Reuters Money

If only business columnist Liz Weston’s new personal finance book were chiseled into stone. “The 10 Commandments of Money: Survive and Thrive in the New Economy” offers advice to help endure during unstable times. The chapters take on each commandment with easy explanations, compelling narrative and plenty of useful resources. Caryn Brooks speaks to Weston about the 10 Commandments of money.

Which of these commandments have you been guilty of breaking?

“I’d say most of them. That’s the way you learn — you screw it up. The budgeting exercise in the first chapter was a real struggle for me. I would run out of money before I ran out of month. It wasn’t until I saw [Harvard economist] Elizabeth Warren’s plan that it made sense: once you get your overhead corralled, the other pieces fall into place. Readers would say, “I cut out lattes and we still can’t make it work.” It ended up being one of two things: they were paying too much for their house or paying too much for their car. This system highlights this. So for me, when the money wasn’t lasting, it was because of overhead.”

Are people resisting what you’re saying?

“The people most resistant are the ones who want black and white answers. If you tell them that all debt isn’t bad, it panics them. I had to come around to it, too — I was raised by parents who hated debt. But right now debt is unbelievably cheap and sometimes tax deductible; you’re kind of nuts to pay that off when you have other priorities, like saving for retirement.”

Are people ready for hard truths?

“I think so because the events of the last few years have scared the pants off of people. We can’t go back to the rules our parents and grandparents lived by because the world has simply changed. I think on some level people understand that and are looking for something sustainable.”

Are people bitter that things are so much harder for them than for their parents or grandparents?

“I don’t think they’re bitter enough. Men without a college education have seen their income drop in inflation adjusted terms 30 percent in the last 20 years. All the easy credit covered that up. People are still in denial and think that they are doing better than their parents. Sure, we have a lot more stuff — cool electronics — but that’s covered up the fact that it is a lot harder. Incomes have become stagnant but a lot of costs are growing. Healthcare has gone up hugely, housing in most areas is much more expensive than it was, education is a lot more expensive: those are three areas that are eating up a lot more budget.”

Is it harder to be a financial advice columnist during a good economy or a bad economy?

“Good, definitely. I’ve been through several of these cycles and I remember back in 1996 when Alan Greenspan talked about “irrational exuberance.” The bubble didn’t pop until the year 2000, so those of us saying stocks are overvalued felt like cranks. You’d tell people to diversify and have some bonds, too. No one listened. The same thing happened with housing in 2004. I was looking at these mortgages and thinking, “These don’t make sense.” You feel like the crank flicking the lights in the basement to stop everyone from necking.”

You say a home is not an investment — it’s a place to live.

“You can’t buy a house and expect to make a fortune. That’s not what it’s about. There are so many aspects to a home: your mutual fund isn’t going to have its furnace break and demand that you fix it. When you buy real estate it’s an ongoing cash drain and you have to make sure you can afford that.”

You have a chapter where you tell people to treat their marriage like a business. Sacrilegious?

“Actually, I get more push back from people when I talk about treating a college education like an investment. I’ve had more people push back when I talk about limiting your debt: don’t try to go to your dream school and just make it work no matter what.”

The saving for retirement commandment may be one of the scariest. Do people in their forties understand what they’re up against?

“Once you’re in your forties you remember being in your twenties and it wasn’t that long ago. Twenty years suddenly does not seem like a long period of time. It scares you. That’s when you say, “I’ve got to start paying attention to this.” I think what’s harder is people in their twenties and thirties who don’t have that vivid sense and feel like they have things that are more important. What concerns me is people prioritizing paying debt off rather than retirement saving. It may feel more satisfying, but if you did the math overall you’d realize that you’re missing out on opportunities to build wealth.”