While checking out msn.com during another record day for the stock market a few days ago, I came across a story on my newsfeed that caught my attention. The piece, called 30 Frugal Habits To Adopt To Get Rid of Your Debt, shares a variety of tips calling for readers to “take action and find out how you can get yourself out of debt”. Since I’m all about winning with a debt-free life, I started reading. While much of the author’s advice was spot-on, other suggestions encourage readers to take on more debt or just move it around. Therefore, I came up with the idea to rate each of the 30 frugal habits (the good, the bad, and the ugly) on a scale as follows:
The point of my follow-up is not to be a hater, I promise! You will find that most of the author’s 30 nuggets receive a positive rating, and several got a perfect score. However, I believe it is important to give a counter-perspective to some of the guidance that includes keeping debt around for far too long via interest games or consolidation tactics. Here we go!
#1 - Put Down the Shovel
Summary of Author’s Advice: Stop using debt but keep your credit card around in case of emergency.
Advice Scale Score: Zero points
Rationale for Score: While the point starts off strong in correctly sharing that the first step in eliminating debt is swearing off further borrowing, keeping the credit card around (hilariously enough, inside a block of ice within a freezer) is not going to completely take away the temptation to take that shovel and keep digging a deeper hole. How about this? Have some plastic surgery AND cancel the account.
#2 - Get It Together
Summary of Author’s Advice: Follow the debt snowball by listing all debts to be organized in paying the minimum balances each month PLUS any extra amount towards the smallest debt.
Advice Scale Score: 5 Points (Genius)
Rationale for Score: This is exactly how I teach clients to handle their own debt. Wonderful job here.
#3 - Consolidate Your Debt
Summary of Author’s Advice: Move all the debt from the various sources into a new personal loan which will require just one low-interest monthly payment.
Advice Scale Score: -3 Points (Awful)
Rationale for Score: This is the problem with so many people who are up to their eyeballs in debt and want to get out. They want to do a “quick fix” by just moving the debt around and tricking their brains into thinking they accomplished something. Mathematically, yes there is potential to save on interest. But the elephant in the room, which is represented by the habits that led to the debt dumpster fire to begin with, hasn’t been addressed. Want to learn more? This article from Forbes lists pros and cons, with reasons not to consolidate debt including added costs, possibility of paying more interest over time, and of course, not solving the underlying issues of why you got into such a mess in the first place.
#4 - Set Up Savings
Summary of Author’s Advice: Have a small amount ($500-$1,000) saved for unexpected expenses.
Advice Scale Score: 3 Points (Good)
Rationale for Score: While having a $1,000 buffer is the correct first step in getting out of debt to eliminate minor bumps in the road, nothing is mentioned about the long-term goal of having a more robust Emergency Fund. A larger savings amount will be needed eventually for major expenditures, so that you never have to borrow money again.
#5 - Give Yourself a Visual
Summary of Author’s Advice: Actively monitor and update your balances while paying off debt. This will serve to provide constant motivation and deter unnecessary spending.
Advice Scale Score: 4 Points (Great)
Rationale for Score: The only reason this is not a perfect score is the author didn’t specifically mention that this process should be a part of organizing a monthly budget. A Net Worth Tracker is another tool that can be updated each month to track progress and celebrate wins.
#6 - Don’t Pay for Free Financing
Summary of Author’s Advice: Some credit cards offer 0% interest over a certain period of time. Make sure to pay these cards off before the true (and probably massive) interest rate kicks in.
Advice Scale Score: 4 Points (Great)
Rationale for Score: The author alludes to the fact that many companies sucker people into borrowing from them on “interest-free” loans that can ultimately turn into a nightmare. If you are considering such a loan, ask yourself this question: Why would a profit-driven corporation be so generous? The correct answer is there are strings likely attached. Not mentioned is the additional fact that borrowing money, even if the loan is truly interest-free, is still creating debt by making purchases you can’t afford.
#7 - Start with the Smallest Balance
Summary of Author’s Advice: This is the exact same advice as #2 above. Debt snowball all day baby!
Advice Scale Score: 4 Points (Great)
Rationale for Score: One-point reduction for repeating the same idea, but overall great advice.
#8 - Keep Tackling One Debt at a Time
Advice Scale Score: 3 Points (Good)
Rationale for Score: Two-point reduction for once again repeating the same idea twice.
#9 - Streamline Your Budget
Summary of Author’s Advice: In addition to advising the readers to keep a budget, which sadly according to this article is a lost art not commonly practiced, the author also kicks things up a notch by pointing out non-essential expenses that could be slashed.
Advice Scale Score: 5 Points (Genius)
Rationale for Score: If you keep a monthly budget and eliminate unnecessary line items, guess what you’ll have? More money!
#10 - Pay on Time
Summary of Author’s Advice: Keep due dates organized to avoid late fees.
Advice Scale Score: 3 Points (Good)
Rationale for Score: I would have added the guidance to keep track of the checking account balance at all times to avoid falling into the group who paid north of $2 billion in overdraft fees in 2023.
