I received this book called The Essential Credit Repair Handbook and I thought it would be a good book to share with you all. The thing I like the most about the book is that it is very readable but it does not talk down to the reader. I got this book just as I was getting some questions from a reader about how to repair her credit and get out of debt so this will be a good review of some of the tips that I gave the reader.
One of the very first things mentioned in the book is to set goals and the writer, Deborah McNaughton, lists her essential ten steps towards goal setting. I disagree with having ten steps as I believe that many of those steps could have been combined and having fewer steps makes the task seem more manageable to someone who is already feeling overwhelmed with debt. The ten steps are a good jump off point for the rest of the book because they show that getting out of debt is NOT easy or quick and you have to follow certain steps to get to each point that you desire.
The book then goes on to address the issue of WHY you are in debt in the first place and challenges readers to take a look as far back as childhood to see what your financial influences were. Only after you identify your attitudes towards and confront the reason why you are in debt can you really begin to make progress towards eliminating that debt.
Chapter four is where we really get into the details of budgets and that was one of the best parts of the book for me. The author lists the things that I did and what I recommend to readers in order to build a budget:
- Track your spending
- Track your income
- Create the actual budget
- Tweak that budget
In order to have a realistic budget you will need to track your income and spending down to the last cent for a full month. It is time consuming but if you make it a daily habit then it gets easier as time goes on.
“But I don’t want to track every cent for a month!!!”
Well then you don’t really want to get out of debt do you? The only way to get an accurate picture of what comes in and what goes out is to track it. And by tracking I mean that you write it down! The author suggests using a notebook or using software like Quicken, but a simple Excel spreadsheet works fine and it will total the values for you…no need to use a calculator. I personally have my monthly spending in Google documents so that I can access them from anywhere and I don’t need to bother with a notebook. It is also recommended to use Mint.com to track your spending electronically but remember that does not take into account cash spending at
- vending machines
- parking meters etc.
After telling you how to create and manage your budget there are a few tips on how to effectively tweak your budget after the first 30 days so that you have a realistic representation of your actual budget. It might take a few iterations in order to get the budget the way you want it but do not give up.
The rest of the book goes on to talk about getting out of debt by increasing your income, reducing expenses and making calculated payments on your debt according to various snowball methods. In order to be totally honest the ONE point that I totally disagree with the author on is that she says the only way to get out of debt to is stop using your credit cards.
I may be the only person saying this but I think you can get out of debt while still using a credit card….because THAT IS THE WAY I DID IT!!!!!!!!!!!! I stopped using the regular cards that had balances but I got ONE clean card that earned cash back and used that for daily living and used the budget money to pay off that card every week. This way goes against the ‘established’ methods of getting out of debt but it worked for me because I was able to use the cash back rewards to put towards the snowflake payments towards other debt. I kept that card at a zero balance by only purchasing what I had the money for. I paid that card EVERY week based on the total of the purchases I had made so that when the due date came along I never had a balance. It worked for me so I know it can be done….but the author chooses to follow the cash method because I guess it is easier for most people and does not take the intense effort that maintaining a clean card does.
The book ends with some information about handling identity theft, which is becoming more and more important for us today. In general, although there were a few minor things I disagreed with, this is a book that I would recommend to my readers!!!!