Table of Contents

1. He Said What?

a. The Con Was Revealed

b. He Owned What??

2. Divorce Equals Freedom

a. Freedom Comes with a Price

b. Credit Cards Equals Debt

3. A Plan is Set in Place

a. Writing Down the Ugly Truth

b. Black and White Numbers Don’t Lie

c. Sorting Bad to Worst

4. Time for a Reality Check

a. Income Assessment

5. Three-Step Plan

a. Accessing Needs from Wants

b. Paying Off Debt for Real

6. Phase II Begins

a. Don’t Quit Now

b. Build up Emergency Funds

7. Quick “Investing” Tips

a. Pay off Home and Car Loans

b. Stocks and Mutual Funds 

Investing in Yourself Before Investing in the Market

“You either pay my bills or get out!”

Yep. That’s what my husband of two years told me in 1990. I remember sitting in the chair as he walked away, thinking, So that’s why he married me. I sat there stunned, realizing my marriage was over. He didn’t have to tell me twice—I was packed and out the door in less than two weeks.

Don’t get me wrong; I knew we had a lot of bills, but I didn’t know the full extent. I blame myself—I was too busy trying to work and pay bills to notice. We were both divorced and ex-military, but problems started a few months into the marriage when he lost his job and was out of work for three months. After losing a second job and being out of work for another three months, the future looked grim.

Two weeks before our lovely conversation, I found out he’d lost a third job when his paycheck was missing from the bank statement. He had “forgotten” to tell me because he had another job lined up. Seriously. That’s what he told me.

When reality hits, it hits with both barrels. My salary barely covered rent, groceries, and daycare for his son. Bill collectors had us on speed dial. And don’t even ask me about the telephone call I received from Kenneth Copeland Ministries asking why they hadn’t received their $1,000 pledge Bozo promised!

I thought that finding out he’d lost another job was the worst of it. But “No,” LIFE laughed, “I’m not done.” That sunny afternoon, I opened a letter from a mortgage company that went something like this:

Dear Bozo,

We’ve been trying to locate you regarding the non-payment of your mobile home loan. This loan is now $50,000. Please contact us

immediately, so we can resolve this matter.

Sincerely,

ABC Mortgage Company

A mobile home? Wait. What? We’d been together almost three years, and I’d never heard of him living in a mobile home, much less owning one.

Of course, Bozo denied that this was his bill, and then he tried to talk his way around it, stating his ex-wife owned it. So why send the bill to us? Because…They had owned it before the divorce. Ok, was ownership mentioned in the divorce decree? “No, I told her she could have it after the divorce.”

I hunted the house for his divorce papers, and there in black and white, it stated that Bozo would assume responsibility for the mortgage payment of the mobile home. It didn’t matter if he’d “given it to his ex”—the bill was his!

“No, I gave it to her.”

“Did the loan company change the loan into her name?”

Again, another lie. “She was supposed to do it.”

Sure.

He’d been divorced three years before we met, so this loan was now six years behind in payments. When I told him he needed to contact his ex and work out a way to pay this off because I sure wasn’t, well, that’s when I got his famous last words.

Divorcing him was the only thing I could do to save myself, but it also came with a thousand problems—nine thousand to be exact—all with my name attached. Bozo had managed to put all the bills into both our names—even my engagement ring—and with his talent for losing jobs, guess who would be next on the creditor hit list. He wouldn’t pay for anything, so I was stuck with over $9,000 in credit card debt.

That may not seem like a lot of money to you, but in 1990, the minimum wage was $3.80 an hour, and I was bringing home less than $600 a month. According to historical currency conversions, that meant I was making around $1,336 mo./$7,200 yr. and had over $20,000 in credit card bills in today’s currency. You do the math—I owed more than three years of take-home pay for debt accrued during just two years of marriage, and that was before the interest kicked in. Credit card interest rates back then averaged 15%, but most charged 21%.

How did I get out from under that mountain of debt? It wasn’t easy, and it sure wasn’t pretty, but I had grown up with a financial genius. Daddy and I sat down and had a long, hard talk. It was rough, but no, Daddy didn’t pay my debts off. He showed me how to do it!

Where Do I—or You—Even Begin?

If you find yourself in a similar situation to this, your first question is, “How did I get here?” Your next question is “How do I even begin to sort this out?”

By bringing out all the ugly. And I mean ALL the ugly: your checkbook, bank statements, several pay stubs, and every single bill you owe. Then, you sort each bill by the amount owed and write down the information in columns—it doesn’t even have to be a spreadsheet if you have a pad of paper. Then, add in everyday expenses like gas, food, clothing, hair, etc. I had to add in my lawyers’ fee for the divorce. Here’s what you need:

Bill Name Total Amount Due Minimum Payment Interest Rate

Then comes the total. Holy Moly! Nothing is so numbing, so discouraging, and as big of a shock as having to face those numbers in all their ugly realities. Numbers don’t lie and will slap you back into reality as soon as you enter the equal sign. If they don’t, then you have more issues than I can address.

But take a deep breath. It’ll be ok.

Sort your bills from least owed to most owed, and then by the interest rate. If you have two similar bills, the one that charges the most interest is placed before the one with the lesser interest rate.

Based on my income at the time, it looked like it would take at least six or more years to pay off everything if I only paid the minimum on all the bills. Which meant that I would be paying at least triple the amount of debt owed. Wow!

Based on these bills alone, my whole paycheck was gone. Since I had to get gas and supply my groceries, etc., I needed more income. My parents allowed me to live at home rent-free until my debts were paid. Whew! I didn’t have to worry about rent just yet, but it was coming. So, my days consisted of being a secretary by day, and a cashier/front-end manager at a grocery store by night and weekends.

