One of the blogs that I’ve been following for years is Financial Samurai, a personal finance website run by Sam Dogen. So I was thrilled to get an early copy of his brand new book Buy This, Not That which is now available at retailers everywhere. The book is officially a Wall Street Journal bestseller now as well!
What I love so much about this book is that it’s easy to understand, has real-life solutions, and is like getting 10-15 books worth of knowledge in one. He covers so many important aspects of financial independence, investing, financial planning, growing wealth, and more. Plus, he does it all without any fluff or filler.
Sam is a witty writer who genuinely wants to help people make better financial decisions. In addition, he challenges readers to think in new ways and develop the courage to change. To get all the juicy details on what’s included in the book, please check out my thorough Buy This, Not That book review.
What I want to discuss here are my three favorite tips from the book and how they’re helping me in my own life.
1. Overcome Decision Paralysis
Buy This, Not That introduces Sam Dogen’s fantastic 70/30 decision-making framework. It’s explained thoroughly in the introduction (not to miss!) and weaved into the chapters throughout the book. What is it? In simple terms, the 70/30 philosophy helps give us the courage to make choices and act.
Sam talks about how so many people get paralyzed by indecision and uncertainty, especially with big decisions that involve money. Fear is also a huge obstacle to decision making. When we don’t feel 100% certain that a decision will result in success, we drag our feet or just turn around and walk away.
The fear of failure and taking risks is legit and scary! But how unfortunate it is when we miss out on fantastic opportunities because we were too scared to act.
Using Buy This, Not That‘s 70/30 decision-making philosophy, we toss the need for absolutes out the window and think in probabilities instead. In other words, if we can forecast that a decision will result in at least 70% success, we should go for it.
This means that 30% of the time, or even less, we will fail or make a suboptimal decision. However, we learn to embrace that amount of risk by making smarter choices that enable us to overcome decision paralysis.
After all, it’s impossible to know the future and what the outcome will be of every decision we make. But we have to learn to take chances and be okay with failing sometimes if we want a real shot at success.
How The Buy This, Not That 70/30 Philosophy Is Helping Me
I can relate to decision paralysis so much! I am very indecisive by nature and have definitely wasted a lot of time in my life feeling stuck and not taking action because I didn’t know what to do or what to buy. Being able to utilize the 70/30 decision-making philosophy has been really helpful for me. Here’s a recent scenario when I used it:
In competitive cities like San Francisco, getting into a top preschool is a stressful and challenging process. Waitlists can be 6 months to several years long. And most people don’t even make the short lists! Thus, we set our hopes low during the application process last year and didn’t plan to enroll our 2yo daughter anywhere for another 1.5 years.
Getting Into A New School
Recently, however, a friend randomly told us about a new school in our neighborhood for ages 2-6. Could this be destiny? Her son went to a school the new director co-founded in another neighborhood prior to the pandemic. We were excited to hear about the opportunity, especially since there was no waitlist. But, we also felt reluctant to put our daughter into a new school with no track record. And we also had some reservations about her starting school before age 3.5.
To help aid in our decision, we attended a parent-only tour and a separate playdate for our daughter. The facilities are small, but newly remodeled. The teachers also seemed experienced and caring. Our daughter was scared to detach from me at the playdate. But she was curious and interested in what the other kids were doing. Since time was of the essence to secure a spot for fall, we applied the Buy This, Not That 70/30 framework to help us decide what to do.
We feel about 90-95% confident the school will be a safe, nurturing place she can thrive. In addition, we feel about 80-85% sure she will have fun, learn new things, and benefit from socialization. Our reservations are around the limited size of the space if/when the school reaches full capacity. And we have uncertainties about sending her there due to her cautious personality and separation anxiety. But, we also think there’s a higher than 70% chance she won’t get into any other schools for this fall.
In the end, we decided to go for it put down a hefty $2,500 deposit and lock in a spot for her this September. If the decision turns out to be a bust, the pros are we can get our deposit back if she attends for at least three months, and we still have a chance, albeit a small one, to get off the waitlist at other schools.
2. Crunch Numbers If You Want To Get Rich
My second favorite tip in the book stems from math. Although I took AP calculus in high school, my arithmetic isn’t that great without a calculator. But, I do appreciate the importance of math in everyday life and in personal finance. And as you’ll learn in Buy This, Not That, crunching numbers is so important to achieving financial independence, successful homeownership, raising kids, having a comfortable retirement, and more.
This isn’t a book that teaches you how to make and stick to a basic budget. You can learn how to do that using free software with Personal Capital. Instead, the book provides helpful ratios and simple formulas that you can actually utilize to make big financial decisions. For example, are you better off buying this home or renting that condo?
So many people throw their hands up in the air in frustration and give up at the first sight of numbers. But running away from math can cost you a lot in the long run. What’s great about Sam’s advice that involves number crunching is that it’s easy to understand. You don’t have to calculate complex statistics formulas or create dot plot graphs. He explains his strategies and guidance in plain English and simple calculations.
