I love a good personal finance book so when A Wealth of Common Sense blogger Ben Carlson mentioned that his favourite book of the year was Jonathan Clements’ How To Think About Money, I had to check it out. The book is full of common sense advice and financial wisdom, but Clements goes beyond the ubiquitous ‘pay yourself first’ and ‘max-out your retirement account’ and instead offers something different for readers to ponder about living a richer life.

Buy More Happiness

Clements says to get the most out of our money we need to spend with greater care. Okay, we’ve all heard that we get more satisfaction spending money on experience rather than things, but Clements backs up his claims with academic research and throws in these nuggets for good measure:

  • Spending money on others can deliver greater happiness than spending it on ourselves.
  • We’re often happier when we have less choice, not more.
  • Raising children isn’t nearly as life-enhancing as many parents claim.
  • Satisfaction through life appears to be U-shaped, with reported happiness falling through our 20s and 30s, hitting bottom in our 40s, and bouncing back up from there.

He also said:

Thanks to what I have learned from the research, I am quicker to make time for friends and family, even if it seems like an effort. I will happily spend money to visit my children or to bring them together for a family vacation or a special meal. I ditched my suburban New Jersey home so I could eliminate a long commute. I quit a high-paying job I had come to hate, because I knew I would be much happier if I spent my days engaged in activities that I thought were important and that I was passionate about.

That passage reminds me of a book I reviewed earlier this year – Victory Lap Retirement, by Mike Drak and Jonathan Chevreau. A happy life is not about earning a big salary or retiring with the biggest nest egg. It’s about finding the right balance to lead the life you want. Sure, money can buy happiness, but not nearly as much as we imagine.

Bet On A Long Life

The biggest challenge after we retire is figuring out how to pay for a retirement of uncertain length, but which could easily last 20 or 30 years. And we need to figure out what to do with all that free time. Clements argues that we should worry less about dying early in retirement, and more about living longer than we ever imagined.

To that end, the author suggests delaying Social Security (CPP and OAS to us Canadians) to get a larger monthly cheque, and also buying longevity insurance and immediate fixed annuities that pay lifetime income. Pensionize that nest egg, so to speak.

I also enjoyed the author’s advice to college students:

I tell them to focus on making and saving money. I even suggest that they might deliberately opt for a less interesting but higher-paying job, so they can sock away serious sums of money.

Clements says, and I agree, that the idea of pursuing your passions in your 20’s (you know, before you become burdened by the demands of raising a family and paying the mortgage) is a big mistake. Get your career on track early, save like crazy, and you’ll be buying freedom for your future self. Who says you’re too old to travel in your 40s and 50s?

Rewire Your Brain

I loved this chapter for the list of 22 mental mistakes that have been identified by experts in behavioural finance. Some of my favourites include:

Believing the secret to investment success is hard work. Activity might give us the illusion of control, but it’s more likely to hurt our performance.

Thinking the future is predictable. It is, but only in hindsight.

Taking credit for our winners, while blaming our losers on others. If we buy an investment and it goes up, it was our brilliant choice. If it goes down, it’s the fault of our broker, or those clowns in Washington, or that idiot on television that we listened to.

Finding stories more convincing than statistics. Academic studies are no competition for a good story: We are still drawn to hot growth companies with their slick innovations and adoring customers.

Think (Really, Really) Big

Bring order to your financial life by focusing on your paycheque, or more importantly, your ability to earn many paycheques over a lifetime. This is called human capital and over a 40-year career it might provide us with earnings of more than $2 million, and perhaps much more. We should take this enormously valuable stream of income and design our financial life around it.

Amassing enough for a comfortable retirement is our life’s great financial task, says Clements, but saving for retirement gets short shrift because we’re so focused on immediate goals and so bad at planning for the distant future.

Chronologically, retirement might be our final financial goal, but we should always put it first. That means dealing with our goals concurrently, rather than consecutively, and always carving off a portion of our income to save and invest for retirement.

To Win, Don’t Lose

Clements reminds us again that the goal isn’t to get rich. Rather, the goal is to have enough money to lead the life we want. While our desires are no doubt different we likely share some common themes, such as time with friends and family, dinners out and vacations, to pursue activities we’re passionate about, and we want these things without constantly worrying about money.

