Custom Search
Personal Capital, a financial primer by JL Eaton, represents the culmination of more than three years of intensive research and writing that has the dual aim of addressing many facets of personal finance (spending, taxes, home-buying, investments, etc.), and also to present the information from a different perspective than most competing works.
Today, there is a very large volume of "how to" guides that are aimed at getting people out of deep debt. Additionally, there is no shortage of books that attempt to teach "secrets of" stock day-trading, or the "perfect flip" when it comes to speculating in real estate. There are volumes of books that address one asset class, and then convey the idea that you too can become rich overnight. However, Personal Capital is neither a guide to rescue debt-ridden people, nor an asset-of-choice get rich quick scheme. JL Eaton's work explains the interrelationship of how very basic economic lessons ignored leave most people permanently debt-ridden (and quite un-wealthy). That is, the message is simple: enduring wealth for most employable people is attainable; however, the route that must be taken is neither easy, nor fast.
Among the many topics addressed and discussed within Personal Capital:
- How saving from your income begins the capital allocation cycle
- Why pretending-at-wealth consumes and wastes resources necessary for wealth-building
- Distinguishing between tax credits and tax deductions -- and why it makes a difference
- All about the homebuying process: the good, the bad, and the rest
- Three major types of debt, and how those debt types kill wealth building aspiration
- Why Your Credit Score can be thought of as a long-term asset
- Introduction to Securities (stocks, bonds, etc.)
- Distinguishing between "qualifying for" and actually affording a particular home
- Investment Real Estate for the long-haul
- Tax-Favored Retirement Accounts (IRA, 401k, etc.)
- and many more...
The book is divided into five major parts:
-Part I: The Basics of Economics
-Part II: Debt
-Part III: Taxes
-Part IV: The Basics of Real Estate
-Part V: Investments
Synopsis of the Five Book Parts:
Part I: Basic Economics
Part I introduces participants to rudimentary financial and economic ideas. These basic concepts assume that participants are not familiar with the time value of money, the Rule of 72, return on investment (ROI), the asset value of a credit score, and the basic definition and key issues that underlay the academic field of Economics. Whereas this is not an economics course, per se, participants are introduced to multi-faceted economic concepts nonetheless. Among key issues that are addressed are such things as the allocation of scarce resources, savings, debt, and income, as well as the financial problems that afflict everyone who chooses to pretend-at-wealth.
Return to Top
Part II: Debt
Part II is dedicated to the most salient reasons why an individual must control his or her spending. Wanton spending generally, and debt-based spending specifically, is what keeps most middle and upper-middle income people from ever having the opportunity to attain enduring wealth. Three types of debt are discussed, two of which drain capital that could have been invested. The third type of debt, investment debt, is explored both for its great contributions to wealth; and also for its potential to wreck the lives of the unwary. Additionally, the inherent neutrality of interest is explored. Also explored in detail is the awful combined consequences of what economists call the Wealth Effect and, additionally, what I call The Refinance Myth. Every homeowner who has been told that he or she is "cash poor, but house rich" will not want to miss the discussion on The Refinance Myth.
Return to Top
Part III: Income Taxes
Part III explores the most basic precepts that underlay our federal income tax system. It de-mystifies the progressive U.S. tax system with illustrative fundamentals on its workings and tangible examples. Additionally, readers will see that not all income is created equal; and that the income earned from a job is the most heavily taxed. Worse, by taking a second job and earning interest on a bank savings account, the highest rates of tax are invited for those additional incomes, as well. In the end, readings and lectures round out this section on taxes by examining different qualified retirement plans, such as the Traditional IRA, Roth IRA, the 401k, and the relatively new "Roth 401k". Most important, the differences between retirement accounts and an investment are explored.
Return to Top
Part IV: The Basics of Real Estate
Part IV is dedicated to the basics of real estate, to include the home-buying process, the real estate cycle, and the players that would-be buyers and sellers might expect to encounter along the way. Among the actors that you will encounter, the real estate agent, the appraiser, the mortgage lender, the inspector, and the title officer (escrow officer/closing agent) are examined. Special emphasis is placed on the implications of relative housing prices as well as the determination of how strongly a buyer or seller may rely on housing prices/values to make major financial decisions. This section concludes by examining the implications of consuming unrealized home equity.
Return to Top
Part V: Investments (Beginning Capitalism)
Part V lays out the essentials behind investing and the more salient features of different investment types. Possibly the single most key feature of this section is the discussion on distinguishing investment operations from all other money-related operations. That is, if you think that all operations involving the purchase of assets is "investing", then you are at a major disadvantage to others who know better. Fundamental concepts behind the purchase of real estate, bonds, stocks, bank products, annuities, and hybrids, such as mutual funds and real estate investment trusts (REITs), are explored. This portion of the book is not intended to make the reader a successful investor, but rather it provides a proper grounding to make it much easier to become a savvy investor in the future. Readers must first understand and embrace the lessons laid out in the first four book parts in order to better understand the basic lessons of Part V. Readers who combine the information laid out in Parts 1 through 5 should have ample resources available to convert excess income to investment assets, and begin a long endeavor of real wealth building.
Legal Disclaimer:
Neither Personal Capital, the book, nor CapitalistCurriculum.com provides investment or legal advice to any individual. You must weigh your own specific circumstances and act according to your own conscience. The primary aim here is to illustrate why increased future purchasing power is critical to advancing financial goals; and to provide knowledge about how future purchasing power may be increased. Individuals must weigh the pros and cons of options that are presented; as no one else bears the burden of mistakes or enjoy the fruits of choices well made.
Return to Top
If you have questions or comments on any of the above information, please leave them here and we will respond shortly. Leave a Question or Comment!
CapitalistCurriculum.com is designed to provide relevant financial information
necessary for comprehensive wealth building.
©2008-2009 Veblen Capital