Debt 101: A Crash Course In Debt Management: From Interest Rates And Credit Scores To Student Loans And Debt Payoff Strategies, An Essential Primer On Managing Debt, by Michele Cagan
This book is a clever examination of debt from the point of view of someone who does not appear to be pushing a particular financial product, but also appears to be highly concerned about the state of debt in the United States. This is a reasonable concern. The author writes in such a way as to comment and reflect upon the importance of having a strategy to manage debt that is able to differentiate between good debt and bad debt, and not to be either afraid or overwhelmed by debt, and to recognize that what is good debt in some circumstances can become bad debt when those circumstances change. This is important to remember, as debt often serves as leverage in both a positive and negative sense based on circumstances, while some debt (like payday loans) is always band frequently part of a death spiral into insolvency. As someone who is no stranger to debt, it is a subject that I ponder about and seek to master in the course of my own life, although not yet to my own personal satisfaction.
This book is almost 250 pages long and is divided into 9 chapters. The book begins with a discussion of how loans work (1), after which the author reflects on the right way to borrow money (2). There is an entire chapter, as makes sense, on student loans (3), before the author talks about credit cards and how to use them correctly (4). The author talks about mortgages, one of the classic examples of “good” credit, along with lengths and various types of mortgages (5) before discussing other types of debt that range from possibly good (business) to middling (car, medical) to disastrously bad (payday loans) (6). After that the author talks about paying off debt and when it is important to do so and how one can do it (7), after which the author talks about being debt-free while still borrowing (8) and ends with a discussion on how one can be on the other side of debt by being the bank whether one invests in debt, buys bonds, invests in an REIT, or engages in peer-to-peer or hard money lending (9), after which the book ends with an index.
It is striking to me that debt is a subject that is not explored as an important subject as people approach college. At the age of twelve, I received my first credit card application, which was not a moment of celebration from my reasonably concerned mother, and certainly it does not take long for many people to gain an experience with credit of various kinds in the face of borrowing money for college, buying a car, handling credit cards, and the like. And it must be freely admitted that while the information in this book is far from surprising–most of it is glaringly obvious to anyone who has thought anything about debt, the ability to do anything about it can be immensely limited. And regardless of how one wishes to assess blame on that count, it is the responsibility of all of us to deal with our financial situation as well as we are able, whether that means saving a bit for a rainy day, or looking at one’s spending patterns or the conditions one is in that one may want to extricate oneself from. If the author does not believe in the elimination of all debt, there is certainly a great deal of wariness about debt and its ability to ensnare which is healthy to have.