The Millionaire Maker by Loral Langemeier -- Book Review

Book Review

Financial coach Loral Langemeier teaches what she calls the Wealth Cycle program. Because the title of her new book is The Millionaire Maker , and because the author sees her money-generating program as "concrete" unlike many others which are "abstract" [page 3], it's appropriate to discern to whom the book is applicable.

The average personal credit card debt for U.S. residents exceeds $8,000 [see page 181] , and much of the book is concerned with the rearrangement of debt into "smarter" forms. On this basis alone one can justify the premise that the book is applicable to many readers.

Debt has its do's and don't's. You shouldn't fall for the TV advertisements which would lead one to believe that consolidating numerous small debts into one large one is necessarily an improvement. You should understand that "credit card debt that you acquired buying perishable items" [182] is just about the worst condition that you could put yourself into.

Another aspect of the book that applies to an enormous number of people is knowledge of the legal ways to pay some of your household bills out of pre-tax money, thus lowering your taxable income. I didn't even know before that it's possible to pay a kid's college tuition with pre-tax income.

I'm not sufficiently educated in economics to assess the accuracy of the "millionaire" part of the book's objective, but my own need for the author's lessons, and perhaps yours as well, becomes apparent.

While the skills of debt management are taught herein [see the five-step "debt elimination plan" in chapter 9], some parts of the author's program appear to be intended largely for people who have net assets of at least some positive amount. Some of the books's contents will not be put to immediate use by those whose financial problems are caused by the earning of wages that are simply too small for a family to live on. The advice applies more directly to the many people who are able to accumulate some assets and are not entirely certain of the best ways to manage it.

The author teaches the concept of investing saving into cash-generating assets, while this cash influx is being reinvested. Here our thought of the old word "risk" can be misleading, because, due to inflation, saving money is more risky than investing it. [79]

The author favors the "more nontraditional assets" [53] In this investment process, knowledge is one of your forms of capital. "Wealth is about access, and now you can finally access the information and opportunities too long kept in too small a circle." [2]

The author isn't going to tell you which assets are better than others. For example, she doesn't make any recommendations regarding the choice betweens stocks and real estate. In lieu of that sort of advice, the reader is frankly exhorted to go out and do the work necessary to "know the market." What she does instead is show you how to manage whatever you do have.

This book's customer feedback at amazon.com were about evenly divided. Those who had expected a cookbook approach to personal finances, or a primer, were disappointed. Those who realized what the author was really doing, leaving it up to the reader to learn elsewhere about various market activities, or, if you intend to start a business, to come to this book already knowing the details about your chosen business, and then apply this book toward a top-down approach to an overall money cycling strategy, awarded the book many stars.

The dynamic use of an IRA is described as essential. You should be moving assets from one form to another to get higher returns. This is the case even when the assets are in an IRA , and perhaps I should say especially when the assets are in an IRA. You can begin with the transfer of IRA funds from the "ordinary" form to "true self-directed IRA companies." [43] (The author invites readers to email her for a list of them.)

I'm also getting the sense of a IRA account as a financial "company" all its own. For example, did you know that your IRA can write a note to lend money to you, or to someone else, at an interest rate? Those interest payments, of course, go into your IRA, so that you get tax-advantaged earnings on your previous tax-advantaged earnings. Admittedly, I didn't know about it before.

This is my perpective in reviewing the book. Retaining some skepticism about the target of becoming a millionaire, I presently want to know what the book can do for my own working class family that has two kids in college. I have found that large sections of the book will convey useful knowledge and skills to someone in this financial situation.

Certain other parts of the book are clearly intended for owners of small businesses. If you have a business, you need to know whether you should choose to give it the form of a sole proprietorship, a C corporation, an S corporation, a limited liability corporation (LLC), a limited partnership, or a trust, each of which is treated by the law differently than personal wealth, and each of which is treated differently than the others. [51-52] Langemeier makes the comparisons by illustrating the plans that she has drawn up for real families. You will see why the Leonard family nested their entities, creating a trust as an "umbrella" which owns their S corporation and their LLC, while the LLC owns their real estate. [52] The benefits of various kinds of entities are suggested very early in the book but are described most fully in chapter 6.

You can't simply delegate the need for this knowledge to an expert. Even when you hire an accountant and/or an attorney, you ought to educate yourself independently, to enable yourself, when speaking with your advisor, to raise discussion points that some people would overlook, to ask intelligent questions, and better comprehend the answers given to your questions. (I recall an old proverb: If you think education is expensive, try ignorance.)

For readers whose businesses involve teams of people, chapter 12 discusses such matters as accountability for task completion . [235] Some of the issues in this chapter involve more generally useful skills for social interaction, such as the means to be persuasive without being pesky. [228] The author, who consistently calls herself a "team-made millionaire", rejects the notion of the self-made millionaire as a fiction.

If my reader will permit me to review a financial planing book without the training required to pass judgment on certain of its contents, this is the approach I must take. I can't estimate the outlook of the reader's ascendancy to millionaire status, and I must abdicate the opportunity to evaluate the sections on business incorporation and "entity restructuring." Instead, I will volunteer the facts that I can now recognize the need to rework my projection of how best to put my teenagers through college, and also my need to call my local credit union and tell them to transfer my IRA.

Loral Langemeier is the founder of the Live Out Loud financial training company, which provides personal coaching as well as seminars. The name Wealth Cycle program is a registered trademark. See all books by Loral Langemeier , some of which are audio books on CD.

McGraw-Hill released the book on December 31, 2006. It hit #7 on the Wall Street Journal Business Books Bestseller List on January 20, 2006. It reached the BusinessWeek Magazine Bestseller List on April 3.

Book review by Mike Lepore for crimsonbird.com