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Book Review: The Psychology of Wealth


The Psychology of Wealth: Understand Your Relationship with Money and Achieve Prosperity by Dr. Charles Richards is a bit different than the usual personal finance book that I’ve been reading lately. This book won’t show you how to become a millionaire or get out of debt. Dr. Richards worked with many successful people and he showcases what helped them become successful. In our society, we often equate money with success, but this is not the whole story. Many rich individuals struggle with inner demons and fears. They have a lot of money, but are not happy. Is that success?

Wealth is a sliding scale and the poorest Americans today live a much more comfortable life than a wealthy landowner from 200 years ago. The key to being wealthy is not comparing what you have to others, but defining what success is for you. If you have confidence and goals, you can achieve great things. Having high self esteem is essential to becoming successful and there are many ways to improve it. Family and upbringing plays a big part, but you need to face challenges and overcome them to really believe in yourself. The book is a bit light on financial advice, but Dr. Richards does cover a few mundane financial topics.

Dr. Richards went over the history of credit and showed us that in the past only a few people had access to credit. This prevented overspending, but also limited opportunities for many people. He categorized debts into consumptive and productive credit. When you get a loan to remodel the kitchen, it is consumptive credit and the kitchen will be for personal use only. On the other hand, if you use the credit to buy a hot dog stand, you can make money from it. Productive credit is a good thing and most businesses need such capital for operations and expansion.

My parents purchased their Thai restaurant for $9,000 in the 80’s. They did not have much savings and put only $3,000 down. They then paid the seller in monthly installments and in a few months they owned an income generating business. Many personal finance gurus believe all debts are bad, but Dr. Richards takes a different view. I agree with him that productive loans are a good thing.

There are many stories of successful people in this book and most share a common trait. They believe in themselves and they never stop trying. The road to success is like a mountain trail. There are rises and falls, but as long as you keep putting one foot ahead of another and head in the right direction, you will make progress. We need to make clear goals and envision where we want to be. What is your mountain top?

This is a very difficult question for me. I don’t have a clear idea of what success means to me. I know what I don’t want to do and I guess that is a start. I don’t want to climb the corporate ladder to become a high ranking leader nor do I want to work in a cubicle for the rest of my life. I suppose I should look though the 200 jobs list and see if anything tickles my fancy, but I’m pretty sure working in a corporation is wrong for me. Being an entrepreneur on the other hand is very attractive to me. My current dream of owning and operating a hostel/B&B near a beach paradise sounds good to me. 😉 What is your dream job?

All in all, I enjoyed this book. It has it’s up and down, but overall it’s an enjoyable read. I will have two copies of the book to giveaway in May so keep an eye out and don’t forget to enter.

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.

For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.

Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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{ 14 comments… add one }
  • Roshawn @ Watson Inc April 25, 2012, 4:32 am

    I have heard about this book before, and now it does sound like an interesting read. I like unconventional books about personal finance anyway, so I’ll have to add it to my reading list. I’ll be looking out for your contest in May.

    • retirebyforty April 25, 2012, 2:16 pm

      I have a feeling that the book will resonate with you.

  • krantcents April 25, 2012, 1:01 pm

    If I had a dream job it would be a paid writer without deadlines. Perhaps that means it will have to be freelance. In 5 years I expect to retire (again) and just volunteer and continue blogging.

    • retirebyforty April 25, 2012, 2:17 pm

      Freelance writing have deadlines right? If there are no deadline, I probably won’t get much done. 🙂

  • Eric April 25, 2012, 4:32 pm

    The issue of debt being good or bad is always an interesting debate. As you say, many personal finance gurus believe all debts are bad. However, Dr. Richards believes “productive debts” are good.
    Recently, college loans (personal debt) is being debated as being good. Since college costs keep rising, loans are the only thing that allows young people to stay “productive”. However, now that college loan debt is so big, what is its effect on our younger generation?
    Before that, mortgages (personal debt) were being debated as being good. Since housing prices continued to rise, loans were the only thing that allowed people to stay “productive”. Now that prices are down, everyone regrets their “good” debt.
    Also, we continue to debate government debt as being a good. Since costs keep rising, government debt is the only that allows us to maintain our way of life at the expense of future generations.
    Even in the third world, as economic situations change many organizations are supplying micro-loans in order to keep people “productive”. However, micro-loans are still being debated as to its validity to actual help at a macro-scale.
    The trend I see underneath all those debates are that as costs keep rising, loans are the only thing that are keeping us “productive”. Debt may be good or bad, but it is a necessity because our world is addicted/dependent on it to ensure our productivity. I wonder what Dr. Richards thinks about a debt-based economy. I guess I need to read the book to find out.

    Keep up the good work,

    • retirebyforty April 26, 2012, 9:10 am

      Thanks for your input Eric. I think an education is worth paying for. I don’t know where I would be if I didn’t get a college education. Many young people are in a bit of trouble with student loans, but I think that can be avoided with some creative thinking. Perhaps a couple of years in community college is a way to save. We are saving for our kid’s college education and will try our best to help out.
      Mortgage debt and government debt are consumption credit to me. A house is just a place to live and if you make a bit of money when you sell, then it’s a bonus.

  • James April 25, 2012, 8:22 pm

    Walk into a Barnes and Noble and you will see 1000 similar books. They all say the same thing. Follow your passion, never give up, visualize the outcome. It blows my mind how so many people can make so much money writing about the same thing.

    • retirebyforty April 26, 2012, 9:11 am

      I haven’t been to Barnes and Noble in a long time. I wonder how much money the authors really make if there are so many books with the same messages out there.

  • Elaine Colliar April 26, 2012, 2:39 am

    I think you may have produced a very powerful “AHA” moment -so many times (in so many books) I have heard the “What is your dream job?”

    Today I sat down and wrote out in exquisite detail what my dream week in my dream job would look like – I now have a whole series of things I need to be,do and have to make my dream int actual reality.

    Thank you so much – my heart (and the knock on to family finances) thank you too.

    • retirebyforty April 26, 2012, 9:12 am

      You’re welcome! I need to write a post about my vision and how to get there too.

  • Christa April 26, 2012, 10:05 am

    This book does sound very interesting. I think taking a look at psychological factors of wealth can be very beneficial to everyone.

    • retirebyforty April 27, 2012, 10:07 pm

      It’s helpful to see what to avoid and what to cultivate. It gave me somethings to think about.

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