Update: This review was written shortly after the book was published in June 2011.

Since that time, Marketplace Money asked personal finance experts from across the country to recommend their picks for summer reads. I suggested this title, then downloaded it and re-read it to refresh my memory on the discussion points. You can listen to my audio book report at the summer reading recommendation podcast and article or at MM’s podcast for weekend of July 12, 2013.

By Paula Wethington / Monroe on a Budget

I have an occasional book report series on Monroe on a Budget.

This was kind of an accidental series. I started with a couple of books written by grocery shopping experts that I found at the local library. Since that time, I have featured a variety of personal finance books that I thought would be of interest to my local readers in southeast Michigan.

Today’s piece is Karen McCall’s new release, “Financial Recovery: Developing a Healthy Relationship with Money.” It’s available both in print edition and e-edition

I have to explain that this book has been sitting on my desk for a few weeks after I agreed to do a book report. I also have breaking news and social desk duties for The Monroe Evening News, and it’s been quite a juggle the past few weeks with all the assignments and projects.

But I was able to schedule some time during the past few days, and got my sticky pad handy to bookmark the pages as I went along. I found this book to be an easy read and well organized.

If you are a new reader to Monroe on a Budget, you’ll realize pretty quickly that my focus is on the practical side of family finances. While couponing is the current buzz, I’ve taken on topics such as Friday night fish fries, high school senior yearbook photos, and whether frugality should be a pageant platform.

But it’s hard to stay motivated on matters such as the the finer details of double coupon policies (today’s hot topic) unless you have an overall plan in mind.

That’s why you want to get the big perspective from time to time as well.

Karen McCall is the founder and owner of the Financial Recovery Institute and lives in Sonoma, Calif. In recent years, she has worked with clients in a wide range of income brackets as they deal with personal finance issues such as too much debt or under-earning. Her goal is a “holistic, transformational approach,” according to the press kit.

My perspective on Karen’s book is that it will partner very well with  more typical personal finance books that focus on budgeting spreadsheets, long-term planning strategies or debt reduction checklists.

She has assembled an extensive list of personal and family budget categories so that you don’t overlook an expense that is relevant to your life (here’s my version on that theme). She also explains why it’s important to track expenses, and how to understand needs vs. wants, without getting bogged down in the details.

Here’s an example in Karen’s book of a want vs. a need: A single woman originally went house hunting for a cheap apartment that was near a public transit stop. But when that woman realized her needs included inviting friends over from time to time, she looked for a slightly more expensive apartment in a better neighborhood.

I liked Karen’s perspectives on how “making do” and “doing without” can backfire in the long run. And in the book, she explains what it was like to make the lifestyle changes that helped pay off her debts that racked up during the 1980s.

The concept I thought was particularly interesting, and what I decided to focus on for my book report, was “Stabilizing Debt.”

Here’s the explanation:

Debt stabilization is quite different from debt reduction. Debt stabilization simply means that you are no longer incurring no debt. It’s not about getting out of debt. That will happen later. Until you stabilize your debt, you’ll stay locked in the vicious cycle of paying down credit cards only to run them up again.

Read that paragraph again.

Here’s more:

If you’ve built a monthly spending plan as we discussed in chapter 5, you have the tool you need to live within your means without charging any of your bills or expenses. For now, I’m going to ask you, once again, to trust the process.

You may be thinking, “But I am stabilizing my debt. I’m paying more than the minimum payments. This is great, but if you’re continuing to use your cards while paying them down, you’re still trying to bail out water while more rushes through the hole.

When finances improve to the point where you can pay for all expenses that would come up during a typical year without using credit … then you can take the next step of reducing that debt in a bigger fashion.

Think about it: if you make minimum payments in a timely manner, and do not put any more burden on those cards, then the balance due on those loans and credit lines will go down gradually. It may not go down as fast as a lottery ticket jackpot would make it happen, but the balance due will start to go down.

After one debt is paid off, you can redirect those funds toward increasing the payments on another debt. Depending on what terminology you are familiar with, this concept is called “roll over” or “snowball.” Karen mentions that concept.

Here’s another snippet from about her debt stabilization before debt reduction method:

While it may not be speedy, this system is true, predictable and effective. As you are reducing your debt you can’t just put your life on hold. Life is to be lived. That’s why your spending plan should include taking care of your needs even while you’re paying down debt.”

By the way, many budgeting systems do include a line item for “savings” that is separate from debt repayment and long-term investments. Think about it: that money may be savings this month, but it’s going to pay for a vacation or a car repair later in the year that may not have been considered when you reviewed the regular monthly expenses.

And one concept you’ll hear repeatedly from personal finance teachers and writers is that of an emergency fund.

I’ve suggested aside one week’s paycheck as a start. That’s enough to cover a deductible for a medical emergency or the waiting time for unemployment benefits if you get forced into a layoff situation. The equivalent of one week’s pay is also easy to arrange with one’s tax refund money, annual bonus or other unexpected funds.

But I also like Karen’s starting point for an emergency fund, and I think it’s particularly appropriate for today’s frenzied chatter about grocery bills: start with accumulating enough to cover your family’s groceries for a month.

In keeping with social media review disclosure procedures, here’s what I do with the books I accept for book reports: I donate the books after I’m done writing my blog post to the Monroe County Library System.

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