Readers Question: 5 best personal finance books

Anonymous wanted to know,

What are your 5 best personal finance book?

Since, anonymous didn't leave a name, website or anyway to contact them, they couldn't win the workbook, but I thought the question was worth discussing.
In fact, the question was perhaps a result of a post that Saving Advice, recently did:
Books For Every Level of Financial Acumen. Jennifer Derrick listed 21 books for every level of financial knowledge.

With that in mind, I’ve put together my list of the best books for every level of financial knowledge. None of these are too obscure or old, so your local or college library is likely to have them or be able to get them through interlibrary loan. Failing that, you can probably find some of them at used bookstores. They’re also all available through Amazon.com, and some used copies are available from other sellers.

Some of her books, without question, would be in my top 5. However, are all of them? Well, lets take a look at the books I would list as my Top 5.

5. Miserly Moms: Living on One Income in a Two Income Economy by Jonni McCoy.

One of the earliest personal-finance books that I read. This is a book that didn't make it on Jennifer's list. However, it is a book well worth the reading. Especially, if you want to learn to more frugal, so that you can learn to make do on less.

4. Good Debt, Bad debt: Knowing the Difference Can Save Your Financial Life by Jon Hanson.

Another book, not Jennifer's list, but a book that I reviewed last year on this blog.
I am a loyal Dave Ramsey fan, who says that there is no such thing as "good debt." Still though, I have heard Dave say that if you do get a mortgage it is to be for 15-years or less. So with that in my mind I wanted to find out what Mr. Hanson called "good debt." As he sees it, "good debt" is debt that eventually increases your net worth.

3. The World's Easiest Guide to Finances by Larry Burkett.

Another book, that was one of the earliest books that I read. Although much more recently. I got this book, when I was on a spree of buying business/finance books on Ebay. It is obvious that it would be a book for the financial novice. I simply talks about Debt Reduction, Budgets, Insurance, Retirement, Investment and virtually all aspects of personal finance.

2. You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead, by Larry Winget.

I thoroughly enjoyed this book. Understandably, Jennifer lists this book as one for the financial novice. It is simple to understand, and is straight talking.

. Larry is very no nonsense and a master of tough love. This book is a basic introduction to getting out of debt, but it will tear down every excuse you can think of and show you that it’s your choices that are making you broke. Warning: He is harsh (but funny), so if you get upset about that, maybe you should pass on this one.

1. The Total Money Makeover: A Proven Plan for Financial Fitness, by Dave Ramsey.

This is a book that Jennifer listed as a book for the financial novice.

I don’t always agree 100% with what Dave teaches, but there’s no denying that he is a great motivator and this book will get you fired up about getting out of debt and establishing a financial plan.

Not only will his books get you fired up, but so will his Live Events as well as his CD's and DVD's. There is no question, that This book is the number 1 personal finance book in my financial library.

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Success is More Than Dreaming

One of my long time dreams has finally come true. Even though, some of my readers, friends and acquaintances don't think it is a good move. For them it may not be. For me, however it is. For many years, I have wanted the position of Assistant Manager, in fact for nine years. For the past, 3 or 4 years I have been actively seeking it. Every manager, I have worked for, those 4-years has known of my interest. Some, have even known of my interest to own my own store(s). That is the case, of the manager and owner of a store in a small town. A manager, who even though, I left employment with him some 9-years ago, I have kept in contact with. It is because, of this dream, that I am motivated to get debt-free so that one day, that dream can come true also.

A friend of mine, recently mentioned a book, he seen in the library. A book, entitled "How come that idiots' rich and I'm Not" by Robert Shemin. It reminds me, that I must remember that the only way to achieve my dreams, whether it be promotion, owning my own business, or simply being debt free is hard work. I haven't read this book, but after looking up the authors website, I can quickly see that is the jest of what he is teaching. Which, is what personal finance guru's, Dave Ramsey, Larry Wingett and John Cummuta teach also.

I cannot say how long it will be, before I will see my dreams become a reality. However, I will continue to work hard, to see those dreams become a reality. Yes, it may mean 50 or 60 hour weeks, but it is something I am willing to do, to accomplish my dreams and make myself more valuable.

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The CIA Wants Your Money

On our road to debt freedom, one thing we must watch out for is the C. I. A.

Nope, that's not the Central Intelligence agency, rather Convenience, Indulgence and Appearance. This is an analogy that I learned from John Cummuta, and I think it so perfectly illustrates our bad spending habits. These 3 areas are the very things we must change, if we are build our savings so that we can enjoy life.

Convenience - While convenience items may save us time, they are robbing us blind. It doesn't matter if it is a frozen dinner, eating out (including fast food) or the kid we have mowing our lawn. They are taking the money right out of our pocket. Anytime we pay someone else to do something that we are capable of doing ourselves, is doing nothing but making ourselves poorer. Which means less money to enjoy life.

Indulgence - An indulgence should be treated as just that - a treat! You can't be running off to the mall because you had a tough week, or buying expensive treats at the most expensive stores. These things will only make you feel good for a short time, then the reality will set in. "The long-term price of indulgence is deprivation."

Appearance - I have repeatedly said that trying to "keep u with the Joneses" is downright stupid. If people around you don't like you, because you don't have the latest "cool" thing, then who needs them. You will be better off financially in the long run. It may seem that they are living the "good life" now, but in the long run they will be still be trying to pay it off and you will be ahead.

For example that by the time your neighbor pays off that plasma screen TV that they paid for with credit, they could have bought 2 (or more). If you are wise with your money and save up and buy yours with cash, you will be able to buy something they don't have, enjoy a longer vacation or even (why would you need to) buy a 2nd plasma screen.

