Book Review & Giveaway: Debt Free For Life by David Bach

I’m excited to review David Bach’s new book entitled, Debt Free For Life!  I’ve been a fan of David’s books since his very first bestseller, The Automatic Millionaire.  David writes in a very easy to understand, logical sort of way which allows readers to follow his advice easily.

I remember the first time I picked up one of his books, I was at Barnes & Nobles.  I sat in a corner for an entire hour and read the book from cover to cover.  Sorry David!  I know I should have bought it instead, but I was practicing my frugal ways at that time in my life.  Actually, I still am.

For someone who is in debt, and who has never read any of David’s books, I highly encourage you to read his latest, Debt Free For Life.  Given I’ve read practically every single one of David’s books, it’s hard for me to learn anything new.  That’s somewhat of bummer since I was hoping there would be something as innovative as the “latte factor” was 10 years ago.  Still, if you’ve only read one or two of his books and are on a mission to pay down debt, this book is perfect for you.

One of the best things about book reviews is access to an author’s mind.  I ask David five burning questions to challenge him beyond the plain vanilla, and to my delight he answers most of them quite directly.  Hope you guys enjoy the insight!  There are three books to giveaway at the end of the interview!

FINANCIAL SAMURAI QUESTIONS FOR DAVID BACH

1) Why do you think people get into such deep debt? One of my theories on Financial Samurai is that people get into debt because it feels great to spend money you don’t have. Otherwise, you wouldn’t do it. Once you get into debt, it feels so great to pay down debt and get out of debt. In essence, debt provides pleasure both ways and people really like debt. Thoughts?

Personally, I don’t know anyone who “likes” debt. Even people who feel great spending money usually feel anxious and horrible when the bills come in, and people I’ve counseled out of debt certainly don’t try to get into debt again so they can feel great paying it off a second time. Two generations ago, people paid cash for everything, held mortgage-burning parties, recycled tinfoil. That philosophy and way of life has disappeared and people get themselves deep into debt because they can.

Our society has incentivized borrowing more – you can open another credit card if you need more credit, or get a tax deduction on that house you can’t afford. The good news is that I see more and more people who want to pay down debt and save money. If anything, the great recession has woken us up to the financial reality that we can’t afford to be in debt anymore.

2) You read stories about people who get into $50,000 and $100,000 levels of consumer debt. How does this happen? Isn’t everything regulated and logical from a business stand point?  In other words, the only way you can get into $100,000 worth of debt is if the credit card company approves your credit limit because your income is large enough to warrant it so.

Unfortunately, we were in an era that became permissive of debt and even seemed to encourage it. We have billions of dollars of advertising to get us to buy things we don’t need, a multi-billion dollar credit card industry that tells us the good life can be ours for the taking when we use their credit cards, banks that loan us money for homes they know we can’t afford, subprime lenders who tell us we’re “silly” to keep equity in our homes when we could “cash it out” to pay off our credit cards, and a tax system that promotes heavy borrowing by offering tax deductions. We’ve been sold a bill of goods, or a bill of debt, and now we have to pay.

In addition, many people who are deep in debt get in trouble by taking on multiple credit cards and spending beyond their means. The problem with credit card debt is that most people do not understand the insanity behind the minimum payment math—specifically, how long it will take you to pay off your current balance and how much it will cost you if you only make minimum payments. In Debt Free For Life (www.finishrich.com/debtfree) I reveal how the debt companies imprison you with basic math to keep you in debt for life. By learning their games, you’ll be able to fight back and win—and achieve real financial freedom.

3) One of my main recommendations for success is to stop being delusional. For example, if you are a terrible student who received a mediocre job and earn a mediocre salary, it is delusional for you to think that you should live like a person who makes much more by spending much more. Instead, recognize you are destined for a mediocre lifestyle, and spend accordingly.  Hence, do you think people who go into debt are more delusional than those who don’t have problems with debt? Is there a self-esteem and psychological aspect to the entire debt situation?

In my experience, it’s easy to get into debt. I can relate – I had problems with spending and credit cards in college. What set me straight was my Grandma Rose. She told me what we all know but have a hard time committing to: don’t spend money you don’t have. Each person‘s situation is different – and their reason for taking on debt will be different. Someone that believes they can spend more than what they can afford is not necessarily delusional – they may just be misinformed and as I said before they are probably mislead.

One psychological state that I can be positive about when it comes to debt is the mindset of when you are completely free of debt or on a solid path towards a debt free life. The moment you start on my Debt Free For Life (www.finishrich.com/debtfree) plan, you will begin to feel better. Just knowing you have a plan in place to pay down your debt in the right order, the right way—a plan you can carry out yourself that will save you thousands of dollars in interest fees and cut years off your indebtedness—will truly lighten your burden, however light or heavy it might be.