But we only get one shot at this life and sometimes things can go awry. Don’t expose yourself to potential disasters by not having disability insurance, or putting your entire retirement nest egg into one stock (your employer’s), or not having adequate life insurance. Invest broadly, cheaply, and don’t trade too often. Own an appropriate mix of stocks and bonds and rebalance regularly.

Final Thoughts and a Giveaway

How To Think About Money offers readers exactly that – five easy steps to help you think differently about your finances and how to achieve financial independence. Clements weaves in a nice mix of personal anecdotes and backs up his sometimes controversial claims with solid research.

The author was kind enough to send me an additional copy to give away to a lucky reader. To enter, leave a comment below and tell us your all-time favourite personal finance book, or the best personal finance book that you read last year.

We’ll take entries until Friday at 5pm EST and announce a winner in the next edition of weekend reading.

Good luck!

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92 Comments

  1. Mary R on January 16, 2017 at 4:43 am

    Sounds like an interesting book. I read and enjoyed the Millionaire Teacher.

  2. Sharon Beck on January 16, 2017 at 5:00 am

    Very thoughtful advice. I have been reading retirement books and have taken the information from Patricia Lovett-Reid’s book “Live Well Retire Well ” to heart. Her book identifies strategies to live a happy and financially balanced life.

  3. Kim D on January 16, 2017 at 5:22 am

    Last PF book I read was How to Retire Early. It was a great read, and I’m looking forward to read more great PF books this year!

  4. Jill on January 16, 2017 at 5:32 am

    The Wealthy Barber was the first book I read about finances and it is still a favourite.

  5. Brian on January 16, 2017 at 5:35 am

    I will teach you to be rich by Ramit Sethi.

  6. Lionel Polger on January 16, 2017 at 5:45 am

    The Wealthy Barber had the most influence on me.
    As I grow older I am coming to realize that successful living is an art and financial security is but one part of the puzzle

  7. David Poirier on January 16, 2017 at 5:51 am

    I would have to go with the Wealthy Barber
    It was my first and still a fav

  8. Adiy on January 16, 2017 at 6:02 am

    Money, Master the Game by Tony Robbins was perhaps the most practical personal finance book I’ve read.

  9. Renate W on January 16, 2017 at 6:06 am

    The Wealthy Barber started me on my road to learning about finances. Gave it to my kids to read also.

  10. Jason St-Hilaire on January 16, 2017 at 6:07 am

    My favorite investing book of all times is Millionaire Teacher. So glad the author updated it!

  11. Karen A Oates on January 16, 2017 at 6:23 am

    Thanks for always bring interesting material to those of us who read your blog.
    “Winning the Loser’s Game” is one of my favorites!

  12. Irene Schoenberger on January 16, 2017 at 6:27 am

    Sound like a good read.

  13. Jason on January 16, 2017 at 6:34 am

    Sounds like an interesting book! Recently read Smart Couples Finish Rich, by David Bach. I also really enjoyed The Richest Man in Babylon, which helped me get out of big debt several years ago.

  14. Andre on January 16, 2017 at 6:45 am

    Steve Jobs by Walter Isaacson, especially the chapter on Norbert’s Gambit 🙂

  15. Ron Moore on January 16, 2017 at 6:46 am

    My favorite personal investment book is Your Retirement Income Blueprint by Daryl Diamond. We read so many books on how to invest and Diamond tells us how to position our assets for drawing income from these investments. A great ‘Blueprint’ for soon to be retirees and retirees.

    • Judith on January 17, 2017 at 1:19 pm

      That would be my pick also. Close runner-up: pensionize your nest egg.

  16. Mario R on January 16, 2017 at 6:52 am

    The Millionaire next door by Thomas Stanley is probably “the book” that retain my attention, as it describe that most millionaire in America don’t leave in million dollar home or have expensive cars.

  17. Carol A. on January 16, 2017 at 6:58 am

    The Wealthy Barber is my favourite personal financial book. Thanks for having this giveaway.

  18. MaxWorth Money Coaching on January 16, 2017 at 7:00 am

    I loved reading The Soul of Money !

  19. PIERRE DUCHAINE on January 16, 2017 at 7:18 am

    For sure, my favourite is Bill Morneau’s “The Real Retirement”. Puts to bed the investment community’s favorite “min 70% rule”.