Simply put, you will only make a finite amount of money in your lifetime, if you give away to much of it in your early and middle years, then you won't have enough during what is suppose to be your golden years.

The 10 Steps To Live on Less

Frugal for Life recently wrote an article that she called "11 Simple Steps to Living on Less." The article was a very good, but brief explanation of some of the very simple things you can do to get your spending under control.

As she so elegantly stated, "Debt is outcome from living beyond our means and wanting it all now. But if you are serious about getting into the black and living a life that makes you happy, there are some simple ways to get back on track."
It is a message that I have said repeatedly on both of the personal finance blogs that I write.

1. Make A spending Plan..
This is the number one thing. You must spend every dollar, every cent on paper at the very beginning of every month. There can be no exceptions, you must do it. If you don't plan your "Fun" money around your monthly obligations, then you will be in a financial pinch when the late fees start adding up.


2. Pay Yourself...
One the things that most every financial expert agrees on is "pay yourself first." Savings should be a line on your budget as if it were another bill. Once your debts are paid off, move those funds to your savings line. This will allow you to save up for those big purchases. Save for your next car, so that you can pay cash for it. Don't forget to save for your retirement to. You don't want to spend your golden years working at the golden arches for failing to plan.


3. Examine every single purchase...
One thing we must do every time we make a purchase, no matter how big or small is ask ourselves, "do I really need it." If it is a big purchase, we must not only compare prices, but if we are married, we must talk it over with our spouses.


4. Follow every Cent...
It is important to know where every little cent goes that we spend. It is the little things that can really blow a budget. 60 cents for a candy bar or can of pop may not seem like a tot but they can really add up. Just buying 1 candy bar and 1 can of pop each day at work from the companies vending machine at 60 cents will cost $20.
It isn't enough just to balance your checkbook, but to keep a spending diary of those little things you spend "pocket money" on.


5. Pay your bills when they come in...
What more can I say. Pay your bills on time and you will avoid the late fees. The best way to do this, and it is something that I need to improve myself, is to pay the bills when you get them. Don't let the bills set idle on your desk. Of course, this may mean getting the debts paid off, before you can actually be in a financial position to do this.


6. Cut your expenses...
Be honest with yourself. If you can't afford something, evaluate your need for it. Do you really need your cable or satellite TV? It doesn't matter how much you want it, if you can't afford it, you need to cut it out. The money you are spending on that service can be applied to your debts, so that you can become debt free sooner. The sooner you are debt free and can build your emergency fund, the sooner you can "enjoy your money" again. As long it is done within your budget.


7. Find free alternatives...
There are a number of things you can do or get for free. Instead of buying (or renting) books, videos/DVD's and music borrow them from the library. Instead of running out and buying a new piece of furniture, look on FreeCycle for whatever you may be looking for. I have given away a few things on the site, and I have received some bar stools by putting out a request on there.


8. Cut up your credit cards...
This is very important. Both John Cummuta and Dave Ramsey suggest this. If you think you are going to build wealth by using your credit card(s), then think again. Look at where you live, then look at the homes of the credit card companies. Multi-story buildings of glass and steel, pretty impressive, huh? Think you are going to have something that nice? Not if you keep giving them your hard earned money.

Now look inside. See all that nice furniture. It's yours! They bought it with the money they stole from you.


9. Remain Focused...
To help you remain focused on getting debt free, make a goal. Write it down and post it on your mirror or refrigerator. Someplace you will see it every day, to remind yourself of why you are getting debt free.


10. Set priorities...
Finally, you must prioritize! If you really want to be debt free, you must live on less then you make. It doesn't matter if you make $19,000, $30,000, or $60,000 you must live on less then you make. You must decide what you really need and what you don't. Eliminate all nonessential bills.

Consumer Cocaine

American's are addicted. No, they aren't addicted to drugs, but they might as well be. They are addicted to what some refer to as "consumer cocaine."

If you don't want be one of the barely surviving, collecting shopping carts at Wal-Mart in your retirement years, you need to change your financial behavior now. You must intentionally leave the 96 percent crowd that's headed for financial dependency and actively move toward the 4 percent who achieve financial independence. Obviously, the first step is to stop making new debt.

The best way to stop yourself from making new debt is to eliminate the credit cards. They are killing you financially. You have to do it. There is no way around it. It is perhaps the most emotional but crucial component to getting debt free.

I know, I can hear it now, "I don't need to cut them up! I just won't use them anymore."

Well would you:

Go on a diet but keep chocolate cake in your refrigerator?

Quit drinking but host a party and serve alcohol?

Kick a drug habit but leave a marijuana joint on your nightstand?

Stop smoking but carry a pack of cigarettes in your pocket?

In fact, I agree with John Cummuta when he calls credit cards Consumer Cocaine.

They're pushed like drugs, and people use them like drugs. If you're anywhere in the vicinity of credit worthy, your mailbox is regularly populated with credit card offers, and these offers seduce you with low-interest or even no-interest introductory periods. They are designed to give you the impression they're offering FREE Money! But these offers are no different from the schoolyard pushers who offer kids free samples to get them hooked. Credit cards are pushed like drugs.

Credit cards are frequently used like drugs to. You've had a tough week at work, and you deserve a treat, so you stop at the crack house for credit junkies (the mall). You slap down the plastic to make yourself feel good. But then when the bill comes in, you feel bad so you go back to the mall for another pick-me-up. Of course that makes the next bill go up even more, so it will take an even bigger pick-me-up to overcome the hangover from the last one, and so goes the cycle goes…just like a drug addict.

But the analogy doesn't end there. Just like with the schoolyard drug pusher, once the introductory period is over, up pops the interest rate and you're forking over more and more of your hard earned dollars to the coalition.

