Debt Destruction, a Primer

Last week I told you the story of how I came to hate debt.  I have to be honest, though.  Even though I hate debt…I was in it.  I financed my Jeep (it’s now paid off), I financed my wife’s engagement ring (thankfully it was paid off before the wedding – just barely), and I financed a computer.  The funny thing about that computer, though, was after we paid it off we ended up selling it because we needed money more than a computer…probably would have been smarter just to not buy it in the first place.  Now we have a simple laptop (that I’m typing on currently) that we bought in cash and got a great deal on.  Thankfully we were able to pay off all our debts except our mortgage in the last year.  Check out some previous posts of mine for the full story.

Look, the point is this: debt is everywhere in our culture.  Even those who earnestly try to avoid it can end up in it.  I mean…I’ve actually got a tremendous amount of debt weighing me down right now.  It’s called a mortgage.  It’s a big, nasty, hairy monster that sits in the darkness threatening me every time I want to make a bold career choice.  It’s got six big ol’ digits in it, too.  But “you’ll always have a mortgage,” right?  Wrong.  My wife and I are currently on a plan to knock out that big hairy monster.  A lot of people see a lot of debts as little monsters running around eating their money.

My goal is to take the fangs out of those monsters so they are much easier to fight.  Your weapon of choice?  Information.  Over the next several weeks I’m going to be posting a series on debt that I call “Debt Destruction.”  The goal isn’t to just reduce debt (which is what all the banks advertise – funny story the banks own ¾ of American consumer debt) but to completely eliminate debt from your life.

“But Heath, why should we get rid of our debt?  Won’t that kill our credit scores?”  Yes, little Timmy, it will kill your credit score.  Which is a-okay in my book, because I don’t plan on borrowing money ever again.  If you never borrow money, your credit score doesn’t matter.

“But Heath….”  There’s going to be a lot of “but Heaths” that come up, and my goal is to address as many as I can.  I know this is truly counter-cultural, and I like it that way.  Listen, I believe what the Bible says, and Proverbs 22:7 puts it this way:  “The rich rules over the poor and the borrower is slave to the lender.”  Let’s break that down.

The rich rules over the poor.  Well that’s kind of a given, right?  I mean the leaders in every country are rich, right?  Stop!  Look at the full context.  The rich rule over the poor and the borrower is slave to the lender.  The rich rule over their slaves.  The borrower is slave to the rich.  These two statements go together.  So who are the rich?

True fact: JP Morgan, Chase, Bank of America, Citigroup, and other credit-lending banks are all MULTI-BILLION DOLLAR companies..  Listen, I’m not talking that it’s a multi-billion dollar market.  Those companies’ net worth are each over a hundred billion dollars.  They’re the RICH.

When you sign up for a loan from those banks, you are the borrower.  You owe them money.  They are the rich who now rule your life because you owe them money.  You are now their slave, because every bit of work you do gets sapped to pay them back for the money they loan you.  And they’ll treat you like a slave too.  Just be late or miss a payment.  They punish you with fees.  If you lose your job, they don’t care.  They’ll still sue you for the money you owe them until you have to file bankruptcy.  You become the slave of the rich, and allow them to rule over you when you borrow their money.

A lot of people see that as an extreme way of thinking.  But my Bible says to “owe no man anything except to love one another. (Romans 13:8)”  It also says in Proverbs 6 that if you find yourself in debt you are to “give no sleep to your eyelids and deliver yourself like a gazelle from the hand of the hunter.”  If you’re in debt you have to WORK to get out of it.  The Bible doesn’t just tell us to work, it tells us to not rest until it’s paid off, because the lender is the hunter coming after us.  The only way to escape the slavery of debt is to RUN LIKE YOUR LIFE DEPENDS ON IT!

And that’s what my wife and I are doing.  We are running full on towards the goal of being 100% debt free.  We knocked out the cars, the computers, and the doctor bills.  Now we’re going to use our new money muscle to take on the big hairy monster that is our mortgage.  And you know what?  I think you can do it too.  Are you tired of paying payments to the banks?  Are you sick of their net worth being absurdly huge and yours being negative?  THEN DO SOMETHING ABOUT IT.  Deliver yourself like a gazelle from the hand of the hunter.  RUN like your entire life’s earning depend on it, because your ENTIRE LIFE’S EARNINGS depend on it!  Stop being a slave, stop letting the rich rule over you and gain freedom like you’ve never known before.