  20. Sandra on January 16, 2017 at 7:21 am

    “Rich Dad, Poor Dad” by Robert T. Kiyosaki was an important book in my financial education.

  21. Nelson Go on January 16, 2017 at 7:24 am

    Better than Before by Gretchen Rubin. It’s not a finance book. However, it helped me change some of my spending and saving habits. And has made me happier in the process.

  22. Marian on January 16, 2017 at 7:38 am

    I very happily took an early retirement 20 months ago which saved my sanity. Since then, I have been forced to learn a lot about personal finance which I unfortunately avoided most if my adult life. I wish that I had read more books like these as a younger woman.

  23. gary on January 16, 2017 at 7:40 am

    this book sounds real robb; especially his comment about money isn’t everything. i hope my grandchildren don’t remember me for my financial situation but for my personality. i want them to say “papa” was fun; took us to the fair, played games with us, took us to plays and to our activities. the wealthy barber and the wealthy barber returns are my favourites — down to earth and darn good advice!

  24. Hetty on January 16, 2017 at 7:46 am

    Hi,
    I really enjoyed “wealthing like rabbits” by Robert Brown

  25. Steve Boyko on January 16, 2017 at 7:53 am

    Great review, and I think I’ll be buying this book if I don’t win it first. 😉

    My favourite personal finance book has to be “The Wealthy Barber” by David Chilton. This book really started me thinking about money in a new way.

  26. Carol M on January 16, 2017 at 8:00 am

    The Wealthy Barber is one of my favourites and still relevant after all these years.

    This book sounds practical and down to earth, my kind of book. Thanks for the chance.

  27. Xavier on January 16, 2017 at 8:00 am

    Last year I enjoyed Wealthing Like Rabbits by Robert R. Brown for the several smiles it provided. I also appreciated The Value of Simple by John M. Robertson, a solid addition to my local library collection on PF.

  28. Connie on January 16, 2017 at 8:17 am

    Rich Dad, Poor Dad

  29. Andrea on January 16, 2017 at 8:21 am

    I would like to win the book because I have not read any financial books except the Wealthy Barber books. So I guess the second one is my favourite. This book seems valuable since it goes beyond saving to how to spend money to maximize the quality that you get from it. Quality not quantity!

  30. Cindy Klassen on January 16, 2017 at 8:22 am

    Back in the day The Wealthy Barber was a great book for me. And now that retirement is here, I feel that part of the reason I am financially in a fairly good position is because of books like that. I would like to give my nephew and his partner a good financial advice book…after I read it first!

  31. Marc Pilon on January 16, 2017 at 8:24 am

    The Wealthy Barber and the Wealthy Barber returns are my all time favorites. Basic concepts and common sense in easy and entertaining books.

  32. Diane Macdonald on January 16, 2017 at 8:25 am

    The Wealthy Barber is indeed one of my favourite’s.

  33. Ben on January 16, 2017 at 8:45 am

    I got the Wealthy Barber Returns for Christmas in grade 12 and it kicked off my interest in personal finance. Still my favourite!

  34. Kenton on January 16, 2017 at 8:47 am

    The Wealthy Barber is my favourite financial book.

  35. Leanne Bohme on January 16, 2017 at 8:52 am

    The Wealthy Barber was the first PF book I read in my early 20’s!

  36. Geoff Vincent on January 16, 2017 at 8:56 am

    Sounding like a broken record but Wealthy Barber. Read it about 20 years ago and implemented most of the recommendations and credit it as a big part of our financial foundation today. His most recent book, Wealthy Barber updated or part II was not nearly as good (sorry to say).

  37. Sergei Z on January 16, 2017 at 8:58 am

    “Stop Overt-Thinking Your Money” by Preet Banerjee is my favourite book! Preet delivers his five rules on the first 2 pages of the Introduction, and states if you just do these 5 things, you will get an “easy A” in personal financial management.

  38. HJ on January 16, 2017 at 9:00 am

    The essential retirement guide by Frederick Vetesse. Lots of graphs, charts. Scenarios. A contrarian’s perspective. My 2 takeaways are.. We spend more than we think the first years of retirement. We don’t need the amount of money for most of our retirement that advisors say.

