Debt Free Map

An honest review of “Pay it Down : From Debt to Wealth on $10 a Day ” by Jean Chatzky

If you find yourself up to your eyeballs in debt, than you might have come across this book title looking for an answer. If you have read the first few posts of my blog you would know that I am in way to much debt myself. So I have written this review from the perspective of someone that needs help getting out of debt.

The big idea of this book is to get out of debt by applying $10.00 a day to an $8,000.00 credit card debt with a 16% interest rate in about 33 months. How does one do that? This book give you steps that if followed will do just that, according to the author.

Step 1 “Assess the Problem”. This step instructs you to figure out exactly how you got into this debt with the idea that you need to find out your habits before you change them. To complete this step you will also need to know who you owe money to and how much.

Step 2 “Break Your Challenge into Manageable Steps”. She explains that you don’t need to pay debt management programs to help you clear you debt. And talks about getting a lower interest rate, which will be necessary to meet your goal.

Step 3 “Know and Manage Your Credit Score”. Any good get out of debt book will tell you to get your credit report and score, it is that important. Many people that need to make decisions about you, will use your credit score. This book puts a very large emphasis on this point. To complete this step, it will be necessary to get your score. Jean Chatzky gives a wonderful explanation of how your score is made. For instance; only 35% of the score is based on how you pay your bills.

Step 4 “Track Your Spending”. In this step the author explains “By not paying off our credit cards, we’re living on borrowed money. By not saving we’re living on borrowed time.” So to do this step you will need to track every penny that comes in and goes out. I have read the same advice of tracking your money in quite a few books about personal finances.

Step 5 “Find the Money”. The point of this step is to find anywhere that you can cut something out of your expenses to find enough money to free up the $10.00 a day. This step also talks about how to lower your interest rates, refinance your car loan, and get a better mortgage.

Step 6 “Find the Money: Consolidating Your Debts”. It seams that consolidating your debt will turn an unsecured debt into a secured debt because you will need to borrow form your house, in return you will get to pay off that debt at a much lower interest rate. She warns against the possibility of charging those cards up again. There is also an explanation of what kinds of loans you could get to do this.

Step 7 “Find the Money: Spending Less”. This may seem simple, but if it was that simple would most of us have this debt in the first place? This step goes over why we spend too much money and has you evaluating your spending list. It also talks about selling off assets and making more money.

Step 9 “Pay it Down-Intelligently”. It seems that all of the debt gurus have a formula of which debt to pay off first. I have read many different ways to choose, hers is to pay the one with the highest interest rate first.

What to do when things go wrong. There is a lot of information about what to do if you go though all of the steps, but you just can’t get the $10.00 a day to pay off your debt. This book recommends getting credit counseling or getting a debt management program, because they can get you a good deal with your creditors, you will give them one payment electronically, and they will use your payment to pay the creditors. You will end up paying the service a fee up front and then a monthly fee until you are done.

As far as aggressive debt collectors go, this is what she has to say “You don’t have to talk to a debt collector. And you don’t have to return their calls.” If you feel that you are being abused by these collectors there is information in this book that will help.

The end of the book consists of “The Debt Diet”. This is just some good rules to live by that will help you spend less money on unnecessary things so that you can get though your debt elimination.

Would I recommend This Book?

This is what I would tell a friend if asked if I would recommend "Pay It Down". This would be a good book for people that haven’t ruined their credit yet, and it contains sound advice for changing your financial habits. I also like the “do it yourself” attitude that is in the steps. On the other hand, Pay it Down is best for people that have a decent income and not a lot of debt. This book is also a bit out dated. With the increase of the monthly minimums that credit card companies hit us with not long ago, $10.00 a day would in no way be enough to cover just the minimums. Unlike other books about getting rid of credit card debt that I have read, this one does not fill me with hope for my future. I find Pay it Down a bit pessimistic for my taste. So, although this is a good book I would not recommend it to anyone that is having real financial problems.

Bookmark It

Hide Sites