If you have a magnifying glass, read the fine print on the next credit card offer you receive. Look at what happens to the interest rate after the introductory period. Then look at the interest rate for cash advances. Then look at what happens to the interest rate if you're late with just one payment. Then look at some of the fees they'll charge you for using the ATM or if you make a late payment, bounce a check, or make any other possible mistake.

Yes, credit cards are consumer cocaine. They're pushed like drugs, frequently used like drugs, and they have long-term punishing effects like drugs. A drug habit cannot be “managed” and neither can a credit habit. Credit usage diminishes your financial health, so – like illegal drugs – it should be avoided not managed.

You need to learn how to eliminate credit from your life. Once you're debt-free, you'll never "need" credit again. If you want to buy a newer car, you'll just trade the one you own and pay the difference with cash. If you want to move up to a better house, you'll just sell the one you own free and clear — maybe take a little additional money out of your growing investment account — and buy your new house with cash.

Once you've paid off all your debts, you'll be able to save up in a few months an amount equal to what any credit card would likely offer you as a credit line. And it will be your money. Money you can use without any interest costs. And while it's in your accounts, it will be earning you interest. Compound interest will be working for you rather than against you. That's how it works when you eliminate debt. When you just manage debt, you stay in the 96 percent group along with all the other financial failures.

"You can likely be debt-free in just 5 to 7 years", says Cummuta. However, you must change your spending habits today. You cannot keep inuring more debt, and get debt-free.

So, ask yourself, do you want to be like the majority of Americans (a financial failure)? Or would like to be a financial success?

"Christian Money Management" Verses Secular Money Management

Anyone who has been reading my blog for any length of time, knows that I hate credit and am a follower of Christian or somewhat Christian money management systems. Especially since, I am a churchgoer.

What Is Christian Money Management?


Christian money management consists of training people to manage their money better, using Christian principles. This is an effective way to reduce misery, save marriages, and even prevent spousal abuse.

It is also of great spiritual importance because how you use your money is how you express your choices in all areas of life, not just church activities.

For example, if you can train yourself to wait to buy something you want, you are also more likely to wait for sex. IE: you are less likely to participate in premarital or extramarital sex.

There are two people or organizations that are considered leaders in Christian money management. A third person is much more about the money and doesn't offer any free information on his website. Of course all three sell their books and tapes as well as seminars, but the two big ones offer "free" advice via their radio programs and websites.

The original idea of financial training at church was vigorously promoted by the late Larry Burkett, whose Crown Financial Ministries is still the leader in the field. Dave Ramsey also has a loyal following; he is a bit more of a financier, and less of a spiritual adviser, than Burkett.

The third, Ron Blue is the founder of the largest Christian CPA firm in the world, who retired in 2003 and started what is now known as Kingdom Advisers.

How is "Christian money management" different from anybodyelse's money management? To a large extent, it's not. What works, works. However, four Christian doctrines loom very large:

God owns everything and we are just His stewards - Put simply, all of our property isn't really our own.

Higher standard of Honesty - We are held to a higher standard of honesty because God is always watching. Ethics isn't just whatever you can get away with.

Marriage is a permanent commitment - I know this doesn't sound like a financial issue, but it is. Secular counselors such as Suze Orman often advise couples to break up when they disagree strongly about money. For the Christian, that is not an option. Nor can marriage be viewed as temporary in the first place

Money does not buy happiness - There is much to be said for the old-fashioned virtue of contentment, the art of realizing that if you aren't happy now, you still won't be happy if you simply acquire more money or possessions.


Who Are the Secular Money Management People


There are a large number of advisers that would fall into this category. However, there are some leaders. Two of which have radio or TV shows (Suze Orman and Clark Howard). One which sells his tapes via radio commercials (John Cummuta). Another, that might be considered a leader, has appeared numerous times on Oprah. His name is David Bach.

All of these people teach reducing your debt load. In addition, they also all teach saving for retirement. However, there are some big differences.

The ones that tend to be Christian all tend teach paying cash for everything. Even business debt is to be avoided by the Christians. One of the secular teachers, John Cummuta, teaches this for personal debt but not business debt.

I personally like Cummuta and his teachings because they so closely resemble Dave Ramsey's. However, as I said there are some differences. Cummuta for example teaches debt reduction mathematically. IE: largest interest rate first.

Whereas, Dave Ramsey teaches that if we were thinking mathematically, we would never have gotten into debt in the first place. It is this reason, that he teaches a psychological method of paying the smallest debt first, regardless of the interest rate. The reason is paying off a debt relatively quickly will motivate you to move on towards your next debt. Both teach paying as much as you can on the first debt, then adding that payment to the payment of your next debt until you are completely debt free.

Wow, maybe I should place John with the Christian Advisers. However, even though, he tends to quote scripture like Dave Ramsey, he isn't considered in most Christian circles as a Christian Adviser.

What's wrong With Suze, Howard and Bach?
To start with Suze Orman worships at the alter of the FICO score. While she does encourage people to get debt free, she is concerned with what your FICO score is. The reason, she believes in, like most of the secular money people, "good debt." She believes in car and home loans, if you can afford it. To her credit, most of the people calling into her show tend to be told they can't afford a loan, at least for something as big as they are wanting.

For Clark Howard, I am not very familiar with him. I don't get his radio program in my area, so I can't say to much about him. However, I have seen his website and one big issue I have with him is he has an article teaching you to use credit cards rather then debit.
The good thing, he seems to be great at alerting his listeners and readers about scams. That is one area that no one can be to careful in. For financial advice, I would suggest, with this limited knowledge of him, avoid Howard. However, listen to his advice when it comes to his scam warnings.