  39. Jennifer Sturgeon on January 16, 2017 at 9:11 am

    “Money Rules” by Gail Vaz-Oxlade. It is dedicated to “all mothers,fathers…..who wish they’d done more to help their kids figure money out” – I’m guilty!
    I bought a copy for my daughter for Christmas, liked what I saw, and am currently reading a library copy, learning things as I go (e.g. why a high credit score is not a good thing) . 261 Rules written in a down-to-earth style, nearly all making sense to me.

  40. Janna on January 16, 2017 at 9:35 am

    Rich Dad Poor Dad. I read it when I was 16 and it’s still one of the best.

  41. Sarah on January 16, 2017 at 9:44 am

    My favourite PF books I read last year was The Millionaire Next Door and Rich Dad, Poor Dad. I also read I Will Teach you to be Rich, which I didn’t like. On my bookshelf for this year will be a classic, the Wealthy Barber among others.

  42. Jeanette on January 16, 2017 at 9:45 am

    “You Could Live a Long Time, Are You Ready?” is one of my favorite books although it is not strictly financial. So then I’ll say “Women and Money” by Suze Orman.

  43. Raphaelle on January 16, 2017 at 9:49 am

    If you speak french, “En avez-vous vraiment besoin ?” by Pierre-Yves McSween is a best seller in Quebec.

    • Raphaelle on January 16, 2017 at 10:16 am

      The title of the book is “En as-tu vraiment besoin ?”. Pierre-Yves McSween is not a polite guy !

  44. John on January 16, 2017 at 9:54 am

    The Wealthy Barber is still one of my favourites.

  45. George on January 16, 2017 at 9:57 am

    Hi,

    My first financial book was The Wealthy Barber. It became my wife’s first financial book as well. Later, we also read The Wealthy Barber Returns. Those books really set us off to building our savings.

  46. fbgcai on January 16, 2017 at 9:58 am

    Favourite is an oldie – Your Money or Your Life – Vicki Robin and Joe Dominguez – love it for its idea of monetizing “life energy” – Is that daily latte really worth 1.5 weeks of your life per year as an example?

  47. Peter Dewaal on January 16, 2017 at 10:06 am

    For me it was the Wealthy Barber. I was at a stage in life where I was like rudder less ship with to many people ( banker and independent financial planners ) giving me conflicting information. According to them the other guy was always wrong! David Chilton helped put things into perspective.

  48. KarenJH on January 16, 2017 at 10:16 am

    While saving for retirement right from the start is ok, I found that I caught up pretty nicely after 40 because I focused on paying the mortgage off first. I retired almost 2 years ago at 55.

    My favorite financial book is “How to Worry Less About Money” by John Armstrong. It’s part of a series from The School of Life.

  49. nic on January 16, 2017 at 10:16 am

    I’d love to win this! My fave book is “The Millionaire Next Door”.

  50. Gayle on January 16, 2017 at 10:33 am

    I’ve already passed this post on to three millennials. I don’t have a favourite finance book – this will likely be it.

  51. Silverfox on January 16, 2017 at 10:36 am

    Millionaire Teacher is a book I recommend to people starting out. Page 131 alone could save many people a lot of grief and money.

    • Gene on January 16, 2017 at 11:27 am

      Like many people, The Wealthy Barber is my favourite.

  52. FritoPaw on January 16, 2017 at 10:42 am

    Mine is Your Retirement Income Blueprint by Daryl Diamond. It is the only book around that gives practical advice on how to monitize your savings. When to withdraw RRSPs vs non registered, how to structure an income pyramid and other tips on pensions,etc. I had been asking financial advisors and active retirees how they manage their withdrawals and I was never given a reasonable answer. Every one knows how you should save, this is the book that tells you the best way to spend.

  53. Steve on January 16, 2017 at 11:07 am

    The best book on finance I’ve read is “Your Money & Your Brain” by Jason Zweig. It explores the new science of Neuroeconomics and why we do what we do with money.

  54. Ed Frankowski on January 16, 2017 at 11:35 am

    Rocking your RRSP was a good read. Hope I can win this book

  55. Lori on January 16, 2017 at 11:38 am

    The book that changed my life was The Wealthy Barber

  56. Denis on January 16, 2017 at 11:52 am

    Advanced Options by Michael Thomsett. He has many books on various investing topics.

