defeating debt

Defeating Debt

February 2, 2015 0 Comments

Please tell me I’m not the only one who hates making and living by a budget. It’s tough to put restraints on yourself.


We live in an age of debt and entitlement; it’s disgusting. For example, I saw a commercial for a furniture store a few days ago, and their tag line is “because you deserve it”. We don’t deserve it! That’s what gets us into debt is the feeling that we deserve it; that we are entitled to it. Where in the Bible does it say that we deserve the newest and biggest? This what’s get us into trouble with debt.


The Lord is very clear in the Bible that he supplies all of our needs. I think our generation and, the one after, is in dire trouble! We don’t have to have all of our wants fulfilled! It’s a ridiculous notion that we have to have all the new Shiny things. What do we benefit from buying things we can’t afford? We get debt, anxiety, depression and a bad credit score! Again, the bible says to owe no man anything!


Romans 13:8 “Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.”


Proverbs 22:7, “The rich rules over the poor, And the borrower becomes the lender’s slave.


Proverbs 21:20, “The wise store up choice food and olive oil, but fools gulp theirs down.”


Proverbs 13:22, “A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous.”


Reading these verses, to me, it becomes very clear that we cannot leave an inheritance and have copious amounts of debt at the same time. Also, without debt, we are able to store up foods to give to those in need. In 2 Corinthians 9:7 it says that “God loves a cheerful giver”. Can we be cheerful to give when we are up to our eyeballs in debt? Yeah, I don’t think so!


It seems that debt is a common commodity these days, though. Who doesn’t have a mortgage or a credit card that has a balance? Who doesn’t have a car payment? It’s just commonplace to have a balance behind their names. Check out this statistic from CNN Money:


“The average American household with at least one credit card has nearly $15,950 in credit-card debt (in 2012), according to, and the average interest rate runs in the mid- to high teens at any given time.”


That’s basically $16,000 in unsecured debt! At an interest rate of mid-teens, say 15%! That’s just crazy. If you only pay the minimum debt you get stuck in something called “perma-debt” which means that you will NEVER pay that card off because you’re racking up just as much in interest each month as you’re paying with your minimum payment. Unsecured debt means that you have no collateral for the loan that you have. When you get a vehicle loan your vehicle is the collateral, which means that if you default on the loan, the bank takes your vehicle.


Check out this statistic about car loans:

“Generally, only one-third of that consumer debt consists of credit-card balances and credit lines. The other two-thirds is made up of car loans, student loans and the like. The average auto loan is just under $27,000.” Read more here. The average auto loan interest rate is anywhere from 5%-10% and payments are usually $300-$400 a month. That’s such a huge chunk of change! Imagine what you could do with an extra $400 a month!


Let’s talk about student loans for a minute; this is the other third of the equation listen above. The national average student loan is almost $30,000 per person with an average interest rate of 6%. Now I’ve had a student loan and I think I paid less than $100 a month on it for YEARS! Read more here. We weren’t in a real big hurry to pay it off because it was a cheap monthly payment and a cheap interest rate. However, that’s how they get you! You


Those numbers just astound me and make me a little queasy. Granted we bought a vehicle for roughly that a few years back. The website above asks how do you compare? I wouldn’t put too much stock in that, however. Just because you only owe $3000 on your credit card instead of $15,000 doesn’t mean you’re in such a better place! Debt is debt and it’s not only dangerous but unnecessary. You can live a debt free life. It’s difficult, and you’ll be thought of as weird and strange etc., but it will be worth it!


Last year my husband and I paid off roughly $70,000 in debt. Most of it unsecured. We did the Dave Ramsey thing. He is a very smart guy with money, but he is not the one stop shop for finances. I feel that many people put him on a financial pedestal and do only exactly what he says! Give yourself room to make different (or better) financial decisions for yourself. Take control and responsibility of YOUR finances.


Here are Dave Ramsey’s Seven Baby Steps:

  1. Get $1000 in an emergency fund: You want this fund in a different bank if possible. You want it to be difficult to get too. If it’s too easy it’ll be to0 tempting to access for stupid stuff like that pretty blouse that’s on sale.


  1. Pay off all debt (except the mortgage) using the debt snowball: So if you owe $500 on your Kohls card, then $3000 on a Bank Of America Card, then $10,000 on your car then you start with Kohls and work your way up. I realize this is daunting, trust me I know! But it’s a good plan that does work if you’re consistent and prayerful in defeating it.


