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February 8, 2010 Matthew Cochrane, Book Review: Total Money Makeover
When it comes to money and financial issues, Dave Ramsay has become one of America’s most trusted and popular voices. He is a best-selling author, host of the wildly popular radio program, The Dave Ramsay Show, television host on the new Fox Business Network, and a recognized financial guru. Ramsay has become popular by combining humor and inspirational true stories with cold, hard number crunching. The fact that Ramsay is an outspoken Christian who is just as likely to quote a Bible verse as a money maxim makes his mainstream success all the more impressive.
In The Total Money Makeover, Ramsay outlines how ordinary Americans can get rid of their debt and build wealth. Stating that personal finance is 20% head knowledge and 80% personal behavior, Ramsay believes that being debt-free and rich is not as difficult as most people believe and should be a goal of everyone.
In the first few chapters of the book, Ramsay discusses different myths surrounding money and debt. In these chapters, Ramsay addresses such myths as, “You need a credit card to build credit,” “Debt is a tool to create prosperity” and “Leasing cars is what sophisticated people do.”
While dealing with the latter myth, Ramsay writes:
Shouldn’t you lease or rent things that go down in value? Not necessarily, and the math doesn’t work on a car, for sure. Follow me through this example: If you rent (lease) a car with a value of $22,000 for three years, and when you turn it in at the end of that three year lease the car is worth $10,000, someone has to cover the $12,000 losss. You’re not stupid, so you know that General Motors, Ford, Chrysler, or any of the other auto giants aren’t going to put together a plan to lose money. Your fleece/lease payment is designed to cover the loss in value ($12,000 spread over 36 months is equal to $333 per month), plus provide profit (the interest you pay).
Where did you get a deal in that? You didn’t! On top of that, there is the charge of 10 to 17 cents per mile for going over the allotted miles and the penalties everyone turning in a lease has experienced for “excessive wear and tear,” which takes into account every little nick, dent, carpet tear, smudge or smell. You end up writing a large check just to walk away after renting your car.
After Ramsay is finished dealing with an assortment of such myths, he starts with the essence of his book: how people can become debt-free and build wealth. Ramsay emphatically believes the first two steps in this process for the individual or family is to stop using credit and creating a budget (and sticking to it). If one doesn’t have the money to purchase the product or service outright, Ramsay thinks people should save up their pennies and dollars until they do. This step is essential to Ramsay’s money makeover plan and the rest of the book is built around this and other behavior modifications.
For the budget, Ramsay recommends using an envelope system. In this system the allotted cash is placed in labeled envelopes at the beginning in each month. When the envelope is empty no more money can be spent on the item until the next month. Ramsay admits the system is simple, but he also knows it will work. Using statistics and studies to back up his claim, Ramsay explains that psychologically it is much easier to overspend when using a credit card instead of cash.
As for sticking to a written budget, Ramsay writes:
The dreaded B word enters the picture here. You must set up a budget, a written budget, every month. This is a book about a process that will enable you to win with your money, a process that others have completed successfully, and I assure you that virtually none of the thousands of winners I have seen did so without a written budget.
After the credit cards are forsaken and a written budget is made, Ramsay outlines his proven plan to financial success which is the essence of the book:
1) Save $1,000 Cash as a Starter Emergency Fund – Ramsay is a firm believer in the rainy day fund. When life happens, we need to be ready and, without using credit cards, this is the way to catch the little things life throws at us.
2) Pay Off Debt – Ramsay recommends listing all debts (excluding the mortgage) on a paper from the least to the greatest. He then states one should make minimum payments on all of them except the smallest debt which should be attacked with reckless abandon until it is paid off. Then one should move to the next smallest debt and repeat the process. During this phase, Ramsay recommends trimming all of the excess from your budget until you are completely debt-free. He even suggests taking part-time second jobs or overtime for a period until a family is debt-free.
3) Finish the Emergency Fund – When the big stuff happens, Ramsay states, you can’t depend on credit cards. Instead, build up the emergency fund to cover three to six months of expenses.
4) Invest for Retirement – After you’re debt free and have an emergency fund ready to cover any unpleasant surprises, start saving for retirement. Ramsay recommends setting aside 15% of your income for retirement. He evaluates a lot of different options concerning this point and lists the pros and cons for each.
