Debt Slavery

debt-is-slaveryAin’t it amazing how a things come full circle?!

After finishing “The Frugalista Files,” I picked up Dave Ramsey’s “Financial Peace Revisited.” I’m plowing through. Today, I reached Chapter 8 “Dumping Debt.”

Ramsey is reiterating some great points. I dog-eared a bunch of pages.

  1. On Page 69, he talked about changing your belief system, your visual paradigm, your filter. He used this example.




Just a few days ago, I saw that phrase on someone’s license plate and started playing with the ‘w’ and the ‘h’ and the space. I chose to go with the more positive route – I am now here.

2. So these numbers are scary. “On average, cardholders carry a $8,367 balance on their cards from month to month (160 percent increase since the past decade), paying on average 18.3 percent in interest. That amounts to $929.70 a year in interest payments, according to RAM Research Corp.”

3. On page 85, he stated that debt consolidation is not always the right choice. He sounds like Michelle Singletary, who says debt consolidation is basically taking on another debt to pay off the previous debt. Doesn’t make sense, right? Consolidation could lower your monthly payments now, but you might end up paying more later. Using the snowball method, folks could pay off their debt faster and at a lower rate than with consolidation, Ramsey said. I’m glad I didn’t take the “easy road” with consolidation some weeks back. My problem now is sticking to the snowball method or Debt Dash Plan (DDP). If it ain’t one thing, it’s another.

4. Ramsey says: “If you’re going to avoid borrowing money, you should definitely avoid co-signing on someone else ‘s loan. When you co-sign, you borrow the money.” If the other person doesn’t pay, then the lender will come after you.

5. If you must borrow money, Ramsey says, then follow two basic guidelines.  First, (1) borrow on short terms and only borrow on items that go up in value. “That means never on anything except possible a home, which you should pay off as soon as possible.” Next, (2) if you can, buy less, so that you can pay off faster, and then make sure you get a very low interest rate.

If you were to finance a $80,000 on a home at 10 percent, you could pay a 30-year mortgage (360 payments at $702/mo. = $252,720 total) or a 15-year mortgage (180 payments at $860/mo. = $154,800 total). By paying $158 per month for 15 months, you save $97,920 overall.

“In order to get out of debt, quit borrowing more money.”

6. “Our problem is not getting out of debt; it is keeping out of debt.” Ain’t that the truth, Ruth. One credit card I’m trying to pay off is one that I had already paid off. Crazy, right?!

And just like I told Teacher and my classmates in the personal finance workshop, Ramsey said “Get mad!!!”

“You can’t scheme, scam, or borrow money your way out of debt. You just have to get mad.”

7. Debt = slavery.

It’s no coincidence that Ramsey book-ended this chapter with Proverbs 22:7 – “The rick rule over the poor and the borrower is servant to the leader.”

A few years ago, I used to have that phrase on my mirror. I thought I was going to work through my issues then, but I reverted to my old ways, ironically, when I started making more money. I started borrowing again, therefore, willingly enslaving myself to the credit card companies. There’s that full circle I was talking about.

DebtIsNotAToolIt’s funny how “slavery” has been a hot topic the past few years in entertainment. I saw several movies regarding the topic – Lincoln, Django: Unchained and Oscar-winning 12 Years A Slave. Kanye West rapped about the “New Slave” and J. Cole rapped about getting another expensive chain, saying “I chose this slavery.”

My goodness. I chose this slavery. SMH. Not anymore.


This image of a credit card wallet was pinned by a woman named Mary on Pinterest. She wrote: “Pull the ribbon and out pop the credit cards. “…the borrower is a slave to the lender.” Proverbs 22:7 This reminds me to spend $ wisely.”


Thinking of house and home

On Thursday, my coworker and I returned to the personal finance workshop. We, along with our 55-year-old classmate, shared our goals with Teacher. Our goals varied as we’re all in different stages of our lives. There’s something special about putting your goals down on paper and out in the universe. When you share them, you feel more responsible and others can hold you more accountable.

