Book Review
Title: "The Wall Street Journal Guide to Starting Fresh"
Author: Karen Blumenthal
Publisher: Crown Business, 2011; 208 pages; $15
Few things in life signify a fresh start like New Year’s. At the risk of stating the obvious, the concept of a fresh start is the most appealing to those who need it. It’s only when you’ve been struggling, floundering or have been through some trials and tribulations that you even need to start over.
And trials and tribulations are precisely what many of us have been through over the last few years, when it comes to our personal finances.
If you’ve lost a job, lost a home or simply lost a lot of equity in your home or on the stock market, the latest entry to The Wall Street Journal’s Guide series might be just what the doctor ordered to help you reboot your money matters this year.
In "The Wall Street Journal Guide to Starting Fresh: How to Leave Financial Hardships Behind and Take Control of Your Financial Life," Wall Street Journal columnist Karen Blumenthal takes an understanding — and understandable — approach to tackling the daunting exercise of financial rehab.
This book is not about fancy tricks or secrets; rather, its power lies in the simple, systematic and comprehensive approach it presents, and in its offering of customized prescriptions for special situations (i.e., recently divorced or widowed, recent health disaster, etc.) without overly complicating the book for everyone else.
Blumenthal starts out walking readers through the exercise of conducting an inventory of their life priorities, assets and liabilities, and creating a basic foundation of daily stability (i.e., functional home, transportation, emergency funds, etc.) from which a deeper financial recovery effort can be launched.
This book represents a step-by-step approach to getting your finances under control, resetting your daily finances to align with your new reality, and getting your financial goals and aims back on track. Here are three steps Blumenthal provides for starting fresh, after experiencing money trauma:
1. Build your "trust team." Blumenthal recommends interviewing and seeking advice on your financial plan from a trustworthy financial adviser, attorney and tax preparer.
In addition to providing interview questions for these folks, she also recommends avoiding debt settlement firms (most cannot do anything you can’t do for yourself) and accessing low- or no-cost resources like nonprofit credit counselors, the IRS’ Volunteer Income Tax Assistance program and even support groups.
It might seem unrealistic to pay for advice if cash flow is tight, but I’ve seen many strapped households make costly errors as a result of doing some things on their own. Especially if you’re considering a short sale or walking away from your home, it behooves you to consult with a local attorney and tax preparer first; I would personally add a local agent and mortgage broker to the list.
2. Adapt to your new reality. Have you ever known someone who’s fallen on hard times, but can’t seem to give up the creature comforts of his or her former life? Blumenthal reality-checks such readers, exhorting them to recalibrate their monthly budget and expenses in line with their new situation.
From deciding whether to move or stay in your home, whether and how to seek a loan modification, and making necessary alterations to plans around college and car expenses, Blumenthal walks readers through the big decisions and changes they must consider to press the financial reset button.
3. Invest for your future. When we encounter financial hard times, it’s easy to get stuck in survival mode, and continually postpone turning our attentions back to our future financial plans. Blumenthal tries to snap readers out of this, reminding them to shift their viewpoints from right now to the future, and to re-up their focus on investing, saving and insuring.
As she provides resources for configuring a new financial plan, Blumenthal provides some very user-friendly tools for necessary need-to-knows around reading and understanding stock market information.
To be sure, this book is a better fit for those who have a job and can pay their monthly living expenses, but are seeking to reconfigure their savings, investment and housing strategies to thrive over the long term in light of recent life and economic changes.
(If you are truly struggling just to make ends meet or have a problem with chronic debt, I would recommend Karen McCall’s "Financial Recovery" as a more appropriate starting point; you can circle back to "Fresh" after things have stabilized.)
