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The ABC's of Getting Out of Debt: Turn Bad Debt into Good Debt and Bad Credit into Good Credit
The ABC's of Getting Out of Debt illustrates how to:
• Beat the Lenders at Their Own Game
• Understand Your Credit Report
• Repair Your Own Credit
• Master the Psychology of Debt
• Deal with Debt Collectors
• Avoid Credit Scams
• Win with Good Debt
• Take Charge of Your Finances Garrett's book reveals how each piece of real estate you own is a business involving all sections of Rich Dad's B-I Triangle. The B-I Triangle is from Rich Dad's Guide to Investing. Look for other Advisors to complete the B-I Triangle.
240 pages, Paperback
First published October 8, 2004
51 people are currently reading
537 people want to read
About the author
Garrett Sutton
66 books222 followersGarrett Sutton, Esq. is a Rich Dad Advisor, a nationally acclaimed corporate attorney and asset protection expert.
A graduate of the University of California, Berkeley and Hastings College of the Law, the University of California’s law school in San Francisco, Garrett has written a number of books guiding entrepreneurs and investors. Garrett’s best sellers include: Start Your Own Corporation, Loopholes of Real Estate, Writing Winning Business Plans and Run Your Own Corporation in Robert Kiyosaki’s Rich Dad Advisor series. Garrett is also the author of How to Use Limited Liability Companies & Limited Partnerships and the co-author of Finance Your Own Business.
Garrett is the founder of Corporate Direct and Sutton Law Center, which since 1988 have provided affordable asset protection and corporate formation and maintenance services for investors around the world.
His articles and quotes have been published in The Wall Street Journal, New York Times, CBS.com, Time.com and Credit.com. More information is found at CorporateDirect.com and Sutlaw.com. Garrett serves on the boards of the Birmingham, Alabama-based American Baseball Foundation and the Nevada Museum of Art in Reno, Nevada. He is married with three children and lives in Reno, Nevada.
A graduate of the University of California, Berkeley and Hastings College of the Law, the University of California’s law school in San Francisco, Garrett has written a number of books guiding entrepreneurs and investors. Garrett’s best sellers include: Start Your Own Corporation, Loopholes of Real Estate, Writing Winning Business Plans and Run Your Own Corporation in Robert Kiyosaki’s Rich Dad Advisor series. Garrett is also the author of How to Use Limited Liability Companies & Limited Partnerships and the co-author of Finance Your Own Business.
Garrett is the founder of Corporate Direct and Sutton Law Center, which since 1988 have provided affordable asset protection and corporate formation and maintenance services for investors around the world.
His articles and quotes have been published in The Wall Street Journal, New York Times, CBS.com, Time.com and Credit.com. More information is found at CorporateDirect.com and Sutlaw.com. Garrett serves on the boards of the Birmingham, Alabama-based American Baseball Foundation and the Nevada Museum of Art in Reno, Nevada. He is married with three children and lives in Reno, Nevada.
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Displaying 1 - 22 of 22 reviews
March 10, 2017
The long stories were annoying to me and, from a writing perspective, was, like many other rich dad poor dad books, used to fill up the pages with words, not necessarily content. I know this is the abcs, but I was expecting a lot more concrete material. There wasn't a lot on using good debt, mostly just the reminder that it existed and was preferable to bad debt.
Notes:
Consider using a home equity line of credit to pay off debts
-Bad debt is easier to get than good debt. ex: Getting a loan on a rental property or to start a business is more difficult than if you want a car loan or new credit card (xvi).
-To people are savers and debt averse, I often ask them 'How long would it take you to save $7 million?'
-A very important lesson in one's life is to know how to minimize bad debt and responsibility use good debt to one's advantage (xvii).
-Robert Kiyosaki
There are 4 types of borrower profiles (p.7-10):
Wishers-Want to keep up with the "Joneses" and are optimistic about credit, focusing on the monthly payments
Wasters- Use money to purchase things to feel better (low self-esteem), relieve stress, and escape their problems
Wanters- Instant gratification; they want it now and the credit industry caters to that desire
Winners- Use good debt.