#11 - Don’t Let Windfalls Blow Away
Summary of Author’s Advice: When chunks of money come your way such as tax returns, bonuses, or an inheritance, use the money to pay down debt rather than on fun purchases.
Advice Scale Score: 5 Points (Genius)
Rationale for Score: Did the author read my last article about how to use tax return money? I agree 1000% with this advice.
#12 – Eliminate Consumer Debt First
Summary of Author’s Advice: The author doubles-down on her earlier advice from #3 above by suggesting debt consolidation via a personal loan or balance transfer credit card. Yikes.
Advice Scale Score: -4 Points (Insanity)
Rationale for Score: Aside from the can-kicking advice to consolidate debt, the author contradicts earlier debt snowball advice in #2 and #7 above by suggesting that the reader pays high-interest debt first.
#13 - Trim the Fat
Summary of Author’s Advice: Avoiding restaurants and coffee shops is the play here. Instead, it is recommended to home-brew the joe and make your own food.
Advice Scale Score: 5 Points (Genius)
Rationale for Score: In addition to the ridiculous tipping culture, never forget that when you indulge in eating out you are also paying for food profit margins, building lease, and other overhead costs the restaurant includes to just break even. I appreciate that this piece of advice was included among the 30.
#14 - Do it Yourself
Summary of Author’s Advice: Do jobs yourself that spike in costs if you pay someone else.
Advice Scale Score: 5 Points (Genius)
Rationale for Score: Certain manual jobs such as lawn care and car washes are often sourced to save time. However, if you are struggling to pay off debt or make ends meet, think of these tasks as having a second job. A penny saved is a penny earned!
#15 - Make a Trade
Summary of Author’s Advice: This was a new one for me, but that’s why reading is awesome! I learned that checking out a bartering group or website is a way of trading one skill you are great at for another that you aren’t. For example, if I wanted someone to fix my garbage disposal, maybe I could offer a free finance coaching session!
Advice Scale Score: 2 Points (Fair)
Rationale for Score: While I’d recommend exercising caution to ensure you don’t come across any nefarious characters, this strategy is certainly innovative and has potential to be a money-saver.
#16 - Analyze a Downsize
Summary of Author’s Advice: Live and drive in what you can afford.
Advice Scale Score: 5 Points (Genius)
Rationale for Score: Specifically, the author discusses cost-cutting measures such as downsizing in apartment or house, and the value of driving a vehicle purchased in cash. This may (gasp!) mean not living in the hip new neighborhood or turning heads at the stoplight, but who cares? Newser has shared that the Average Size of US Homes, Decade by Decade has more than doubled in the past century. Have we doubled in size? Of course not! So, be content with what you can afford, regardless of it meeting out-of-whack expectations your “friends” may have.
#17 - Earn More at Your Job
Summary of Author’s Advice: Put in extra hours if you can. If you are on salary, start spit-shining your image to stand out and make the bosses want to put more money in your pocket.
Advice Scale Score: 4 Points (Great)
Rationale for Score: There are two ways to have more money. The article has to this point given several serviceable strategies to save money. The other option is to make more! My add-on: If you are unable to pick up extra hours and feel that you’ve hit the glass ceiling, use professional networking such as LinkedIn to expand your network, earn additional certifications, or seek a new job that can increase your pay.
#18 - Get a Second Job
Summary of Author’s Advice: Get a part-time job on time of the full-time one to make extra money.
Advice Scale Score: 3 Points (Good)
Rationale for Score: While there is nothing inherently wrong with a part-time job, especially if mired in debt, the long-term play would be to also prove your value within your main career field to grow your main salary exponentially. A surgeon isn’t going to flip burgers on Saturdays; she is going to perform more surgeries.
#19 - Get a Gig
Summary of Author’s Advice: Rather than an official second job, this would be along the lines of freelancing with the skills you use in your main career, or a-la-carte hustling in your spare time, such as Lyft or dog sitting.
Advice Scale Score: 3 Points (Good)
Rationale for Score: Freelancing can pay top-dollar but is extremely competitive and can be time-consuming. As I noted in my rationale with #18 above, other gigs that are not using your career skills can make you more money in the short-term but could also stunt your long-term professional growth.
#20 - Sell it or Rent it
Advice Scale Score: 5 Points (Genius)
Rationale for Score: One man’s trash is another man’s treasure. If the things are still your treasures, remember that you can still sell them, get out of debt, and get new treasures later that you can afford!
#21 - Stop the Madness
Summary of Author’s Advice: Use a screening website or hit the unsubscribe button in emails to eliminate tempting new offers to borrow money to get more stuff.
Advice Scale Score: 3 Points (Good)
Rationale for Score: While screening your internet or emails is all well and good, you get the gold star if you put your big boy or big girl pants on and just learn to say no. You can’t even buy a new t-shirt anymore (check out #3 here) without being asked to open a new line of credit or split the payments, so you’re just going to have to learn to live in a world where borrowing money is normal, while you are an awesomely weird person who doesn’t participate in such foolishness.
