This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Vice President and Publisher: Cynthia A. Zigmund Editorial Director: Donald J. Hull Senior Managing Editor: Jack Kiburz Interior Design: Lucy Jenkins Cover Design: KTK Design Associates Typesetting: Elizabeth Pitts © 2002 by Deborah McNaughton Published by Dearborn Trade Publishing, a Kaplan Professional Company All rights reserved. The text of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher. Printed in the United States of America 02 03 04 05 06 10 9 8 7 6 5 4 3 2 1 Library of Congress Cataloging-in-Publication Data McNaughton, Deborah, 1950– The get out of debt kit : your roadmap to total financial freedom / Deborah McNaughton. p. cm. Includes index. ISBN 0-7931-6007-3 (8.5 × 11 paperback) 1. Consumer credit—United States. 2. Finance, Personal—United States. I. Title. HG3756. U54 M362 2002 332.024’02—dc21 2002006184 Dearborn Trade books are available at special quantity discounts to use for sales promotions, employee premiums, or educational purposes. Please call our Special Sales Department to order or for more information at 800-621-9621, ext. 4455, or e-mail Robin Bermel at
[email protected] Dedication To my wonderful husband, Hal, who has been my strength, my anchor, and my support in all of our financial endeavors, challenges, and growth. You are my greatest cheerleader and my best friend. Acknowledgments I consider myself truly blessed by the wonderful people who surround me with their great insight and encouragement on all my books and projects. A special thank you to Cynthia Zigmund and the team at Dearborn, who have caught my vision to spread the word to help individuals with their finances and to share my story. Cynthia, your words of wisdom and direction are always greatly appreciated. To Mindy Weinstein, my managing editor for the Financial Victory newsletter, who helped put the finishing touches and polish on this book. I couldn’t have done it without you. You’re the greatest. To my agent, Chip MacGregor, who is always there to jump in and help me get my projects off the ground. I know I can count on Chip to be there for me and look out for my best interests. A special thank you for the team at the Debt Relief Clearinghouse, where I am a spokesperson. The passion all of you have to help individuals get out of debt is impressive. To John Puccio, Richard Puccio, Chris Viale, and Thom Fox—thank you for believing in me. You’re the best. Keep up the good work. For my wonderful husband, daughters, sons-in-law, and grandchildren, you are what makes life meaningful to me. I treasure you all. And last but not least, to all of you readers who have taken your first step to get out of debt and attain financial freedom. You can do it! God bless you. iv Contents Preface vii 1. Are You Drowning in Debt? 2. The Ten Myths of Credit 1 8 3. Where Did I Go Wrong? Analyzing Your Personal Situation 4. SOS! Warning Signs of Debt 28 5. Deciding Who to Pay First: Prioritizing Your Debts 6. Increasing Your Income While You’re in a Slump 7. Tips to Save Money to Pay Off Your Debt 8. Setting Up Your Budget 11. Debt Free! Now What? 50 63 72 111 9. Stating Your Case to Creditors 10. Tips to Get Out of Debt <