Good Debt- Involves someone else paying off the debt for you. Ex: a real estate investment loan in which a tenant pays rental income in excess of the mortgage and related expenses, or an SBA (Small Business Administration) loan that allows your business to grow (so long as your business can pay it off). "The best loans are nonrecourse loans, which require no personal guarantees. Good debt leds to wealth (p.11)
Bad Debt: Something you pay off yourself. Ex: credit cards, car loans, consumer loans, and home mortgages. Some bad debt is better than other bad debt. For example, "buying a personal residence is in most cases better than buying a car on credit."
To get a out of debt
Based solely on the number of months, begin ranking each debt. Your first priority is the debt with the lowest number of months. The come up with an additional $150-200 per month. Pay the minimum amount on every debt that you have listed, but add the extra money to your number 1 debt; keep doing this until the first debt is paid off. Then, continuing to pay the minimum amount on every debt, your new top debt will be paid with all the money you used for the first payment (P.18-19).
"The ideal scenario for someone with debt is to get a ow-rate consolidation loan and pay it off in 3-4 years." (p.27) "For winners, though, a consolidation loan is just a way to lower costs in order to get out of debt faster." (p.28)
One of the most popular ways to consolidate your debt is to use the equity in your home. There's always a risk that you could lose your home if you can't pay a home equity loan or the new mortgage.When you trade credit card debt for home equity dent, you're giving up the opportunity to take the home equity to turn it into good debt (p.31).
Refinancing usually isn't free. Closing costs usually add up to about 4% of the mortgage amount. Some lenders offer no-cost refinancing, but you'll pay a higher interest rate (p.33).
Bankruptcy can stop collection effort, giving you time to deal with your debts. But even a Chapter 7 won't erase all debts (p.51).
"The greatest danger for a family in financial distress is not bill collectors. The greatest danger is false optimist"-Elizabeth Warren (p.52).
If you die with an outstanding student loan, your federal loan debt will be discharged. Your estate will not owe any money on your loan (p.67).
Forbearance: If you are temporarily unable to meet your repayment schedule but are not eligible for deferment, you may receive forbearance for a limited and specified period. During forbearance, your payments are postponed or reduced. Whether your loans are subsidized or un-subsidized, you will be charged interest. Forbearance may be available because you are making federal student loan payments that are equal to or greater than 20% of your monthly gross income (p.68).
If you move, change your name or Social Security number, or reenroll in school, you must make sure your loan holder won't lose track of you (p.69)
FICO Scores
Scores above 720 are usually considered excellent. Those in the 680-720 range are still quite good, while those in the 650-680 aren't terrible, but will carry higher rates. (p.90)
A way to build your credit is to "Borrow someone else's good credit" by have them add you onto their major credit card as an authorized user. This is not a co-sign (p.135).
Your goal should be to have "four or five positive references always paid on time--and as little bad debt as possible." (p.135)
Simply getting married won't merge your credit history. You'll have to add your new spouse to your accounts or vice versa for them to be reported on both your credit reports (p.147).
A collection account is automatically considered negative information, so simply paying it may not make a significant difference in your credit score (p.152)
"While you are creating your plan to get out of debt, at the same time figure out how that will free up cash flow for you to devote to your positive wealth-building goals. Keep your eye on the real prize." (p.171)
Notes:
Consider using a home equity line of credit to pay off debts
-Bad debt is easier to get than good debt. ex: Getting a loan on a rental property or to start a business is more difficult than if you want a car loan or new credit card (xvi).
-To people are savers and debt averse, I often ask them 'How long would it take you to save $7 million?'
-A very important lesson in one's life is to know how to minimize bad debt and responsibility use good debt to one's advantage (xvii).
-Robert Kiyosaki
There are 4 types of borrower profiles (p.7-10):
Wishers-Want to keep up with the "Joneses" and are optimistic about credit, focusing on the monthly payments
Wasters- Use money to purchase things to feel better (low self-esteem), relieve stress, and escape their problems
Wanters- Instant gratification; they want it now and the credit industry caters to that desire
Winners- Use good debt.
