We Paid Off $168,000 of Debt! Wish You Could Pay Off Debt Too? Here’s How!

Written By:  Valerie L. Richter

Photo By:  Rising Capital Associates

The average American has $16,748 in credit card debt, $28,948 in auto loans, $49,905 in student loans and $176,222 in mortgages, according to the 2016 Federal Reserve Q4 report. That’s A LOT of DEBT!  It’s no wonder that most of us feel HOPELESS when it comes to getting out of debt. I’m here to tell you that it’s possible to become DEBT FREE!

It’s possible to become DEBT FREE!

It HAS to start with a paradigm shift.  Our culture tells us to buy what we “deserve” and “make easy, low payments” on this and that, and such and such.  We are marketed to death by companies that want our hard-earned money.  They are not bad.  But we need to be AWARE and we need to BE SMART.

Banks advertise personal loans, mortgages, car loans and line-of-credit loans that make it “easier” for us to afford homes that are above what we should spend, home remodels we can’t afford, expensive cars we can’t pay cash for, and debt consolidation, which is a result of increased interest rates due to the fact that our debt-ratio is too high!

Why can’t we live within our means?

Why can’t we live within our means?  Sure, we TRY to do this, but SOMETHING always comes up…a car registration fee, a birthday, a meal out, Christmas, etc.  These are emergencies we need to put on our credit card, right?  WRONG.  Guess what? Car registrations, birthdays, and even, Christmas, happen every year!  Imagine that!

OK, so maybe you plan for THOSE expenses, but what about car repairs, medical bills, field trips, vet visits, etc.?  How can we pay for these emergencies?  This is where your paradigm shift begins.

Create a ZERO-BASED BUDGET.  Use a SIMPLE and FREE tool like Dave Ramsey’s EVERY DOLLAR.com  to plug in some simple numbers.  TRUST ME, this is a MUST. Budgeting doesn’t have to be complicated, dry or boring.  It can be quite freeing when you have a REALISTIC VIEW of what is happening financially.  It’s simple, record MONEY IN and MONEY OUT.  Your goal EACH MONTH is to tell every dollar where to go, instead of it telling you.  I have used this tool faithfully, and it has resulted in a huge pay off…literally!  Don’t worry, it will take 2-3 months of tweaking budgets to settle into the swing of things, but you WILL get there.

By creating a zero-based budget (telling every dollar where to go), you will begin to identify where you are overspending.  You can also identify items that may be luxury items…something you may want to take out of your budget until you become debt-free.

This is the next part of the PARADIGM SHIFT.  A wise man, by the name of Dave Ramsey, has taught me the concept of how to “Live like no one else, so that we can LIVE and GIVE like no one else.”  What does this mean?  It means, evaluate what you can live without or decrease TEMPORARILY until you get out of debt.  THEN, you will be able to live well and give generously to help others.

What kinds of things can I change?