5) Pay off the Home – A t this stage, Ramsay urges his readers to start making extra payments toward their house. If someone can pay off their home early they free up a huge portion of their income that can now be spent in a variety of ways.
6) Build Wealth – When people reach this stage of building wealth, Ramsay states there are three ways to spend your money: a) have fun; 2) invest; and 3) give.
In this clip, Ramsay succinctly summarizes his plan:
What to like: Throughout the book there are worksheets and lists to help the reader organize assets, debts and income and to crunch numbers. For those incompetent at math, these sheets can really help.
Interspersed throughout the book are inspirational true stories, mostly in the forms of letters to Dave, by those who have used his advice to get out of debt and build wealth. Most of these stories are truly incredible. Reading about families who have climbed out of more debt than me on less of an income actually did motivate me a bit. The stories also helped the book read better by putting stories about real people behind the numbers.
What not to like: Some examples Ramsay used were a bit unrealistic in today’s world. For example, in hypothetical situations he kept using the example of a $130,000 dollar mortgage. Well, I don’t know where Dave lives, but in most cities around America you can’t buy a trailer home for that price, much less a single resident dwelling. Also, some of his advice is a bit unorthodox and doesn’t make sense mathematically. For instance, instead of paying off one’s debts from smallest to greatest, why doesn’t he recommend paying them off from highest interest rate to lowest? Ramsay states the reason why he recommends his way is purely psychological – so his readers can quickly see the progress they make and stick with the plan. I understand his reasoning but high interest rates can kill that progress. If one is truly motivated to get out of debt I would definitely recommend paying off debts from highest interest rate to lowest.
Memorable Excerpt: “Only the strong can help the weak, and that is true of money, too. A toddler is not allowed to carry a newborn; only adults who have the muscular strength to ensure safety should carry babies. If you want to help someone, many times you can’t do so without money. The Bible states that pure religion is actually helping the poor, not theorizing over why they are poor (see James 1:27). Margaret Thatcher said, “No one would have remembered the good Samaritan if he hadn’t had money.” The good Samaritan had a good heart and a heavy enough purse to pay an innkeeper to help take care of the injured man. Money was involved. Money was at its best that day. Money gives power to good intentions. That’s why I’m unashamedly in favor of building wealth.”
Conclusion: This is not an advanced book on stocks and investing techniques for savvy investors; rather, it is an excellent book for ordinary people struggling with debt or looking for ways to maximize their money. I think it is especially useful for those who are willfully ignorant when it comes to personal finance or those who have never thought to examine where their paycheck goes each month. Ramsay does a good job keeping his advice straightforward and explaining complex financial issues in simple terms without speaking down to his audience. He also keeps the big picture in mind with personal finance, explaining it’s not about having the most toys or having more than your neighbor but helping others.
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February 4, 2010 Matthew Cochrane, From the Depths of the Web, February 2010
It’s been awhile and we’re definitely due for a FDOTW. Every month (or so) I like to share with my readers what I’ve been reading around the web in hopes that you will find these news items and opinion pieces as enjoyable, edifying, or interesting as I did. Let’s get to the links!
One of my pet goals is to encourage people to read more. Trevin Wax, who makes it a goal to read 100 books each year, offers seven tips for setting reading goals. All are helpful and worthwhile but I especially like his second point: Read everywhere. Wax writes:
Waiting for a haircut? Read. Waiting at the doctor’s office? Read. Going on a trip? Read. Watching TV? Read. Taking a bath? Read. Getting dressed in the morning? Listen to an Audio Book while you’re combing your hair, brushing your teeth, taking a shower. Boring sermon? Read. (Just kidding on that last one… although I will admit that as a kid I used to read Scripture if the preacher was making me sleepy.) Get in the habit of reading anywhere and everywhere.
It seems with the great leaps made in mobile technology the last few years, people now play video games/text/tweet/etc. in situations where they used to read. Technology is great but we could probably all stand to gain a little if we put our iPhones away and pack a book the next time we run errands.