#22 - Make Biweekly Payments
Summary of Author’s Advice: Make bi-weekly payments instead of monthly payments to cut the amount paid on interest.
Advice Scale Score: 2 Points (Fair)
Rationale for Score: The author earns a positive score because this strategy can outperform making regular monthly minimum payments (by adding the equivalent of one extra monthly payment during a 12-month year). However, lots of broke people get caught up in interest games as an excuse to stretch their margin even more thin, so for me this strategy gets a hard pass. An additional point the author also made: Make sure the bank or lender allows these half-payments. Some do, some do not.
#23 - Lower Your Interest Rates
Summary of Author’s Advice: Stop me if you’ve read this one – You can transfer your debt to another loan, consolidate the debt, and lower your interest!
Advice Scale Score: -5 Points (Death Star)
Rationale for Score: Another point dropped for repeating the same bad advice. I officially wonder why there was a need for 30 items on this list.
#24 - Ask for an Interest Reduction
Summary of Author’s Advice: Ask your lender to be nice and lower your interest rate, so they can make less money off you!
Advice Scale Score: 1 Point (Passable)
Rationale for Score: I was between zero and one here, but I’ll be nice since I do believe that if you don’t ask for something, the answer is automatically no. But seriously, if you are at the point of having to beg for a ridiculous interest rate to be lowered from a loan you never should have gotten, you are in deep doo-doo.
#25 - Think Twice Before Closing Credit Cards
Summary of Author’s Advice: Pay off your credit cards, but don’t lose them, because credit score! If this isn’t enough to make you squeamish, the author goes on to suggest that keeping credit cards open can “help with your future needs”. Good grief.
Advice Scale Score: -5 Points (Death Star)
Rationale for Score: The only reason you need a credit score is if you plan to borrow money again. A credit score is literally the rating of your ability to borrow money and pay back debt. No thanks!
#26 - Ask for an Interest Reduction
Summary of Author’s Advice: Basically the same advice as #24 above, but now you are begging a medical billing department, widely known for its compassionate customer service (sarcasm alert), to reduce your debt.
Advice Scale Score: Zero Points
Rationale for Score: Again, why was this list so long?
#27 - Lower Student Loan Payments
Summary of Author’s Advice: Now we are relying on the U.S. Department of Education to see how we can lower our monthly payment.
Advice Scale Score: -5 Points (Death Star)
Rationale for Score: Student loans are an epic failure in our country, and the Department of Education has been the problem, not the solution. Scams such as the SAVE Plan are designed for borrowers to avoid paying off money they chose to borrow through tactics such as stretching out payments for decades or banking on forgiveness that may not happen.
#28 - Knock Out Your Car Loan Early
Summary of Author’s Advice: This is the same hack suggested in #22 above: Making bi-weekly payments rather than monthly payments to knock off the unfortunate decision to finance a car from 60 months of soul-crushing debt to “only” 54 months.
Advice Scale Score: -1 Points (Don’t Do It)
Rationale for Score: According to nerdwallet, the Average Car Payment Per Month is currently $738 for new cars and $532 for used. Let’s average this out to $635 and multiply by 54 months...Hmmm, a grand total of $34,290 for a car that will be worth significantly less at the end of that term. What if you didn’t care what other people thought about your car, were weird and went with a reasonable cash purchase, and instead invested $34,290 into the red-hot S&P 500? Why, if you did this over 54 months, assuming a reasonable 10% return on investment, you’d have $43,082. Hope you enjoy the car!
#29 - Take Years off Your Mortgage
Summary of Author’s Advice: Once again, the bi-weekly hack strikes again. This time the author has calculated that this could take four years off a mortgage (which I assume based on some of the other advice I’ve read is a 30-year and not the 15-year that I recommend).
Advice Scale Score:-2 points (Bad)
Rationale for Score: Who wants to keep a mortgage around for 26 years by only making minimum payments (even if you hack your way to an extra half-payment every six months)? If you own a home on anything longer than a 15-year fixed rate mortgage, you should consider aggressively paying that home off as fast as possible. You cannot afford to retire with a house payment.
#30 - Get a Home Equity Line of Credit
Summary of Author’s Advice: As a last resort, put up debt against your home.
Advice Scale Score: -10 Points (Death Star on Fire)
Rationale for Score: The author saved the worst advice for last. Having a hard time paying off your debt? No worries, just risk losing your home by getting a HELOC!
Final Verdict:
If you’re still reading, KUDOS for sticking around until the end. With continued repeated advice and several doozies that made me glad I hadn’t eaten my lunch before clicking, this list certainly could have been trimmed. In all fairness to the author, I said at the beginning I wasn’t trying to be a hater, and despite me being forced to give zero or negative points over the last six tidbits, the final score still tallies to a positive 39 points, with most scores (17 out of 30) in the 3-to-5 point range. However, following even one of the negative-scoring pieces of advice could cause critical damage. My advice: Never borrow money again, and work like a maniac to become debt-free as fast as possible so that you can focus your attention (and money) on the things you want out of life, with zero payments holding you back. Remember, no matter how you choose to approach debt, if you truly want to get out, you will!
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