Teacher encouraged me to dig deeper – to put target dates and monthly savings amounts next to each goal. My goodness! That’s going to be tough. I don’t know what car I’d like to buy in the next two years, let alone how much it costs.

In big letters above our goals, Teacher told us to write: “Am I willing to do what it takes?”


Next, we jumped into credit.

Teacher said the recommended debt-to-income (DTI) ratio should be 15 percent or less. Right now, I’m at 20 percent. Then, I learned that I had been using APR (Annual Percentage Rate) and interest rate interchangeably. Of course, they’re not the same. The APR determines the amount of interest you accrue while keeping a balance on a credit card.

She blew our minds when we reviewed the formula credit card companies use to calculate your balance. Most companies use the average daily balance method, meaning that interest is compounded based on your daily balance.

Here’s what I gathered: Credit card companies will find a way to increase your balance every month. That, in turn, increases your interest. And if you continue to pay the minimum balance, then you’ll end up paying interest on interest and never really pay down the original balance. It’s the dreaded snowball effect. That’s why it seems to take so long to make a dent in the debt.

We all started to get mad at credit card companies and ourselves for not knowing this. You gotta pay attention to the fine print. And you gotta get mad enough and know the right information in order to make changes. Teacher continues to empower us with knowledge, and I’m so grateful.

House_with_Keys2After work, I attended a first-time homebuyer’s seminar with a realtor, a lender and a woman who runs a down payment assistance program through the city.

I sat with seven or eight other black women­ – some younger than me, but most a bit older. I could tell that most of us didn’t know where to start. The realtor didn’t know where to start either when she bought her home.

She earned her real estate license and closed on her own home at the encouragement of a relative who wanted to flip houses. That plan fell through, but the realtor now shares her experience with women with similar backgrounds. The realtor’s a young, black female who grew up in the projects, didn’t have role models who owned homes and didn’t have a high-paying job. But she had good credit and prayed to God that if she was going to be in a position to lose her home in the near future, then not to let her have it at all. Interesting, right? I, also, love the fact that she bought her home before meeting her husband.

The realtor spoke candidly and let the conversation flow freely. There was no PowerPoint (although she provided a handout in the goodie bag). We just asked whatever questions were on my mind. I asked about 20.

  • What’s this acronym? What’s that acronym?
  • How do you get started? (Check your credit score, and call her.)
  • How much money should you have in the bank in order to qualify for a loan? (3.5 percent of the mortgage)
  • Which credit score do lenders consider during pre-qualification? (The middle score of the three from Experian, TransUnion and Equifax. The seminar instructors recommended using instead of sites like
  • What makes up a mortgage payment? (Principle, Interest, Taxes and Insurance = PITI).


  • Why should anyone even own a home? How does it appreciate in value, especially in this current climate? (You do it for security, to own your little piece of Earth.)
  • What are all of the costs involved in owning a home? (For starters, think about your monthly mortgage payment, insurance, maintenance and landscaping.)
  • What should you housing-to-income ratio be? (No more than 30-35%.)

Many of the other ladies had similar questions. The realtor answered them all with a straightforward, Southern sensibility to which could all relate.

My parents have never talked to me about home ownership, and I always lived in an apartment, so I didn’t know the first thing about it. But I left the seminar feeling enlightened and empowered. I’m going to continue to increase the knowledge and interest I have in owning a home. Maybe it won’t happen within a year, but it’s best to start planning now.

(Great resource: Wells Fargo My FirstHome interactive learning experience)

Feeling dumb while setting S.M.A.R.T. goals

So S.M.A.R.T. goals isn’t so easy for this Wise gal. (Corny, I know.) Actually, I’m over-exaggerating a bit, but setting goals that are specific, measurable, attainable, realistic or relevant, and timely requires a good amount of effort. I just spent the last hour or so trying to detail my short-, intermediate- and long-term goals to complete Teacher’s homework assignment for Thursday’s session.

Setting-Smart-Financial-GoalsAs I was thinking of my goals, I poked around on the Internet. I mean, all great ideas come from the Internet, which turned 25 years old today. HBD, WWW). I found this great survey, albeit an old survey, that featured financial goals of non-retirees and retirees. It seems that I think a lot like my counterparts.