1.  CANCEL PAID SUBSCRIPTIONS (magazines, newspapers, wine clubs, Netflix)
2.  CUT THE CABLE and choose Chrome Cast or rabbit ears.
3.  OPT FOR THE FREE HOME GYM verses gym memberships.
4.  NEGOTIATE CONTRACTS with your internet and cell phone providers. It’s easier than you think!  Be sure to ask for a supervisor to get through the layers that are designed to keep you paying higher prices!
5. SKIP THE STARBUCKS and make them “Your Bucks”!  Coffee is easier than ever to make at home.
6. DRIVE “NEW-TO-YOU” CARS (a.k.a. used cars, beaters, jalopies) and sell that expensive car or motorcycle. Don’t worry if you get teased for driving a less expensive car…you will smile triumphantly when you are out of debt and can afford whatever car you like!)
7. SKIP THE MANICURES, PEDICURES, EXPENSIVE HAIRCUTS AND EXPENSIVE HOBBIES (golf, skiing, scrapbooking, shopping “just because”).  Learn how to cut your own hair or enlist the help of a friend.  Paint your own nails. Choose less expensive hobbies temporarily.
8. SHOP AT ALDI (you can cut your grocery bill significantly)
9. BUY CLOTHES/HOUSEHOLD GOODS at resale shops like Goodwill.
10. ATTEMPT YOUR OWN CAR/APPLIANCE REPAIRS. Most auto parts stores will diagnose an engine code for free.  YouTube videos are a great resource for learning how to do simple repairs (or complicated repairs if you are really adventurous!)
11. EAT AT HOME.  Dave Ramsey says, “You shouldn’t see the inside of a restaurant unless you are working there!”
12. PLAN YOUR MEALS so your hunger doesn’t surprise you and create a food “emergency”!
13. HAVE CREATIVE VACATIONS. Look for free events in town, visit your local park/beach and make a day of it, pack your own food/snacks when you venture out, have a couples “cooking night” by inviting others to bring an ingredient to cook/dine together, host a bonfire (s’mores are relatively inexpensive).
14. PICK UP EXTRA HOURS/EXTRA JOBS.  “The best place to go when you’re broke is to work!”, states Dave Ramsey. Make money with hobbies, delivering pizzas, etc.
15. RENT FREE MOVIES FROM THE LIBRARY
16. AVOID DISCOUNT WAREHOUSES (like Costco and Sam’s Club).  How many times have you come out of there spending MUCH MORE than anticipated?  Do you really need that 5lb. jar of mustard? Plus, you’ll nix the annual membership fee!
17. SELL STUFF (rummage sale, E-Bay, Craigslist, etc.).  Dave says, “Sell so much stuff the kids or the pets think their next!”
18. USE CASH!  “Feel the money, ” and feel the purchase.  Using cash instead of plastic allows EACH PURCHASE to register emotionally!
19. DON’T FINANCE FURNITURE, CARS AND OTHER STUFF. Companies do a great job of marketing debt.  Businesses like car dealers make the most money on finance plans and warranties verses the actual sale of the car!  Banks make their money by lending it to you (INTEREST).  Imagine all the wasted money we’ve spent over the life of each and every loan!
20. STOP USING CREDIT CARDS!  By budgeting and making all the above changes, you should be able to save $1000 for a starter emergency fund ($500 if your annual income is $20,000 or less).  This will be your cushion so you can stop using those credit cards.  Eventually, you will want to pay all those off and CLOSE them. (Again, INTEREST is not your friend.) Some people claim to use credit cards for the reward “points” and pay off the balances each month.  How many extra purchases did you talk yourself into to get those “points”? How long would it take you to actually save money for those reward items verses the long time it took to accumulate the “points”? Credit card companies know exactly how long!
21. USE A DEBT SNOWBALL (after you have saved $1000 in your starter emergency fund).  http://catalystaz.com/media/fpu-debt-snowball.pdf   The basic premise of a Debt Snowball is to list all your debts, SMALLEST to LARGEST, not including the mortgage (don’t worry about interest rates).  Start by paying off the smallest debt first.  Then, add the minimum payment you were making on that first debt to the second debt…pay that one off…and so on and so forth.  Your debt payment picks up more “snow” as it goes along, paying them off faster.
22. BE CONTENT. Our culture needs a lesson on contentment.  We don’t need the newest I-phone, the bigger TV, the more expensive car, the fast food salad we could have easily made at home, the fancy cup of coffee, the bigger house, the fancy gym, or the designer clothes to be content in life.  Even the smallest of incomes in the United States is considered “rich” by the standards of many other countries.

The FINANCIAL PEACE that comes with financial freedom is priceless.   We, like so many other Americans, lived paycheck to paycheck.  We were one emergency away from a financial disaster.  By budgeting, evaluating expenses, telling every dollar where to go, saving $1000 for a starter emergency fund, paying with cash and closing credit cards/store accounts, we have paid off over $168,000 in debt!  We are on our way to becoming debt free!

What are the next steps?  Stay tuned for the next weekly blog, “Pay Off the Mortgage Early and Make a Plan for Retirement”.  Also, if you have questions regarding Financial Freedom or anything written about in these blogs, please contact me below.  I will be sure to respond!

Recommended Resources:  DaveRamsey.com, EveryDollarcom

 

Give Yourself Permission to Take Care of YOU! …a Season of Healing

Written By:  Valerie L. Richter

I had just worked a 12-hour shift and my whole body ached after being on my feet all day long.  My normal routine was to come home, pry off my shoes and fall onto the couch in sheer exhaustion…only to repeat it again the next day.  What was I doing? Why am I falling apart?  What happened to the joy in life?

