Let me start by saying that David Bach is one of my favorite personal finance authors! You can read about my assessment of David Bach and some of the more popular type of financial authors in this article: “Which Financial Author Should You Follow?”
Okay, now with my statement of admiration with regards to David Bach and other financial authors out-of-the-way, I’ll continue…
Financial authors are just like you and I, except that they are famous and have studied or read up on the personal finance areas. In fact, they may or may not know as much about some financial areas as you and I. Take David Bach for instance, perhaps he not planning on using a 529 plan to put his kids through college (I’m sure he’ll have enough money…), so he might not know as much about it as parents that are using such a mechanism. Perhaps that’s why in his newer book “Fight For Your Money” he states the following incorrect line about 529 Plans:
all the proceeds are supposed to be used for your child’s college or graduate school expenses (basically, everything you have to pay for as a condition of enrollment, such as tuition, fees, books, supplies, and equipment – but NOT room and board, living expenses, or transportation).
As I was skimming his book (which I borrowed from my local library), I had to take a double take and re-read the above line 3 times, thinking that I must have misread is somehow! Everything that I had ever read (including the info at the IRS web site) stated that you can use the 529 money for room and board as qualified expenses in the 529 plan. To read the official government take on qualified 529 expenses click here!
While we all make mistakes, I just want to put this article out there in case someone is reading about 529s and reads David’s book that “room and board” aren’t qualified expenses and rethinks their college savings stategy based off of that particular mistake.
The funny thing is that almost any nonfictional author has mistakes of some sort. I remember when I was in college, often times I would put a slash through the incorrect statements in textbooks and put the correct above the slashed out works or figures in pencil. I used pencil because I wasn’t always sure and wanted to check with my professors first. Most of the time I was correct and I only had to erase my slash mark once.
The point is, if you believe that something you read from an expert (any expert, not just financial ones) is incorrect, or partially incorrect, look into to it via a higher source. In my example above, I went to the IRS site to make sure I was right.
Not to pick on David, but I’m sure if I read the book cover to cover I would find some more errors of some type. But then again, given almost any book, I’m sure we can all could find errors in them if we look hard enough or know a topic area well enough.
Care to share any errors in recent financial books that you read? Please share them in the comments section if you do.