Book Review Master Your Debt: Slash Your Monthly

Book Review
Master Your Debt: Slash Your Monthly Payments
and Become Debt-Free
Diane E. Johnson
Author: Jordan E. Goodman with Bill Westrom
Publisher: Johns Wiley & Sons, Inc. (2010)
ISBN 978-0-470-48424-1
For a quick read that can add new tools to a practitioner’s
counseling and educational toolkit, consider reading bestselling author Jordan Goodman’s new book, Master Your
Debt: Slash Your Monthly Payments and Become Debt-Free.
Jordan Goodman is the best selling author of Everyone’s
MoneyBook as well as 12 other books. For 18 years he was
the Wall Street correspondent for Money magazine. Goodman also appears on national television and radio broadcasts
and hosts the Web site www.moneyanswers.com.
Master Your Debt offers understandable and detailed advice on becoming debt-free and managing credit using the
latest government rules and programs designed to help
consumers. Also included are tried and tested solutions for
credit problems as well as some strategies that may be new
and even controversial. The book is a useful and relevant
resource for the current economic climate. Below is a description of each of its chapters:
Master or Victim? You Decide. This introductory chapter
provides an overview of the book and explains how readers can use it to become educated, proactive consumers
who can control their own financial destiny. Readers will
find a summary of each chapter with suggestions for using
the book depending on which credit issues may be problematic for themselves or for clients. The author places
the information on credit and debt in the historical context
of a deep recession, the credit crisis, and changes brought
about by the election of a new president and new legislation. This chapter provides a sense of the complete book,
so readers can go directly to a chapter that includes the
information they can use immediately.
How Did We Get Here? And Where Are We? In this
chapter, Goodman describes what went wrong in the
economy and the credit industry. Readers will learn how
new legislation and rules are designed to address some
of these problems. The chapter sets the stage for the rest
of the book with sketches of the following kinds of debt:
mortgages, home equity lines of credit, reverse mortgages,
credit cards, car loans, installment loans, student loans and
retirement and life insurance loans. Goodman gives the
reader a synopsis of the bad behavior on the part of both
creditors and consumers that resulted in legislation that is
creating a new credit environment.
Find Out Where You Stand. This chapter takes readers
through steps to know and understand their financial situation. Forms are provided for these exercises. Goodman
challenges readers to follow his most important piece of advice: “Don’t lie to yourself about your money.” In addition
to the tools familiar to most counselors and educators (net
worth and cash flow), Goodman provides an eight question
debt analysis and 13 signs of debt trouble, which educators
and counselors can use as quick tools for client assessment.
Other People Are Grading You Too. If readers do not
know what factors comprise a credit score, what a credit
file looks like, or how to read it, they will after reading this
chapter. Information on how to request and correct a credit
report are included.
Diane E. Johnson, M.S., CFCS, AFC, CHC, Associate Professor Emeritus and Retired Extension Educator, Family and Consumer Sciences,
The Ohio State University Extension, Darke County, Greenville, OH 45331, johnson.8@osu.edu, (937) 548-5215
76
© 2010 Association for Financial Counseling and Planning Education®. All rights of reproduction in any form reserved.
The author also provides an excellent breakdown of how
a credit score is developed: 35% on payment history; 30%
on the amount you owe; 15% on the length of your credit
history; and 10% on new credit applications. Finally, 10%
for the positive impact of having a mix of different kinds of
credit in your credit file. Goodman gives specific advice on
how to use the information to improve your credit score.
Credit Cards: Just Because It’s Called MasterCard
Doesn’t Mean It’s the Boss of You. Credit card users are
divided into two payment style groups: people who carry a
balance from month to month and people who pay off their
balance each month. This chapter describes how to find the
best credit card for each payment style and shows readers
how to pay off and use the credit cards they have.
Avoiding a Modern-Day Identity Crisis. Identity theft
is one of the fastest growing crimes in our country. Being
forewarned is being forearmed. Goodman tells readers
about the many ways identities can be stolen and then
describes specific actions consumers can take to prevent
identity theft. This chapter provides information about
identity theft to help avoid the problem and describes who
to contact if you have been a victim. Specific information
about flagging credit files with fraud alerts and a credit
freeze is also included.
For those interested in the provisions of the Credit Card
Accountability, Responsibility and Disclosure (CARD)
Act of 2009, this chapter offers an excellent explanation.
Goodman discusses the CARD legislation and provides
specifics about how this legislation will help consumers,
while he also tells readers how creditors are already finding ways to generate new profits through an assortment of
fees. He details each of the new rules and lists a winner’s
strategy for each.
Win the New Mortgage Game. In this chapter, readers
will learn how much of a mortgage loan they can afford,
how to shop for a mortgage, and how to juggle points,
rates, loan length, and closing costs for the best deal. A
surprise to me was the idea of cutting closing costs by
breaking these costs down and finding ways to cut each
one. An example is shopping for an appraiser rather than
simply accepting the one listed by the lender.
