Conversation: Ellie Kay
Get out of debt — and stay out
Ellie Kay, author of Living Rich for Less: Create the
Lifestyle You Want by Giving, Saving, and Spending Smart (WaterBrook Press), is
bent on helping people get out of and stay out of debt. As the consumer finance
educator for Wal-Mart, Kay loves nothing more than showing shoppers how to make
the most of every dollar. Recently, she spoke with Managing Editor Kirk Noonan.
tpe: Some financial leaders are saying the current economy
has some good points.
KAY: I agree. Our economy is a wake-up call for Christians
to get their finances in biblical order.
tpe: Have followers of Christ become too comfortable with
KAY: In the last 50 years the church’s attitude toward debt
has become almost indiscernible from the world’s. Many Christians look at debt
as just a necessary evil and not as a choice, which is the result of a
consumptive lifestyle. Christians need to go back to the biblical principles of
being debt free and being content with whatever they have.
tpe: Sounds easier said than done. But you have a principle
you promote to make that possible. Tell me about that.
KAY: I believe the 10-10-80 principle is God’s principle for
our finances. The first 10 percent of our income is His, the second 10 percent
ought to be put toward savings, and then one should spend the last 80 percent
tpe: Some people cannot imagine being content unless they
have it all.
KAY: All of us have a choice to be content or not. Are we
going to choose to be like Paul and choose to be content in every circumstance
or are we going to go into debt to have something else that we feel we need or
tpe: You’re regarded as a financial expert — did you
always have your finances in order?
KAY: Not really. When Bob and I got married we had $40,000
worth of consumer debt. I went from being an insurance broker with no money
problems to a full-time wife and mom and one income. It was not easy. One week
we didn’t even have enough money for groceries, but God provided groceries for
us from my husband’s ex-mother-in-law.
tpe: Was that your low point?
KAY: It was humbling, but that was our turning point because
that forced us to commit all of our finances to God. We committed to getting
out of debt, and of course we put the tithe first. Everything that came in,
whether it was a birthday check or an unexpected insurance premium refund went
toward consumer debt. Within two and a half years we were debt free and have
remained so since.
tpe: Beyond just the personal ramifications of not following
God’s principles when it comes to finances, what else suffers?
KAY: Debt robs us of our freedom in Christ to be obedient to
the call He has put on our life. If that call is to reach out and give a
traveling tour group $500 for their ministry or support a Third World child
monthly so they can have food and clothing — all of that giving is
limited by debt.
tpe: Some people will counter all this and say debt is how
our financial system works best. How do you respond to that?
KAY: During the first 15 years of our marriage we lived on
one military income. It was not abundant and we had that $40,000 worth of debt
to pay down. But within 15 years we not only climbed out of debt, but we were
able to buy 11 used cars (gave three of those away), buy two houses, go on nice
vacations, and dress our seven kids in nice clothes. And we gave away $100,000.
We live what we call a rich lifestyle, but it was all within the lines of
tpe: Do you think the current economy will distract
followers of Christ from tithing and giving priorities?
KAY: This is a great time for everyone to turn their
financial plans over to God. Do that, and tithing and giving will remain or
tpe: How can a person cut their family’s grocery bill?
KAY: Layer the savings at the grocery store. To do that, buy
items that are on sale and that you have a coupon for — savings are even
greater if you shop at a store that does double coupons. You can also sign up
for a store card that gives you discounts at the register. I also tell shoppers
to look for items that offer cash rebates or credit toward their next shopping
trip and to shop at stores that honor all competitors’ ads.
tpe: A lot of consumers know that they can get the annual
fee on their credit card waived by simply calling their credit card company and
asking that it be waived, but you say doing so can be risky?
KAY: Let’s say you’ve had a card for eight or nine years and
you read this article and say, “Oh, I shouldn’t have to pay a fee,” so you call
and make the request to have the fee waived, but the company will not waive it
so you consider canceling the card.
I would really caution against canceling a card you’ve had
that long because it could negatively impact your FICO score, which impacts
everything — including the APRs you will pay on other loans for things
such as autos and homes.
tpe: Is it possible to get the APR reduced on one’s credit
KAY: Yes you can, and you don’t have to have Consumer Credit
Card counseling services do this for you or hire some for-profit,
debt-consolidating agency to do it either. This is something every consumer can
tpe: How do you do it?
KAY: Call your credit card company, find out what your
current APR is, tell them that you are wanting to pay down your debt as quickly
as possible, and ask them if they can do better on their interest rate. Often
the person on the other end of the phone has the authority to lower the APR
immediately. But don’t take the first cut they offer. Thank them and be polite
then push back a second time. Usually you can get it lowered even more if you
have a good credit and payment history.
tpe: What do you want our readers to take away from this
conversation besides ways to get out of debt?
KAY: If we give up materialism and consumerism and commit to
do our finances the way God intended us to do them, our lives will be so much
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