Good Debt- Involves someone else paying off the debt for you. Ex: a real estate investment loan in which a tenant pays rental income in excess of the mortgage and related expenses, or an SBA (Small Business Administration) loan that allows your business to grow (so long as your business can pay it off). "The best loans are nonrecourse loans, which require no personal guarantees. Good debt leds to wealth (p.11)
Bad Debt: Something you pay off yourself. Ex: credit cards, car loans, consumer loans, and home mortgages. Some bad debt is better than other bad debt. For example, "buying a personal residence is in most cases better than buying a car on credit."
To get a out of debt
Based solely on the number of months, begin ranking each debt. Your first priority is the debt with the lowest number of months. The come up with an additional $150-200 per month. Pay the minimum amount on every debt that you have listed, but add the extra money to your number 1 debt; keep doing this until the first debt is paid off. Then, continuing to pay the minimum amount on every debt, your new top debt will be paid with all the money you used for the first payment (P.18-19).
"The ideal scenario for someone with debt is to get a ow-rate consolidation loan and pay it off in 3-4 years." (p.27) "For winners, though, a consolidation loan is just a way to lower costs in order to get out of debt faster." (p.28)
One of the most popular ways to consolidate your debt is to use the equity in your home. There's always a risk that you could lose your home if you can't pay a home equity loan or the new mortgage.When you trade credit card debt for home equity dent, you're giving up the opportunity to take the home equity to turn it into good debt (p.31).
Refinancing usually isn't free. Closing costs usually add up to about 4% of the mortgage amount. Some lenders offer no-cost refinancing, but you'll pay a higher interest rate (p.33).
Bankruptcy can stop collection effort, giving you time to deal with your debts. But even a Chapter 7 won't erase all debts (p.51).
"The greatest danger for a family in financial distress is not bill collectors. The greatest danger is false optimist"-Elizabeth Warren (p.52).
If you die with an outstanding student loan, your federal loan debt will be discharged. Your estate will not owe any money on your loan (p.67).
Forbearance: If you are temporarily unable to meet your repayment schedule but are not eligible for deferment, you may receive forbearance for a limited and specified period. During forbearance, your payments are postponed or reduced. Whether your loans are subsidized or un-subsidized, you will be charged interest. Forbearance may be available because you are making federal student loan payments that are equal to or greater than 20% of your monthly gross income (p.68).
If you move, change your name or Social Security number, or reenroll in school, you must make sure your loan holder won't lose track of you (p.69)
FICO Scores
Scores above 720 are usually considered excellent. Those in the 680-720 range are still quite good, while those in the 650-680 aren't terrible, but will carry higher rates. (p.90)
A way to build your credit is to "Borrow someone else's good credit" by have them add you onto their major credit card as an authorized user. This is not a co-sign (p.135).
Your goal should be to have "four or five positive references always paid on time--and as little bad debt as possible." (p.135)
Simply getting married won't merge your credit history. You'll have to add your new spouse to your accounts or vice versa for them to be reported on both your credit reports (p.147).
A collection account is automatically considered negative information, so simply paying it may not make a significant difference in your credit score (p.152)
"While you are creating your plan to get out of debt, at the same time figure out how that will free up cash flow for you to devote to your positive wealth-building goals. Keep your eye on the real prize." (p.171)
November 18, 2018
Very basic
Very basic. Was hoping to learn more than I actually did. Love the Rich dad books but this one unfortunately wasn’t as helpful.
Very basic. Was hoping to learn more than I actually did. Love the Rich dad books but this one unfortunately wasn’t as helpful.