    This book gave me many ideas most would not recommend for investing but options to get into equities cheaper (short puts), get income (short puts) and to enhance dividends via CC ( non dividend months ).

  57. Claire Ryce on January 16, 2017 at 12:18 pm

    I also would have to go with The Wealthy Barber. I have never enjoyed a book more and have given copies to all my children in the hope that they too might gain valuable financial insights.

  58. Lisa Gouthro on January 16, 2017 at 12:31 pm

    The last book I read was by Margaret Atwood: Payback: Debt and the Shadow Side of Wealth. But it was Boomer&Echo that really engaged me and got me into my new financial services career! Thank you!

  59. Dan on January 16, 2017 at 1:09 pm

    I read the Essential Retirement Guide by Fred Vetesse. It co-ordinates Canadian social benefits (CPP, OAS, Health Care, etc.) with the size of a retirement nest egg. The result is an amount a lot smaller that that proposed by investment professionals.

  60. Jerry on January 16, 2017 at 1:31 pm

    The Millionaire Next Door, The Wealthy Barber and The Wealthy Barber Returns (not as good as the first) are 3 of my favs. They are all easy reads, provide the basics of how to save money, get ahead in life financially and know how to act when you do get there.

  61. Murray on January 16, 2017 at 1:44 pm

    Most of the books mentioned have provided several things to think about when dealing with my personal finance situation. I think that is the definition of a good ‘self help’ book. No one has exactly your situation, so no one else will have all the answers, getting a few that help you steer away from stepping in the big piles of problems is always welcome.

  62. Ana Chiarelli on January 16, 2017 at 3:00 pm

    I am currently reading The 7 Most Important Equations
    for your Retirement by Moshe Milevsly. Already planning for retirement!

  63. Mike on January 16, 2017 at 3:02 pm

    Good stuff. I found the Skeptical Investor to be quite useful

  64. Tarilyn on January 16, 2017 at 4:35 pm

    The weatherly barber returns! Covers all the bases in a hilarious way!

  65. Lynn on January 16, 2017 at 4:57 pm

    Best financial book: “Your Money or Your Life -Transforming your Relationship with Money and Achieving Financial Independence” by Joe Dominguez and Vicki Robin. I agree with what the LA times said – it is the seminal guide to the new morality of personal money management.

  66. Brian M. on January 16, 2017 at 5:08 pm

    The Wealthy Barber. While it’s not new, it contains never-get-old financial lessons told in a folksy & easy-to-understand style.

  67. Sharon Columpsi on January 16, 2017 at 7:07 pm

    Rich Dad, Poor Dad. Unfortunately I attended one of their meetings which was followed up by signing up for more “investing” which then required further of my investment to learn more of his tricks and building into his empire. Some of us were able to have our money refunded but were given considerable resistance. So not a fan of theirs.

  68. Beth on January 16, 2017 at 7:27 pm

    The Wealthy Barber returns is one of my favourites, and I finally picked up a copy of Your Money or Your Life. I like books that remind me that money isn’t just about math.

  69. john on January 16, 2017 at 9:18 pm

    I will say the Wealthy Barber was my all time favourite. I am now retired and did very well with his plan. I would love to win this book. The more information one can get, the better they can prepare for the future………….even in retirement. I love this site and learn a lot. Never too late to teach an old dog new tricks.

  70. lori n. on January 16, 2017 at 9:28 pm

    My favourite financial books is “your money or your life” but I glean a lot of inspiration from many of the books i read. i think it’s important to plan on having enough money and the tip that you may live a long time is a good one to be your guideline… so many people say “oh my parents died young… etc” but that is not saying that you will!! Plan to be around so you have enough to live on. We are just a couple of years from retirement and trying to ramp up the savings but with three kids in uni, it can be hard sometimes. But here is hoping that 2017 gives us a good boost!

  71. Phyllis on January 16, 2017 at 9:39 pm

    The Wealthy Barber Returns. Also one of my daughter’s favorite books. She emailed David Chilton with a question and he phoned her with the answer – how cool is that?

  72. Rick on January 16, 2017 at 10:11 pm

    The Wealthy Barber Returns was a great PF book I read last year having read Chilton’s first book when it was first published.

