Book Review: Pay It Down

Jean Chatzky’s take on debt.


This was a quick read from the library: Pay It Down: From Debt to Wealth on $10/day by Jean Chatzky.   The  book is abbreviated and condensed into this series of articles on Money.cnn.

First off, this book is nearly entirely about budgeting.  Figure out what you’re already spending, and then take a look.  The topic was just as dreary as it could be in this relentless little book.  It would not let you escape the reality that you’re going to have to spend less than you earn if you want to pay off debt.  No bright promises of riches, no assurance that this will be easy, nothing but the drilling down of a determined accountant.  This was a root canal.

If, however, you need a root canal, better to get one than to be given a tube of teeth whitener.  This book has me headed over to my spreadsheet to see if I can’t set up a budgeting tool to use with my people.  I’ve got one coming in tomorrow I can try it out on.

There was some good stuff in there about how to find places to cut in your budget, some of which would be worth the price of this book if you were fairly new to this.  Short version: sell things you own that you can’t afford to own and go get a second job.  (Uh, did I mention that most of this book was dreary?)

I also appreciated her take on ways to improve your credit score.  It was more specific than I’ve seen before.  She said:

35% of the score is based on how well you pay your bills on time.  One late payment can drop your score by 20 points!
30% is based on “balance and burden”, where they want you to have a lot of available credit you’re not using.  (This indicates that someone checked your income at some point.
10% is based on whether you’ve had new inquiries.  All inquiries in the same 15 day period count as one inquiry.  Inquiries over 12 months old don’t count.
10% is financial composition: what percentage is bank-card debt and what percentage is installment debt.  They prefer a ratio of 60-70%bank card debt to 30 to 40% installment debt rather than you have too much of one or the other.  I’m not sure what “installment debt” is: the only kind I’ve seen on my credit report are student loans and they’re all paid off.  I can’t see how that hurts me, but apparently it does a little.
15% is based on the average age of your credit cards.  It’s best to keep cards for a long time and not close them.

She had some interesting notes on health insurance, too:

She suggests looking at and Fortis Health for quotes on health insurance policies.  (She noted that medical expenses were the leading cause of people getting into trouble with debt, and any solution has to involve getting health insurance.)

She quoted some figures for health insurance costs that were roughly 1/2 of what I’d expect to pay and it sent me scrambling for the copyright date on this book.  My guess is that it was written five years ago.  Could health insurance rates have doubled in that time?  It seems unlikely, but possible.  Nevertheless, the point is the same.  People need to be prepared to seek out their own policies, just as they seek out their own life insurance, car insurance and possibly disability insurance.In Massachusetts, though, I’d recommend that you start with the Commonwealth Connector if you’re trying to find health insurance.  I tried out and it said it didn’t work in my zip code.  I suspect it wouldn’t work in any of MA.

She also mentioned that you can search for insurance agents in your area through the National Association of Health Underwriters and review health insurance companies at the National Association of Insurance Commissioners‘  and/or the National Committee for Quality Assurance sites.

Originally published January 1, 2009 at