The Real Cost of Living: Making the Best Choices for You, Your Life, and Your Money
By Carmen Wong Ulrich
Personal finance is about more than money - it's about balancing the personal with the economic cost of every decision.
Do you think if people are faced with the real cost of their financial decisions, they will make better choices? Or will they still fall prey to their emotions?
They'll absolutely make better financial decisions. I have some examples in the book, such as the taxi driver who told me: "I'm so proud of putting my daughter through school. We're going to mortgage the house." All I had to do was explain to him the thought process of how and why that was not wise. He was looking at the percentage he [would be]paying [if he drew on]the equity in his home, which was a lot cheaper than a student loan. But that's not actually thinking through the impact of that decision.
Equity's a big part of his retirement. His daughter has more time to pay it off than he does. I want people to be wholly informed about the costs and rewards of all their decisions.
Is the problem that people make too many decisions in the moment?
That's a huge part of it - big picture versus little picture. For example, house buying. I've heard so many people recently saying that it's a buyers' market, prices are really low, we'll never see interest rates likes this again. You have to think about the big picture. Buying a home is a 30-year commitment. It's a huge debt. Are you thinking beyond today? If you don't buy the home the right way, you could lose the home.
What would a reader find most surprising about this book?
The idea of personal finance not being about cheques, credit cards and interest rates. [It's about]thinking through what this debt means, how much does this credit-card debt really cost me, what am I giving up to have that wardrobe or that car. I know it's hard for people to save cash - especially people on tight budgets with kids - but that extra $20 a week really grows.
You have a master's degree in psychology. Is that why you look at the emotions behind people's money decisions?
I had some folks scoff at me when I left grad school with a psychology degree for personal finance journalism. But the perspective has given me the ability to understand the humanity behind the numbers. I feel we lost sight of that when money was flowing like crazy - the fact that money affects people's lives. When your dad has to take out a second mortgage because he's out of work, it hurts everybody.
WHY WE SHOULD TRUST HER
Carmen Wong Ulrich is Glamour magazine's personal finance columnist, an expert contributor to the Dr. Oz Show, and the former host of CNBC's daily personal finance show On the Money. She usually has about eight personal finance books stacked next to her bed, but enjoys reading all genres.
Her current read is An Object of Beauty by Steve Martin. Her first job after completing her undergrad was at Christie's auction house.
This interview has been condensed and edited.