As for Bach, I have so many problems with him. I have never heard him say anything about getting debt free. He teaches reducing your credit card debt, moving everything to lower interest cards, but never close those low interest cards. Additionally, he thinks there is actually something called "good debt." Avoid this guy, he will not seriously help the vast majority of people of have trouble handling debt. He might be ok, for the very small percentage of people who can manage to pay their credit cards in full every month. However this is not most people, and is not most of the readers of this blog.

I hope this post explains why I tend to follow Dave Ramsey, John Cummuta and to a certain extent Crown Financial. I know it only scrached the surface and didn't get into as depth as I would have liked. But then the post would have been extremely long, and very few people would have even finished reading it.

So what did you think? Did this post help you? Do you have anything to add? I want to hear from you.

Welcome! Look Around and Stay A While

It seems that I must have hit the lottery sort to speak. Yesterday, I looked at my stats and was amazed to see such a huge influx of visitors. Looking more closely at the states, it seems most of the new visitors are coming in, by way of Google searches. The search term, in one day has become the number one search term for this site. What was that term? Various versions of "84 square foot house" or home. All in all at midnight central time, I had received 310 hits on that article/page alone. Over all I had 384 unique visitors for the day. Considering I normally have 50-100 and occasionally 200 a day, to swell to almost 400 is fabulous. If this keeps up, I could be the number one personal finance blog rather then just one of the top 100.

So I would like to welcome all the new readers. If this is your first time here or if you have never commented before, I would like to welcome each of you. Everyone is encouraged to comment on any of the articles. All I ask is that if you don't have a blogger account, click on other and give yourself a name, so that your comments will be taken a little more seriously then a no name anonymous reply would be. The name you type in can be your real name, a nick name or an online pseudonym and is just to identify your comments.

This blog is (as stated above) a personal finance blog. I discuss my personal financial troubles openly here and my readers rebuke or support (with their comments) me. In addition I have talked about various frugal and thrifty tips. Discussed financial gurus like Dave Ramsey and John Cummuta. I have even discussed billionaires and business leaders such as Ron Burkle and Warren Buffett. It's all here, it's all my opinion, with your agreements, disagreements and thoughts thrown in. It to is my open book of the huge stupid mistakes I have made financially and all my struggles as I dig myself out of debt.

So with that, I would again like to say welcome and thank each and everyone of you for stopping by. Feel free to make a comment here to say hi and post how you found my blog.

SPONSORED Post: Gold Star Credit

GoldStarCredit.NET is a website that compares credit card offers. As those who read this blog regularly know, I do not do credit and agree with Dave Ramsey along with John Cummuta that credit cards are evil and should be avoided at all costs.
There is no question in my mind. A person get ahead faster, in the long run, by paying for everything with cash. Now it may seem at the start credit is better, but in the long run, like the turtle and hare, cash will win as those using credit pay those interest rates and make the banks richer and the spender poorer.
The website even allows the reader to apply right there on the website. However, I would suggest avoiding GoldStarCredit.NET.
GoldStarCredit.NET even compares auto loan companies as well as good credit, poor credit and gas cards. One good thing I found is debt help. However, to make matters worse there was no comparison, it offered one company that being Care One debt counseling.
So as you can see, for someone who follows the teachings of Dave Ramsey and/or John Cummuta, GoldStarCredit.NET is a site that must be avoided at all costs.

Revisiting Practical Way to Become Debt-Free Forever!

In August of 2006 I posted Practical Ways To Become Debt Free Forever. Today, I thought I would re-post the article, with a few minor updates.

1. If you have Credit Cards with Outstanding Balances.

A. Cut up ALL Your Credit Cards, and do NOT open new lines of credit.

B. Call those cards and ask them to reduce the interest rates.

2. Save or Earn an Extra $150 - $200 Per Month.
3. Pay this Extra Money off ONE Credit Card each Month until it is Paid Off.

A. Do NOT open new lines of Credit, as the idea is to get OUT of debt, not deeper into it.

4. Continue to Pay the Minimum of ALL your other Credit Cards each Month.
5. Once One Card is paid Off Apply the TOTAL amount to a Second Card.
6. Continue until All Your Credit Cards are Paid Off.
7. Apply the Same Method to your Car and House Loans.
8. Do Not Borrow Money for Consumer Goods Ever Again.
9. Use this Monthly Amount to Build Your Assets (aka Savings).

Using this Simple Method, as John Cummuta says, most People can become Debt Free in 5 to 7 Years and Wealthy in 10 to 15 Years. Please note Dave Ramsey say, that you will be more successful if you build an emergency savings of $1,000 ($500 if you make less than $20,000/year) first, and then pay off you smallest debt first. According to Ramsey, it may be mathematically correct to pay off the highest interest rate first, but if we were think mathematically, we would never have gotten ourselves into debt in the first place.

Awesome Live Event Was Biggest Ever

Saturday morning, I drove to Kansas City to attend the Dave Ramsey, "Total Money Make Over," Live Event. According to Dave Ramsey officials the Kansas City event sold out faster then any other event in Dave Ramsey history. It also was the largest live event ever with 10,000 tickets sold. I however, know of two tickets which were not used.

I arrived in Kansas City around 10:30 am, about an hour before the door opened. While I waited, I stopped in at the Wendy's about a mile or so from Municipal Auditorium, where the event was held, and met several people on their way to the same place I was. Many of them could be reading this blog for the first time this week.

Over the past year, I have often tried to compare Ramsey's teachings with those of John Cummuta. They both teach basically the same thing. Although Cummuta teaches paying off your debt first, Ramsey teaches building your emergency fund first. However, during his his live event, he actually said that he used to teach get out of debt first, then build your emergency savings. Problem was, he said, that people kept falling off the wagon.

