“You will open the eyes of the blind. You will free the captives from prison, releasing those who sit in dark dungeons.” Isaiah 42:7
I know we are not alone in our debt, but our situation is a bit extreme. While Jeff and I each have good take home pay, our expenses are often daunting. There are many times I am so overcome with dread and sadness about my student loan debt, the only way I can prevent myself from spiraling into darkness is to just pay the bill and ignore the reality of the situation.
However, we know that we do not want to be slaves to debt for the rest of our lives. So, we must face the reality, buckle down, and make strides to get out of debt.
To give you an idea of the scope (which is incredibly shameful and embarrassing):
We each had car payments over $700 a month. My private student loan balance (that were taken out for my undergraduate degree) just recently dropped below $100k, after 11 years. Jeff’s federal loans are much more manageable, but have a balance. My federal student loans grow in interest, and total well over $100k (from graduate school). We moved from our home in Illinois in 2017, and it has still not sold due to the terrible market in that area. We own a home in South Carolina that we live in. I am still making payments to medical bills from my miscarriage, ectopic pregnancy and resulting imaging to determine the scope of my abnormal uterus. Fortunately, we have mostly been responsible with credit cards, but we have balances there as well.
A good 90% of the arguments that Jeff and I have stem from being trapped by our financial burdens. Of course, the negative emotions associated with being a slave to your debtors is one of the major reasons scripture notes to dissuade us from going into debt in the first place.
So, where do we go from here? Of course, it would have been better to heed warnings in the Bible to avoid going into debt in the first place, as explained in Proverbs 22:26 – 27, “Don’t be one of those who enter agreements, who put up security for loans. If you have nothing with which to pay, even your bed will be taken from under you.” Looking at over a half a million dollars in debt is daunting and frustrating.
I’ll admit, it is very hard to not be angry and hopeless about growing debt. I fight the urge to feel as though I have fallen victim to my debtors regularly. How does an 18 year old comprehend what repayment of $22k a year at 8%+ interest on student loans will look like on the other side of a degree that society urged them to take? How is it possible the housing market can completely fall out in an area you had called home, making it impossible to sell? The dreams we have for our future seem to often be out of reach due to the responsibility we have to our lenders. Proverbs 22:7 summarizes this feeling perfectly. “The rich rule over the poor, and the borrower is a slave to the lender.”
Growing interest seems especially daunting. And, repayment of my federal loans, based on my income, makes filing taxes each year a nightmare. Thoughts of giving up creep in regularly. The truth is, though, we took on these responsibilities, so we have the obligation to repay our debts. Avoiding debt repayment is viewed hashley in the Bible, going as far as describing debtors who neglect payment as ‘wicked.’ Psalm 37: 21 states, “The wicked person borrows and does not repay, but the righteous one is gracious and giving.”
Now, we have all this debt, a hard lesson to learn, and a massive challenge to tackle. I turned my devotional Bible today to Isaiah 42, where the theme describes overcoming feeling discouraged. While I have not yet read through the entire book, many of my favorite inspirational verses come from the positivity of Isaiah and the other prophets of this book have to share. For context, I read through the summary of Isaiah in my Lutheran Study Bible. While the book of Isaiah spans several hundred years, chapter 42 falls in “the Second Isaiah” section, where God’s people are exiled from their homeland to live in Babylonia, many as captives. As you can imagine, it was a dark time for those who were enslaved by the people who had destroyed their homeland. These middle chapters of Isaiah describe God’s promises to free his people. Throughout the 66 chapters of Isaiah, one message is clear – God has a plan and a purpose for our lives.
One of the most inspirational verses from this chapter, to me, is “You will open the eyes of the blind. You will free the captives from prison, releasing those who sit in dark dungeons.” Isaiah 42:7. This gives me so much hope that the future will be beautiful.
And like yesterday, the “Love Letter from God” once again hits the nail on the head when it comes to how I am feeling:
“Beloved Daughter
My light shines through the darkest darkness. I know there are times when you can’t see the way through. It may appear there is no way out of the darkness that surrounds you. What you see is an illusion of the enemy to try to get you to doubt who I am and how powerful I am. When you can’t see, close your eyes and call My name. I will come and carry you out of the dark dungeon of discouragement and place you in My divine light. Rest in Me, and allow My presence to put your heart at peace,
Love,
Your Heavenly Father”
Of course, God cannot repay my earthly debts, though He has paid the debts of my sins through the sacrifice of His son Jesus. But, these promises assure me that I do not have to have all the strength and all the answers I need to get through this challenge right now. This experience has provided lessons about debt and how I can move forward from it.
Obviously, the first lesson is to stop taking on more debt. It is impossible to build wealth by spending money on excessive “stuff,” when you have debt. Jesus warned, “Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal …”(Matthew 6: 19 – 20). What is the purpose of all the stuff that we cannot take with us when we are dead? Plus, if you have big dreams of a nice home and providing for a family, squandering money now does not provide for the future.
The second lesson is to make a path to get out of debt, which starts with finding the strength to buckle down and the faith to believe in the process. We are finally avidly working on this process. While adding to our income is not easy at this time, we have taken strides to make our situation better. Knowing that we are wanting to make a final move to our forever home in Tennessee soon, this is a challenge we have had to face.
