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Press
Release
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Source:
GoodDebt.com
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Should
Our Kids Drink Suze's Kool-Aid? - Debt
Expert Says Some Advice Will Increase
Debtabetes(TM)
Monday
April 25, 6:15 am ET
COLUMBUS
,
Ohio
,
April 25 /PRNewswire/ -- Jon Hanson,
author and debt expert of GoodDebt.com (www.GoodDebt.com),
says people are drowning in debt because
of their small daily choices, called
habits.
After
reading financial expert Suze Orman's
newest book, "Young, Fabulous, and
Broke," in which Orman contends
that we live in unprecedented times that
call for unprecedented advice, Hanson
says Orman should re-watch
"Casablanca," if only to be
reminded that the fundamental things do
apply, as time goes by.
"The
laws of economics, like the laws of
physics, simply don't change," says
Hanson. "To suggest otherwise to
young people, especially regarding the
use of consumer debt, is bad for our
children's financial health. Follow
certain parts of the advice in 'Young,
Broke and Fabulous,' and you may end up
old, broke and in debt."
Hanson,
author of the new book, "Good Debt,
Bad Debt" (Penguin-Portfolio 2005
ISBN 1-59184-073-2) believes in keeping
the use of consumer debt to an absolute
minimum, no matter the circumstances.
"Credit cards are the crack cocaine
of consumer debt. For Ms. Orman to claim
that credit card debt can be good for
young people just starting out is
dangerous advice. Forty-three percent of
all credit card users pay the minimum or
only slightly more on their accounts,
guaranteeing them a lifetime on the debt
treadmill. To think that today's young
people are different than their parents
-- that somehow circumstances today have
turned young people into prudent and
responsible borrowers -- is wishful
thinking."
Back
to Financial Phonics
Hanson
believes that Ms. Orman's contention
that young adults operate under a new
economic paradigm is just plain wrong.
"In 'Good Debt, Bad Debt,'" he
says, "'The past is the past,
unless you still owe for it.' Many are
suffering from Debtabetes(TM), the
inability to break down and eliminate
debt."
"The
only thing that's different today is the
wide availability of credit to untested
borrowers. The speed and ease of debt
accumulation has increased
exponentially. But the fundamental fact
that financial success lies in
discipline, deferral, and discernment in
money matters is unchanged. Wealth comes
through accumulation. Borrowing for
consumption is always bad debt, calling
it a 'good use,' does not make it good
debt."
Hanson
likens Orman's paradigm shift to what
happened with reading during the 1950's
when phonics gave way to the Look Say
method of reading. "'Young,
Fabulous, and Broke' seems to be saying
'hey, kids, you don't need to follow the
rules of Financial Phonics anymore.'
When Orman says 'this is not your
parents' money book,' she means it. If
Ms. Orman is leading the charge for Look
Say Finance, put me down as the guy
sticking with Financial Phonics."
Orman
is right, Hanson believes, to encourage
kids to follow their passion early in
life. "I am all for preferring the
low-paying job you love over one you
hate, but only if you are not mortgaging
your future to do so. If you're making
$30,000 a year and borrowing one percent
of your annual income each month to
bridge a low salary in your dream job,
as Orman recommends, you've borrowed
$7,200 in just two years." Make the
minimum payments (most increase the
balance) and it will take you between 33
to 52 years to pay it back. By which
time you won't be so young, things won't
look so fabulous, and you'll still be
broke -- as time goes by.
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Available Topic Expert(s): For information on the listed expert(s), click
appropriate link.
Jon Hanson
http://profnet.prnewswire.com/ud_public.jsp?userid=514630
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