Readers are introduced to the home equity line of credit
(HELOC) and tips for shopping for this product. The
book also helps readers evaluate whether refinancing is
a financially sound move. Two additional new concepts
readers might gain from this chapter are the ArcLoan and
the Harmony Loan. The ArcLoan is an automatic rate cut
mortgage and the Harmony Loan is similar to the ArcLoan
without the behind the scenes refinances. These loan products were both new to me.
Mortgage Free in Five to Seven Years. The promise of
the book is delivered in this chapter. The author explains
how to use a HELOC to pay off your mortgage in five to
seven years. This strategy of equity acceleration or mortgage acceleration is used in Australia and the U.K., but is
new to most consumers in the U.S. The HELOC is more
than simply making extra payments on your mortgage. It
also involves using your HELOC as a method for managing all your bills. Goodman gives two detailed examples
of how this system works and suggests companies that can
help the consumer accelerate payments correctly. The concept is described here and precautions are added suggesting that this strategy is not for everyone.
Journal of Financial Counseling and Planning Volume 21, Issue 2 2010
The author finishes this chapter with several strategies for
how consumers can get more out of their credit cards than
the credit card companies can get out of them. He writes
about maximizing rewards, using balance transfers, and
wiping out balances once and for all.
Car Deals: Making Sure You’re in the Driver’s Seat.
Readers will learn about shopping for new and used cars or
leasing cars in this chapter. One of the automobile buying
strategies that might be new to readers is using a buyer’s
agent to help buy a car. Goodman also suggests a variety
of ways to finance a car besides using the traditional car
loan from auto finance companies.
An Education in College Costs. For readers who want
to learn about education financing, this chapter describes
what you need to know about planning ahead and navigating the confusing options for borrowing and paying back
student loans.
Goodman gives a summary of each kind of education loan
available for financing an education and provides a smart
strategy for each. Stafford, Perkins, PLUS, private loans,
and some non-traditional alternates are discussed. The
author also mentions some new government programs to
help ease the burden of paying back these loans.
Don’t Let Bad Luck Derail Your Finances. Many personal situations can result in financial disaster: job loss,
loss of health insurance, and divorce are all examples.
Problems precipitated by the credit crisis have also caused
consumers to find themselves in financial difficulty. When
77
disaster strikes, steps for setting priorities for whom to pay
first and where to get help with debt are explained in this
chapter. Goodman suggests “debt triage” using three levels
of debt problems: problems you can solve yourself, problems that credit counseling agencies can help with, and
problems where bankruptcy is the best solution.
Surviving Bankruptcy. When all else fails, this chapter
has information on what the reader needs to know before
filing for bankruptcy and for recovering afterward. Goodman discusses Chapter 13 and Chapter 7 bankruptcy and
how to decide which is most appropriate for the income
and type of financial issues the consumer has.
Debt Strategies for Every Age. In this chapter, Goodman
outlines the different financial tasks that are needed for each
stage of life. He lists strategies for teenagers and young
adults to establish themselves financially; the 30s to 40s
group to build wealth; the 50s to count down to retirement;
the 60s and beyond to spend and save in early retirement;
and over 75 to slow down but enjoy and protect assets.
Permanent Mastery, Going Forward. In this final chapter, readers will learn to polish skills such as research,
math, record keeping, decision making, discipline and
self-soothing. Goodman lists the following principles for
consumers: “There are no dumb questions; the devil is in
the details; follow the money; pay off costliest debt first;
borrow for appreciating assets, not depreciating ones;
don’t lie to yourself about money; and the bottom line is
the one to watch.”
Resources and Index. This final section of Master Your
Debt is filled with helpful Web sites, toll free numbers,
and addresses for government agencies, associations, nonprofit organizations, services and companies which can be
useful in implementing the recommendations in the book
or looking for more information. Mentioning AFCPE as
a resource may have been helpful for evaluating the educational and ethical standards and credentials of financial
counselors. Listing AFCPE in the resources section would
have been helpful for readers looking for both qualified
counselors and educational resources.
I found Goodman’s conversational style easy to read and
understand. The information was well organized. He covered debt very thoroughly. I particularly liked the section
on new legislation and the winning strategies that were
highlighted. While on one hand I appreciated his straightforward advice, I was somewhat concerned by his recom-
78
mendations for specific businesses or companies. This
raises concerns about bias and conflict of interest.
One specific strategy, the use of the HELOC to rapidly
repay a mortgage, is fairly complicated and requires very
disciplined execution. However, Goodman does suggest
caution when using this strategy.
The breadth and scope of the resources listed in the book
are outstanding, but problematic at the same time. Many
of the web sites will probably be out of date quickly. However, knowing about a resource can give you the basis for a
web search on your own. The author does have a Web site,
www.masteryourdebt.com, which may be used to update
some of the resources listed in the book, but this is not
clear when visiting the site.
Readers will find this book particularly helpful in understanding and applying new strategies for working with
clients, and researchers will find many ideas for examining proposed strategies. I recommend this book as a good
one to add to your professional library because of the new
information it contains, but I add caution because of the
shelf life of the resource list.
Journal of Financial Counseling and Planning Volume 21, Issue 2 2010