When trying to come up with something worthwhile to write, I realized that not every piece of financial advice I gave was a pearl. Some, I have to say, was boilerplate; not original nor thoughtful.  But, I did give what I thought was my best, to people trying to get out of debt.  Early on I was shocked by how much credit card debt people were carrying.  Most did not realize how little of their monthly payment went towards lowering their balance until I pulled out my Hewlett-Packard financial calculator and showed what was applied to principal and interest, especially on those cards with 24% interest.  I developed a strategy of “target and eliminate” which concentrated on getting rid of one balance at a time while paying the minimum on the remaining cards.  For those that had the discipline to follow through, they were debt free in 18 to 36 months.  But, only about half of my clients were able to follow through.  That was the good advice.

Some clients were so far in debt, and their cash flow so tight, that no debt reduction schedule could work.  If they had equity in their homes, I recommended that they refinance, or get a line of credit on their equity, to get out from under the crushing debt.  It worked to pay off that crushing debt; they were debt free except for the mortgage and/or the line of credit payments.  Even car loans were paid off.

What I learned is that my advice actually hurt some.  A year later they were back in as much debt as had been paid off, and yes, there was a new car.  Being debt free allowed them to buy stuff they didn’t need, and, I suspect, didn’t really want. Getting into debt wasn’t a financial problem, it was an emotional problem.  In hindsight, I should have set up a debt reduction schedule and, insisted they follow it, if they really wanted help.  A hard lesson learned, but too late.