In addition he showed this video clip, that I had posted on this blog last year. Take a look at the video again. It is hilarious.




Over all I had a great time, and am pumped to do what I can to get back on track and get these dang debts paid off.

Wasted $20

Today, I wasted $20. I took a vacation day today and promptly wasted $20 tonight. Well, OK so it wasn't all wasted. I spent $4.45 for some sale items at the store (TV dinners - limit 6 - 69 cents each) getting $20 back. Then went to Aldi's and picked some sausage biscuits and eggs spending $3.35 of that 20. I then went across the street to a store with milk on sale for $1.99 to pick up a gallon of 2%, spending another $2.14 of that $20.
Then it was time to go see the movie (Peaceful Warrior) with the free tickets I had printed off at the public library (as mine here at the house is out of ink). Along the way, I stopped and bought a Chicken sandwich at my favorite fast food joint, Chick-fil-a. There goes anther $3. Then I couldn't (or rather didn't) keep spending in check at the theater, buying a $4 (small) popcorn and a $4 (large) Coke. After the movie wasn't any better as I dropped the remaining $3 into an arcade game.
Not very smart of me I know, but that is why John Cummuta says not to ask for cash back at the register for any reason. You tend to forget where that extra $20 was actually spent.

Book Review: Good Debt, Bad Debt

As I sat down to read and review this book titled Good Debt, Bad Debt by Jon Hanson, one thought was nagging at me. I am a loyal Dave Ramsey fan, who says that there is no such thing as "good debt." Still though, I have heard Dave say that if you do get a mortgage it is to be for 15-years or less. So with that in my mind I wanted to find out what Mr. Hanson called "good debt." As he sees it, "good debt" is debt that eventually increases your net worth.
In this book, he even lists what he calls good debt as:

• Earns its keep
• Increases your net worth or cash flow
• Secures a discount that can be converted to cash or net worth
• Creates leveraged position ($300 out, $400 in monthly)
• Examples: debt for real estate at a safely leveraged level, debt for education that can be applied for a return of capital, and debt for a business you are competent to operate.

The list then continues and list what he calls bad debt:

• Is typically for consumption
• Decreases your net worth or cash flow
• Examples: Car loans that rob your retirement fund, continuing credit card debt, living on student loans, furniture loans, loans for rapidly depreciating items, and loans for parties, weddings or vacations.

Like John Cummuta he compares credit cards to cocaine.

Credit card companies, perhaps taking their cue from drug dealers, send college students sample cards with credit lines of $500-$2,000 to hook new users.... They come to you without prompting-in fact, often with a premium just for signing up. T-shirts and cookies are common premiums on a college campus. Credit cards are the crack cocaine of the credit industry.

He even has what he calls "para-debt," or "almost debt." According to Hanson, this is the commutative effect of all the nonessential monthly spending. Even though these bills are not actually debt, it has a similar effect. Unlike normal utilities, these unneeded bills, like cable TV do not involve long-term contracts. In addition they are voluntary monthly obligations they can be cancelled at any time.

A bad debt is money owed on high-interest credit cards for trinkets and non-essential items. Bad debt gives temporary pleasure, such as driving a shiny new Jaguar off the dealer lot. "Dump the pride issues," he writes.

One thing was clear in reading "Good Debt, Bad Debt, Hanson despises Cars. He calls borrowing to buy a new car akin to driving your retirement into the ground. A car loan is a loan on something that decreases in value.

The average new car loses value at a rate of $250 per month or more in the first few years of service, he writes. "Cars are the easiest area to save money in," he says. Like Ramsey he strongly suggests buying less and driving it longer (IE: buy a beater). Save the difference, buy your next car with cash that you saved, preferably in a good mutual fund.

Hanson wants you to think before you spend and to deal with your financial problems head-on as they arise. "It is about gaining perspective and right-sized spending and saving," he writes.

He encourages readers to "avoid the consumer entitlement mentality that can only lead to debt, regret and broken dreams — not to mention a garage and basement full of junk." The goal: Get control of emotional spending.

Like Cummuta, he says that, "No matter the amount of your income, wealth can be obtained, or maintained, only through the amount you don't spend." The caveat is that it won't happen over-night like so many get rich quick schemers would like you to believe. It will take a number of years of spending less then you make. This is the key issue that Ramsey, Cummuta and Hanson all agree on. Yes, I believe, since debt is based on income, you can be debt-free with-in 7 years, if you start living with the just mentioned philosophy and focus on getting your debt paid off as Ramsey would say with gazelle intensity.

Today's actions will affect what you can do in the future. "Your spending will determine your ending," Hanson philosophizes.

Hanson wraps up this personal finance book with a chapter entitled. "You Married Who? The Ultimate Good Debt, Maybe." Unbridled emotions in any financial dealings can be dangerous, he preaches. Marriage, the ultimate financial partnership, must be entered with clarity.

To help, Hanson offers his checklist to help you and your fiance align your money and life philosophies before you say, "I do." But you will have to get the book to see the list.

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I will be giving away three copies of this book. The first contest will begin on Monday March 19. Entries will be submitted to that post on Monday. With the winner announced the following Monday. Anonymous posts will be disqualified. If you do not subscribe to the blogger service, you can choose "other," and type in a name that will identify you. Check back Monday, for the contest.


links to the giveaeays and winners:

Book Giveaway # 1 - Lauri
Book Giveaway # 2 -
Book Giveaway # 3 -

Suze Orman Endorses John Cummuta's TDIW

With my blogiversary only 12 days away. I thought I would revisit some of my most popular posts in the past year. In some cases most controversial posts as I count down to the big day. Today, I am revisiting one of those controversial posts from June of last year.