Debt creates fear. Not having it creates peace of mind. This may sound like a cliché, but its true. When you have less debt, you will feel more FREE. You will have fewer worries, less stress, less tension and fewer fights at home. In short you will have less fear and more serenity.

The problem is most people don’t know how or where to start. This is why I wrote my new book. To give people a step-by-step plan to get out of debt—no matter how much you owe. In addition, I have teamed up with Equifax, one of the leading nationwide credit reporting agencies to create a revolutionary online tool called Debt Wise™. What’s great about Debt Wise is that it has taken my DOLP system and made it automatic. As a result, in literally seconds you can see how much debt you have, what order to pay it off in, and how long it will be until you are debt free. Debt Free For Life includes a FREE 30 day trial of Debt Wise.

4) Your book advocates now getting completely out of debt, and not play semantics between good and bad debt. Is this a knee-jerk reaction to the economic crisis and any personal crisis you may have recently experienced? So many businesses have succeeded through the use of debt. What about the choice of going to a great school that costs $40,000 a year in tuition and
going into debt vs. going to an unknown school for only $5,000 a year. How does one weigh the choices?

Last winter, a friend asked me about ‘good debt’ vs. ‘bad debt.’ I started giving her the standard answer about how good debts are debts you incur to buy things that can go up in value (like a home, business or college education) while bad debts are things that will depreciate or go down in value (like credit card balances). But then I had kind of an epiphany and realized, this recession has changed everything. Home equity has been dropping—by trillions of dollars over the last few years and people with college degrees are looking for jobs.

The truth is, that when you’re in debt, it doesn’t matter what you borrowed money for. The only thing that matters is whether or not you can afford to pay it off. When you can’t afford to make the payments, the only difference between “good” debt and “bad” debt is that the “bad” variety can destroy your life much more quickly. Now I’m not saying all borrowing is bad. The ability to borrow money helps us function as a society and borrowing to build assets – like a business – can make sense, if you have a real plan to repay your debt.

5) Do you think there’s a correlation with people who get into debt and those who have compulsive, addictive tendencies? In other words, those who go to the extreme and cut up their credit cards may have a propensity to do other unhealthy things such as over eating, watching too much TV, playing too many video games, smoking, and so forth? Is it possible to have a balance instead?

All types of people are in debt – as a country we have a debt problem. However, when you decide to get out of debt you will have to sit down and look at what behaviors got you into your financial situation, addictive or not. You see plenty of stories about people who are compulsive shoppers with thousands of dollars of credit card debt—but you do not have to have these tendencies to land yourself in excessive debt – it is all situational. If you have an addictive tendency that costs money and you do not have enough to support that habit—there will most certainly be a correlation.

With this said, it is possible to find balance – but you need the support and action plan to do so. What I recommend is that you first try and take control with my Debt Free For Life action plan. In the book you will find the tools and information necessary to take control of your finances and start your journey towards debt freedom. I also encourage everyone to join my Debt Free Challenge. Challenge participants will be automatically entered to win a debt busting $10,000! You do not have to be compulsive or have addictive tendencies to fall in the trap of debt; joining this challenge will help you keep a balance through the use of free information and support.

After taking the challenge, it’s time to stop digging yourself further into debt. Taking little steps can help – for instance, I’ve come up with something called the Latte Factor®. It’s based on the simple idea that all you need to do to build wealth is look at the small things you spend your money on every day and see whether you can redirect that spending to pay off debt or invest in your retirement. Putting aside as little as a few dollars a day for your future rather than spending it on little things like lattes, bottled water, fast food and so on can make a difference between accumulating wealth and living paycheck to paycheck.

TO WIN ONE OF THREE BOOKS

* Sign up for my RSS feed and if you’ve already signed up, sign up for Yakezie.com’s RSS feed. (1 point)

* Tweet this post. (1 point)

* Comment as to why you think people get into uncontrollable debt. (2 points)

* If you have a blog, link back to this contest. (5 points)

The contest ends one week from today on Friday, Feb 11th at 11:59pm PST!

Book description: Hard cover, 265 pages, retails for $19.99 pre-tax.  That’s $22 in California after tax!

For more information about David’s book visit www.finishrich.com for free resources and tools.

Regards,

Sam

Note: A free copy of Debt Free for Life was delivered to me by the PR firm, Jackson Spalding.

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

You can sign up to receive his articles via email or by RSS. Sam also sends out a private quarterly newsletter with information on where he's investing his money and more sensitive information.

Subscribe To Private Newsletter

Comments

  1. Lisa @ Cents To Save says

    I think there are a lot or reasons people get into debt. First, lack of financial knowledge. Either they were raised by parents that had no clue on how to manage their money and they are repeating the same patterns. Next, the individual feels that they are entitled to have all the “stuff” that everyone else has and they want it now! They don’t have the money so they either finance it or charge it without realizing how much they will actually be paying by the time the finance charges are added in. The small monthly payment can be so deceiving in the beginning. Sometimes debt is incurred because there is no planning for potential layoffs or reduction in work hours. Without the financial cushion, you may have to charge the necessities such as groceries and gas.

