Paying Off Debt

Book Review: Pay It Down!

April 20, 2006

When on vacation I like to seek out independent books stores to visit. (At home I usually patronize chain stores and Amazon…go figure.) While on vacation in Florida a couple of months ago I found a great used book store and picked up a copy of Jean Chatzky’s Pay It Down! I am familiar with Jean from her Today Show appearances and her columns in Money magazine. She’s also one of the three experts for Oprah’s Debt Diet.

The premise of the book is that finding just $10 a day will dig you out of any credit hole you’re in and help you begin to build wealth. Chatzky’s initial suggestions for finding that $10/day include skipping the popcorn at the movie, skipping lunch at McDonald’s, and skipping the carwash and washing it yourself. Her premise is similar to – no, it’s exactly like – David Bach’s “latte factor.”

One question kept lingering in my mind as I read through the book. What if the reader finds the $10/day and still has a cash flow problem? After all, people who find themselves in deep debt got there because they were spending more than they make. If that deficit is more than $300/month then they’re still taking on debt and not paying it down. I didn’t see that potential problem addressed in the book.

I suppose that one of the hazards of reading too many personal finance books is that there’s usually nothing new. As a reader of these books I doubt that I was Chatzky’s target audience but much of her information is very simplistic. Such as the difference between before tax and after tax income. And how secured debt differs from unsecured debt.

I was happy to see talk with great caution about using home equity to pay off credit cards. She states that 1/3 of people who cash out to pay credit card bills run their cards right back up. (I’m actually surprised that it’s that low.) And she offers some good suggestions on keeping that from happening should you go the home equity route.

All in all, it’s a quick read and a good beginner guide for someone looking to get out of debt. And despite the fact that there’s nothing really new here, I do feel it can be beneficial to hear the same message more than once. Besides, it’s always interesting to see how someone puts their own spin on it.

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