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New Money Rules for the 'Modern Girl'

Kimberly Palmer

When Manisha Thakor and Sharon Kedar's personal finance book for women, "On My Own Two Feet," first came out in 2007, the financial world was a different place: The Great Recession hadn't yet rocked the markets, the unemployment rate was below 5 percent and housing prices appeared to be marching steadily upward. Thakor and Kedar's bestselling advice fell on eager ears, even as their readers didn't yet know just how badly they would need to follow it to survive the coming storm.

Six years later, Thakor and Kedar have released an updated version of their book, and they're the first to admit that while the bulk of the advice stays true, it also had to undergo some significant revisions to keep up with the times. U.S. News spoke with Thakor about those updates, how the financial world has changed and how people can best stay on top of all the flux. Excerpts:

What's changed since your book first came out?

The biggest thing that has changed is that the investment principles presented in the book were stress-tested on both ends of the spectrum. The first edition came out literally right before the 2007 to 2009 market melee. Those who followed our recommended suggestions of only putting money to work in the markets that can be left there for at least five years, keeping a health emergency cash cushion outside of investment accounts and creating age-appropriate asset allocations experienced a stomach-wrenching drop at first, and then stayed put to see the market soar and more than reward them for their patience and discipline.

[Read: 25 Ways to Improve Your Finances in 2014.]

As we stand here today at market highs, it is another great time to pause and make sure that your asset allocation matches both your risk tolerance and your cash flow needs, should a period of duress present itself. The one thing that endures in market history is regression to the mean, which is another way of saying, "Be cautious when things feel too good and bold when things seem bleak."

What kind of questions have you gotten from readers over the last six years, and did some of them inspire some of your updates?

The questions we received tended to fall into one of three broad buckets: 1) questions about budgeting and paying off debt, 2) questions about finding investment guidance, and 3) questions about sticky interpersonal money situations. When you step back, this makes sense: The first set of questions revolve around understanding how to live within your means -- especially in the face of life's uncertain twists and turn. The second question addresses the issue of increased choice and complexity in our investment landscape. The third question brings it all home to what life is all about - love, family, friends, community and the ups and downs that can arise when those precious areas of our live rub up against money.

[Read: 6 Tips for Women Who Want to Retire.]

Given how few of us receive a formal education in financial literacy, it is understandable that the most common questions boil down to: Can you help me understand how much I can comfortably spend today, how exactly I should invest for the future, and the best way to maintain financial harmony and in my most treasured relationships? This updated version of the book contains some eye-opening statistics around the issue of spending and saving wisely, some innovative new resources around investment advice such as betterment.com, bicyclefinancial.com and gogirlfinance.com, and updated figures on some of the less glamorous but often heated issues that can arise on the homefront, such as how much to comfortably spend on a home or a car.

You also added a chapter on student loan debt - is that a bigger issue now for people?

Hands down, the single biggest change since the first edition came out in 2007 is the incredible financial burden so many hard-working folks are carrying in the form of student loans. After years of being considered "good debt," and something that could be easily digested in almost any portion size, millions are now struggling with student loan induced-financial indigestion.

With the aggregate student loan debt burden eclipsing that of credit cards, the problem is now gaining national attention. What hasn't generated as much discourse as we'd hoped is the heart of our student loan chapter ... straightforward rules of thumb that can be used by students to decide in advance of taking on student loan debt whether or not the future lifestyle tradeoffs implicit in that decision are ones that they truly want to be taking on. Resources we recommend include Zac Bissonnette's "Debt-Free U" and studentloans.gov. We also review options such a loan deferment, loan forbearance and income-based repayment plans.

[See: Your 10-Step Financial Recovery Plan.]

Do you think the recession made people more interested in learning about personal finance?

The biggest impact of the recession and financial crisis that we have seen is an increased desire on the part of women in their 20s, 30s and 40s to take proactive steps to immunize their standard of living and protect themselves should history repeat in the not-too-distant future. The depth and length of the 2007 to 2009 crisis left few untouched -- if you didn't experience a financial setback personally, odds are high someone you cared about did. There appears to be a greater understanding that your financial well-being is something that is important to take ownership of.