The ABC's of Getting Out of Debt by Garrett Sutton, Book Review

The greatest barrier to attaining wealth, to becoming financially savvy and to ultimately helping one's self and one's loved one's out had to be the management of money and credit.  I was recently at a meeting and someone stood up and asked the panel of financial advisors why having good credit was a good thing; essentially why should they use credit at all---he insanely went on that he felt that credit was a conspiracy based trap.  (Yes, I am often in surprisingly insane company in educational settings.)    First, it's no shame to get into debt or be confused about credit; as a teenager I got my first credit cards and while I didn't go buck wild, it was a learning curve.   After a few years of charging away, eventually my family bailed me out of credit card debt of a couple thousand before I left for college   Rich Dad, Poor Dad was actually instrumental in my learning how to manage credit (and start a business) by teaching me what money and credit are to be used for.

About 10 years ago, I started again with a secured credit card (you give a bank a deposit of say $200 up to $10,000 in cash and they extend you a credit card worth the amount of money you've deposited---a savings account that you access with your credit card.  The charges onto the card are minused from the total and you repay (yourself) to the bank/to the balance and eventually they not only increase your credit limit but this is reported to the 3 credit reporting agencies (Experian, Trans, and Equifax) as having credit card responsibility.  Your credit score is generated by credit card usage (credit scores go from 300 to 800, the higher the better---you want as an adult 600+; timely bill payments, minus outstanding balances and loans.)

If I couldn't pay for it in cash, I didn't buy it.
No car leases, no phone contracts, no store credit cards, no store payment plans, I simply focused on paying off all of my debt (mainly college loans---yeah, all them degrees look cute on the wall but the bill every month keeps me on the career pole!).  I applied the strategies in this book by Garrett Sutton to snowball my payments---essentially pay off the small first (sending at least $5 to the large ones---if you try to pay, you can't go into collections because you're legally making an effort) then when you pay off the small snowball, that payment rolls into the next largest bill due and so on.

I was recently talking to a friend about my interest in buying a property here in NYC in the next few years and that I'd been designing/building my savings towards paying for more/law school (again!) but also making sure that I had spotless credit.  Every year I pull my credit report (you can get it for free by typing in free annual credit report) and I shockingly discovered that I owed a library fine (a small amount) and an old electric bill from another state---but other than that I'd paid off everything else, using these tactics. This is a great book for teaching one how to build and maintain good credit and then what credit is good for.  I learned one of the secrets to credit is that you get a bad mark (your score is lowered) when you spend more than 1/3 of your credit limit at any given time (it shows a lack of control)---I now teach this regularly to all of my students when it comes to credit/financial discussions/classes.

Back to the nut in the meeting: what is credit good for?  

Credit is how we buy property in America (and the rest of the world) and most importantly pass the property on to future generations and this has been the secret of amassing wealth.  Credit allows you to go to and pay for college by taking out loans and education is the key to personal empowerment. Credit allows you to gratify yourself now for something you can afford over time and teaches you how to delay gratification.  You live in a capitalistic society, you must master it's rules before you can achieve or navigate it or it will consume you.

Pssssssst.  The capitalistic society will not go away in your lifetime, nor your children's. 

You might also want to consider that in your attempts and desires to be in a loving relationship, management of money will come up.  You have probably been overlooked or passed by when you revealed to someone of good credit that you have low or bad money management skills.  Change that.  Money is also our responsibility to others (to care for them) and a measure of our personal Accountability and Responsibility translated simply to Integrity.  As I've aged, so have my parents, and now they need, just small things because they've been reasonably financially wise, but they still require my help with things or I can expediently send them things that it might be difficult for them to find in their town.  There's also a host of things that I've learned aren't covered by my parents insurance, small but building expenses that it's a pleasure to be able to jump in and take care of.

The ABCs of Getting Out of Debt is a worthy addition to your financial bookshelf because you'll have to maintain and manage your credit for the rest of your life (and perhaps even teach a spouse or children how to do the same).  Wealth is designed by knowing and understanding how money works.  Most people are poor not for lack of smarts, talent, ability, work ethic or even money but because they lack the understanding of what money is and how to manage it. 

That guy at the meeting?  Welfare.  Bad credit.  Thief.  Often borrowing money and having to be bailed out.  He's in his 50's.  Knowledge is power and ignorance pervasive 

Thank you!
Kyle Phoenix
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