Biblical Finances – Baby Step 2

“In a new survey, 21% of people said they expect to be outlived by their debt.” – Forbes Magazine

Continuing with the financial posts I have shared, here is Baby Step # 2. This step was a life changer for me. For those who haven’t read my earlier posts, I am an avid Dave Ramsey fan and am following his 7 step financial program.

Baby Step # 2 is to “Pay Off Debt”. This step means that you focus on paying off all of your debt, except your house mortgage. I wish I could tell you that I went from Baby Step #1 directly to Baby Step #2 with enthusiasm and joy but I’d be lying.

I enjoyed saving so much that I kept saving and failed to progress to the next step. I had “normal” debt – a car payment, and a student loan. Luckily, I didn’t have any credit card debt, since I’d already had a run in with credit cards and had a policy to never carry a balance.

I listed all of my debt from smallest to largest. It was a bit scary to see how much I owed. It was about ½ of what I made in a year, which was shocking. I thought I was responsible with money and doing the right things but the numbers told another story.

I was making the monthly payments but I was just one car accident away from being in financial trouble and it turns out most of us are in the same position. According to a survey found on Nerdwallet:

“The average household has $129,579 in debt – $15,355 of it on credit cards.”

That should terrify you! That’s a lot of money to owe someone and it can feel overwhelming if you’re just starting on this journey but it’s also freeing to see your numbers in black and white and to have a plan for how you’re going to break free.

Here is an example of how I listed my debts and related information – please note the amounts provided do not reflect my actual situation.

Debt Min.


Monthly Payment Total Balance Interest Rate Due Date Target Pay off Date
Medical Bill 50 100 300 0% 1st 3/1/16
Car Loan 400 400 19,000 8% 15th 7/15/19
Student Loan 600 600 30,000 4.60% 20th 5/1/21

The process Dave Ramsey recommends for paying off debt is the Debt Snowball. The thought process is that any extra money goes towards your first debt and then once the debt is paid off, all the money that was going toward Debt A is applied to Debt B. This shows you making progress and increases the likelihood of maintaining motivation in what is one of the toughest parts.

I mentioned earlier that I had continued saving with Baby Step #1 and was almost at my “magic” safety number, but “Evil Dave” feels so strongly about the importance of getting out of debt that he stresses pulling all savings (unless there are extenuating circumstances like a job layoff, etc.), except the mandatory $1000 emergency fund, out to pay off debt.

I didn’t like this idea one bit. I remember thinking that Dave was stupid and my plan to repay debt would be fine, etc. I hate it when God gets in my way. Everywhere I looked there was something about the dangers of debt, or tips on being financially responsible. It was in my face, so I made a deal. I’d take half of the money out of savings, pay off a debt and see how I felt.

It became addicting and I am pretty sure everyone began to get tired of my discussing becoming debt free. Since I’m single I stayed motivated by plugging into Dave Ramsey’s show on YouTube and discussing it with family and friends who I knew would keep me accountable. I took out the rest of my savings, keeping only the emergency fund in place, and began paying off debt. Every time I reached a new milestone or paid off a debt, I celebrated. My friends and coworkers teased me about my envelopes but I could feel myself breaking free of the burden.

There were setbacks along the way but I finally paid off ALL of my debt in March 2015! Being debt free changed my life in ways I couldn’t imagine. I was able to make decisions without finances being the motivator. I quit my job and moved across the world. I’m planning trips and enjoying the fact that the money I have isn’t going to bills. According to Forbes I wasn’t the only one: “Some 22% of Americans say they have zero debt, up from 14% last year.”

Is anyone else getting out of debt or have gotten out of debt? Did you follow Dave Ramsey’s principles or another plan? Are you interested in the next financial post focusing on Baby Step # 3, budgeting, the envelope system or more on getting out of debt? Let me know if you have any questions, I love hearing from you all.



Biblical Finances – Baby Step 1



This post is following up on my overview of Dave Ramsey’s Baby Steps and providing my personal experience going through Baby Step #1.

