For us to get a handle on the debt we had accumulated, we had to admit we didn’t know how to properly handle money and our bills. We had to acknowledge we had been making choices through the lens of living in the world instead of through God’s plan for our lives.
We asked God to help us get ourselves back on track and 2 Peter 1:3-9 (The Message version) seemed to be a good starting point for us:
Everything that goes into a life of pleasing God has been miraculously given to us by getting to know, personally and intimately, the One who invited us to God. The best invitation we ever received! We were also given absolutely terrific promises to pass on to you–your tickets to participation in the life of God after you turned your back on a world corrupted by lust.
So don’t lose a minute building on what you’ve been given, complementing your basic faith with good character, spiritual understanding, alert discipline, passionate patience, reverent wonder, warm friendliness, and generous love, each dimension fitting into and developing the others. With these qualities active and growing in your lives, no grass will grow under your feet, no day will pass without its rewards as you mature in your experience of our Master Jesus. Without these qualities you can’t see what’s right before you, oblivious that your old sinful life has been wiped off the books.
Things we had to have to become debt-free: spiritual understanding, discipline, patience, wonder, and love. I understand these verses aren’t necessarily talking about money, but our focus was so out of line, we needed an intervention only Jesus could provide. Paying off debt can be done without Jesus, I’m sure. But eventually you’ll end up right back where you started if you don’t do a major inside transformation also. And for us, that meant living by God’s standards and not the world’s.
We’ve used some form of a budget since we got married and combined our incomes. Before we decided to aggressively pay off our debt, we used the budget to plan out what bills were due when and then see how much money we had left to do whatever we wanted with. Which sounds funny to say, because if we wanted or needed something we didn’t have money for, we just charged it. But we had a loose outline of what money was coming in and where it needed to go.
What changed with the budget is we now planned where the money would go each paycheck, what money would go directly to our savings, and what debt we’d pay down with the extra instead of looking at that as money to spend on whatever. So things got really tight really fast.
I made a list of all our monthly expenses: credit card bills, student loans, medical bills, utilities, groceries, gas, tithe (we’ll talk more about that tomorrow), mortgages, child care expenses, cable bills, gym membership, etc. On the list, I also wrote down when the payment was due each month. Chris got paid every Friday and I got paid every other so I looked at the calendar, wrote down when our paychecks came in and how much, then just figured out when each bill needed to be paid for the month and where it fit best with the money we had coming in.
Once I established the pattern, I went back and figured out where our extra money was and planned exactly where the extra money needed to go. Instead of that money being for eating out or movies or random trips to the mall, we had a specific plan for the extra income. We followed Dave Ramsey’s advice of starting with the smallest debt and put all the “extra” money toward that. Then when we’d pay off that small debt, we’d take whatever money we had been paying (the monthly payment plus whatever extra we had budgeted), and go after the next bill. Dave Ramsey calls that the “debt snowball” and you can read more about it here.
This takes time and discipline. Seeing the occasional bill go away and not wanting to spend that money or celebrate with buying something new is hard. Occasionally we lost that battle, but more than not, we just kept trucking along. Praying for patience and focus is greatly encouraged during this process. (I would add now, in 2018, the one Achilles’s heel I still have is spending money before I have it. I know a check, refund, payment, etc. is coming and instead of waiting to spend it when it arrives, I’ll use our credit card to spend it and then pay it back when it arrives. I know, I KNOW. Seriously, I’m 36. I shouldn’t even have to be told at this point.)
I have a binder where all our bills, budget stuff, and income trackers go. I kept a list of all our debt inside and as we paid something off, it got marked off the list. If we had extra money show up, we also knew exactly where it was going and weren’t (for the most part…) tempted to spend it on something besides debt. In the summer when Chris worked more and I was home so we didn’t have any preschool/daycare expenses, we made major dents on the debt. Every year tax season rolled around, we sent our refunds directly to Sallie Mae or the bank to pay off our car loan. If we were gifted money at Christmas, it was put toward a bill. We also made sure to save part of my paycheck; we had to work on building our savings so if an unexpected expense came, we didn’t have to use the credit cards we were trying to pay off.
