Quit Like a Millionaire | Kristy Shen

Summary of: Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required
By: Kristy Shen

Introduction

Welcome to a life-changing journey exploring the secrets of financial independence! In the book ‘Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required’ by Kristy Shen, you will uncover vital topics such as the importance of following the math to attain your dreams, the negative impact of consumer debt, the benefits of index investing, and debunking the myth of homeownership as the ultimate investment. This easy-to-follow guide provides valuable insights that give you the power to take control of your finances, and ultimately pave the way to your dream retirement. So, buckle up and get ready to dive into an ocean of financial knowledge!

Following Your Heart May Not Be the Best Choice

In her book, Kristy emphasizes that following one’s passion may not always lead to the best outcome. The math behind pursuing a major, such as engineering or accounting, that will guarantee a higher income, rather than a passion like creative writing, will offer a more secure financial future. While dreams are worth pursuing, it’s important to consider the financial resources they require. Kristy, an author herself, followed this advice when selecting her major, and ended up with a fulfilling career as a writer, after securing a well-paying job in engineering.

The Chinese Attitude Towards Saving and Debt

Chinese citizens save 38% of their income on average, which is significantly higher compared to Americans and Japanese. The absence of credit channels and endemic corruption in China has compelled its citizens to choose between taking on onerous personal debts and saving up until they could buy something outright. This culture has made it customary for Chinese people to pay their personal debts during the New Year, or risk being cursed with twelve months of misfortune. However, this frugal attitude towards debt is a pretty good attitude to adopt worldwide, especially with the application of the Rule of 72, an insight first formulated by a fifteenth-century Italian mathematician named Luca Pacioli. The rule shows that the longer the investment period, the better the returns. This makes it a favorable option for investors. But, for debtors, it is best to avoid unnecessary debts and pay off existing ones to stay debt-free.

Slaying the Debt Vampire

Debt is like a vampire, draining you of your finances and leaving you trapped in an endless cycle of payments. To achieve financial freedom, you must start by tackling consumer debt with high interest rates. Cut your expenses and prioritize paying off loans from the highest interest rate to the lowest. Refinance your loans, but be cautious of falling back into debt traps. Gaining financial independence with debt is like running a marathon with a backpack full of bricks – you won’t get far. Slashing your debts will pave the way towards a brighter financial future.

Luxury Spending and Happiness

Splurging on luxury items can give you a neural high, much like cocaine, but it may not bring you lasting pleasure. The brain constantly increases its expectation levels, which means people require larger amounts of cocaine or more expensive material possessions to feel satisfied. However, not all spending is created equal. Research shows that experiences such as learning new skills or traveling bring longer-lasting happiness than buying material possessions. In summary, understanding the link between luxury spending and happiness is critical in ensuring lasting satisfaction from the money you spend.

The Hidden Costs of Buying a House

Learn why buying a house may not guarantee a good investment, as this summary uncovers the hidden costs that come with it.

Many people believe buying a house is a smart investment, and they are often willing to borrow money for it. However, purchasing a home can come with hidden costs that may not make it a wise investment after all.

The average American family stays in their home for nine years, expecting the property’s value to increase. Unfortunately, hidden fees and expenses often arise. For example, to buy the property, a title search from the land registry office is necessary, along with a title recording fee and a lawyer’s payment, totaling $2,150.

Additionally, insurance fees, property taxes, and maintenance costs can sum up to $112,500 over nine years. To sell the property, there are expenses such as a commission of 6% of the final sale price, a land transfer tax of 1.2%, and another lawyer’s pay, totaling $61,821.

Bringing these hidden costs to $175,571, which amounts to 51% of the initial profit gained, homeowners need to be cautious. More so, families often pay a ten percent down payment in cash and borrow the rest from their bank, incurring an interest of $162,033 over nine years, which is 98% of the sale price.

The summary sheds light on hidden expenses when buying a house, which can potentially make any profit unattainable. Property owners must be cautious and prioritize accruing knowledge before their investments.

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