  1. Save One Thousand in an Emergency Fund

“Ummm…that’s going to take me forever. I don’t make enough money and Dave R says I should be able to do this in a month. He is crazy. God, are You sure I should be following this crazy and unrealistic advice? Okay. Fine.” (I don’t know how you talk to God but that is exactly how some of our conversations go…especially when I’m acting like a toddler.)

Anyways, this step is about having an emergency fund. Cash to pay for those unexpected emergencies – not an amazing sale at name-your-favorite-store. What is an emergency? It’s having an unexpected medical bill or a blown tire or a cracked windshield. It’s having the water heater at your house die. It is not Christmas or a wonderfully priced pair of shoes or something that is not necessary.

As I said, I’d been funneling about $50 a pay check or $100 a month into savings and wasn’t feeling much of a dent, so I decided to buckle down and focus on saving the $1000. It was around my birthday, so any birthday money went into the fund, any returned items or items sold and the profit went into my emergency fund. It really didn’t take too long and it made me feel safe.

Let me just tell you that I know money doesn’t make me safe and that my trust should be in God but this is how I felt at the time. I felt joy and pride in being able to do it. For the first time ever, I had a good savings account. It made me eager to cross it off and keep saving. It was a bit addicting in knowing that I could save.

“…just 37% of Americans have enough savings to pay for a $500 or $1,000 emergency.”

– Forbes Magazine

What happened in Baby Step # 2? That’s another story for another day.

Are you one of the 37%? What Baby Step are you on? Let me know if this is useful or if you’d like more information. I know several people who have done this and would love (and I mean love) to help anyone just starting their journey.


Biblical Finances – My Journey

Finances. One of my favorite things to talk about but it wasn’t always that way. It took learning God’s principles and giving Him control of my money before I enjoyed talking about it. Sometimes I still struggle to give it to God but thankfully, He brings it to my attention quickly so I can repent and give it back to Him.

I struggled and was living paycheck-to-paycheck and barely making ends meet. Due to some great financial decisions as a young college student, I had a little debt and a bad credit score.

My debt included a car loan, credit card debt, and some unpaid bills. It wasn’t a huge amount but it might as well have been 500K in debt. I was struggling to pay rent and even slept on the floor/an air mattress and then a futon for about 8 months because I simply couldn’t afford to buy new furniture.   With a tax refund, I paid off a large chunk of debt, but then I stopped. I didn’t really have any savings and continued living paycheck-to-pay check thinking that there was nothing else I could do.

Fast forward a year, I was promoted and my Mom introduced me to “The Automatic Millionaire” by David Bach. (Side note: I highly recommend this book). It had a story about a normal couple who didn’t look rich but had established an automatic savings account and retired early as millionaires which inspired me. I opened a Roth IRA and began automatically investing and saving. It was small at first – a total of $100 per pay check. It seemed like a large amount but I noticed that I adjusted my spending accordingly and didn’t even notice. This began a love of finance and I began reading a lot and watching finance shows.

I set up my savings and left it alone. I was studying finances but wasn’t doing anything else. In 2014, I stumbled upon this interesting Christian who taught about finances – Dave Ramsey. I watched him on YouTube and began reading his books. God was working in my heart and wouldn’t let me ignore the principles I didn’t like. I felt compelled to follow his teaching, which consist of 7 “Baby Steps”. Dave incorporates biblical principles into his teachings and provides a simple method to apply them. I say simple because the principles are simple but the application is not so easy. Here’s a brief overview of the Baby Steps, which I will be covering in detail in the next few weeks.Dave Ramsey

Photo credit: Pinterest

Recommended Reading:

  • The Automatic Millionaire by David Bach
  • The Millionaire Next Door (and others) by Thomas J. Stanley
  • The Total Money Makeover and Financial Peace (and others) by Dave Ramsey
  • Rich Dad, Poor Dad by Robert T. Kiyosaki
  • One Year to an Organized Financial Life by Regina Leeds

Did you find this useful, interesting, dull? Anyone else a Dave Ramsey fan? Let me know if you have any questions or suggestions.