Having entered a new year, no doubt many folks have been
pondering what resolutions they should take on in order to improve their lives.
Given our current economic climate, one excellent resolution for countless
American families would be to become debt free.
In today's culture of instant gratification, easy credit,
and stifling debt, more and more Americans are finding themselves in financial
disasters. Foreclosures have been at record levels, with even the lenders
themselves going under. The consequences are staggering: broken homes, broken
marriages, bankruptcy, criminal behaviors, stress-related health problems, and
so on. Sadly, many Americans are learning the hard way the truth of the Proverb
which says, "The borrower is slave to the lender."
When it comes to personal finances, the recent recession has
certainly gained the focus of an otherwise ADD-afflicted America .
According to the Barna Group, a January 2008 report showed that,
"Americans are troubled by a diverse palette of concerns. Three types of
issues are of particular concern, perceived as ‘major' problems facing the
country." Leading the way, with 78% listing it as a "major
problem," was the personal debt of individual Americans.
The personal debt of Americans has reached epic proportions.
A few months ago, David Beim, a professor at the Columbia Business
School U.S.
households have debt that is equal to the total U.S. economy. According to Beim,
this happened only once before in U.S. history: 1929.
Our current recession, just as with any other, had many
contributing factors. However, most experts agree that this recession, which
began in late 2007, was mostly caused by the so-called subprime mortgage
crisis. Blame for this crisis has been laid at the feet of various entities.
Whoever is to blame, tens of millions of Americans are
suffering as a result. In my state of Georgia ,
according to the National Bankruptcy Research
Center , between January and November
of last year, one in 50 Georgia
households declared bankruptcy. Nationwide, during the same period, personal
bankruptcies were up 32%. As the Wall Street Journal recently put it,
"never...underestimate [U.S.
consumers'] willingness to spend beyond their means."
For the United
States to recover from this financial
disaster, one thing is certain: American families, businesses, churches,
governments, and so on need a much more cautious attitude toward debt. Given
that the family is the foundation of all institutions, this attitude must begin
in the family.
What would it mean to you to be totally debt free? How would
you feel if your home were completely paid off? What if you had no car payments
and no overdue credit card payments? Can you imagine the peace? If you're
married, can you imagine never fighting about money?
I'm 40 years old, and for the last 10-plus years of my life
my wife Michelle and I have had zero debt. We are not, nor have we ever been,
wealthy, at least by secular American standards. I have been a public and
private school teacher for the last 17 years. Michelle has worked full and
part-time for a Christian ministry throughout our marriage, but for the past
eight years she has been mostly a stay-at-home wife and mother.
Michelle and I married in early 1998. Just after our
wedding, we began to pay off about $25,000 in consumer debt. Despite having
combined annual incomes that were only slightly above the U.S. median, we
accomplished our goal in about 14 months. During that 14 month period we
committed ourselves never again to go into debt—not for cars, vacations, or
even a home. (A video of our personal testimony from Crown Financial Ministries
can be seen here.)
Over the last 10 years, after paying off our initial debt,
through the "blessing of the Lord," we have been able to: 1.) Build a
debt-free, 3500-square-foot home (over about a 4 year period, acting as our own
contractors); 2.) Bring four beautiful children into the world (with Michelle
being a stay-at-home mom) and all the expenses that go along with them; 3.)
Purchase five (used) vehicles with cash (average cost approx. $10k); 4.) Place
approx. $25k in emergency savings (not including my retirement); 5.) Begin to
fund college saving accounts for each of our children.
I take almost no credit for where we are financially.
Michelle has always been more financially disciplined than me. Early in our
marriage, through her efforts and the ministry founded by Larry Burkett,
Christian Financial Concepts (now Crown Financial Ministries, www.crown.org), I
embraced the simple, wise truths put forth in Scripture concerning money and
debt. In other words, we are where we are financially by the grace and wisdom
of God.
There are two key principles with which I believe everyone
who is serious about properly managing his or her money must come to grips: 1.)
Budgeting and 2.) Stewardship.
A budget is a tool. All it does is tell you when you've
spent what you've agreed to spend in any particular area throughout a given
time period. A good budget, one that is formal and written out, is essential in
maintaining a healthy bottom line.
A budget can help keep you from overspending in any
particular pay period or in any particular area, help you plan for non-regular
expenses, such as car repairs, and help you plan for your financial future.
Establishing a budget can be a lengthy process. It can take as long as a full
year to get a budget working well, but the benefits are certainly worth the
hard work involved.
Our budget has played an essential role in helping us
weather these difficult financial times. I despise the rise in gas and food prices
that we have experienced over the last few years. Being a family of six on a
single income, these increases have hit us hard. Our budget is in constant
flux, but it helps us see the adjustments in spending that we need to make, and
therefore maintain sound financial discipline.
The second principle, stewardship, is the most important
one. Only when we understand, as Scripture teaches, that none of us really
"owns" anything, can we truly have the right perspective on money and
wealth. The Bible says, "The earth is the Lord's, and everything in
it." We are merely stewards, or managers, of His property. If you want
peace in your life when it comes to your finances, you must first accept your
role as a steward.
Our situation was and is a unique one; I certainly would not
recommend that anyone do things exactly as we did them. Our path was truly
"a calling." However, I hope our story encourages those who are
looking for direction in their financial lives. We applied tried and true,
simple financial principles by which we are still living. These principles
would benefit most anyone.
Copyright 2010, Trevor Grant Thomas
At the Intersection of Politics, Science, Faith, and Reason
Trevor and his wife Michelle are the authors of: Debt Free Living in a Debt Filled World
tthomas@trevorgrantthomas.com
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