I had no life.  I had no joy.

As a middle-aged empty-nester, I had put all my focus on the season of going back to work full-time.  My goals were to work hard, pay off debt, pay for three kids in college and occupy my time.  At first, it was great.  I felt appreciated and valued, especially after being promoted three times.  I loved my co-workers, appreciated my customers and treated my workplace as a mission field.  But then it hit me.

My heart began to race.

The next morning, I was driving to work when I felt my heart begin to race.  “No problem”, I thought, “All I have to do is cough and hold my breath and it will go away…just like every other time.” Ever since the birth of my third child, I had experienced this.  But THIS time, it wasn’t going away.  My mind started to race.

I decided to pull over and call my husband.  At this point, it was becoming difficult to breathe.  My words were broken as I gasped for breath.  I knew I had to get to the parking lot of my workplace.  Somehow, I got there.  My husband had called my boss to come out and find me.  By this time, 30 minutes had passed and my heart was still racing. My chest began to hurt like it’s never hurt before.

Rushed to the Emergency Room.

My boss immediately rushed me to the Emergency Room.  I just kept saying, “I’m sorry, I’m sorry.”  I felt so badly because her boss was coming in that day, and now she had to take me to the hospital.  Of course, my wonderful boss was more concerned with me than anything else at that moment.  (Like I said, I loved my co-workers.)

45 minutes had passed, and my heart rate had now reached 198 beats per minute.  I was starting to experience the symptoms of cardiac arrest.  Thankfully, the ER team was able to get my heart back into the proper rhythm.  I felt like I had just run a marathon without the benefit of the exercise!

I was diagnosed with an “electrical” heart issue, not a “plumbing” issue.  I had an extra “circuit” that caused it to beat out of rhythm.  It had actually gone misdiagnosed for 20 years by other doctors, so it was a relief to finally get the correct diagnosis.  I was told it can be brought on by hormones, caffeine and stress (working 50+ hours a week, planning/implementing my daughter’s wedding, worrying about my youngest son who was ill, having had pneumonia twice, etc.).  Most importantly, I was told how it could be fixed…a Heart Ablation.

Heart Ablation…That sounds scary!

It was about that time, when my knees began to really bother me.  I thought I was literally falling apart.  Faced with the upcoming Heart Ablation, physical pain and exhaustion, the let down after the wedding and my daughter moving away, worrying about my son, extended work hours, limited staff, and the stress of our workplace becoming a training hub (I was the Training Specialist), I became devastatingly overwhelmed.

I became devastatingly overwhelmed.

It only took one hurtful email to send me spiraling downward.  Without a word to my family, I took off in my car and just started driving.  I didn’t know where I was going, I didn’t know what I was going to do, but I was in a fog… I became numb. There is something halting about contemplating whether you’d be better off gone.  You become still.  You stare without looking. You cry without shedding tears.

God met me right then and there.  I realized I was in the Kohl’s Department parking lot…the store my mother has worked for all her life.  God said, “Call your mom.”  I did, but I still wasn’t sure what I was going to do.  She and my dad were my angels that night. They gave me the lifeline I so desperately needed.

Angels….they gave me the lifeline I so desperately needed.

I realized, through the help of God, my parents, my husband and my children, that something needed to change.  I needed to give myself permission to take care of myself.  I needed a season of HEALING.  So often, women feel they have to take care of others without taking time to properly care for themselves.  All of our energy goes into making sure everyone else is alright.  But there comes a time when you need to take a pause and a well-deserved season to heal and refresh your body, mind and soul.  It’s then, that we can offer our best to those we love.

Give yourself permission to take care of YOU….a season of HEALING

I am so thankful to those around me who supported my decision to leave my job so I could have my heart procedure, attend physical therapy for my knees, embark on a weight loss journey, strengthen my body, relieve some stress, and most importantly, pursue the things that give my life meaningful purpose.

I share this with you, so you can honestly evaluate when you need a season of healing. It’s OK to give yourself permission to take care of YOU!