Tebow's 30-second ad hasn't even run yet, but it already has provoked "The National Organization for Women Who Only Think Like Us" to reveal something important about themselves: They aren't actually "pro-choice" so much as they are pro-abortion. Pam Tebow has a genuine pro-choice story to tell. She got pregnant in 1987, post-Roe v. Wade, and while on a Christian mission in the Philippines, she contracted a tropical ailment. Doctors advised her the pregnancy could be dangerous, but she exercised her freedom of choice and now, 20-some years later, the outcome of that choice is her beauteous Heisman Trophy winner son, a chaste, proselytizing evangelical.
Pam Tebow and her son feel good enough about that choice to want to tell people about it. Only, NOW says they shouldn't be allowed to. Apparently NOW feels this commercial is an inappropriate message for America to see for 30 seconds, but women in bikinis selling beer is the right one.
My life long dream of being like Spiderman is closer than ever.
Albert Mohler reviews a fascinating new book on how pornography “hijacks” the male brain. He writes:
But, even as technology has brought new avenues for the transmission of pornography, modern knowledge also brings a new understanding of how pornography works in the male brain. While this research does nothing to reduce the moral culpability of males who consume pornography, it does help to explain how the habit becomes so addictive.
As William M. Struthers of Wheaton College explains, "Men seem to be wired in such a way that pornography hijacks the proper functioning of their brains and has a long-lasting effect on their thoughts and lives."
It took how many scientists to figure this out? The best way to get a good night’s sleep – duh!
It took how many scientists to figure this out? Exercise is good. More is better.
Jesse Wisnewski of Reformed and Reforming does a good job of defending paedobaptism using the argument from silence.
Bill Watterson, the reclusive but genius creator of Calvin and Hobbes, grants his first interview in over twenty years.
Tim Challies reviews Evidence of the Afterlife, the latest NYT bestseller dealing with near death experiences (NDE’s). Challies writes:
Looking at all of this evidence, and having determined that there is, indeed, an afterlife, Long says “Because NDEs happen to people all over the world, they are a spiritual thread that binds us together, a common experience that reminds us of our mutual spiritual nature.” Later he writes, “This book has important implications for religion. The great religions have always spoken of the belief in God and an afterlife. The evidence of near-death experiences points to an afterlife and a universe guided by a vastly loving intelligence. Near-death experiences consistently reveal that death is not an end but rather a transition to an afterlife. This is a profoundly inspiring thought for us all and for our loved ones. I hope that this book helps to promote such an encouraging message.” He even feels that an understand of our common end in the afterlife ought to be able to bridge us to worldwide peace.
Stuff and nonsense. Let me know how that works out for you, Dr. Long. World peace through NDEs may be one of the most ridiculous things I’ve heard in a long time. Of course as a Christian I have to grapple with asking exactly what a NDE is. It seems irrefutable that many people, when gravely injured and often when clinically dead, do experience something. The accounts are too common and too consistent to ignore entirely. So we see that such experiences do appear to exist and that they seem to lead directly away from what the Bible teaches us. What recourse do we have, then, but to state with some confidence that these experiences are somehow a trick of Satan? And would it not be just like the Enemy to use such an experience to convince people of their own divinity–to lead people as far from what is true as is possible? I am persuaded that NDEs do exist but that they exist to deceive, to provide false comfort, to provide false hope, to enslave, to trap, to destroy.
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January 31, 2010 Matthew Cochrane, Further Reflections on 37 Years of Legalized Abortion
Sorry I’ve been away for awhile. Since this month marked the anniversary of Roe v. Wade, I thought I would share some more thoughts on legalized abortion:
In their gut-wrenching article “ Mugged by Ultrasound”, The Weekly Standard’s David Daleiden and Jon Shields write about the intense emotional trauma the brutal practice leaves on those who perform abortions.
In general, abortion providers have censored their own emotional trauma out of concern to protect abortion rights. In 2008, however, abortionist Lisa Harris endeavored to begin “breaking the silence” in the pages of the journal Reproductive Health Matters. When she herself was 18 weeks pregnant, Dr. Harris performed a D&E abortion on an 18-week-old fetus. Harris felt her own child kick precisely at the moment that she ripped a fetal leg off with her forceps:
Instantly, tears were streaming from my eyes—without me—meaning my conscious brain—even being aware of what was going on. I felt as if my response had come entirely from my body, bypassing my usual cognitive processing completely. A message seemed to travel from my hand and my uterus to my tear ducts. It was an overwhelming feeling—a brutally visceral response—heartfelt and unmediated by my training or my feminist pro-choice politics. It was one of the more raw moments in my life.
