on a policy will add up over time. What do you lose? Well, compared to a 90-day elimination policy you’ll lose out on an additional 3 months of income, but only if you become disabled. We think you should make plans to self-insure for the first 6 months of disability. You’re total loss and maximum ‘regret’ if you are indeed disabled and had chosen 180 days over 90 days, is 3 months of payments. Compared to your total lifetime income (pre- and post-disability) this is a trivial percentage. Have some sort of emergency money (cash, Roth IRAs, and even employer retirement accounts can be used in this case).
Step 2 - Life Insurance
Like the book, we strongly discourage you from purchasing any life insurance which is not “term” life. That is, avoid whole life and other “permanent” life insurance policies. Otherwise, this is a short, basic introduction to life insurance. Additional and overlapping information can be found on our own life insurance FAQ.
Step 3 - Spending Plan
Not much to say here. It’s a standard chapter on budgeting.
More to Come!
Keep any eye out for more of our review. Part 2 covers chapters 4 through 9, while Part 3 covers chapters 10-12 along with a critique of the design.
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