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Broke because you want to be: 12 rules for debt elimination


This is a guest post by FWP at the Financial Wellness Project. Through stories, lessons, and progress reports, she shares her attempts at reducing and managing her debts, learning how to save and invest, building income, living frugally, and acquiring financial stability and independence.  If you enjoy this post, please consider subscribing to her rss feed.  She blogs from the San Francisco Bay Area, CA.

Last month, I finished reading a copy of You’re Broke Because You Want To Be by Larry Winget. I requested this book on reserve from the local public library after casually noticing it mentioned at another personal finance blog, and also on Amazon’s list of popular personal finance books. I must admit I quite enjoyed it.

Winget is very straightforward and to the point. he doesn’t and won’t put up with (almost) any excuse as to why someone is in debt. There is no hand-holding or gentle encouragement from this author.  There are no parables.  If you’re in debt, you put yourself in that situation, you chose to, you wanted to, and you must start taking responsibility and get yourself out!  That’s all there is to it.  Although he will come off as blunt and crass to some, i found his telling-it-like-it-is attitude rather refreshing.

The book is divided into the following main sections:

Part one: why you’re broke

  • money matters
  • your real problem

Part two: how to start getting ahead (maybe even rich)

  • know where you are
  • how to get out of debt
  • how to cut your expenses and increase your income
  • the stuff most people overlook
  • now it’s time for your new budget!

Part three: proof that it can be done!

  • interviews with larry’s rich buddies!

In this article, I review Winget’s steps for getting oneself out of debt.


Larry Winget tells us that we must both reduce our expenses AND increase our income. he advises the following habits to adopt to pave the way:

1. Stop spending. ‘Stop the hemorrhaging’ he says.  spend only on the basic necessities such as food, shelter, and bills to get yourself out of your debt.  and no new debt!

2. Keep a journal. Keep track of every penny you spend in a notebook.  Write down the date, and what you spend every single day.  Also pay attention to categories.  He even suggests a category for ‘stupidity’ — it will help you to see the ‘stupid stuff’ you spend on now so that you will stop doing that later.  He includes a sample of what a page in your journal might look like.

3. Cut up your credit cards so that you can not increase your debt.  He does suggest keeping one card for emergencies,  and it better be a real emergency: “I’m talking broken bones or blood, something that requires medical attention.” He doesn’t say to cancel cards, but if you can’t pay off your credit card balance monthly, don’t use your cards because interest is not cheap.

Winget brings up the three most important numbers in your life: the three in your credit rating.  He tells us that our scores can either cost us hundreds or thousands of dollars, or save us just as much.  Although we can try to better our score later on after tarnished, the records will still be there.  as ratings can be between 350-800+, He suggests to aim for a rating in the 700s.  a rating in the 600s can get you a decent interest rate on a home or a car loan.

4. Call your creditors. Talk to them to demonstrate your willingness and ability to pay.  Hiring someone else to do this is not free.  He tells us to handle our mess ourselves.

5. Set pride aside. Don’t get defensive when the creditors call you to ask you for their money.  They are just doing their job, and asking for what is owed to them or the companies they work for.  It is your own fault that you owe them that money, and your responsibility to pay them back.  So be nice to them and try to pay a little something to everyone.  Winget recommends paying more towards the debt with the higher interest rates, and less (the minimum payments) towards the ones with lower rates.

6. Be patient. Don’t give up so easily or get discouraged because paying off your debt seems to take forever — it is not a quick process, It takes time, especially since you might have high interest rates, so your balances will incur interest.  Since you gradually accrued debt, you will also gradually pay off your debt.

7. Get a calendar. Winget suggests writing your bill due dates on it, and marking in red ‘PAID’ in big letters on the days when they are paid.  He says that we should hold up our end of the bargain when we signed up for the credit and agreed to pay our bills on certain days.  Otherwise, you are just a liar for not abiding by the terms.  He offers a simple example of such a calendar.

8. Pay your bills as they come. It will be less onerous over paying them all at one time.  you’ll feel better knowing you are making progress paying your debts regularly.

9. Make little payments on your payments. Pay as much as you can for your first payment of a bill for a particular month.  Then, pay a little more towards it each time you can to chip away at your debt.  “Use all available income to pay off your debt.”

10. Don’t borrow your way out of debt. It is a good thing to reduce the interest on your debt.  However, be careful with the lure of using home equity debt consolidation as an answer.  Winget says that unless you do not incur more unsecured debt, you run the risk of later having more debt and having a home equity loan to boot.  He suggests just leave your debts the way they are and focus on paying them off.

11. Don’t borrow from family or friends. He says they don’t mix with funds, lest they later cause resentment or loss of friendship.  Say no to any offers, and fix your own mess yourself.

12. Bankruptcy should never be your first option. Despite people wanting an easy way out and looking to bankruptcy as such a solution, bankruptcy is actually no such thing.  He reminds us that we should focus on our behavior, on spending less, earning more, and saving, rather than looking to bankruptcy for a quick fix.  He can speak from personal experience, and does not recommend it, warning us to avoid that route.  Although bankruptcy eventually officially goes off your record, unofficially, it will still come back to haunt you.  Winget himself is constantly reminded whenever he tries to do anything on credit or buy a house.