Building a cushion in the bank and paying off debt takes time. I remember at one point after Ellie was born, some men came to our house offering to trim the almost-dead trees we had in our front yard. They also said they could treat whatever thing was killing them all for the low, low price of $100. We had been wanting to get the trees trimmed and were hoping to save them (they were huge and old and at one time, beautiful; we didn’t want to have to cut them down) so we agreed. Chris was handling all the dealings with them and ran to the bank to get cash from our savings account to pay them because they didn’t accept checks or credit cards.
I was busy with Ellie and didn’t pay much attention to what they were doing and soon Chris had paid them and they left. Later, I looked at our trees and couldn’t tell they had been trimmed at all. I asked Chris about it and he said they cut down about two branches, sprayed something that looked like Windex at the base, and then asked to be paid. Chris who is the most non-confrontational person in the world, didn’t question them about what they did, just paid them, and then they took off fast.
Obviously, we had been conned. They did absolutely nothing for our trees and we gave them one hundred dollars. I was so mad and so frustrated. We didn’t even have $400 in our savings account and we had just given some random guys $100 for nothing. I cried most of the day about this. I was mad at Chris. I was mad at myself for not getting involved. I was mad that we didn’t have any money.
I felt like we were never going to get anywhere with our debt, never have extra money, and never make wise financial choices. It would have been really easy to quit every time something set us back. AND SO MANY THINGS SET US BACK. But we just kept going, even when I felt hopeless and couldn’t stop crying. Even when we were, apparently, just giving away what little money we had.
We had a plan, we stuck to it even when things seemed hopeless, and trusted that God would take care of us while we tried to live within His rules for our lives. Nothing came easy or without heartache. Nothing came quickly or without challenges. But we just kept going.
My 2018 edit would be about building a savings account. It’s still hard. We still put a portion of my paycheck into a savings account every pay day. What works for us is to bank at two banks. We bank at credit unions. One bank gets our paychecks and we use that money to pay bills and for daily expenses. The savings account attached to that checking account is used for upcoming bills we know about. (We heat our house with propane so we fill our tank every six months. I “pay” my savings account each month to prepare for the large expense. I also use that savings account for short term savings like for our mortgage. I get paid twice a month and pay for half our mortgage with each pay check. Moving the money to the savings side means I don’t think we have more money than we really do. Then I transfer it back when it’s time to pay the mortgage.)
The other bank holds our main savings account and rental property checking account. We cash the rent check and pay rental bills out of that checking account so that rental money and our money don’t mix. I don’t carry that bank card around, I don’t carry checks for that account, and we don’t live near that bank. These are all done on purpose so it’s hard to spend that money. That’s where our monthly savings goes, it’s where excess money gets deposited, and it’s what we spend for major purchases like to get the car fixed or buy an oven. We started, like Dave Ramsey suggested, with $1,000 in savings. Then we bumped it to $2,000. I would, ideally, like to have a minimum of $5,000 in there at all times. That’s a focus for this year as we rebuild after medical bills and job loss. (This is just readily-accessible cash, not retirement funds, not investments, not saving for a specific purchase or trip, not home equity–things we could get to but not immediately.)
Is talking about money weird to you?
I talk about all kinds of things that make others uncomfortable so it’s okay if you’re sweating right now. You don’t have to tell me about your money. I’ll just tell you about ours and then you can go talk to your spouse or your parent or your friend and figure out how to handle yours better. Like so many things we have to do as adults, I feel like we’re just expected to know how to manage finances but no one really talks to anyone else about it. Like mental health. Like healthy marriages. Like addiction. Like sex. DON’T WORRY I’M NOT GOING TO TALK ABOUT SEX. But I have before. Go find those on your own though.
This post is almost twice as long as my normal length so I’m stopping, but if you’re interested in seeing what my budget binder looks like, how I organize all our finances, and get some easy printable resources to start focusing your money, I’m sending out an email at 8 PM EST to my email subscribers. It’s nothing fancy or secretive, I just don’t want to make this post any longer. If you’re even here still. This is super long. I should stop typing. Right now.
(If you’re interested, here’s the original post about our budget from April 2016.)
If you’re new to this series, begin here.