My Objectives for Good Debt, Bad Debt

Good Debt, Bad Debt: Knowing the Difference Can Save Your Financial Life
by Jon Hanson

(Page 3 of 7)

Here are my goals for Good Debt, Bad Debt as set out in my journal:

1. Brevity - To make literary bouillon cubes with a financial flavor.
2. Wit - Humor with its thinking cap on. Laugh or smile while learning.
3. Visual humor - Cartoons with a lesson of financial frugality.
4. Incontrovertible arguments - Arguments with results that are verifiable (knowable) in advance.
5. Fun - A book that's fun to write, read, and share; one that creates useful new words and terms.

Brevity. Would you buy a 763-page book called How to Be Brief? Mark Victor Hansen of Chicken Soup for the Soul fame says that most people have about two hours to spend with a book, perhaps on a short flight from Boston to Atlanta, in the evening at home, or over a couple of lunch breaks. The thinking in the book is no more important than the think- ing caused by the book. See www.gooddebt.com for discussion guides.

Wit. My catchphrase for this book is "The past is the past unless, of course, you still owe for it." It seems that many people can't go where they want to go because of where they have been. Truly, what constantly pulls your past into today? Debt. If I tell a church audience, "It's hard to give your heart to Jesus when your butt belongs to MasterCard," they understand the message. Not only is it scriptural, it is common sense. When I refer to spendthrifts and those striving to keep up with their imagined reference group as the Consumerati, and people who follow a plan and seek wisdom as the Econowise, it's easy to follow. It makes sense.

Visual Humor. Throughout Good Debt, Bad Debt you will see original cartoons by Patty Kadel. When I developed an idea for a cartoon, I would put it in writing via e-mail or letter to Patty, who would turn my concept into a drawing. You will probably have your favorite. Here's mine - a guy dripping with talent who suffers from the inability to gain financial traction because he lacks discipline. Talent is only one part of success. If you flip to Chapter 10 ("You Married Who?"), you will see a cartoon on "relationship baggage" that generates a great deal of comment. We have all seen this type of relationship. It's a simple concept, but many overlook it or seemed surprised when the "unpacking" starts. I had a great deal of fun doing the chapter on marriage, an area in which I've done well. My wife, Nita; my son, A. C.; and my daughter, Paige, are a perpetual blessing.

Incontrovertible Arguments. Our arguments must have both texture and depth, or our success will be short lived. After the smile wears off the words, does a residue of wisdom remain? Few will argue with the saying "You must spend less than you make. You must have capital to capitalize." The first five chapters are about developing a philosophy of debt or avoidance of most debt. Except for business or investment debt (at safe loan-to-value ratios), the goal, in time, is to have everything in your personal life debt free.

"It's hard to give your heart to Jesus when your butt belongs to MasterCard."

Fun. Personal finance is simple, requiring little more than basic math and sincere forethought. We only need add human nature to finance to make it both funny and tragic. While fun is not an absolute prerequisite for success, it does make the more mundane but necessary parts of life easier to accept. If you can laugh at others' inability to embrace discipline, delayed gratification, and discernment, then perhaps you can learn these lessons without the unpleasant aspect of firsthand experience.

What's NOT in Good Debt, Bad Debt

No quick-fix temporary solutions. No optimistic taffy to soothe your ego. Good Debt, Bad Debt is about embracing the reality of where you are at and working to improve your position. You won't find specific to-do lists and forms to fill out. No slavish devotion to budgeting. When your reasons are right and you can foresee the promise of a prudent financial philosophy, you won't need someone to micromanage your life. All things will work together for good for those who embrace sound financial fundamentals. Good Debt, Bad Debt will concentrate on what you can do using your present income.

What's IN Good Debt, Bad Debt

How should you think about debt? Is debt good or bad? Can debt be an effective tool? This is a book to help you develop a philosophy of debt, spending, and saving. Good Debt, Bad Debt is about fundamentals - time-tested and, sadly, debtor-proven ones. It's about building a foundation for your future.

Some of it is tongue-in-cheek, but not so outlandish that people can't relate to it. For example, in Chapter 1 ("The Debt Effects"), I say, "Credit cards are the crack cocaine of the credit industry." I am not actually accusing the industry of drug pushing, just something close.

Throughout I encourage a healthy skepticism which will allow you to deconstruct advertising and media messages. Think of it this way: you edit what comes into your mind, or else the media and advertisers will. In Good Debt, Bad Debt I teach you to question the media and merchant messages you receive hundreds, even thousands, of times a day. When you hear the message "Don't put all of your eggs in one basket," you will wonder if the message was sponsored by the National Basket Makers Association.

Think of it this way: you edit what comes into your mind, or else the media and advertisers will.

Understand the debt effects, manage emotions, deflect media influence, work from a plan, monitor burn rate, delay gratification, track and tabulate expenses, and invest for your future. That's simple enough, right? Grasp the first four chapters and you will have a better understanding of debt and money than 90 percent of Americans. Actually put these fundamentals to work in your life as a financial liturgy, and you will finish financially ahead of 97 percent of Americans. How are you doing? How are you really doing?

Copyright © 2004 Jon Hanson. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.

About the Author

Jon Hanson lectures to audiences of all sizes on personal finance topics. A twenty-four-year veteran of the real estate business, he is now a full-time writer and public speaker.