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Using John Cummuta's Transforming Debt Into Wealth Course, you'll discover (as I did) "saved money" while you are in debt is really an illusion perpetuated by the very institutions you owe money to. Here's a clue: Who does it profit more to keep your money in a bank at less than 1%? You? Or your bank?

Rapid Debt Payoff is catching on in some enlightened financial circles:

sources:
http://journals.aol.com/brujonte/TheFredBlog/entries/357

and on CNN & fortune Magazine:
http://money.cnn.com/magazines/fortune/fortune_archive/2003/06/16/344218/

"Everyone should be aggressively paying off MORTGAGE debt as fast as possible."
- Suze Orman, financial planning self-help guru and author of six best-selling financial self-help books

Suze has always advocated paying off credit cards. Now she includes your mortgage, highlighting the devastating impact of debt on ordinary families.

Pay off all of your debt in 5-7 years using the money you already make. Find out why financial guru and best-selling author, Suze Orman, is advising her millions of followers to "Pay Everything Off as Fast As Possible!"
Free Lesson - Debt Freedom Course

As those who have been following my blog since I began a couple months ago (March 25, 2006), know that I started off hard touting John Cummuta. Since then I have brought in Dave Ramsey, and have tried to merge the teachings of two of the greatest financial teachers I have ever heard. Cummuta makes since when he talks about eleminating debt before building your savings. However, Ramsey also makes since in having that $1000 emergency fund in place first, so that you don't use the credit card at all anymore.

"Today we live in a world with more unknowns than I have ever seen in my life," she says, sitting in the lobby of the CNBC building in Fort Lee, N.J. Orman tends to infuse even one-on-one conversations with oratorical intensity. "Having talked to literally tens of thousands of people, I can say that what is good for America--and not just what is good theoretically, or for some financial wizards, but what is good literally--is not having credit card debt, not leasing a car, and not having mortgage debt. This is not good for a human being. It's just not. All these financial shows spending all their time telling people what to do with their money ..." She waves her arms toward the rest of the CNBC studio. "Well, get out there and talk to people like I do. The truth is, they haven't got any money. Who has money to invest anymore? Invest what?" - Suze Orman

I am glad to see Suze come on board and recomend paying off all your debts including the mortgage. I think it's time that I look up her program again on CNBC and give it a watch to see what she has to say. It's been to long since I have watched her.

"It may be fabulous for you to get a tax write-off. But if something happens to you, ladies and gentlemen...I promise you one thing: Uncle Sam is not going to let you move in with him." - Suze Orman

Blog Madness: Top 64 battle for Number 1

OK, so Money blog Site is conducting the Personal Finance blog version of March Madness. Becoming and Staying Debt Free has made it into the top 64 and now the battle is on for number one. This site is listed in what money Blog Site calls region 2. Voting is conducted via the appropriate posts. IE: since my blog is in region 2, your votes for this site would be on the region 2 post. Please follow the link below and vote for Becoming and Staying debt Free. The post he links to is the controversial post from last year about Suze Orman endorsing John Cummuta.

Please Click Here To Vote for Becoming & Staying Debt Free in Blog Madness

Truth About Interest Rate

I am often asked,

Why should I pay off my low interest rate loan (mortgage or otherwise) when I could make so much more by investing in the market?

John Cummuta says, On a typical monthly mortgage payment, 90% or more of the payment is interest each month. While the loan company made you feel like you were getting a 5% or 6% mortgage, you're actually paying 90%+ of your money toward interest each month. It would only be 5% or 6% if you paid the entire balance off the first year.

The other reason paying off your mortgage is a good idea is that paying off debt gives you a guaranteed return on investment equal to the debt's interest rate, so you must only compare paying off your mortgage loan with investments that would also guarantee their return. What investments guarantee their returns? Growth/equity mutual funds do not guarantee their return. In fact, you can lose money in these funds. It's the same with individual stocks, bonds, real estate, precious metals, and almost all types of securities. The safest investments that do guarantee their return rates are U.S. Treasury instruments, such as bills, notes and bonds. You'll find that long-term bonds generally offer the highest interest rate of the three, but this rate will always be less than current mortgage interest rates. So prepaying your mortgage will always give you a higher return on your money then the best comparable guaranteed-return investment.

Credit card fees can suck you in

I found this article interesting. Those of you who insist on using credit cards, may want to reconsider that after you have read this guys story. Especially those of you, who use the arguement that you pay your balance off in full every month. If everyone, that says they paid the bill in full actually did, then the credit cards companies would be bankrupt. However, there is a more pressing reasoning to cut up those credit cards. This time I am not releying on Dave Ramsey to prove my point, instead I am looking to an article in the USA Today (Dec. 15, 2006).

René Rodríguez of Juana Diaz, Puerto Rico, paid late on his August credit card bill for the first time in years. A simple oversight: He misplaced his bill.

But the fees Rodríguez was hit with were hardly simple. First, Citibank charged a $39 late fee. And even though he paid his full balance, the bank dropped his interest-free grace period. Then it began charging interest, compounding daily, at a 24% annual rate. All told, it cost him nearly $100. The policy "is perplexing," Rodríguez says. "It's probably somewhere in the contract, and whether it's fair or not, once the company puts it there, you're stuck."

Remember when most of us paid only an annual fee on credit cards? Today, late fees and over-the-limit fees are replacing that annual fee. Add in a dizzying array of extra charges: for phone payments, "expedited" online payments, credit card use overseas and balance transfers from other cards.

At a time when Americans wield more plastic than ever — 692 million credit cards, with $711 billion of debt — fees and policies have grown so complex that even regulators struggle to grasp them.

That's right folks, miss that payment due date once, and your grace period no longer exists.