  2. Angela says

    The state of Vermont does a program called Bridges Out of Poverty. I went to a training that talked about the different ways people view money based on if they were raised with or without basic resources. I remember them saying that generally the poor view money as something to be spent, the middle class as something to be managed and the rich as something to be invested (the classification of poor/middleclass/rich had more to do with self perception then actual resources). I think if you view your money as something to spend, you spend it and eventually have to take on debt to get things you need even if you understand it is a bad idea. I think lack of an emergency fund is a big reason lots of people end up in debt.

    Very interested in this book.

  3. retirebyforty says

    Nice interview! I’ll have to put The Automatic Millionaire on my reading list.
    David, if you send me the book, I’ll review it for you. :)
    We don’t have any consumer debt, but we do have a few mortgages for our home and rental properties.
    I think people go into debt because of peer pressure. Everybody has nice cars, why should I drive a beater? for example.

  4. Jenn T says

    I would love to win this book! I think people get into uncontrollable debt b/c they lack self control – I have a family member who constantly complains about needing to get out of debt – but is the first person to buy the new gadget b/c she “deserves it” or “everyone else has it”. It gets hard to listen too!

    If it counts – I am also signed up on your RSS feed. :)

  5. JT McGee says

    I think it’s a few different things, but most importantly:

    1) Most people always see a better future (financially or otherwise) for themselves. This is why you’ve 20-somethings with $700,000 homes and $70,000 incomes….

    2) Debt is a cycle that most start young. A lot of debt is good debt (leveraging debt) but when you spend on top of it for consumption purposes, there isn’t much difference between good and bad debt.

    3) People see a monthly debt payment as say…$500. They don’t see it as $300 principal and $200 interest, nor do they realize that interest is, in many cases, just wasted money.

    4) It seems we’re more likely to finance depreciating assets than we are to finance other things. As a result, the inversion of resources is detrimental to those who don’t see the difference between investment and consumption.

  6. Gordie says

    I was lucky enough to get the Ebook for free when David launched this. I haven’t read it yet, as I’m still have to finish “The 4-Hour Body”.

    I like what he says about people need to stop being delusional and a live within their means. I can understand it’s hard for some people when marketers target everyone rich, average or poor to buy their products.

    Debt is extremely bad in New Zealand too and getting worse.

  7. krantcents says

    Everyone should read the book, however only people who are willing to change will read it. Although I feel there is good and bad debt, any money tied up in debt is money that can not be used elsewhere.

  8. Charlie says

    I’m still helping my parents get out of debt. It’s not easy my friends, but I’m glad I’m able to help them a little. Debt has overpowered so many people it’s hard to think about sometimes. I don’t think there’s any one reason why as everyone’s story is different.

  9. Jeff says

    Bach lost my trust when he was flogging homes as investments months before the bust. Shame on him and his greedy ways! Lots of investors followed his advice and got screwed over in ways only Enron could duplicate.

  10. Patrick says

    People get into uncontrollable debt the same way people become alcoholics and strippers, one day things aren’t so bad and you can “control” your life the next day you need an intervention and a show on TLC to figure out where it all went wrong.

    I think people are in denial about two things: 1) How much debt they have, and 2) How they got in debt in the first place.

    Until they can answer those questions then they will never be able to get out of debt. It requires a lifestyle change, much like a religious awakening. Let’s hope they find Christianity and not Islam, we don’t need any more suicide bombers out there.

  11. Jeremy Johnson says

    Already signed up for your RSS

    Tweeted: http://twitter.com/#!/JeremyNJohnson

    My blog post: http://www.jeremynoeljohnson.com/money-control/the-debt-monster/

    Why people get into uncontrollable debt:

    These are the cliff notes from my blog post…

    * No education about money management
    -> For me, it wasn’t until my early 30′s that I realized I could make decisions for the better about my money. I don’t recall all throughout my school years being taught about money management.

    * No philosophy of increasing wealth
    -> My self esteem was very low for a long time. This led to me not caring what my bank account balance was. A philosophy of importance and self worth that an individual adopts at an early age is so important to making correct decisions.

    * Impulse spending and entitlement
    -> Many people work a full time job and have a family. This is draining and a sense of reward and entitlement for that hard work makes it easy to impulse spend on food, electronics, you name it.

    * Easy to spend, hard to save
    -> It’s easy to swipe a card and spend. It takes seconds. It’s hard to delay gratification. The act of delaying gratification is the key to staying out of debt. But that means pain and not getting what is desired, so most people don’t do it.

    * Point of no return
    -> When a high level of debt is reached, many people just give up. I know one person who has many tens of thousands of dollars of debt. They do not believe and have no plan to get out of debt.

