Pimp Your Finances

Are you saddled with debt and have no idea where to start?  If so, then this is a good book for you.  If you don’t have debt or you already have a plan, you may better off skipping this one.

The author starts by helping you assess your spending problem by clearly listing out all of your monthly expenses and incomes.  This shows the (presumably negative) net income you have.  This is a great idea, because I think you have to be fully aware of your problem before you can do anything about it.

Once you realize the extent of your problem, the author helps you make a plan for fixing it.  I like her approach – for a goal to be useful, it has to be specific, have a timeframe, and be measurable.  A good example is to “Be debt free is three years by spending $10 a day paying down debt”.  I think all goals should follow this format, because you can see how well you’re achieving it at any time.  Vague goals won’t help if their open ended.  A goal that’s not measurable isn’t a good goal either.

After that, the book focuses on tracking your spending, and identifying ways to save money.  If you’ve been budgeting for a while, you probably already know all these.  If you’re just starting out, it could be helpful.

The goal of the author is to help you free up $10 a day to put towards debt or buidling wealth.  It’s a good idea, but shortsighted.  $10 is a good start – but by no means a destination.  I think she should have put more of an emphasis on constantly increasing the money you put towards debt or building wealth.

The rest of the book gives advice for how to pay down debt, and what to put the money towards.  It also has tips on how to deal with financial hardships, like when you can’t afford to make minimum payments on credit cards.  Again, seems like the book is aiming low with it’s goals.

Some of her money saving advice is decent, but I disagree with her in some areas.  As an example, the author advises that you should be putting money towards an emergency savings fund even if you have debt.  I disagree with this.  Keeping money in a savings account when you have outstanding interest is a losing proposition.

Overall, the book is great for if you’re just starting out, have lots of debt, and have no idea how to reign in spending and start paying off debt.  If you’re already budgeting – including money for paying off debt – then you probably don’t need to read this.  Her ideas for how to set goals and how to save money could be helpful for anyone.

Executive summary:

Title: Pay it Down – from Debt to Wealth on $10 a Day

Authors: Jean Chatzky

Target Audience: People with debt who do not know how to reign in spending or make a plan for paying it off

Pages: 214 (small pages)

Topics/Chapters:

0. The Promise – Getting Ahead and Staying Ahead

1. Assess the Problem

2. Break Your Challenge into Manageable Steps

3. Know and Manage Your Credit Score

4. Track Your Spending

5. Find the Money

6. Find the Money: Consolidating Your Debts

7. Find the Money: Spending Less

8. Find the Money: Making Hard Choices, Selling Assets, Earning More

9. Pay it Down – Intelligently

10. How to Deal When Things Go Wrong

11. Staying Ahead of the Game

12. Afterword: Congratulations

Should I Read it? Read it if you have trouble with debt