2 of 2 people found the following review helpful
Useful book with practical solutions,
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This review is from: How to Get Out of Debt, Stay Out of Debt, and Live Prosperously*: Based on the Proven Principles and Techniques of Debtors Anonymous (Paperback)
I work as a debt advisor at Citizens Advice Bureau so I purchased this book to see if I could learn anything which may be of use to my clients and also because I am in debt! I am up to date with all my repayments so my debts certainly aren't as problematic as those of my clients however my finances could be in better shape.
The author draws from his own experience and the experiences of others who have participated in the debtors anonymous program to set out a framework for systematically reducing your debt. The concepts are simple: do not take out more debt, record everything you spend, create a spending plan based on the record of your spending and do a pro rata offer of repayment to your creditors. The author surmises that the only way to reduce debt is to either cut back on your expenses so you have more money to pay off your debts or increase your income so you have more money to pay your creditors.
Whilst insolvency (bankruptcy) as an option is touched upon briefly, it is assumed that the readers will use the techniques in the book to pay off all their debts. Whilst this may be ethically sound, it may not be the most practical option for everyone.
The techniques certainly work and I have personally found keeping a record of everything I spend on a daily basis, using a petty cash book purchased from a stationary shop, to be a useful exercise in examining where your money is going.
One thing I found particularly interesting in the book, and this is something which has occurred to me previously, is that practical strategies for getting out of debt are not always sufficient.
People often get into debt because of their patterns of thinking/mindset and after attending a financial capability course recently, the tutor emphasised the impact of emotion in relation to money. Using practical techniques alone may not be sufficient if a person is still operating on the same mindset that got them into debt in the first place. It's the reason why we often see celebrities or lottery winners ending up broke because they are still operating on the same financial mindset they had when they were 'poor'.
Having read books such as 'The Richest Man in Babylon' by George S Clason (which is also recommended in the resources section of this book) and 'Rich Dad, Poor Dad' by Robert T Kiyosaki I can definitely see the patterns of thinking and different mindsets that 'poor' people have from rich people. Whilst this book is great in terms of the practical strategies and acknowledging that the practical strategies aren't always enough, it fails to explore the psychology of debt further.
If you have never previously read a book relating to finance this will be a good introduction and I also recommmend the two books I mentioned previously. If you already have experience in this area or have read other books on finance you will not learn anything groundbreaking but it's useful consolidation of your existing knowledge and it has certainly inspired me to work harder at managing my own finances.