Month 1:
Kohls: $250.00 (or as much as you can dump onto this debt)
BOA Card: $100
Car: $200 (or whatever minimum payment is)
Month 2:

Kohls: $250.00 (Your last month with this debt!)
BOA Card: $100
Car: $200


Month 3:
BOA Card: $350.00 (adding the Kohls payment AND the BOA payment. Adding as much as you can plausibly pay is great. Just be sure not to pay to the point where you don’t leave enough cash in your checking account and have to use the card to save yourself at the end of the month.
Car: $200.00


Then you do this until the BOA card is paid off then you put the $350.00 on that card plus the $200.00 from your car payment and add it together. You should be paying roughly $550.00 on your car each month until it’s paid off. This step takes a while, but in starting with the smallest debt first, it’s very rewarding and gives you the motivation to keep going.


  1. 3-6 months of expenses in savings: Notice that it says EXPENSES and NOT income. If you or your spouse loses a job you’re going to be on a bare bones budget. So no Netflix, no eating out, no extra crap that you don’t need to survive.


  1. Invest 15%-25% of household income into Roth IRA’s and Retirement: You want to prepare for your future! Even if you have a 401K at work it’s always a good idea to have an extra retirement account and/or mutual fund.


  1. College Funding for Children: I put this into a mutual fund and NOT a 529 account. If our son decides not to go to college or decides to join the military I don’t want to be penalized for that choice. I’ll probably take a cruise! If anything, I can put that money towards a vehicle for him or something to jumpstart his healthy financial future.


  1. Pay off the home early: This is where paying off the mortgage comes in handy. Be aggressive! Get angry at your debt! Until your mortgage is paid off you’re basically renting your house from the bank.


  1. Build wealth and GIVE: This is the step where you have NO debt, where you give to the church and to charity and to others who just need help. You also pad savings accounts, college funds, mutual funds etc. too.


This list is easier said than done. I get that. My husband and I are on the downhill slid off this list and it’s been tough! It’s sucked for a good portion of the time, to be honest. I don’t like the inability being able to be spontaneous all the time with meals out. It takes a carefully planned budget to make this happen and any deviation that’s not accounted for can be the beginning of a dangerous spiral into blowing the entire month!


Another thing my husband and I did (I absolutely am NOT saying that we are the know-it-all for this money stuff. I feel so inadequate when it comes to dealing with our finances, but something we are doing is working when we stick to it!) was to start out investing earlier than step 4. This is one place that I don’t really agree with Ramsey here and prefer the Primerica method. If someone has an abnormal amount of debt or a very small income, it’s going to take them years and years to pay off their debt. I don’t want to wait that long before starting a college fund and retirement find for my family! Our son is already 5 if I waited any longer than he wouldn’t have much of anything in there. What we did was start off at $50 a month into retirement and into the college mutual fund. It’s in my budget, it comes out of its own category and my debt isn’t going to miss $50 that bad! Here is the trade off, you can save the 4% of interest off that $50 or you can MAKE 12% by putting that $50 into a mutual fund. It just makes more sense to make money concurrently.


I try to stay away from window shopping also. It tempts me to make financial concessions where I shouldn’t. This means that I stay away from target unless absolutely necessary! Talk about sacrifice! Have you seen their 70% off sale rack?! (Said in my best Chandler Bing voice). It can be difficult to not always spend your lunch break with your co-workers at the Chinese place up the street. Trust me, I understand. It makes you feel left out and secluded and just yucky. But once you start making great financial strides I promise that it’ll all be worth it.


I noticed, when I was looking at our budget, that I was always going over budget with our food. I started looking for cheaper freezer meals to make that still had plenty of fresh foods.  Check out these two sites: and I have fallen in love with them! These two websites, along with Pinterest, are my go-to sites when I’m preparing my menu for the month. It does take a while to get comfortable in the process of “cooking for a month”. I don’t cook anything when I’m preparing meals; I stick all the ingredients into a ziplock and throw it in a crockpot for a few hours and we eat it when we are ready! Also try eMeals, another Dave Ramsey Special, it’s has great meals plan for very inexpensive. My only issue with some of these meal plans is that it’s a lot of beans and rice. This is great for the budget, but not usually for the digestive system! I still use beans and rice but not for every meal.


Below is a link to the budgeting template I use. I live and die by this budget! In order to make headway with your finances, you must be strict and stick to your plan! It will work if you give it time.

 Check out the template here
DIY recipes are here.
Saving money and budgeting are hard! The more resources you can learn from the better! I encourage you to take a financial seminar. Your local church or chamber of commerce could probably help point you in the right directing. You can defeat your debt! It takes time and sacrifice and strong will power.
January 26, 2015

Nila Rhoades