  12. Barb Friedberg says

    Wow, really insightful interview. I think people get into debt for a variety of reasons. For one, they are not taught to delay gratification and save for what they want. The I want it now mentality is supported by our culture, advertisements, the media and many families.
    Number two, people get into debt because they can…. As you stated, the credit is available.
    I subscribe to both feeds and will promote this in my round up this week. I’m off to tweet it now.

    Very nice approach to the traditional book review!

    • Financial Samurai says

      Tanyetta – Sounds like you really really want this book and it could help you, so congrats! You are the second winner! E-mail your mailing address at: financialsamurai AT gmail DOT com. Thx

  13. tanyetta says

    I think the reason people get into uncontrollable debt has a lot to do with misunderstanding how easy it is to get sucked into special offers and using credit cards irresponsibly.

  14. Squirrelers says

    My take is that people get into uncontrollable debt is due to lack of financial education, poor financial role models when growing up, and lack of discipline/self-control. Sometimes, it could be due to health reasons or other unfortunate maladies that get people into a hole that’s hard to dig out of. So it’s not always personal irresponsibility that gets people into those situations, though it usually is most of time I would guess.

  15. Eric says

    I got into a large amount of student loan debt because of the free available credit. At the time, I was focused more on my schoolwork and college experience than my finances. Additionally, I assumed that I would be able to easily get a job once I graduated.

    I think college students in particular are susceptible to over extending their debt because it seems so intangible when young. Factors such as parents controlling finances instead of students, the ability to defer payments, and the fun/expensive lifestyle of college students causes them to spend beyond their means.

    I am lucky to have a job, however, if I had reduced some of my expenses in college, I would not have quite as much debt as I do now.

  16. Money Reasons says

    I think David is a good middle of the road approach to building wealth (yes, I know this article is about getting out of debt…). He suggest a path that the middle masses (like me) can follow and build a little bit of coin!

    I read his first book “The Automatic Millionaire”, but the rest I borrowed as audiobooks from the local library (apparently they are fans too!). I would then listen to the audiobooks when I drove to and from work each day! Since I liked his ideas, I would listen to them more than once…

  17. Michael says

    People get into debt because they think everyone around them has better things than they do – clothes, cars, shoes, toys. What they do not realize is that these folks may have rolled loan upon loan onto each other in order to buy that brand new car that they can’t afford. All they are doing is keeping up appearances.

  18. RAHAB NYAMBURA MBUTHIA says

    y take is that people get into uncontrollable debt is due to lack of financial education, poor financial role models when growing up, and lack of discipline/self-control. Sometimes, it could be due to health reasons or other unfortunate that get people into a hole that’s hard to dig out of. So it’s not always personal irresponsibility that gets people into those situations, though it usually is most of time I would guess.like me i have almost 15 needy chilren am taking care and i dont have any house to stayand also to keep those children but i have to give them food so if i can get money i buy i house and money to educate them like buying for the clothes i will be very happy

    thanks and God bless you

  19. Angela says

    Still interested. We’ve dropped our debt significantly since Jan 2010 but are having trouble maintaining motivation. Hopefully this will help us maintain and whipe it out completely this year. Just emailed you my address. Thanks again.

  20. Jacob Johns says

    Honestly I got into debt because I truly feel like I wasn’t educated. I don’t regret going to a private school for my college education but I definitely would have thought twice about it if I knew a couple things. If I knew the tuition compared to expected income prior to entering this college (I work in social work field) I would have gone to a state school, or chose a different degree. My parents made too much money to qualify for federal loans but weren’t able to help out with payments for my education (and I don’t blame them either because my school was expensive). To sum up, I really feel like people need to be better educated on debt and how it impacts your future. My poor wife has had to deal with my school debt but luckily we are paying it off and should be done in two years. Education is key and I hope to one day educate my children, if I have any, on debt and finances.

  21.  Boyd says

    I’m excited to review David Bach’s new book entitled, Debt Free For Life! I’ve been a fan of David’s books since his very first bestseller, The Automatic Millionaire. David writes in a very easy to understand, logical sort of way which allows readers to follow his advice easily.

  22. Jennifer@Debt Consolidation Loan says

    Well, I think there are a lot or reasons people get into debt. First, lack of financial knowledge. Either they were raised by parents that had no clue on how to manage their money and they are repeating the same patterns. Next, the individual feels that they are entitled to have all the “stuff” that everyone else has and they want it now! They don’t have the money so they either finance it or charge it without realizing how much they will actually be paying by the time the finance charges are added in. Everyone should read the book, however only people who are willing to change will read it. Although I feel there is good and bad debt, any money tied up in debt is money that can not be used elsewhere. Thank’s a lot for this post

Leave a Reply

Your email address will not be published. Required fields are marked *