Madison over at My Dollar Plan invited her readers to comment on a question she received from a friend about how to get rid of $14,300 in debt. I have never faced debt like this, so what I have to offer is only theory crafting - but I like crunching numbers so I figured I’d give it a shot. According to Madison, the debt is distributed in this way:

• Personal Line: $3,500 balance @ 15% - $7,000 limit
• Credit Card #1: $2,300 balance @ 9.6% - $5,000 limit
• Credit Card #2: $6,600 balance @ 8.5% - $8,000 limit
• Credit Card #3: $1,900 balance @ 18% - $2,000 limit

Currently the person pays of their debt in this fashion:

• PL: $210 per month
• CC #1: $0 per month
• CC #2: $1,200 per month
• CC #3: $100 per month

For the sake of the experiment I am going to make some assumptions about this individual. He currently is using all his extra income to pay down his debt (the $1,510 shown above) and he is unable to get a credit card with 0% interest. I am doing this to remove the idea of getting another credit card at 0% interest and transferring the balances over to that card. It is a great idea, but just isn’t any fun to crunch the numbers on. Also, the credit card company charges interest on the largest balance within the billing month, so if there is $2,300 on a credit card on July 1 he will have to pay interest on all $2,300. The minimum payment for each card is 100, which I will make to avoid late fees.

From the get go this dude is in trouble (given my assumptions). Given his current payment plan his debt will shrink significantly, by 48.8% over a five month period (jumping to $7,319). Not too bad.

There is one major method that people generally employ when facing this kind of debt: the debt snowball. The way a debt snowball works is that as you pay of a debt you use the money that you were using pay back that particular debt (i.e. credit card debt) to be used in paying off other debt (i.e. another credit card). This a proven method for success. However, not everyone agrees on how a person should prioritize which debt to pay off first.

There are two prevailing schools of thought in when it comes to money management in a debt snowball. The first is to pay off the lowest balance first. This is the view of Dave Ramsey. If our in debt friend were to employ this method his debt would look something like this after 5 months:

• Personal Line: $1,928 balance @ 15% - $7,000 limit
• Credit Card #1: $0 balance @ 9.6% - $5,000 limit
• Credit Card #2: $6,328 balance @ 8.5% - $8,000 limit
• Credit Card #3: $0 balance @ 18% - $2,000 limit

In all his debt will only have gone down by 42.27% (a total of $8,256 outstanding) over the same five month period. This is worse than paying off his debt as he is now!

The other version of the debt snowball is to pay off the highest interest rate first. This scheme is designed to reduce the interest you will be forced to pay on your money over the life of you debt. This strategy will have the following results:

• Personal Line: $0 balance @ 15% - $7,000 limit
• Credit Card #1: $929 balance @ 9.6% - $5,000 limit
• Credit Card #2: $6,328 balance @ 8.5% - $8,000 limit
• Credit Card #3: $0 balance @ 18% - $2,000 limit

With this strategy his debt will have been reduced by 49.25% (a total of $7,257 outstanding), a marked improvement on the Dave Ramsey version of the debt snowball but only slightly better than his current debt strategy.

This person should employ a debt snowball approach that focuses on interest rates to pay down his debt. Though his debt only decreases slightly more than the his current payment plan, my experiment did not include late fees for missing payments which could have made the difference between the methods significant. It just goes to show you though, living debt free is the way to be.

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Posted in Money Management ~ 1 Comment

It goes without saying that money is important. We need it to eat and to have shelter (at least a little bit of money that is¹ ). In addition to using money to meet the most basic needs, most people also use money to indulge in trivialities and other non-essentials, and I am certainly among that crowd - though somewhat near the Spartan left.

If money didn’t decide whether my family and I ate or had a place to sleep at night I wouldn’t work for money. I wouldn’t spend my days doing things that have no lasting value. But work I must until the resources I have accumulated empower me to be able to divert my attention and my energy toward more fruitful and exciting endeavors.

I work a regular job that any college graduate might. I sit behind a desk, staring blankly at a computer screen, getting paid to be bored and fiddle away my day surfing the internet. I manage offshore workers in a data mining operation that breeds a middle-class hopelessness that digs relentlessly into my soul, leaving behind pencil thin columns ready to collapse at the slightest seismic activity. Right now the job pays enough to cover my family’s basic needs and a little bit extra, but not much. At our current clip, work like this is going to last a very long time.

Enter additional income. Right now, this seems like my ticket out of working for pay and into working for the love of others. I can’t get it out of my head. I think about it on my way to work, at work, and on my way home from work. Many of my extra hours are spent working on ways to make an extra buck here and an extra buck there. In fact, I want my work now to pay off into extra bucks for years and years to come that will eventually be turned into food and shelter for me and my family.

I already had some modest goals for earning extra income for this year that I am well on my way to achieving. I set the bar at $100 of additional income to be earned exclusively from blogging. As of right now I am about a quarter of my way toward that goal and already I am making a new one for myself. One-hundred dollars is nothing considering the thousands that my family will need to live off of until the day I die. Instead of thinking in terms of lump sums I am beginning to see my goal in terms of dollars per day.