SecurianFinancialGoalsStudyResultsMy goals seem to align with those survey takers as well as MoneyUnder30’s 6 ½ Steps to Financial Stability and Dave Ramsey’s Seven Baby Steps.

My immediate priorities are to:

  • build an emergency fund of at least $1,000
  • eliminate debt
  • save $500 for my summer vacation
  • start saving for retirement to take advantage of compound interest

With further poking, I came across this great post about creating S.M.A.R.T. financial goals from Wealth Informatic$.  It’s one of the most comprehensive, step-by-step breakdowns I’ve seen. Check out this chart:

SMARTfinancialgoalsThe chart motivated me to create a color-coded Google spreadsheet of my own. I added a “Reason” column to remind myself of why I’m doing this. I also added monthly amounts I needed to save (or spend in regards to debt goals) in the “Need to Save” column to know the specific actions I need to take immediately to achieve them.

It won’t be easy, but as Teacher said in our first session, “If you fail to plan, then you plan to fail.”

Working toward a plan

Over the past few days, I feel as if I’m making good progress toward creating a solid financial plan.


On Monday, I couldn’t wait to put one-third of my tax refund into my main savings account – the Emergency Fund. Seriously, I jetted off work to make sure I arrived at the bank before 5 p.m. closing time. It felt so good to save that money, although I hated seeing my checking account deplete because of it. It’s so funny how I used to spend, spend, spend until I was near zero by the next paycheck. Not anymore. I like seeing stuff grow now.

It was tough to figure out what to do with the refund, but I followed this one-third rule. A writer on suggested that we consider using your tax refund in three areas: save, pay and spend. Solid advice. I had to get a balance and this was perfect for me.

On Tuesday evening, I did the overdue homework of completing the spending plan Teacher, the personal finance adviser who’s teaching the free workshop at the local women’s center, has been using for years. She said she can track down every expense. Nothing slips by her.

When I was done, I thought “My goodness! Crunching numbers really does lay it all out there.” I didn’t have to do too much work because I already started tracking my expenses and adding them into my Google spreadsheets. The exercise reiterated the point that you can’t know where you’re going until you know where you’ve been.

On Wednesday, March 5, I had the pleasure of participating in a “How To Budget” Google Hangout with Michelle Singletary. In the Q & A Session, I asked her if I should cut down on spending on insurance and my Roth IRA in order to cut down debt. I also asked if I should have term insurance.

When my picture and name appeared on her screen, she smiled and said “Hey, girl.” It felt so great that she recognized me even if she pronounced my name as Dionne, as in Warwick. Just the week before, I tweeted her that I had given my “21-Day Financial Fast” book to one of my best friends and bought another for my mother’s birthday gift. Michelle agreed that I should cut down on spending for the future to reduce debt now.

So yesterday, I asked the same of Teacher. She concurred. Teacher and my classmates commended me – the baby of the group – for even putting money toward those vehicles.

Later that day, I called Insurance Man and told him about my plans, the nearly $6,000 in credit card debt and all of the school loans. He agreed to stop the Roth IRA payments until the end of the year. Then we’d reevaluate my situation.

He said, “Now, I want you to promise me that you’ll put that $88 toward debt…”

I cut him off. “Oh, I’m already excited about creating an automatic transfer.”

“Dioni, you rock!” Insurance Man said laughing.

He said he’s proud of me, and believes in my plan and ability to budget. Well, I’m glad somebody is. It’s hard out here for a pimp.

As soon as I hung up the phone with him, I set up that automatic transfer toward the first credit card balance I wanted to kill. That extra money is an addition to the minimum payment, so I should knock this out within 4 months.

I’m so excited. I can see the light at the end of that tunnel.

Day 13: The Curse of Credit

Main Point: Credit is dangerous.