Lots of card issuers offer low initial interest rates these days. But once they've pulled you in, they often replace "fixed" rates with floating rates — which can rise — and impose penalty rates of up to 30% even on those with good credit.

"It's like economic Darwinism," says Chi Chi Wu of the National Consumer Law Center, an advocacy group. "The business model has changed from one rate and annual fee to all these different tiers and fees designed to make money."

As I have stated repeatedly, you cannot beat the credit card companies. Eventually, you will miss a payment for some reason, probably by accident and they will sock it to you. It's not a game that I am willing to play. Pay cash for everything, and you will come out ahead of anyone that pays with credit. Ths article is a perfect illustration of that point.

As for those 0% and low intrest credit card offers, the article is clear in repeating what I have said in past posts. Those offers are to lure you in and then they snare you, like a wild animal in a hunters trap. Or, to use John Cummuta's annalogy, like a drug dealer, giving a new adict his first taste of cocaine. Once you have tried the drug, it becomes hard to refuse it. That's why Cummuta refers to credit cards as "Consumer Cocaine."

Save VS Borrowing: Why Borrowing Is Stupid

(image from 1st Tennessee) One responder to my post the other day (on 0% credit cards) left this message,

I have to disagree with the premise and the following statement "don't spend (or invest) money you don't have."

The average home costs $170k in the US. Should someone not buy a home because they don't have 170k in cash?

Should a high school graduate forgo college because he doesn't have 30k for tuition & books?

Should you forgo medical treatment (even though you might die) because you don't have 10k for medical treatment?

The whole "don't spend money you don't have" sounds pretty stupid when you start putting things into context.

The short answer to this person is yes, and while his comment saying that the idea of not spending more then you have is stupid, is in fact well stupid. However, the poster is using the mindset of most Americans. Americans who will never be wealthy, because they want everything now, rather then following the advice of those who actually have money, like Warren buffet, Dave Ramsey or John Cummuta.

The key is to save for those big purchases, such as a house. John Cummuta even suggests you may have to borrow to buy your first house. However, what you do is buy a smaller house (a starter house) save up money as you pay off that house, then when the time comes to move into a $170k + house, you pay cash for it. The thing is when you borrow to pay for anything, you end up paying much more for it. For example over the course of 30 years you will end up paying the bank a half million dollars for that 170k house. How stupid is that? Why not save the money up and pay less. That is in fact how rich get rich and the richer get richer.
Take a look at Donald Trump, a great businessman, but a poor example of wealth building. How many times has he filed bankruptcy now?


Now for education, this is a common problem, but if a student graduating high school had truly wise and prudent parents, then they would have money saved up for their kids education. Dave Ramsey tells a story about a couple who had a few thousand saved for their first kids education. Now she was pregnant with a 2ND child and wondering how they were going to pay for the education of that 2ND child, who wasn't even born yet. Dave didn't have an answer, probably only be able to pay half of each child's education. That wasn't good enough for this couple, they returned to Dave a few months later and reported that the young father (a school teacher) had gotten a 2ND job over the previous few months, delivering pizza, to earn enough money to fund the newborn education.

These parents were wise, and they thought ahead enough, to even get a 2ND job, to make sure their kids future was met. So Mr. Rich Slick, if you want to really have enough money to be a "rich slick" then you will save rather then borrow and live within your means.

In fact the graph on this post (from 1st Tennessee) shows how much more a borrower will spend on education then a person who had saved. Rich Slick is that what you want for your kids? Sorry, but I want to provide better for my kids future then that.

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this article has made it's way into other blogs. Mandy commented on D's post

I guess you mean to take the advice with a grain of salt. Aim high. Some people feel that if there's a loan on offer for 95% of the purchasing price, they should take it. Or if they can get student loans for their kids' entire education, they should go for it.

I think the aim should be to have as much of your own cash as possible. Get the smaller house if needs be, and pay it off earlier. Then it's an asset.

Plan for your kids' education instead of letting it sneak up on you (and them). If you have something to contribute, the debt incurred will be significantly less.

To me, it's all about an attitude adjustment from the "I want it all now" to "I want what is possible without huge debt"

It has also made it's way to GetRichSlick.

You Can't Beat The Credit Card Companies

Yesterday, I received a comment from someone who said,

I'm still making $10/day on credit cards.

This is the same detractor who repeatedly tries to convince me that he is smarter then the Credit Card companies.

Repeat after me: A credit card is not money. A credit card is not money. A credit card is not money. A credit card is not money.

If you don't have real money at your disposal, you don't have any business even thinking about anything but the most basic of needs. Again: A credit card is not money. As Dave Ramsey (and John Cummuta) says, don't spend (or invest) money you don't have.

The thing is you don't know what will happen tomorrow. You may think your paycheck will be available to you on your payday, but what happens if the company goes bankrupt between now and then. Or maybe the "mail" truck delivering the checks to your location wrecks (breaks down, gets stuck, etc), delaying the checks. Borrowing from so called free credit cards is risky. The credit cards aren't stupid, they can tell what you are doing and trying to pull the wool over their eyes will only make you a higher credit risk to them rather then a better.

Michael Clarke writes in This is Money,

The practice, where a customer draws the maximum amount on a 0% card to either put in a high interest account or to offset a mortgage, has been popular with sophisticated card users since 0% deals first became popular in early 2000.

At the end of the 0% introductory period, stoozers (British term: those who borrow at 0% then invest the borrowed funds) either withdraw the money from where it has been invested and use it to pay off the full credit card balance, or switch to a new 0% deal.

...One way card providers are stopping customers doing this is by preventing them from transferring money into current or savings accounts. While it is still possible to transfer balances between credit cards, most card providers can now recognise bank account numbers and stop transfers to current accounts.

