A recent book by David Bach claims to have the solution for you. Well, it is written with the American consumer in mind, but, you know, Canadians are not that different…
David Bach is a big name. You may say – a financial guru. He was hugely successful with even his first book, published more than 10 years ago – “Smart Women Finish Rich”. I remember, I gave a copy to a friend of mine for Christmas and she was ecstatic about it after that… Other well-known books by David Bach are “The Automatic Millionaire”, “Go Green, Live Rich”, “Start Over, Finish Rich”. Do you see the pattern? He knows the road to riches.
His new book “Debt Free For Life” does not contain the word “rich” in the title, but if you think about it –it also leads in that direction. To be frank, I did not like everything in the book – especially that constant self-promotion of other books he published, or even some of his suggestions. But at the same time the book does successfully drill into your mind the important steps one should take to get rid of debt.
Here is what David Bach recommends:
1/ Make your efforts to get rid of debt a family affair. It is always easier to achieve anything when you have the support of your family members.
2/ Never ever spend money on anything if you can’t afford to pay cash for it. In other words, before even start thinking of getting rid of debt stop piling more debt.
3/Get organized – create folders for each credit card you own and write down the current date, the outstanding balance, the interest rate and the monthly due date for your payments.
4/ Add $10 a day to your regular payments to retire your mortgage much sooner.
5/ Always pay your balance before the due date and pay at least double the minimum payment on your statement.
6/Reduce the number of credit cards you are using and try never to exceed the credit limit of any card.
7/ Consider using the service of the website www.debtwise.com.
8/ Call your credit card company and try to negotiate a lower interest rate. The credit card companies know that many of their customers may be in difficult financial situation. Instead of getting no payment on the loan, they are better off to reduce the rate and make it a bit easier for the borrower to pay.
Well, these are common sense ideas, not a revolutionary new approach to solving the personal debt problem. The exception here is the www.debtwise.com website. This is new. It is an interesting service. And it is built by the credit reporting agency Equifax based on David Bach’s ideas. According to Equifax the average person who uses the service can expect to save more than $30,000 in interest charges on their credit cards, other loans, and mortgages, and get out of debt 15 years quicker.
What does Debt Wise do? Once you sign up, it automatically collects all the information about your existing debts and ranks the different accounts. The one with the highest interest rate pops up first – this is your target account, which needs to be taken care of first. You can also choose a payment plan to follow, which calculates exactly when you will be debt free… if you don’t screw up during the process.
I think it is a great tool. But like anything new, it cost money to use it. You can try it free for a month, but after that a charge of $14.95 per month would apply. Isn’t it paradoxical – you have to spend more when you try to reduce spending… That’s life, perhaps that is also one of the way to finish rich.