Today’s assignment: 

Think about your credit card purchases, eve if you pay off the bill every month. Would you make these same purchases if you were limited cash> Of the objectives of this fast to break the hold credit has on you. One this day of the fast, write down in your journal the answers to these five questions:

1. How has MasterCard (or Visa) become my master?

Visa has become my master my giving me false sense of security. Sometimes I thought, “I can go ahead of get this item. I have the Visa in my wallet, although I have no money in checking or savings account.” Plus, I’m bound to Visa until I pay off the balance and high interest I’ve accrued. I look forward to the day when I won’t be indebted to Visa.

2. How would buy the things I need, or want, if I couldn’t use credit?

Without using credit, I’d force myself to scrimp and save for items I needed and wanted. I’d pay cash. It’s so rewarding to pay cash.

3. How has credit card debt impacted my marriage or other relationships?

Credit card debt has impacted my family relationships most. I haven’t told anyone how bad the situation is. I haven’t expressed my feeling of disgust to my mom for enabling me. Credit card debt is keeping me from having a deep relationship with a man, I believe, because I’d be too ashamed to divulge this information.

4. How much more would I have in savings if I didn’t have to make credit card payments every month?

I spend about $250 each month to credit card companies. That’s 10 percent of my take-home pay. That’s 10 percent that I could be saving or tithing or what have you. In a year, I could save $3,000 if I could just save the money I give to creditors. That’s a damn shame.

5. How have I felt since I’ve had to stop using credit for the fast?

I feel proud for freezing the cards, but I’m afraid of a large purchase suddenly coming up. I feel as if I would have no other recourse but to use the credit card because I have no savings.

Pull out your credit card statements from the last three months (leading up to the fast). Write down the total you spent for each month. Without looking at the itemized list of your purchases, try to remember what you bought. Why do this? Evidence shows that consumers often can’t recall recent purchases bought on credit. If you can’t recall what you purchased, isn’t it likely you didn’t need the items or services?

I think I paid for gas for the car, a Christmas gift and the gas bill.  I also bought two pair of pants and a top from New York & Co. because of the Black Friday deal. Everything was marked down 50 percent AND the store offered free shipping. I thought it was a great deal at the time. I still enjoy the pants and use them often. The shirt wasn’t flattering, so I returned it.

Here’s what I really used credit cards for from October to December 2013:

  • NY & Co clothes
  • Old Navy clothes
  • groceries
  • FedEx printouts
  • gas
  • sports bras
  • gas bill
  • $600 car repair

What I wanted to buy today, but didn’t:

Nothing really.

What was easy about today?

It was easy to not think about my money when I was with friends. I kept myself occupied at exercise class, a dinner party and a birthday party.

What was hard about today?

It was hard to actually figure out my Debt Dash Plan and get all of the numbers right.

What did I learned from today’s chapter?

I learned that it’s better to wait for certain things instead of pulling out the credit card. Many of us, myself included, have a problem with instant gratification. Credit cards give that to us, but at a high cost.

What I was feeling today about my finances?

Today was a weird day. I didn’t get any mojo going as far as wanted to work on my finances today. I think I needed a break.

Day 12: No Debt is Good

Main Point: Debt is dangerous.

Today’s assignment: Complete a debt reduction worksheet. Make a commitment today to list every creditor, bank, relative or friend you owe money to. The information on this list should be transferred to your Debt Dash Plan. Total the debt. This is an important exercise so that you can see just how much debt you’ve accumulated.

Take some time to reflect on your use of debt. In your journal, answer the following questions:

1. Has being in debt led you to some things you know are wrong? If so, list them.

  • Not paying bills on time
  • Going ahead and splurging on items because I thought an extra $50 in debt wouldn’t matter with my already high debt total

2. How has debt affected your life overall? For example, have you had to delay buying a home because you have massive credit card debt? Are you stressed when the mail arrives or the phone rings because of the creditor call.

I’m stressed when I can’t do simple things like cover a bill that’s higher than I expected or give to loved ones in need. I don’t want to be the one in need all the time. I want to able to bless others.

3. Is your debt burden weighing down your spirit? If so, how do you imagine life would be different if you were debt free?