Do you want to know the secret magic trick that will pay off a mountain of debt?

It’s. Hard. Work. Period.

My Three-Step Plan to Pay Off Debt:

1. Start by paying only the minimum amount owed for each bill—except for your lowest bill. Pay the minimum amount, PLUS any spare money you can afford to add to this bill until it is paid off.

Min + Spare $$

2. When the lowest bill is paid off, continue paying the minimum to all your bills—except your new lowest bill. Pay the minimum amount, PLUS the money you paid for the first bill, PLUS any spare money you can afford until this bill is paid off.

Min + Min + Spare $$

3. When your second lowest bill is paid off, continue paying the minimum to all your bills—except your new lowest bill. Pay the minimum amount, PLUS the money from your lowest bill, PLUS the money from your second lowest bill, PLUS any spare money until it is paid off.

Min + Min + Min + Spare $$

Repeat Steps 2 and 3 until all bills are paid off. The more bills you pay off, the more money you’ll have to apply to the other outstanding bills. Not only will you start knocking down those interest payments, but you’ll discover that the bills will be easier to pay.

• Important Notes:

Don’t buy any high-priced ticket items until everything is paid off. Set a hard limit of $50 or $100 as your breakpoint, and don’t go over it. Let’s face it, it’s time to get real with yourself. You don’t want to go down that rabbit hole of horrors again, so ask these questions:

o Do you absolutely need it?

o Can you get by without it for a bit longer?

o Can a cheaper model/item be good enough for now?

o Can you afford it without a credit card?

o Is it that important to buy this item than making an extra debt payment?

Trust me, sometimes verbal warfare is harsh. I had a small black & white tv, which I’d had for at least 10 years, and I used it until it finally died. Only then did I search for a replacement, and it wasn’t the newest, greatest thing ever. It was a small color tv, bigger than my little one, but something I could pay cash for.

It took six months of putting everything I had into paying off my debt. Six months of not doing anything but going to work and back home. Or date nights with my Granee, where I’d fall asleep on her couch while watching tv together. Or reading financial books Daddy loaned me.

But when I paid that last bill off, it felt so good! It was as if 9,000 pounds had been lifted off my shoulders. Literally.

Learning to Invest in Yourself

Now, why should I pay any attention to this person?

Trust me, I get it. But I earned my stripes, and I know what I’m talking about. Many years after my divorce, I worked in the securities industry for ten years. Then, I became a Financial Advisor for a while and even worked as a tax preparer for several years. I’ve also graduated from Dave Ramsey’s Financial Peace Program. But, more importantly, my Daddy was a financial genius who taught me well.

We all need a little help now and then. None of us know everything about anything—at least not in this life—so we should seek counsel. Dave Ramsey suggests listening to your spouse, parents, pastors, and experts. He quotes Proverbs 12:15 “The way of a fool is right in his own eyes, but he who hears counsel is wise,” (Ramsey, 2003, pp. 242-243).

We can prepare and plan out our lives for 50 years, but “Life” always has a way of interrupting. It’s those lessons we learn during those times that need to be shared. As Romans 13:7 states, “Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed,” (The Holy Bible, English Standard Version, 2001).

So, let’s get this started! The first thing you need to invest in is yourself. Not in the market, not a new car or a new house. Not even the lottery. Just Yourself.

Why? Because you don’t know when you’ll need it! In God Wants You to be Rich, Paul Pilzer states “…saving money is more than a commendable habit. It is a personal act of faith, a form of self-denial that expresses confidence in the future,” (Pilzer, 1995, p. 173).

Once you’ve paid those heavy bills off, it’s time to start paying yourself. You’ve already done the hard part—you know how much you need to live on—so open a savings account and start adding to it. This is your emergency savings, and It Is Not To Be Touched unless it’s a real, true emergency. Like you are out of work for an extended time and there’s no money in your checking account type of emergency. When you have six months of living expenses saved up, you can face most emergencies without going into debt again.

Quick “Investing” Tips:

 Invest your time into learning about finances and investing. As Suze Orman puts it, “There isn’t a part of our lives that money doesn’t touch—it affects our relationships, the way we go about our everyday activities, our ability to make dreams reality, everything,” (Orman, 1997, p. 2). So why learn to pay off bills but not learn how to save?

 One of the most simple, easiest-to-read books on finance has been around since 1926, and it was my father’s “financial bible”. Daddy must have given 100 copies out to those he helped. In The Richest Man in Babylon, you will find that living on 70% of your pay, saving 10%, giving away/tithing 10%, and investing 10% is easily attainable. Trust me, this is a great little book!

 Do you have a mortgage, home equity loan, or car payment? These loans charge interest on the daily balance, so the more money you add to the principal the less interest you will pay. Try moving your payment date up by a week and adding as little as $50 to the principal. You’ll quickly notice a difference.

 Almost paid your car off? As soon as it’s paid, start paying yourself the same loan amount. Put it away, and when it’s time to buy again, you can either pay cash or have a really good down payment.

 Know the difference between a stock and a mutual fund? If you buy stock in a company, you are the owner of a tiny piece of it. Like a small bag of single-colored M&M’s. If you buy a mutual fund, you own a small bag of multi-colored M&M’s representing all the different companies the mutual fund plan includes. When you can invest serious money into the market (at least $1,000) please work with a licensed financial advisor.

I know this was a lot to digest, but God gave me a father who loved me so much that he didn’t pay my bills but taught me how to pay them. With his help, I didn’t have to depend on anyone else and I’d always remember the lessons. But more importantly, God gave me the strength to follow these plans, and I know He’ll help you too!

It’s just one step at a time, and the first step is the hardest. But you can do it!