They also recognize other credit card numbers, and while viewing your credit report, they will see a lot of balance transfers between credit card companies. Eventually, they will say, "hey this guy is jerking us around," or something to that affect and start denying his credit. The person that thinks they are smarter then the card companies will begin to see their credit score (FICO) to drop.

Be leery of anyone like this guy, that tells you that you can beat the credit card companies.

Neither a Borrower Nor a Lender Be

"Neither a Borrower Nor a Lender Be" - Shakespeare


Have you ever stopped to consider what that famous line from Shakespeare's Hamlet means. I know, I for one had heard that phrase numerous times, but never gave it much thought, until now. Now that I am working to get debt free, that phrase has come to mean so much more then I had ever thought it would.
Rich McIver of CreditCardLowDown.com

Credit cards were just making an appearance in mom's day, but to see the way plastic has replaced cold cash today, one would think they've been around forever.

Nowadays, borrowing to buy a home is considered by even the most conservative financial experts to be a good move, but spending is a big problem, as evidenced by the millions of Americans who are in debt over their heads. Nowadays Shakespeare might be more likely to advise us to "neither a borrower nor a spender be."

It's spending, not low income, that is at the root of most financial problems. Sometimes events beyond our control can propel us into debt, like the loss of a job, the death of a spouse, or large medical bills, but let's face it: for most of us, spending is what gets us into trouble. In fact, I believe that the key to having money is learning not to spend it. Notice that I didn't say "learning how to spend it," but rather, "learning not to spend it.

The more money most people make, the more they spend. If they get a raise in salary--they buy a newer car, or a bigger home, or a bigger, better whatever. But it's not just the big things they buy, it's all the little things they now feel they can easily afford, and those things add up amazingly quickly.

When you borrow, you end up paying more for everything, then you would have if you had paid cash. When it comes to lending to family and friends, it just becomes a barrier between the two of you, especially if they thought it was a gift (and you thought it was a loan) or are slow to pay you back.

As Dave Ramsey, John Cummuta and so many others have said over and over, it's better to pay cash for everything. You end up paying less, and in the long run the tortoise always wins.

Consumer Cocaine

American's are addicted. No, they aren't addicted to drugs, but they might as well be. They are addicted to what some refer to as "consumer cocaine."

If you don't want be one of the barely surviving, collecting shopping carts at Wal-Mart in your retirement years, you need to change your financial behavior now. You must intentionally leave the 96 percent crowd that's headed for financial dependency and actively move toward the 4 percent who achieve financial independence. Obviously, the first step is to stop making new debt.

The best way to stop yourself from making new debt is to eliminate the credit cards. They are killing you financially. You have to do it. There is no way around it. It is perhaps the most emotional but crucial component to getting debt free.

I know, I can hear it now, "I don't need to cut them up! I just won't use them anymore."

Well would you:

Go on a diet but keep chocolate cake in your refrigerator?

Quit drinking but host a party and serve alcohol?

Kick a drug habit but leave a marijuana joint on your nightstand?

Stop smoking but carry a pack of cigarettes in your pocket?


In fact, I agree with John Cummuta when he calls credit cards Consumer Cocaine.

They're pushed like drugs, and people use them like drugs. If you're anywhere in
the vicinity of credit worthy, your mailbox is regularly populated with credit
card offers, and these offers seduce you with low-interest or even no-interest
introductory periods. They are designed to give you the impression they're
offering FREE Money! But these offers are no different from the schoolyard
pushers who offer kids free samples to get them hooked. Credit cards are pushed
like drugs.

And credit cards are frequently used like drugs. You've had a tough week at work,
and you deserve a treat, so you stop at the mall (a crack house for credit
junkies). You slap down the plastic and give yourself a quick feel-good. But then
when the bill comes in, you feel bad so you go back to the mall for another
feel-good. Of course that makes the next bill go up even more, so it will take a
bigger feel-good to overcome the hangover from the last one, and on the cycle
goes…just like a drug addict. It's scary.

But the analogy doesn't end there. Just like with the schoolyard drug pusher,
once the introductory period is over, up pops the interest rate and you're
forking over more and more of your hard earned dollars to the coalition.

If you have a strong stomach and a good magnifying glass, read the fine print on the next credit card offer you receive. Look at what happens to the interest rate after the introductory period. Then look at the interest rate for cash advances. Then look at what happens to the interest rate if you're late with just one payment. Then look at some of the fees they'll charge you for using the ATM or if you make a late payment, bounce a check, or make any other possible mistake.

Yes, credit cards are consumer cocaine. They're pushed like drugs, frequently
used like drugs, and they have long-term punishing effects like drugs. A drug
habit cannot be “managed” and neither can a credit habit. Credit usage diminishes
your financial health, so – like illegal drugs – it should be avoided not managed.

You need to learn how to eliminate credit from your life. Once you're debt-free, you'll never need credit again. If you want to buy a newer car, you'll just trade the one you own and pay the difference with cash. If you want to move up to a better house, you'll just sell the one you own free and clear — maybe take a
little additional money out of your swelling investment account — and buy your
new house with cash.

Once you've paid off your debts, you'll be able to save up in a few months an
amount equal to what any credit card would likely offer you as a credit line. And
it will be your money. Money you can use without any interest costs. And while
it's in your accounts, it will be earning you interest. Compound interest will be
working for you rather than against you.

That's how it works when you eliminate debt. When you just manage debt, you stay
in the 96 percent group along with all the other financial failures.

"You can likely be debt-free in just 5 to 7 years", says Cummuta. However, you must change your spending habits today. You cannot keep inuring more debt, and get debt-free.