Sadly, the article relates Dr. Harris is still in the abortion industry. Fortunately, many others are not. The article continues:
In 1990 Judith Fetrow, an aide at a Planned Parenthood clinic, found that disposing of fetal bodies as medical waste was more than she could bear. Soon after she left her position, Fetrow described her experiences: “No one at Planned Parenthood wanted this job... I had to look at the tiny hands and feet. There were times when I wanted to cry.” Finally persuaded to quit by a pro-life protester outside her clinic, Fetrow is now involved in the American Life League.
Of course, there are many other converts from the abortion industry. Last fall, Abby Johnson gained national attention after she quit her position as a director of a Planned Parenthood clinic in southeast Texas after watching an abortion procedure via ultrasound. Mike Huckabee interviewed Johnson after her decision:
In an excellent post, Kevin DeYoung lists laws in all fifty 37 different states that define a person to include the unborn . He then concludes:
On January 22, 1973 the Supreme Court, in Roe v. Wade, determined that abortion is a “right in the concept of personal ‘liberty’ embodied in the Fourteenth Amendment’s Due Process Clause; or in personal, marital, familial, and sexual privacy said to be protected by the Bill of Rights or its penumbras.” In the 37 years since Roe, 50 million unborn children have been killed in their mother’s womb–more than a 9/11 massacre for 13,514 straight days.
“They show that the work of the law is written in their hearts, while their conscience also bears witness, and their conflicting thoughts accuse or even excuse them on that day when, according to my gospel, God judges the secrets of men by Christ Jesus” (Romans 2:15-16).
David Mathis tackles the high abortion rate of unborn babies diagnosed with birth defects:
Haiti happens every day in the world's abortion clinics, where 130,000 human lives are destroyed. In the United States 3,000 die daily, crushed in the earthquake of abortion (more than the 2,976 who died in the 9/11 attacks).
With the advent of widespread prenatal testing availability, a kind of "eugenics by abortion" is growing, as parents kill their disabled offspring at a horrific rate. As Wesley Smith writes, "Americans may heartily cheer participants in the Special Olympics, but we abort some 90 percent of all gestating infants diagnosed with genetic disabilities such as Down Syndrome, dwarfism, and spina bifida."
Dr. Russell Moore talks about the connection between abortion and adoption:
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January 22, 2010 Matthew Cochrane, Roe v. Wade: The 37th Anniversary of Legalized Abortion
This week marks the 37th anniversary of Roe v. Wade, the landmark Supreme Court decision which legalized abortion. The ruling overturned laws restricting and prohibiting abortions in all fifty states. Since the decision was made in 1973, more than forty million unborn babies have been legally aborted in the United States.
While there are many arguments used to advance the cause of legalized abortion, what cannot be debated is this: Life begins at conception, not birth. The scientific consensus on this issue is simply overwhelming. In an article this week on Conservative 21, I tackled this very subject:
A few years ago, while on another blog, I debated abortion with someone who was fiercely pro-choice. We finally got to the heart of the argument when we started discussing the viability of the baby in the womb. I asked her when the magical moment was that a fetus turned into a baby. The moment, in her mind, it would change from being the lawful abortion of a fetus to the murder of an infant child. She answered, “A fetus becomes a baby when it's born. That shouldn't be so hard to figure out.” That sentiment, though all too common amongst abortion advocates, reflects a severe ignorance of the debate at hand and completely ignores the advances science has made in the last thirty years. Indeed, the scientific consensus, as we shall see, is clear: life begins at conception, not birth.
If this debate is to be won in the public square, it is important this scientific truth is asserted with clarity and confidence. Please be sure to read the article in its entirety.