 

In Debt? Overweight? How to Win at Both

Written By: Valerie L. Richter

My husband and I were the typical Americans, living paycheck to paycheck.  We had debt of “all kinds of stupid”…credit cards, store cards, student loans, car payments, medical bills, etc.  We had NO SAVINGS, and, to top it off, we were unhealthy and (dare I say) OBESE. We got sick and tired of feeling unhealthy and hopeless, feeling we would never lose weight or get ahead in our finances.  Fast forward three years later, and we have paid off $163,000 in debt and have begun our weight loss journey by losing a collective 50 pounds so far!  How are we doing it?  We discovered the link between faith, finances and physical health.

PAID OFF $163,000!  LOST 50 POUNDS!

If you are like most people, you work hard at life.  You have a job, volunteer, go to school or stay home with your children.  You seek stability and security in having a place to call home and the resources to succeed and enjoy life.  All of this good, but when it gets out of balance, we end up “paying the price”.

My life was so out of balance.  It began years ago.  It didn’t happen overnight.  There was the drive to succeed in college, (Freshman 15), the rush to get married, the STUDENT LOANS, (french fries are vegetables, right?), the desire to own a home, the birth of three children, (didn’t know it was possible to eat 100 hamburgers and a gazillion chicken nuggets), the need for two cars, the desire to give our children ALL the experiences they “deserved”, the medical situations, (doughnuts and cake make it better, right?), the CREDIT CARDS, the bigger house, the better car, the Disney vacation paid solely on credit card, (but those giant ice cream cones were sooo good!), the SECOND MORTGAGE to pay off the credit cards, (let’s eat out three times a week), the SECOND time maxing out credit cards, the refinancing of the house to “pay off the credit cards we aren’t ever going to use again”, THREE kids in college, (wine and cheese, please!), PARENT PLUS STUDENT LOANS and, “Oh my gosh, the furnace broke!” (hot chocolate with marshmallows?)  All we could do was PRAY.

FRENCH FRIES ARE VEGETABLES, RIGHT?

That Sunday, we went down to the front of church to seek prayer for our MESS. The pastor prayed with us and told us about a new class that could help us with our finances:  Financial Peace University.  https://www.daveramsey.com/fpu  We needed to get a hold of our finances and get out of debt fast!

WE NEEDED TO GET OUT OF DEBT FAST!

This short, nine-week class opened our eyes to reality!  We weren’t going to be able to offer the best for our family and ourselves if we kept up our unhealthy financial and physical habits.  Something had to change.  We started by taking an accurate look at where EVERY DOLLAR was being spent.  Enter…THE BUDGET.

Before you stop reading, don’t get scared by the word, budget.  It’s a lot easier than you would think, especially if you use a ZERO-BASED budget. https://www.daveramsey.com/budgeting/how-to-budget/ This isn’t the kind of budget you put together and hope you have something left over at the end.  You intentionally tell every dollar where to go. YOU are in control.

INTENTIONALLY TELL EVERY DOLLAR WHERE TO GO!

It took about three months to accurately tweak our budget.  We told our hard-earned dollars where to go!  We tracked our expenses, receipt by receipt, and quickly found out where we were overspending.  We changed what was unhealthy.  We got WEIRD!  (It’s OK to be weird.)

We swapped cable for Chrome Cast/rabbit ears, we negotiated a lower price with our internet and cellphone providers, we shopped at Aldi (paid only half of what it costs elsewhere), shopped at Goodwill (found great quality items and brand name clothes for a fraction of the cost), limited going out to eat (ate healthier at home), opted for the “home gym” verses the gym membership, drove “new to me” beater cars instead of having car payments, and paid CASH FOR EVERYTHING…not CREDIT. (Check back for more money saving tips in future blogs).

ATE HEALTHIER AT HOME!

CREDIT CARDS….credit cards, let’s talk about those.  What if you took your entire monthly paycheck, cashed it out at the bank in $1 bills, and spread them out on your kitchen table?  What would that look like?  It would look impressive!  Then take out the bills for each fixed expense (rent/mortgage, utilities, car payments, credit card payments, tuition, etc.).  This probably took out most of your paycheck. Now take out money for cable, gym memberships, restaurants, Starbucks, movies, etc. It most likely left you with little or nothing.  Did you have an “ouchie moment”?  What I am illustrating here is that you are “FEELING THE MONEY”…not just recording an electronic transaction or swiping a credit card.  Those are real dollars…earned the hard way….NOT borrowed.  Our culture needs to “feel the money” again and live within our means!