This debt burden is definitely weighing on my spirit. I keep juggling between what I can ay and note pay on a regular basis. My paycheck is already spent before the direct deposit is made. I’d be able to give more and save more if I weren’t debt free. The debt is holding me back from other things, some of which I think is subconscious. If a wonderful man came into my life right now, I’d be embarrassed by my debt and I probably wouldn’t be able to hang out or contribute much to our dates. I’m broke… in more than one aspect of life.

What I wanted to buy today, but didn’t:

I wanted a sugary snack. I wanted cookies.

What was easy about today?


What was hard about today?

Spending money on even laundry and groceries. I spent about $20, and it hurt. It wasn’t budgeted. Ha. The irony.

What did I learn from today’s chapter?

This chapter reminded me of two money moments in my life:

One story is about going to the Bank of America location in Kinston. I had to be 18 because it was right before I was going off to college.

My mom and I opened a checking account for me and two lines of credit. That was 9 years ago. I don’t have nearly as much in my bank account as I’d like to. It gets depleted every 1st and 15th of the month. Also, I maxed out the smaller $500 card, paid it off, then maxed it out again. My mom took the larger credit card with the balance of $1900. I got very little explanation about interest rates, the importance of paying off the monthly balance each month. None of that.

My mom maxed out that larger card and, of course, didn’t tell me about any the purchases. So now she sends me the monthly minimum payment. It would take 10 years to pay it off if we only paid the minimum.

Also, while in college when I “needed” some clothes, I told my mom about the credit card offer at Old Navy and she encouraged me to do it to get the deal – probably because she didn’t have any cash to send me either. So then she realized it was a Visa card, so I could use it anywhere although ON was blazoned on the front of the card. So when she needed a large sum of money one time, she called me on campus and instructed me on how to go the bank to get a cash advance of $400, I think. Of course, cash advances come with a hefty interest rate. But I didn’t know that. She didn’t explain it to me, and we never made a plan to pay it back in a timely manner.

Fast forward to a few months ago. I’m 26, gainfully employed and only responsible for taking care of myself.

I couldn’t even give my baby brother $30 when he texted me, which he never does. Him reaching out had to be because of an emergency. He needed that money to pay Mom for rent. I think I had a little bit more than $130 or maybe $87 left in the bank at the time. I called my Mom and asked if she really needed the money or if she could wait to get the money from my brother.

I didn’t want to tell him or her that I didn’t have the money. Giving away $30 would have broken the bank.

The ‘big sister’ and the ‘goody two shoes daughter’, who had a bachelor’s and a master’s degree, and a well-paying job that paid more than what he and mom made combined couldn’t even afford to give away $30.

Pathetic. I was either always spending money on bills, buying crap that I didn’t need or overextending myself by paying for events or items for my new apartment. (I hadn’t even accounted for all of the bills that would come with getting a new apartment.)

Nothing was every budgeted.

Last month, I paid my ridiculously high gas bill (which may have been caused by my faulty furnace that’s getting replaced) with that ON bill. Of course, I intended to make up for it before the next billing cycle. Then I realized that I wouldn’t have enough cash to pay for other bills. It’s like a sad never ending cycle.

I paid off the minimum balance just to use the card again and increase it again.

I’m disgusted by myself and also by my mother. I didn’t live with my father, so my mom was my money role model.

Parents, I implore you to please talk about money with your kids AND actually show them how to be good stewards. The showing is most important. I wish my mother would have been honest about her money situation and stopped catering to my siblings and me at every chance. When she told me that she wasn’t going to buy a prom dress my senior year, I remember thinking it sucked a bit, but I understood. I wore the dress I rocked during the Kinston Junior Miss pageant the previous year, and I survived.

She could have told me “No” and herself “No” so many times. Why didn’t she?

Now, I have to tell myself to “No” in order to climb out of this debt pit.

I hate feeling like this. Just hate it. I need to buckle down and get this under control now. I sincerely want to get this monkey off my back and pass on good money sense to my future children.

God, grant me the strength and resolve to kick bad money habits.

What I was feeling today about my finances?

I’m feeling meh. I’m excited about paying off two small debts, but I just want to make sure I’m doing the right thing.