Money troubles start young.
Bankruptcies filed by people under age 25 soared almost 100 percent nationwide from 1991 to 1999. And by graduation day, nearly 10 percent of college students have saddled themselves with at least $7,000 in credit card debt.
Those gruesome statistics reflect the fact that young people learn little at home or school about managing their financial lives, according to Dara Duguay, author of "Don't Spend Your Raise and 59 Other Money Rules You Can't Afford to Break."
Duguay, who admits to nearly drowning in credit card debt as a young adult, wanted to write an easy-to-follow survival guide to help the younger set get started on the right financial foot. But just about anyone can benefit from following her simple rules, she says.
Duguay says the one money rule no one should break is No. 33 in her book: "Never have more than two credit cards."
"Credit is something that gets so many people into trouble," Duguay said in a telephone interview. "It's sort of a slow process. You don't realize how deeply in debt you are until at one point, you can't make the minimum payments."
Limiting yourself to two cards, each with a low credit limit, is a way to stop yourself from getting in over your head.
"Never have more than two cards, and make sure you have low limits. Then you can only get into so much trouble," Duguay said, noting that Americans on average have nine credit cards.
The book offers a host of other things never to do, such as never go to a credit repair clinic (most of the things a clinic can do legally you can do on your own for free); never go to a rent-to-own store (rental and interest charges are so high they pay for the item four or five times over); never get a car loan for longer than three years (if you can't afford the monthly payments at three years, you can't afford the car); never hide from the bill collector (when he finds you, and he will, you'll only be in deeper trouble), and never make a significant purchase on the first trip to the store (basically, haste makes waste).
Duguay, executive director of an advocacy group promoting financial education for young adults, said she collected fodder for the stories during her six years as director of education for the Consumer Credit Counseling Service in Los Angeles.
At least one of the book's rules that is sure to rattle many readers is No. 14: "Never buy a new car."
"The reality is that you have lost several thousand dollars in value before you even make it to your driveway," Duguay writes. "The simple act of driving your new car off the dealer's premises has decreased its value."
Duguay swears she's purchased only one new car in her life. "And that was very stupid. I did it when I was young before I knew better."
Her point is, let someone else take the initial hit. Buying a car that's a year old or even just six months old can save a bundle.
That rule and many others the book serves up can be followed by using a measure of discipline. A few of the rules, however, are harder to fathom.
No. 49, for example, advises, "Get married and stay married," the reason being that it's too costly to divorce.
"A divorce rarely improves your financial situation," the book says. "It usually results in making it worse."
|Author Dara Duguay offers these tips for avoiding debt problems:¢ Never have more than two credit cards.¢ Never go to a credit repair clinic.¢ Never buy a new car.¢ Don't spend your raise.¢ Live below your means.¢ Don't try to keep up with the Joneses.¢ Haste makes waste.|
Does that mean couples should stay in a miserable marriage because it's too expensive to go it alone?
"If you want to stay solvent and be more well off, studies have shown you will be better off if you stay married than if you get divorced. That's all I'm saying," Duguay said.
Then there's No. 22: "Don't try to keep up with the Joneses."
"There always will be someone richer than you," the book says. Some will actually be richer, while others will only appear to be.
"We all know about the Joneses," Duguay writes. "We try to keep up with them, but every time we get close, they refinance."