DID YOU HAVE AN “OUCHIE” MOMENT?

While we were faithfully doing our budget and making changes, we began putting away money in a STARTER EMERGENCY SAVINGS fund.  Our goal was $1000 ($500 if you make less than $20,000 per year).  We did everything to get that fund to $1000 quickly (sold some things, worked more hours, streamlined the budget).  It was at that point, we got REALLY WEIRD!  We CUT UP our CREDIT CARDS!

SAVED $1000, THEN CUT UP OUR CREDIT CARDS!

Cutting them up was the first ceremonial step to financial freedom!  Of course, we still had to make monthly payments to PAY THEM OFF and CLOSE THEM, but it got us pointed in the right direction.  (Remember, you can still use a debit card that is attached to your bank account, AKA “real money”, to make reservations and anything you THINK is only possible with a credit card.)  Our faith teaches us, “The rich rule over the poor, and the borrower is slave to the lender.”  Proverbs 22:7. We don’t want to be a slave to our debt!  We want to handle what is given to us in a much better way!

“THE BORROWER IS A SLAVE TO THE LENDER”

Once we had our starter emergency fund in place, we attacked our debt with “gazelle intensity”…you know, the kind of intensity a gazelle experiences when a lion is chasing it?!!  We put together our DEBT SNOWBALL http://catalystaz.com/media/fpu-debt-snowball.pdf   The basic premise is to list all your debts, SMALLEST to LARGEST, not including the mortgage (don’t worry about interest rates).  Start by paying off the smallest debt first.  Then, add the minimum payment you were making on that first debt to the second debt…pay that one off…and so on and so forth.  Your debt payment picks up more “snow” as it goes along, paying them off faster.  It works, folks!   (Try constructing a paper chain with each link representing $100 of debt and securing it to your family room or bedroom ceiling!  It’s a great visual reminder and very satisfying to cut the links off as progress is made!)

HOW DOES THIS ALL RELATE TO LOSING WEIGHT?

How does all this relate to losing weight?  Thought I’d never get there?  Well, it suddenly dawned on me that the same mindset I had on getting out of debt could translate into a mindset for losing weight. I began to budget calories and exercise with the help of a free app called “Lose It”.  https://www.loseit.com/

I’ve tried all kinds of diets and programs throughout life, and none of them have stuck.  I decided this was not going to be a “diet” but rather a new way of living.  I gave myself permission to lose weight over an extended period of time.  After all, I didn’t gain it overnight!  I combined all that I’ve learned (and what I’ve needed to unlearn) with this simple “journaling” app.  The FREE “Lose It” app does all the calculating for you and gives you realistic benchmarks for the goals you are trying to achieve.  I translated the “budgeting dollars” concept into “budgeting calories and exercise”.  The journaling/budgeting gives me a realistic view of where I am “spending” my calories and when I’m “overspending”.

NOT A “DIET”, … A NEW WAY OF LIVING!

The whole journey of getting out of debt, handling finances better and getting healthy, is even more successful when you enlist the help of an ACCOUNTABILITY PARTNER.  This can be a spouse, a friend, a parent, or a co-worker.  Find someone who can take this journey alongside of you.  It will benefit both of you.  For me, it was my husband and God.  It will take intentionality!  Start your journey today for a healthier, happier, wiser you!

Stay tuned for future blogs which will cover topics like:

What’s Next?  Steps to Paying off Mortgage Early, Saving, Investing, Retirement and “Living and Giving Like No One Else!”

Give Yourself Permission to Take Care of YOU

Real Meals and Exercise Suggestions that are Good for the Body, Budget and Soul

Rapid Pickup, an Account of Medical Emergency and Faith

How to Go from Saying, “My Husband Drives Me Crazy!” to “My Husband Loves Me Like Crazy!”

Faith Builds Bridges

How to Raise Awesome Kids to be Awesome Adults

Budget Friendly and Relationship Building Entertainment

Resource Recommendations:  Dave Ramsey’s “Complete Guide to Money”, Rachel Cruz/Dave Ramsey’s “Smart Money, Smart Kids”, Financial Peace University @ https://www.daveramsey.com