What we know about debt:
I wanted to first share what we have learned from years of accumulating debt, moving, refinancing, etc. We are certainly not experts, as you can see from our horrible debt decisions, but what we have learned has motivated us to take control. Once we learned what our finances look like now and what they need to look like to get a new home and get out of debt, I have found it exciting, like a game!
The major things to look at are – where your money is going, where you can cut back, how much you are bringing in, and how much you are shelling out for debts. When looking to make a purchase, like a home or a car, lenders look at the debt to income ratio. This essentially determines how much of your paycheck gets chewed up by your debts (credit cards, loans, mortgage, etc). So, lower payments work in your favor if you really need a new car or you are moving. Interest rates are also important, because these dictate how much extra you pay your debtor over the life of the loan. Here is where paying more than the minimum payment (toward the principal balance) is important, because it helps you pay off debt faster, therefore spending less over time.
Here are a few ways we are working to improve our Debt to Income ratios and get out of debt faster while paying less to our debtors. Note we are by no means experts, and all of this we have learned through trial and error.
- Interest rates are very low!
Refinancing Jeff’s truck saved us over $200 a month in payments, and we will pay less in the long run with a lower interest rate. We literally did nothing but visit the bank to make this improvement. I will be applying to refinance my private student loans once a few of the things lower on this list resolve from my credit to increase my chances. We would also look into refinancing our SC home, if we were planning to live here longer, and I know multiple friends who have saved a ton of money (instantly) doing this already. While the housing market is crazy right now, and you run the risk of overpaying for a home, the good thing is, interest rates are low right now!
- Many vehicles are retaining value!
There has been an issue with dealers getting cars with the pandemic. I made a rookie decision to take on a lease for a new 2020 4Runner last year to eat up the negative equity we had from a previous vehicle – and for a year, I had feelings of guilt and shame over that choice. Fortunately, the dealership was able to give us nearly what we owed to buy out the contract on a trade! Now, my payment is $320 less a month, and I will actually own my car when I am done (plus, my interest rate is SUPER LOW)! AND, part of my goal to get and stay out of debt, I have made a commitment to stop trading for new vehicles before getting out of debt and saving to pay for it.
- Rental contracts negate negative equity
Fortunately, we have a family member who will be renting out our Illinois house (eventually purchasing it). The great thing is that the rental contract will remove the mortgage from our negative equity, as well as lower our debt to income ratio. And, of course, having someone else pay the bills associated with that house will really help us put that money where we need it.
- Pay Less in Interest
Of course refinancing is a great way to lower your interest rates, but credit cards are a large money sync when it comes to interest. I currently only have one credit card with interest that I am making extra payments to pay down faster. I have been working to not put anything on credit and save for it, and when it is necessary, I always look for 0% interest deals. I also called my credit card company with interest to inquire about deals, and they were able to lower the interest rate based on my updated credit score, salary, and repayment history.
- Extra Payments and Savings
So, now that we have freed up some cash by manipulating other debts, we are working to put that extra money into paying off major debts, like student loans, credit cards with interest, and of course, saving to make a higher down payment on the new house.
- Choose your home loan carefully
Most home loan types have specifications for your debt to income ratio and credit score. They also almost always require a downpayment between 3% and 15%, and you usually have to pay closing costs (especially in this market when sellers are less likely to make deals). Additionally, some loans charge a fee if you put down less than 20% or mortgage insurance may be required until your loan is paid down below 20%. So, the more you can bring to closing, the better. This is where savings, low debt to income ratio, good credit, and a good loan officer pay off.
Of course, we cannot forget about the third lesson here – to find joy in your life that doesn’t add to your debt. There is no reason to put off living until your debts are repaid. Afterall, you are alive – now! When reflecting back on the trials people face in the Bible, even those with the greatest struggles made time to be grateful and praise God for their blessings. I have a favorite quote, from Melody Beattie, hanging in my craft room for this topic – “Gratitude turns what we have into enough,” and that quote continues “It turns denial into acceptance, chaos into order, confusion into clarity.” Basically, the emotions we struggle with from the problems we face can be played down by being grateful for what we do have – by choosing joy!
There are so many ways to find joy for cheap or free! Some of the more affordable ways I choose joy each day include: starting my day with a short devotional and prayer for a new day, sitting in the sunshine, going for a walk, working out, cooking a fun meal, telling my husband how I am grateful for him, gardening, practicing art, learning new things, building relationships with my students and colleagues, chatting with my family and friends, reading about things I am interested in, watching comedy shows, ending my day with a short devotional and prayer, bible study, this blog, and more!
What are you waiting for? What are some ways you can find joy in your daily life?
This Going HomeSteadily blog will be loaded with stories about how I am working to rebuild my faith, how we have survived repeated pregnancy loss and fertility complications, learning to live life without my mom, striving to dig ourselves out of massive student loan and multiple mortgage debt, sharing a full time home office, cultivating a home garden, relearning the Bible as an adult, exploring and planning for a homesteading future, and above all, actively choosing joy.
So, stay tuned, and God bless.
Stephanie Brown