Here are a few other links to reflect on the anniversary of this tragic day:
No endorsement of any single issue qualifies a person to hold public office. Being pro-life does not make a person a good governor, mayor, or president. But there are numerous single issues that disqualify a person from public office. For example, any candidate who endorsed bribery as a form of government efficiency would be disqualified, no matter what his party or platform was. Or a person who endorsed corporate fraud (say under $50 million) would be disqualified no matter what else he endorsed. Or a person who said that no black people could hold office—on that single issue alone he would be unfit for office. Or a person who said that rape is only a misdemeanor—that single issue would end his political career. These examples could go on and on. Everybody knows a single issue that for them would disqualify a candidate for office…
You have to decide what those issues are for you. What do you think disqualifies a person from holding public office? I believe that the endorsement of the right to kill unborn children disqualifies a person from any position of public office. It's simply the same as saying that the endorsement of racism, fraud, or bribery would disqualify him—except that child-killing is more serious than those.
I still love this video released after last year’s election of Barack Obama:
The legal problem with Roe v. Wade is simple: The Supreme Court's decision to invalidate state laws prohibiting or restricting abortion lacks any basis in the text, logic, structure, or original understanding of the Constitution of the United States. The late John Hart Ely, a famous legal scholar who himself supported legal abortion as a matter of public policy, said that Roe v. Wade "is not constitutional law and gives almost no sense of an obligation to try to be." The justices who manufactured a right to abortion in Roe violated and dishonored the very Constitution they purported to interpret by substituting their own moral and political judgments for those of the elected representatives of the people. Their ruling was a gross usurpation by the judiciary of the authority vested by the Constitution in the people themselves, acting through the constitutionally prescribed institutions of republican democracy. As dissenting Justice Byron White put it, Roe was nothing more than an exercise of "raw judicial power." It was not merely an incorrect decision, but an anti-constitutional one.
I would venture to say that most constitutional scholars who support legal abortion basically (if all-too-quietly) agree with Professor Ely. Roe is an embarrassingly poorly reasoned opinion. Of course, some pro-abortion scholars believe that the result in Roe could be justified by a different form of constitutional argument, and there is something of an industry among them in "re-writing Roe." Justice Harry Blackmun, in his opinion for the Court in Roe itself, claimed that restrictions on abortion for the sake of protecting fetal life violate the provision of the 14th Amendment forbidding any state from depriving any person of "life, liberty, or property without due process of law." Frankly, that's ridiculous, and almost all legal scholars know that (even if some won't say it publicly). The most notable effort to place the holding in Roe on a more plausible constitutional footing involves the claim that abortion restrictions deprive women of "the equal protection of the laws" (another 14th Amendment guarantee). There are various reasons why that approach fails, too, but many of Roe's supporters at least find it less embarrassing.
Also be sure to see my review of George’s book, Embryo (co-authored with Christopher Tollefsen), on the scientific and philosophic defense of pro-life reasoning.
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January 21, 2010 Matthew Cochrane, Book Review: Embryo
One of the common complaints heard among pro-life advocates from those who support legalized abortion and embryonic stem cell research is that all pro-life reasoning stems from religious belief. In Embryo, coauthors Robert P. George and Christopher Tollefsen put that argument to rest once and for all. George and Tollefsen make a compelling case, using a nearly seamless hybrid of science and philosophy, that human life begins at conception. Furthermore, they assert, all human organisms are fully persons and deserve the complete protection and rights afforded to persons from the embryonic to mature adult stages of life.
In the book’s opening chapter, George and Tollefsen explain embryonic stem cell research to the uninitiated: what it is, the possible medical promises and benefits it holds, and how embryos are destroyed using these research methods. George and Tollefsen then succinctly explain the moral dilemma this research presents; namely, whether the embryo is a human life and, if it is, does it deserve the full rights other persons, more fully developed, are granted?
The authors then go on to discuss the first of these questions: Is the embryo, from the moment of conception on, a living human organism? To answer this question George and Tollefsen give a fairly detailed account of the development of an individual human being, from their parents’ gametogenesis to fertilization and on. Indeed, to those less biologically-inclined (as I am), much of this chapter required intense concentration and rereading. A typical paragraph under the description of fertilization reads:
Once the sperm has penetrated the zona, the oocyte completes its second meiotic division, which results in a second polar body and a definitive oocyte. The nuclei of both the mature oocyte and of the sperm now begin to enlarge, becoming, respectively, the female pronucleus and the male pronucleus. Both pronuclei, which contain all the chromosomal material of the sperm or egg, replicate their DNA in anticipation of the one-celled embryo’s first mitotic division, called cleavage, and the male pronucleus moves closer to the female pronucleus.