*  *  *

So far, personally I have not gotten into such deep debt that I must worry about creditors or bankruptcy.  For the most part, I have taken the actions he mentions above, and can say from personal experience that they do indeed work:  I recorded my spending for several months in a small notebook; set up calendar and e-mail reminders for paying bills with Google and Gmail; use Dave Ramsey’s ‘snowballing’ method to regularly make payments towards my debts; no longer use a credit card for regular use; and have basically minimized non-essential spending.

Larry Winget’s 12 rules to debt elimination are simple, sound, and common sense, but may not necessarily be easy to follow.  But once you begin, you might be surprised to discover how easy it can be to keep up these habits as you make successful progress and get closer to a debt-free life.

How about you?  What do you think of Mr. Winget’s advice?  Have you also adopted these steps in your own quest to become debt free?

About the author

Clever Dude


  • Great post on getting out of debt. Creating a budget always helps in managing one’s debts. A great way to know where you stand in terms of paying off your debts. Earlier I also used to borrow from my family but now i have stopped the practice. Trying to implement all these points in managing my finances.

  • I like all those steps for eliminating debt. I believe that if the debtors follow those steps, they will be on the right tract to becoming debt free. I like especially the ones on keeping a journal and getting a calendar. Writing down one’s expenses in a journal will help in keeping track of the expenses and getting a calendar will help in sending payments on time thus avoiding hefty fees.

    Evelyn Guzman
    Debt Challenger

  • Great article and some great suggestions! About 6 months ago I came to the conclusion that my debt was getting too big, it was all fault of some bad decisions and it was only me who could get me out of it. I took the responsibility and cut off most of the excessive spending and started spending less than I earn. I am in the process of increasing my earnings and hopefully I will be out of the debt around March/April 2009.


  • Great suggestions. It is definitely a matter of learning from your mistakes in order to not repeat them. Many were caught up in the frenzied economy and made half-hazard financial decisions all to oft (with some “great” justification as well!) but at some point, responsibility comes upon us.
    In my opinion, bankruptcy never needs be an option. If you truly want to take control, you can. I have seen people with nearly 1,000,000 in credit card debt dig their way out (bad business deals, bum thing). It was through a process called debt validation and resolution, like settlement on steroids. He managed it in about 18 months. The key now is not to do it again!!

  • Sigh. You know, intellectually I know not to take it personally but I get really tired of hearing how my husband and I are in debt because we *want* to be.

    Hubby is a bit of a spender and we’re slowly working on that. But when he and I met he was having trouble holding down a job because of medical issues (the worst eczema most doctors have ever seen) and I was on disability. And because of the job situation, he had about $20,000 in student loans he couldn’t pay back.

    I helped him find a job with a very understanding boss. We just finished paying off his student loans, but during this time he also had to have $7000 of oral surgery because of an inherited calcium deficiency (plus all the steroids for his eczema since birth) had made his teeth crumble away. Then of course the actual dentures which at 50% coverage meant we paid around $1500.

    Oh, and a month before our wedding, even his very understanding boss couldn’t keep my husband on anymore because of all his absences. So now he’s on unemployment and working with the Dept of Vocational Rehabilitation. I’m working some contract work from home part-time and we’re slowly paying down $12,000 in credit card debt.

    Not all of that was necessary. I should have reined in the spending more at times. But I’d say around 90% or more is due to various hospital visits, missed work, co-pays and other random events we couldn’t avoid.

    And yes, I know, these books aren’t for people like me. Because the main audience for debt reduction are people who have been frivolous or simply were never taught anything about finance.

    All the same, the lectures about second jobs or cutting out “luxuries” get hard to stomach. All the “hard-nosed” writers who say that you’re in debt because you’re irresponsible? I dare them to live a week in my life. See how fast they can cut down debt on $36,000 a year, which is what we’re living on — minus $336 a month for insurance (before that it was $475 for COBRA).

    I guess that’s why I had to just give up and start a blog of my own. Seemed like no one else was much interested in talking about how to cut down debt when you’re already living pretty bare-bones. Or when your fatigue means you can’t even leave the house that day.

    Okay, that’s enough ranting. I apologize for spewing quite so much cynicism all over your blog. I guess this post was just the proverbial straw.

  • @abigail
    I am with you and know many people who have faced dire circumstances such as yours. A client I work with came into a heap of medical bills due to unforeseen sickness. As self-employed individuals, their health coverage wasn’t exquisite (due impart to difficulty in qualifying with lingering health problems). Combine that with a wavering economy (and they are landscapers/hardscapers) and you have recipe for financial trouble. The past matters little more than the lessons learned and that is what is important. Aside from that, blame, etc. are nothing but energy drains. Solutions are what matter! (and some of that solution should include a plan to prepare in case medical issues arise again, etc.)

  • Hello,

    My name is Mona Clark, I’m a blogger with a focus on internet marketing.

    I noticed that you offer guest post opportunities – are you still actively accepting them?

    I’d be honored to submit content for your approval if you are.

    Below are a few topic ideas:

    Topic – “3 Ways to Give Your Social Media Marketing an Extreme Makeover”
    Topic – “Answering Your Questions About Branding on Social Media”

    Thanks and let me know your thoughts.

    Mona Clark

  • Hello,

    I just wanted to reach back out and follow up to see if you received my previous email.

    I’m interested in guest posting on your website and provided a few topics.

    Thanks and please let me know, as I can begin writing the approved topic as soon as I hear back from you.


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