Join me on this journey as we break down and destroy the myths around debt and I’ll arm you with knowledge and truth to combat those monsters.  You can do this.  We can do this.

 

-Heath

Being Weird is Awesome: Paying it Off

Having a house is pretty awesome.  You can do what you want to it, i.e. decorate it, change things, mount your TV to the wall, pave your driveway, and overall have your home reflect you.  It’s a very personal thing to have a house.  It gives you a sense of home and security.  It becomes a place of memories and happiness.  All of this of course is assuming your home isn’t falling apart and/or hoarded.  But even then…it’s your busted pile of stink.  And that’s cool.  Better than not having a pile of stink I suppose.

My wife got a house before we got married.  We were engaged at the time, so I had some input on the house, but my wife’s decision was the final one.  She looked at about 47,000 houses before she decided on the one I’m currently sitting in writing this almost 4 years later.  It’s not a bad house, though this house and I honestly have a bit of a love-hate relationship.

You see I love this house because it’s our home.  It’s where we’ve been raising our daughter.  It’s where we’ve made some great memories.  It’s where we’ve have plenty of friends come by and hang out.  It’s where we make all our important decisions.  And it’s certainly the place I can’t wait to get back to after a long day of work.

However, this house also makes me upset at times.  In my opinion, it’s small, cramped, and trying to kill me.  Whether or not the house truly has the intention of ending my life is unimportant, but what is important is that I really don’t want to have a big family in this house.  When too many people come over it feels like we’re loading up the clown car.

My wife would be upset at me if I didn’t finish that thought with a positive note, so here it is:  I’m slowly getting over it.  I’ve decided to make an effort to stop complaining about the size of our house, because ultimately it’s our house.  I need to own up to owning it.

But that’s the actual problem at hand.  You see…we don’t actually own this house.  It doesn’t truly belong to us.  It belongs to the bank.  Why do I say that?  Because the bank loaned us six digits and fully expects us to pay it all back plus interest.  So we like to say it’s our house, but in reality it’s not.  If we stopped paying on the mortgage, they would take the house away from us.  Which would be awful.

My wife and I decided something this past week that truly rocked our worlds when we put it all out and looked at it.  We decided that while this house is small, it’s our home.  It’s cramped, but we enjoy it.  So we came up with a plan to get the bank off of our backs.  We’re going to pay this house off.

You see, the way I think about it is that if this house didn’t have a mortgage against it, it might open up a little space around here.  If we could get rid of our monthly payments against this house, it might feel a little less cramped.  When this house – our home – no longer has a giant weight of debt around us holding us down…the walls will certainly stop feeling like they’re closing in.  Thus our journey has begun.

We’ve only owned this house for a little less than 4 years.  We now have a goal and game plan to pay it off in the next 7 years.  That means we’ll have paid off a 30 year mortgage in 11 years.  How is that possible?  Well we’re going to throw everything we have at it.  Extra money from side businesses, extra money we can squeeze out of our budget.  Whenever we have overtime and/or extra days at our current jobs.  All of that will be used like ammunition to attack the target: our mortgage.  You see even if it’s only a little bit, everything beyond our standard mortgage payment will knock a little more off the principle every month, meaning there is less to charge us interest on.  Less interest means more principle paid per monthly payment, which of course means less interest, etc. etc. ad nauseum.

This simple principle will help us accelerate the pay-off process.  And it actually is that simple.  As long as you’re paying more than your standard mortgage payment, you’ll pay off your house sooner.  You can turn a 30 year mortgage into a 25, 20, 15 or even 10 year mortgage by adding extra money to each payment.  How much you can knock it off depends on how much extra you put in.

We have a goal to pay this sucker off.  If we can do it in seven years, I’ll be 35.  I’ll be a 35 year old with a paid off house.  And that will be weird.  But you see, normal is broke and boring.  Being weird is awesome.

-Heath