Dealing With Personal Debt

October 25, 2012

Interview with Jo Anneh Nagler, author of the book The Debt-Free Spending Plan: An Amazingly Simple Way to Take Control of Your Finances Once and for All

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Mike Carruthers:
We have a personal debt problem in this country.

Jo Anneh Nagler:
The most interesting stat is really that the average credit card debt per household is $16,000 with 40% of low and middle income households relying on credit cards to meet their basic day-to-day needs.
 

Jo Anneh Nagler, author of the book The Debt-Free Spending Plan, says there are reasons for this.

Healthcare and housing is significantly more expensive for us than it was for our parents. But I also think there’s a sense of entitlement that we’ve grown up with, with credit cards. It’s sort of a board game we figure Oh we’ll front ourselves cash and then we pay it back.

But often that payback never happens.  Getting out of debt isn’t easy or quick and Jo Anneh says you have to be careful not to try to fix the problem all at once.

If you gouge your living expenses to pay down your debt you’re not going to have enough to live, you’re going to rebel, you’re going to need – you have needs it’s realistic.

For instance when Jo Anneh was setting up her cash only spending plan for her household it was still important for her husband to go out to dinner.

So what we knew was we had to account for some money to go out to dinner so we didn’t feel deprived. So if you ask somebody who owes $58,000 to never go out to dinner until they pay off their credit cards you’re going to feel deprived. So you have to find a way to make sure you’re funding some things that are meaningful to you and you make the management of it simple and easy on the soul.