Beating Broke

Personal Finance from the Broke Perspective

Money Rules by Jean Chatzky

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Money Rules : The Simple Path to Lifelong Security

money rules
Amazon

By: Jean Chatzky

Chatzky is a pretty big name in the realm of personal finance media, so when I was asked if I wanted to review her latest book, I jumped at the chance.  In Money Rules, Chatzky aims to break down personal finance into it’s most simple denominators and give it out in a set of rules.  Overall, there’s 94 rules.  Each is a paragraph or two long.  And, each is pretty solid.  I had a hard time finding any of the rules that I could argue against.  There are a few that are borderline, but I think that they get a pass in the sense that they can be considered a standard personal finance rule.

There are some readily acceptable rules too.  Increasing savings with each raise, not treating your primary home as an investment, not shopping hungry, and 90 others.  From the longer ones, to the shorter ones, the book is a quick read, at 114 pages, so you don’t really have any good reason to not read it.  I think that it’s one of those books that you can read quickly, and refer back to occasionally for guidance and reaffirmation of some basic personal finance principles.  Because of it’s size, you’re not going to get bogged down in the nitty-gritty details of each point, but merely get the point and be able to find ways to apply it in your own life.

Currently, the book is a bit over $10 at Amazon in paperback, and a bit over $9 for the Kindle.

P.S. I’ve got a couple of copies to give away, so come back tomorrow to see the details on that!

What is a Debt Management Plan

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As you no doubt know, this is a blog about personal finance with a leaning towards getting yourself out of debt, staying out of debt, and learning how to handle the money you make once you’re out of debt.  There are lots and lots of ways to get out of debt.  My personal favorite is pretty close to the Dave Ramsey “Total Money Makeover” method.  Not everyone is willing or able to go “gazelle intense” and bust their debt down to nothing the TTM way though.  For some, they’ve gotten so far down into that debt black hole that they just don’t know where to start.  Those people will, more often than not, end up at a bankruptcy hearing long before they’ll be exclaiming “I’m debt free!” on the radio.

But, if you’re one of those people, there’s one last stop on the debt freefall before you declare bankruptcy.  Call it a last ditch effort if you will.  That stop is a Debt Management Plan.  Too often, the DMP is associated with shysters posing as financial advisors who promise to get you out of debt, while loading you up with fees on the backend.  The problem with a DMP that charges fees is that you are actually adding on extra debt as you try and pay off your debt.  But, there are some reputable places that do offer a free debt management plan.  There are some that will help you to pay off your debt without going into further debt and without declaring bankruptcy.

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What exactly is a debt management plan?  The administrator of a DMP acts as your agent.  They contact all of your debtors, like credit cards, auto loan lenders, etc…  and negotiate a payoff schedule with a payment that you can afford.  Usually, that payoff schedule will include some pretty significant drops in the interest rate as well.  You make one large payment to the DMP agency, and they distribute the payments out to your debtors.  At the end of the DMP, you’ve paid off all of those accounts.  Any good DMP will require that you don’t add any new debt while on the plan.  It also will include at least a minimal amount of counseling to help you avoid getting back into debt when you’ve finished with the debt management plan.

A debt management plan isn’t perfect.  It’s not the ideal way to get rid of debt, but for some, who are having issues getting their debt under control, or, issues making all their payments, they can be a valid way to go about doing so without the pain of bankruptcy.  Your credit will still take a hit, however.  Not nearly the hit that a bankruptcy would deliver, but the accounts will get reported as being negotiated.

In the end, if your choice is between a debt management plan and bankruptcy, I’d take the DMP any day.

Return of the Rewards Cards

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It wasn’t that long ago, as the economy was crashing down around us, that people started noticing a drop in the number of credit cards that were offering the 0% transfer rates, and a drop in the number/quality of the rewards associated with rewards cards.  Higher default rates and changing regulations seem to have been the culprits, making it harder for credit card companies to offer the great rates and rewards while still maintaining their (already bloated) margins.

But, as the economy levels off (if not starts a recovery), there have been an increase in cards offering the great transfer rates, and now, there’s been an increase in rewards cards too.

Just the other day, Chase announced the British Airways card, with a pretty good rewards system. Then, today, I got an email announcing the Hyatt card. It too, has some pretty good rewards.


 

The thing I don’t really like about cards like these is that you get locked into an airline or hotel chain. Also, they both charge an annual fee. I think in a pinch, you might be able to call Chase and be able to get that fee waived once or twice, or at least get your value out of it in flights and stays. Aside from that, the rewards are pretty good. The British Airways card has a potential for 100,000 Avios (BA’s points) which should be able to get you a couple of trips overseas or quite a few domestic trips on their partner airlines. The Hyatt, with it’s 2 night free stay bonus, is pretty good as well. And in both cases, the points accumulate at a good rate.

As always, responsible credit card use is a must. You’ll pay way more than what the rewards are if you don’t pay the balance off, and lose money on the whole deal. It’s just not worth it. If you do pay your balance off, however, it’s something to look at.

I might even have to think about that Hyatt card, as the Financial Bloggers Conference this year is at the Denver Hyatt, and while the even rate is pretty good, it’s not as good as two nights free!

Editors Note: As with any financial offer, credit card or otherwise, YOU are responsible for reading the full terms and disclosures in order to understand what it is that you’re applying for.  Don’t read them, don’t come crying to me.