Table of Contents
To everyone overwhelmed by debtIve been there! Dont give up ...
so much can change in just a matter of months!
Introduction
Managing your finances is like driving a car down a winding mountain road. Take your eyes off the road for just a second and you can end up upside down in a ditch. In personal finance, that ditch is a thing we call debt.
Debt is far more than just a balance or two that you owe to someone. Its a parasite that seems to cling to you, sucking away your energy and joy, continuing to grow and grow even as you do your best to get rid of it.
If that sounds familiar, then Im glad you found this book. My hope is that it will serve you in many different ways, ranging from emotional support for your situation to tactical advice about the next steps.
The good news is, youre not the only one. Enough of us have gone through this that there are answers about how to end your cycle of late bills, phone calls from creditors, and mounting credit card balances. Even better, this book comes fresh on the heels of the most chaotic economic period of the last three decades. Its written with a new breed of consumers in mind. Theres hope and wisdom for the overstretched mortgage owner. There are practical tips for households getting nickel-and-dimed by higher gas prices and other types of inflation. Especially important, theres some tough love for people who need to hear it when it comes to their spending habits.
But before we go any further, let me give you the first and most important lesson in debt reduction. Its hope. Hope that things can be different than they are now. Hope that itll never be like this again. Hope that youll regain control and regain your life.
I promise you that if you take and apply the principles in this book, change will occur. Not overnight, as I like to say, but inevitably. One to two years from now, things can and will be so different that youll look back and laugh about where you are right now.
Hows all that going to happen? Ive written this book to help you accomplish five main tasks:
Understand debt and how it crept into your life.
Give you step-by-step instructions for changing the way money flows in and out of your household.
Arm you with strategies to deal with each type of unique debt.
Educate you on how to protect your credit score, your identity, your sanity with pushy creditors, and what little cash you might have.
Prepare you to live in a way that ensures youll never return to a lifestyle plagued by debt.
How to Use This Book
Like someone working a gigantic jigsaw puzzle, youll go about these tasks very systematically. Everything you read will be used as the building blocks for the skills outlined in later chapters. While all the chapters are written to be standalone resources if you need them, your best education and highest likelihood for permanent change will come if you read this book straight through.
Part 1, How Debt Works, helps you establish a vocabulary and working knowledge of the different types of credit and loans. You learn how to break debt down into categories like long- and short-term debt, as well as good, bad, and ugly debt. Moving forward without this information would be like trying to work that jigsaw puzzle while blindfolded. You also take a laymans look at the math of debt and a psychologists look at the emotions that surround dealing with your debts.
Part 2, Your Debt Reduction Plan, is the meat and potatoes of this book. Its where you find the most important techniques you need to conquer debt. We take a good look at how money flows in and out of your household, why budgets by themselves almost always fail, and how to create a spending plan that virtually assures you make progress on paying your balances off. You also end up with a shopping cart full of tips about how to deal with unexpected financial events and how to tame the paperwork monster.
Part 3, Debt-Specific Strategies, contains tidbits and wisdom for dealing with each kind of debt that will turbocharge your debt reduction plan. You learn the tricks of the trade thatll help you make significant progress trimming your credit card, mortgage, and student loan balances. You also get armed with a working knowledge of how to attack medical, legal, alimony, child support, and IRS bills. And to make sure you dont get detoured in your quest for financial freedom, we also review some of the popular and much talked about strategies that backfire on a regular basis.
Part 4, Protecting Yourself, teaches you how to get creditors off your back, keep identity thieves off your trail, and get your credit score to where it should be. You get an insiders view of the mysterious FICO score and a courtroom view of your rights as a consumer and borrower.
Part 5, Life After Debt, takes everything youve learned and crystallizes it into a new lifestyle. It helps you navigate the future uses of debt that are inevitable, teaches you how to plan for some of lifes biggest events so that you dont have to borrow to fund them, and shows you how to pass on healthy money skills to your kids and family.
Youll also find four helpful appendixes that help you address specific debt challenges: a glossary; easy-to-use sample letters to send to your creditors; resources of books, websites, and organizations; and a directory of student loan forgiveness programs.
Extras
As you go into battle against your debt, I want to make sure that you have the best weapons at your side. To help ensure that, youll find some easy-to-recognize sidebars throughout the book. They contain tips, tricks, key definitions, cautions, and some encouragement to set certain goals.
Dollars and Sense
These are some of the best pieces of advice and followup steps Ive compiled over my career as a financial planner. Each one will help you trim just a little bit more debt out of your life.
In the Red
One of the most frustrating things is working hard to make progress only to feel like youre sliding backward. These red flags will help you identify things that need to change and actions you need to avoid.
Set a Goal
Some of the chapters include an action step that I want you to take right then and there before you read any further. Keep a pen and pad of paper handy, because youll be writing a lot of these goals down for easy reference!
Debt in America
The assurance that you arent alone in the journey is crucial to not getting too overwhelmed. Throughout the book, youll find statistics about credit and debt usage in America.
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