However, I do highly recommend that you look at the details of your income stream(s), expenses, net worth, and financial goals in conjunction with what you learn in the book. You have to get very familiar with your finances if you want the best shot at growing your wealth.
If you need help with that part, just sign up for a free account with Personal Capital. Their secure software will easily help you compile and manage all of your financial accounts. You can learn more in Sam’s Personal Capital review.
How Number Crunching Is Helping Me
As a mom of two kids living in expensive San Francisco, I really enjoyed the sections on education and sending kids to public versus private school. This is a difficult decision that a lot of parents go through at the grade school level and then often again at the collegiate level.
I attended public school until 10th grade and then switched to private school for my junior and senior years of high school. The only reason I was able to do that was because I got a scholarship and financial aid. Then I attended a public college thanks to the help of a scholarship, financial aid, grants, and loans. As a result, I was able to see some of the best and worst aspects of both public and private schools.
Although there are so many different variables to consider when choosing a school, the biggest one is almost always cost.
The guidance in Buy This, Not That helped me take a look at our income to tuition ratio and actually calculate how much we could end up spending in various scenarios. The framework also helped me put fears and emotions aside so I could focus on probabilities, affordability, and the mathematical aspects of the decisions instead. Ultimately, we were able to confidently select two separate schools, one for each of our kids, that fit our family’s needs and finances.
3. Don’t Have Only One Source Of Income
My third favorite tip from the book is related to income. When I was growing up, I thought I’d be set for life if I went to college and got a job. While that’s certainly a very important achievement that I accomplished, I didn’t realize there was SO much more I needed to do to really be financially free.
I didn’t know anything yet about investing, taxes, paying for insurance, saving for retirement, or recessions. That’s why I love Buy This, Not That. It covers so many important topics for adulthood that we never learned about in school. Plus, it talks about the importance of building multiple income streams.
A lot of people have only one source of income, typically a full-time day job. But think about the risks of having all of your eggs, so to speak, in one basket. Wouldn’t you sleep better at night if you had at least one or two other income sources coming in at the same time?
There’s some great advice in the book on putting time into starting a side hustle. And before you jump in and complain about being too busy, try to keep an open mind. Taking on a side hustle doesn’t have to be a permanent or long-term commitment. Take advantage of time, energy, and skills while you have them. A side hustle can really open more doors than you realize.
In addition, Sam’s also spot-on when he talks about the importance of building passive income streams. Active income streams are important and can be very gratifying. But, being able to earn money passively is really what can allow you to live a better life, take your foot off the gas, and relax.
If you aren’t already, the book will get you excited about the possibilities of earning passive income through dividends, interest income, rental property, online real estate, or even selling your own products. There are endless possibilities!
How Buy This, Not That Is Helping Me
Although I sometimes overwhelm myself unnecessarily over small things, I really like the gratification that comes with active income. Getting results and money after putting in time and effort on something is a great feeling, especially when you’re doing work you love. So even though I left my traditional day job in 2015, I’m still working today, just in a very different capacity.
I typically spend 6-7 days a week doing editorial work, operational tasks, writing, and tackling adhoc projects. Even though I love the productivity that comes with working a lot of hours, my work schedule is capped at about 4-5 hours a day. The rest of my time is spent taking care of my kids, preparing food, cleaning, and handling misc tasks.
One of the main reasons I was able to escape the grind was because I started side hustling many years before I left. Another is that I was able to negotiate a severance thanks to Sam’s advice, so I left my job with money in my pocket.
In addition, I started saving like crazy and slowly started investing as much money I could into different types of income producing assets. I owe most of my financial decisions to Sam’s advice he’s been publishing on Financial Samurai for over a decade. And Buy This, Not That incorporates so many of his best recommendations and more.
As of now I have roughly six sources of income from self-employment, stock dividends, bond interest, rental property income, online advertising, and a small amount of interest income. I used to have some P2P income as well, but I decided to wind down my account and reallocate the funds elsewhere. It took a long time for me to get there, but I really believe that building passive and semi-passive income streams is well worth it.
Get Even More Tips From Buy This, Not That
Although I’ve covered my three favorite tips from Buy This, Not That, I actually have so many more. But I didn’t want to spoil all the surprises and suggestions in the book!
I really recommend this book to anyone who wants to figure out how to make better financial decisions. Not only that, you can also learn so much more about how to get the most out of your career, how to improve your relationships, and plan out the biggest stages of your life all the way into retirement.
Buy This, Not That is the best personal finance book I have ever read. It is an instant Wall Street Journal bestseller and will likely become one of the all-time personal finance book classics. At over 300 pages, the book is so full of useful, life-changing information to help you make better decisions.
You can read why Sam decided to write his personal finance book as well. There js no better finance writer today.
Buy This, Not That by Sam Dogen of Financial Samurai is available now at retailers everywhere. Simply click any of the retail buttons below or call your local bookseller to order your copy today.