Read
March 19, 2020I just discover a lot of people are in debts and also under credit issues crisis, I was also among them before i met the God eye that change my life for good. Michael Andrew have help me with my 23 accounts including student loans, auto loans and i have debts in all. I also have some credit cards that are maxed out already. My credit score was 580 as at then. He helped me clear the debts on my 23 accounts within a week, He also got the debts on the credit cards gone within a week as well. He helped me increase my credit score 820 excellent within 144 hours. All my accounts are free from debts and i can now use my credit cards again. He literally help got all done within 2 weeks and 3 days. All thanks to the ANDYHACKS, LLC. You are worth publicizing for Checking them out contact them through email (FIRSTCREDITSCOREHACKER @ GMAIL dot COM) or 615 721 2387
June 8, 2019
This book has quite a few very obvious concepts it, but also had a lot of good data I didn’t know on how credit works, how to make deals with creditors to pay pennies on the dollar for debt and other very useful tidbits.
July 17, 2018
A lot of very good and useful information that I wasn't aware of.
May 14, 2021
It was a interesting book that taught me a few major concepts about credit,the only pet peeve I gave was when they played audio from a interview.It felt a bit out of place.
February 4, 2022
Es un buen libro. La mitad del contenido está hecho para personas que viven y trabajan en EEUU. Pero la otra mitad tiene consejos que aplican en todo el mundo.
September 2, 2022
It had some good information for college students on how to get good credit without getting bad debt, which may be useful for someone I know.
September 22, 2022
Muchos de los puntos que expone ya los hacia pero hay detalles simples que harán una diferencia cuando los pones en práctica.
December 7, 2022
Es un buen libro. La mitad del contenido está hecho para personas que viven y trabajan en EEUU. Pero la otra mitad tiene consejos que aplican en todo el mundo.
November 14, 2013
Overall, this book gave a pretty clear, concise presentation of some steps or options that a person in various stages of debt can use to become debt free. It didn't offer any great insight, because basically there are only so many real steps to getting out of debt (stop racking up charges, live below your means, and throw every bit of extra income at the debt).
There were some useful tips that most people just starting to reduce debt may not know. For example, debt has a statute of limitations and that a car loan can be refinanced for a lower interest rate. It also touched on credit scores and repairing credit, which again someone just starting to look at debt reduction would find interesting.
In the end this book provides a pretty good foundation of information for a person looking to get out of debt and good information on credit and how to protect it.
There were some useful tips that most people just starting to reduce debt may not know. For example, debt has a statute of limitations and that a car loan can be refinanced for a lower interest rate. It also touched on credit scores and repairing credit, which again someone just starting to look at debt reduction would find interesting.
In the end this book provides a pretty good foundation of information for a person looking to get out of debt and good information on credit and how to protect it.
September 26, 2015
Kind of an interesting book that applies to people in many different stages of debt. It fits with the Rich Dad philosophy of there being good debt and bad debt, although it seems kind of awkward to mention. Are people in debt ever worrying about charges they managed to rack up that don't fit in the consumer debt category? Still, normally books in this category are about how evil banks are or how stupid the consumer is for putting "doodads" on credit. Even worse is when they pull the religion card saying God is telling you debt is evil and wrong. Then they tell you to stick your money in a 0.00001% yield savings account or to invest in an imaginary mutual fund that makes an average of 12%. This book tells you to do none of that nonsense. How refreshing!
November 27, 2014
This book seems much more detailed than a lot of others and covers methods of dealing with creditors if one is in over their head and deal with extreme situations. In this way, I found it was more interesting than some other books I've read although it doesn't really apply to our situation.
May 15, 2015
This book explains debt; the differences between good debt and bad debt and help for getting rid of the bad and building up one's credit score and much more. I particularly found the chapter on student loans helpful.
December 11, 2016
A few good tips for getting/staying out of debt, but nothing I haven't already seen elsewhere. Some of the advice sounded kind of shady, but not necessarily illegal. The author/narrator was mega-cheesy and sounded like he was talking to a group of 1st graders.
June 13, 2012
This book was well done but didn't really apply to my credit situation.
February 3, 2015
Full of practical techniques for disputing and dealing with debt.
February 6, 2016
useful advises to manage your debts
Read
December 11, 2016lots of good information on the difference between good and bad debt
August 20, 2009
same old get out of debt stuff not much new.
March 25, 2019
Very informational!!
Displaying 1 - 22 of 22 reviews