I heard about this book through Forbes.com. The title naturally caught my attention because of the work that I do, so I thought I’d check it out for you and share what I found.
In reviewing the book, basically I wanted to know:
- Did it contain any legitimately helpful information? Did it offer any new insights? Or …
- Was it the same old watered-down useless drivel that you often find in financial publications?
The short answer is this book is pretty decent.
The author, Nick Clements, was formerly an executive at one of the larger credit card companies in the world (didn’t say which one) where his job was to encourage people to get into debt. Then a few years ago he left that company because he wanted to shed some light on what’s really going on behind the scenes and help people get out of debt.
I would have loved if Mr. Clements named names and leaked a few juicy internal memos, but my guess is that he didn’t want to deal with a huge lawsuit. :-)
What I Liked
Mr. Clements begins his book by explaining in detail some of the clever (but legal) ways credit card companies get people hooked on debt. Hint: It’s largely psychological manipulation.
The end result >> 40% of Americans are unable to pay off their credit card debt in full.
Another interesting statistic >> If you use plastic to pay for things, you will end up spending 30% to 100% more than if you paid with cash. I didn’t expect it to be that much, but I’m not surprised. I guess that just further validates why “cash is king.”
Have you ever wondered how the credit card industry got started? Here’s a quick history lesson (excerpt) from the book:
America’s addiction to plastic was born in 1949, when businessman Frank McNamara forgot his wallet while eating in a New York restaurant. He was so embarrassed by the incident that he vowed to find a better way to pay. When he returned to the same restaurant one year later, he was able to pay with a cardboard Diners Club Card, which he created with his partner Ralph Schneider. With that single restaurant transaction, McNamara unwittingly created a global industry and a global addiction to instant gratification and debt. The Diners Club removed the risk of embarrassment and the annoyance of using cash to pay at the end of a meal.
I found that a great deal of Mr. Clements’ financial philosophy is very much in line with ours here at the Donaldson Williams website. For example:
- Consumers have much more power than they realize.
- You don’t have to stay trapped in debt forever.
- Having a debt problem is nothing to be ashamed of. It happens.
- You are not alone. Many people are struggling to pay their debt.
- Do your best to live within your means. No need to keep up with the Joneses.
- People spend far too much time worrying about their credit scores. You don’t need to worry, obsess or track your score daily. It’s not as “life-threatening” as the media makes it out to be.
- If you have the money to pay your debt in full, you should do the right thing and pay your debt.
What I Found Especially Interesting
If you’re struggling with excessive debt, this book provides lots of information regarding your various options including Consumer Credit Counseling, Bankruptcy, interest rate reductions through balance transfers and personal loans. It even mentions settlement as a viable option for reducing debt, which many authors ignore or view as taboo.
Curiously, though, Mr. Clements mentions attempting settlement for less than full balance only with collection agencies and not directly with the credit card company.
In my 10+ years working in this industry I’m here to tell you we’ve settlement millions of dollars of credit card debt directly with the credit card company before it was sent to a collection agency. Granted, each credit card company has very different policies and procedures, so maybe he didn’t want to open that can of worms. Or maybe he didn’t want to burn any bridges with his contacts still working in the credit card industry. Not really sure.
Either way, just know that it’s totally possible to settle for less than full balance directly with most credit card companies. The catch is that you usually have to work with someone in the industry (like us) that knows how to navigate the settlement maze and get favorable deals, otherwise you’ll probably get stonewalled.
Living Within Your Means
Before closing, I’d like to briefly revisit the topic of living within your means. Mr. Clements tells a great story about the wisdom of his father:
My father left a great example. He died at the age of 61 years old. It was far too young. But he was always very concerned about making sure that my mother would never have to worry. The home was paid for completely. I remember real estate agents constantly telling my father he could buy a bigger home. I remember my father’s co-workers making fun of him for buying a smaller home. And I remember being a bratty teenager, wondering why we didn’t buy bigger homes. But in his death, his wisdom was clear. Not only was the home paid for, but the automobiles were paid for in full. And in addition to a large 401( k) and IRA, he had purchased term life insurance. The result is that my mother was heartbroken when my father died. But 10 years later, my mother still lives in the same home and has never had to worry about money.
His father was indeed a wise man.
Overall, “Secrets From An Ex-Banker: How To Crush Credit Card Debt” is well-written and a good read with lots of details about the inner workings of the credit card industry as well as a breakdown of possible solutions for people struggling with excessive credit card debt.
For more information, please visit Mr. Clements’ website at www.magnifymoney.com