As you can see, while the reading might be difficult to those who haven’t thought about biology since their high school days, it is also not impossible. I am sure many things went over my head in this chapter but I also learned a great deal about the embryonic stages of human life. The machination and utterly complex process of fertilization renewed my appreciation for God’s amazing handiwork. After fully examining the fertilization and first few weeks of embryonic development, the authors conclude:
There are three important points we wish to make about the human embryo. First, the embryo is from the start distinct from any cell of the mother or of the father. This is clear because it is growing in its own distinct direction. Its growth is internally directed to its own survival and maturation. Second, the embryo is human: it has the genetic makeup characteristic of human beings. Third, and most important, the embryo is a complete or whole organism, though immature. The human embryo, from conception onward, is fully programmed and has the active disposition to use that information to develop himself or herself, the mature stage of a human being, and, unless prevented by disease or violence, will actually do so, despite possibly significant variation in environment (in the mother’s womb). None of the changes that occur to the embryo after fertilization, for as long as he or she survives, generates a new direction of growth…Rather, all of the changes…either facilitate or retard the internally directed growth of this determinate and enduring individual.
After establishing that human life does begin, in fact, at the moment of conception, the authors use the rest of the book to explain why these human organisms are deserving of the same right we accord every other human. Using sophisticated philosophical arguments based on reason and logic, George and Tollefsen shoot down one pro-choice argument after another while explaining why unborn babies still in the embryonic and fetal stages of life need to be given the right to life. The authors tackle familiar pro-choice arguments taking on the forms of moral and intellectual dualism, constitutionalism, utilitarianism, consequentialism, and the developmental and attribution views. While it is beyond the scope of this review to examine each and every argument they make, I thought these familiar pro-choice arguments crumbled under the weight and force of logic employed by George and Tollefsen.
In the later chapters the authors also discuss more common arguments offered for not conferring full human rights upon embryos. One such argument abortion and embryonic stem cell research advocates often give is that because the embryo does not look human and is smaller than the period at the end of this sentence they do not deserve the same rights accorded to human beings at more mature stages of development. The authors reply:
To claims about the size and appearance of the embryo, we must say that it simply begs the question about the humanity (and the rights) of the embryo to say that it does not resemble (in size and shape) human beings in later stages of development. For the five-day embryo looks exactly what human beings look like at five days old. Each of us looked like that during the embryonic stage of our lives. The biologically relevant consideration is not appearance; rather, it is the fact that from the beginning, the embryo possesses the active capacity for self-directed growth and maturation through the various stages of a human life. We all started off small. But that just means that we exist as temporal creatures who grow and mature through time.
While refuting the common argument that states since an acorn and oak tree are different, so an embryo and human being must be different too, George and Tollefsen write:
So to say…that embryos and human beings are different kinds of things, or that acorns and oaks are different kinds of things, is true only if one focuses exclusively on accidental characteristics – size, shape, degree of development, and so on. But this is not how biological taxonomy works…What we are seeking to identify by the notion of a species is not some set of accidental characteristics, but rather the essential nature shared by some set of beings across various stages of development.
It should also be noted the authors intentionally avoid any theological or religious arguments. Not because they believe religious discussion does not belong in the public arena but because they simply believe it is unnecessary to do so to assert the right to life for human embryos. They write:
…the arguments of this book do not rely on any premise, claim, or authoritative teaching of any form of revealed religion. These arguments are not in any way sectarian or religious. They, are, rather, arguments using what the late John Rawls called “our common human reason” – a power, it is worth reiterating, that adult human beings exercise by virtue of having developed to the point of immediate exercisability an inherent natural capacity they possessed in radical form from the very beginning of their lives simply by virtue of being human beings.
Throughout the book, George and Tollefsen use the intellectual weight of their reasoning to assert their claims and arguments; they never resort to insulting or demeaning their opponents. The result is an academic treatise which immensely strengthens the intellectual and moral standing of the pro-life cause. George’s and Tollefsen’s contribution to pro-life literature is both intellectually weighty and compellingly persuasive. Anyone involved in the pro-life movement or who wishes to communicate their pro-life positions more effectively would do well to take the time to read it.
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©2009 Matthew Cochrane
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