Book Review: The Debt-Free Spending Plan

This has been a great month of reading for me. I received three books to review and just completed The Debt-Free Spending Plan: An Amazingly Simple Way to Take Control of Your Finances Once and for All.

In this book the author, JoAnneh Nagler guides you step-by-step through the process of digging yourself out of debt. Nagler was once in debt herself and shares the details that have helped her attain financial success. This isn’t a get rich quick book. If you are looking for some magical cure to erase your credit card bills you won’t find it here. What you will find is a methodical process of documenting your income and expenses that will help you live within your means.

There are three main steps to this process. First, document your income including how much you make after taxes and deductions and how often you get paid. Second, capture your fixed expenses. This includes categories like mortgage or rent and insurance payments. You must include the costs of these expenses as well as the dates they are due. Third, write down what she calls daily needs. This is everything else that doesn’t fit into the fixed expenses category. It includes everything from filling up your car with gas to getting your hair died and trimmed. I’m not exactly sure that all of the things in this category are ‘needs’, but that is how the author chooses to define them.

After writing down all of this information, Nagler asks you to subtract your total income from your fixed expenses in an effort to determine exactly how much you have left for your ‘daily needs.’ Based on her process you will be left with a line item budget for each and every non-fixed item you currently purchase.

Nagler then asks you to purchase a small pad of paper in which to write down each and every expense you encounter on a daily basis. On each page you write down how much you budgeted for a specific category, how much you just spent and how much you have remaining. If you choose to spend money in one category and have already blown your budget there you will need to subtract money from another category. So for example, if you spend $10 going out to eat, you will subtract $10 from another category like hair cuts. In your journal you would subtract $10 from hair cuts on one page and add $10 to your eating out page. On the eating out page you would write a note describing which category the money came from.

I love this idea. I think it’s a great way to remain accountable to yourself. You have to take the time and effort to write down your purchases, which helps you think deeply about where your money is going. Rather than spending money without any thought you know have to think about not only what you are buying but also what you are NOT buying. Recognizing what you are missing out on is a great way to rethink your purchases.

Here’s an example. Let’s say you love the theatre, but are constantly taking money away from your theatre budget to go out to eat or buy clothes. After reading through your journal you can begin to ask yourself if your spending habits reflect your joys and passions in life. If it were something you are truly passionate about then wouldn’t you set aside time and money to attend a show? Why are you buying clothes you don’t need and don’t find enjoyment from, when you could spend that same money on something you truly love and would remember for a long time to come?

The Debt-Free Spending Plan is a great guide for those in debt. The simple act of writing down your purchases and being accountable to your budget and yourself will surely help you rethink the way you spend money. We all claim to have passions and joys in life, but our purchases don’t always reflect these passions. This book will help you align your purchases with your passions.


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