Right now my family of 2 (3)² lives off of approximately $72 a day. I think that is a good starting goal for me to aim for. If I can cover our living expenses then I can turn my salary ($131 a day before taxes and benefits, $94 a day after) into a mass of wealth that, if managed well, can last forever. Then, once the whole eating thing is out of the way, I can funnel any additional money that comes my way into avenues that can positively impact human lives the whole world over.

Oh additional income, I pine for you.

1. There are some who are essentially free from the need to earn money because they have means to acquire food ‘free’ from the land and take shelter in the land, but even these people required a certain amount of money to get this to happen [↩]
2. We have a bun in the oven. [↩]

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Posted in Budgets ~ No Comments

In case you haven’t heard, today is Father’s Day. I guess I’m not technically a father in the eyes of the majority of the medical community and probably not in the eyes of many people in the Western world, but I already consider myself a dad. This is a distinction that I have wanted to have for a very long time and here are my top 3 reasons why:

Being a dad means that I get another opportunity to be the image-bearer of extravagant, graceful¹ love . The love that a father has for their child should be one marked not only by an extreme affection - one that feels a power not unlike the unrelenting surge of the oceans tides - but also one that seeks it highest joy in the unconditional expression of that affection in words and actions. Whether my yet unborn son (or daughter) turns out to be the most well behaved child or not, my joy and duty in fatherhood will be to run with open arms and an exhilarated heart of love to my child in all circumstances. When late nights leave me cranky and tired, or spilled milk threatens to ruin a perfectly normal dinner, or the stress of providing for my family attacks my own fears and insecurities, the call of fatherhood is to lay those all aside and take up the cause of love. Chances are at first I won’t be perfect, heck, I may not even be that good at it, but I will try; and I will learn; and I will cry out for help; and over time the love that is within me will be refined until it is purer than I could have imagined. To be a dad is to love.

Being a father means that I get another opportunity to protect and nurture someone who is unbelievably beautiful . Part of being a good husband is that you get to protect and nurture your unbelievably beautiful wife. When things try to strike at her heart - bodily insecurities, various fears, unforgiveness, broken friendships, or evil in another’s actions - it is the husband’s joy to stand up for his beauty and fight for her. He gets to prove how precious she is by his passion for her defense. It is the same with one’s children. I am not here advocating or endorsing a model of fatherhood that fights other people over the simplest slight. Instead I see fatherhood as a chance to fight against the fears that plague many children - the fear of not being lovable, or of being worthless, or of not mattering. A father needs to watch over his children in aggressive resistance to these lies that attack the young. To be a dad is to fight.

Being a papa means that I get to explore the mind of my child … and build forts again . And not just forts, but dart wars, tea parties, wrestle matches, tickle fights, pillow fights, rolling down the hills, ghost riding bicycles on the playground², hunting for tadpoles, searching for leprechauns³, you know, fun stuff. What makes it all even more fun will be getting to see the mind of my child invent and interact with the world around them. They will have thoughts and experiences all their own and being a parent means that I get a chance to be a part of that. I get to discover who they are and I can’t wait to get to do that. To be a dad is to explore.

So even though my child is till four months away from leaving the warm, comfy goodness of my wife’s baby incubator I am still pumped about that idea that I am a father. Today I will sit back and enjoy my opportunity to love, protect and explore the life of my child - relishing the shadow of love I get to become and the great big cosmic sized love I get point my naked baby to.

1. literally full of grace [↩]
2. [↩]
3. [↩]

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Posted in Family Life ~ 2 Comments

My father is a great man. He would never admit it and he may not even know it, but he is. I owe him so much more than I will probably ever know. Here are just three things that he taught me:

“God causes all things to work together for good to those who love God, to those called according to His purpose .” Losing your mother when you are 15 is not something that is easily dealt with. It is even harder to see such a thing as a ‘good,’ and yet that is what has happened over these past 10 years of my life. The truth of God’s sovereign, all-encompassing grace is a lesson not easily learned, but my dad helped me learn it through the painful ordeal of real life. Even though I was often hard of hearing and slipped into stubborn inward rebellion the truth of God’s love for all of his children involved in the fatal cancer that took my mother’s life is magnificent in its scope and stunning in its application. I owe a great debt of gratitude for my father in pointing me in the direction of truth when the pain of loss seemed too much to bear.

A home is not about a place, it is about people . This may seem a little odd coming from me since my family lived in the same house for practically its entire existence, but I feel like it is a strong message that the life of my father has sent. A home isn’t about what type of food you eat every day, or how clean the carpets are, or what the yard looks like, or what neighbors you have. Instead, a home is founded on the love of its members for one another. Its wall consist of shared experience, creating an inclusiveness defined by the things that affect those closest to your heart. And a home is roofed with the actions of love that protect you from the storms of this life.

It is okay to respond passionately to really wrong things and to be aggressive in dealing with them . By no means was my father perfect, but even in his imperfections he taught me vital lessons about what it means to be a man. If my dad felt like something was wrong he could respond explosively, often demanding immediate change and adherence to correct conduct. This principle, applied rightly, has a powerful effect both on one’s own ability to do right in the world and one’s effectiveness at protecting others from external and internal harm. Seeing my father’s love for righteousness, even if sometimes misapplied, has left a deep impression in me, creating in me natural and loving responses that protect both my heart and the heart’s of those I love from evil. This is a lesson that I cherish particularly deeply,

Thank you dad for all the ways that you have been the shadow of our Dad to me. I love you.

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