  73. John on January 16, 2017 at 11:11 pm

    Hi Robb,

    For something completely different, I recommend.” How to Speak Money: What the Money People Say–and What It Really Means”. It’s by John Lanchester and it’s an informative lexicon of financial terms written with a wry and cynical sense of humour.
    https://www.amazon.com/How-Speak-Money-People-Say/dp/0393243370

    By the way, Lanchester wrote what is, in my opinion, the easiest-to-understand description of the financial crisis of 2008-09. Its title is “”I.O.U.: Why Everyone Owes Everyone and No One Can Pay”. Lanchester has the happy knack of writing jargon-free books about finance. https://www.amazon.com/I-O-U-Why-Everyone-Owes-One/dp/1439169861/ref=pd_sim_14_2?_encoding=UTF8&psc=1&refRID=8TAW5DK9S5896NN5G1RW

  74. Marilyn on January 17, 2017 at 12:13 am

    Preet Banerjee’s Stop Over-Thinking Your Money! was last year’s favourite for me. It’s nice to be reminded that personal finance isn’t always as complicated as we like to make it in our minds. Or that it should require a degree to decipher.

  75. Carlos on January 17, 2017 at 7:42 am

    Great summary..my favorite book is the millionare teacher

  76. Carol on January 17, 2017 at 9:11 am

    “How a Second Grader Beats Wall Street” by Allan Roth finally made sense of investing for me. It lead me to many more good books, but that one gets the prize for starting it all.

  77. Kim H on January 17, 2017 at 9:28 am

    As a young girl, I felt that I was somehow “different”; I loved saving and figuring out my finances and working on good financial decisions. I was influenced by The Wealthy Barber which I loved and also Your Money or Your Life. In my 20s I atteneded a popular seminar Wealth Without Risk for Canadians and bought all the cassettes (yes cassettes) and reading material. Today (at 52), I’m more focused on creating balance and designing the life I want. My hyperfocus on money was often detrimental to my happiness and life satisfaction but its never too late to get it right. I’m still learning and would love another great reference to draw from.

  78. Echozoom on January 17, 2017 at 10:22 am

    Your Money Or Your Life

  79. Ann Kieswetter on January 17, 2017 at 10:59 am

    Both Wealthy Barber books by David Chilton & also Money Talks by Gail Vaz Oxlade were informative.

  80. Melinda Cheng on January 17, 2017 at 11:57 am

    Tony Robin’s MONEY Master the Game: 7 Simple Steps to Financial Freedom . Well researched and tons of information about different strategies. I do plan to re-read it and focus on selecting a few small steps that I can do this year.

  81. Russ on January 17, 2017 at 2:31 pm

    Chilton’s The Wealthy Barber got me on my financial journey many years ago. As for last year, I bought copies of Wealthing Like Rabbits for each of my four children for Christmas.

  82. garth on January 17, 2017 at 4:28 pm

    Ben Carlson’s “A wealth of Common Sense” was my favourite.

  83. Judy on January 18, 2017 at 5:07 am

    “Common sense on Mutual Funds” by Jack Bogle, “The Intelligent Investor” by Benjamin Graham, “The Wealth and Poverty of Nations” by Landes and “The Millionaire Next Door” by Stanley.

  84. rhonda on January 18, 2017 at 7:37 pm

    I am plowing my way through Daryl Diamonts book Retirement Income Blueprint.It is amazing, although it is a bit of a hard read, it is the one with the best explanations.
    I find that my financial advisor is following the same blueorint, so I feel more confident in my knowledge.
    I have every single book written by Gail Vos Oxlade, and I love them all, and they are tattered from reading, and rereading.

  85. Lynne on January 19, 2017 at 7:22 am

    My latest favorite is Wealthing Like Rabbits. This book sounds interesting. Thanks for the giveaway!

  86. Rorry Harding on January 19, 2017 at 4:18 pm

    Best PF book last year was Unstuck by Karin Mizgala and Sheila Walkington.

  87. Yannick T on January 20, 2017 at 6:08 am

    My all-time favorite personal investing book is “The Four Pillars of Investing.”

    My favorite personal investing book I read last year is “A Wealth of Common Sense.”

  88. Stephen Zamon on January 20, 2017 at 7:59 pm

    My favourite financial book is “The Millionaire Next Door”.

  89. DALE on February 8, 2017 at 10:00 pm

    Reducing the Risk of Black Swans-LARRY SWEDROE

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