A Christian’s Perspective on Debt-Free Living

[Morning! Please welcome to the site today, Larry Thomas, who shares his financial recovery going through Dave Ramsey’s baby steps program. If you can believe it this was actually a *comment* left in response to our post on 6 things Dave Ramsey is Wrong About, but had to share it here in the form of a blog post as I thought it made for an excellent counter-perspective. Here’s his note below briefly edited for clarity. Thanks, Larry!]


In January of 2005 I was organizing the financial information for the preparation of my 2004 tax return.

To my amazement, I found that during the 2004 year my wife and I’s income was just over $100,000 before taxes. I proceeded to add our joint income for the previous years from 1999 to 2004. It came to more than $540,000.

I was stunned.

Where did that over half a million dollars go? What did we have to show for it?

As much as I could tell, it was debt. How did we get into this mess? Why were we always broke? When we added our debts together they totaled over $68,000 not including the house mortgage.

When Barbara and I were married in 1992 we kept our finances separate. Since I was coming off of a divorce from my first wife, I had debt and alimony payments. Because of these issues, we decided to keep our finances separate. Since my income was more that Barbara’s income we divided the bills proportionately according to our incomes.

We both had car payments, so each of us paid our own car note. Since I made more money, I paid the house note and purchased the groceries. She paid the utilities and paid for household items and housewares. We each paid our own car insurance.

The disconnect in our separate finances caused us to build separate lines of credit and separate paths to going in debt. This disconnect had each of us thinking our debt was under control because we did not know what debts the other had accrued.

At some point in time, about 2002 or 2003, Barbara decided to work an extra job. I thought it was to earn extra money for Christmas spending. Little did I know that it was to mask over spending. I myself had run up credit card debt on household items for repairs and my hobbies of wood working, golf and liquid libations. But I thought I could handle the additional debt. What I did not expect was the continuous increase of interest rates on my multiple cards from single digits to double digits, with some of them reaching as high as 27%.

I thought I could borrow my way out of debt. So I took out lower interest credit union loans to pay off higher interest credit cards. But all that did was extend the amount of time that I remained in debt, and I still had the credit card and personal loan debt.

Looking back to ’05 I started listening to financial guru Dave Ramsey on the radio. I had seen him on a CBS feature on starting the New Year right by getting your finances in order. It intrigued me so much that I had to learn more about controlling my finances and not letting them control me.

Dave Ramsey prescribed what he calls the Baby Steps. The Baby Steps are no quick fix. They involve a lot of hard work over a period of time. But in order for them to work, both Barbara and I had to work together and combine our financial life sans debts.

To start the Baby Steps, we first had to commit to living on a budget and learn how to use budgeting tools. I also took on an extra job to help pay down debt by working part-time at Radio Shack. We have found that there is also a spiritual component to controlling ones finances.

Below are the Baby Steps in case you’re not familiar with them. I’ve added some bible passages to go along with them that help illustrate the point.

#1. $1,000 in an Emergency Fund

After you do your first budget, save up $1,000 as fast as you can. Just take care of the essentials (housing, utilities, transportation, food, and clothing) and make the minimum payments on your debt until you get the $1,000 saved up.

Why have an Emergency Fund?

An Emergency Fund will help you keep your head above water while you’re getting out of debt. As soon as you start this journey, life will happen. Murphy’s Law goes into effect. Murphy might even move in with you. For example, your refrigerator might break down but guess what? You have an emergency fund to take care of that so you don’t have to stop your debt snowball.

“We should make plans–counting on God to direct us.” – PROVERBS 16:9 TLB

#2. Pay off all debt (except the house) utilizing the “Debt Snowball”

The debt snowball is simple, yet effective. First, list all your debts smallest to largest. Next, make minimum payments on all the debts except the smallest one. Put as much money as you possibly can on that debt.

Once the smallest debt is knocked out, carry the money you were putting on your smallest debt up to the next smallest debt and attack that one. Over time, you’ll knock out debt after debt until they’re all gone!

“The rich rules over the poor, and the borrower becomes the lender’s slave. The Lord will open for you His good storehouse… bless all the work of your hand… you shall lend to many nations, but you shall not Borrow” – PROVERBS 22:7, DEUTERONOMY 28:11 NAS.

#3. 3-6 months expenses in savings for emergencies

Once your debt is gone, build a larger emergency fund of 3-6 months. This emergency fund is important as it will serve you in case loss of employment occurs. This fund allows you to continue living the way you are without stress and fear. It gives you time to choose your next step and place of employment. It allows you to stay on the plan.

“A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences.” – PROVERBS 22:3 TLB

#4. Fully fund 15% into pre-tax retirement plans and ROTH IRA, if eligible

Once you’ve reached this point, it’s time to put a little away for retirement! Take advantage of your company’s 401k if they have one; put money in mutual funds… whatever it is, just start putting away 15% of your income.

“There is precious treasure and oil in the dwelling of the wise, but a foolish man swallows it up.” – PROVERBS 21:20 NAS

#5. College funding

You have kids? Guess what… high school graduation comes before you know it! What better gift to pass on to your children than a college education. They might not understand now, but they will someday!

“Let each of you look not to your own interests, but to the interests of others.” – PHILIPPIANS 2:4 NRSV

#6. Pay off home early

It’s time to own a home! On Baby Step #6, you pay off your home as fast as you can. Put as much extra money as possible toward your house payment.

Once that house is paid off, you just gave yourself a raise because you have NO PAYMENTS, BABY!

#7. Build wealth and give!

Keep socking away money and making it work for you so that you can retire with dignity. By the time you hit Baby Step #7, guess what has happened? You lived like no one else so that later you could live and give like no one else.

“Don’t forget to be kind to strangers, for some who have done this have entertained angels without realizing it!” – HEBREWS 13:2 TLB.

The Baby Steps are no quick fix. They involve a lot of hard work over a period of time. But if you work the plan, it will work for you.

And trust us, being debt-free, being on the other side – is a wonderful feeling. It’s all worth it. I just got a layoff notice today amid the COVID-19 pandemic and don’t know when I will go back to work. If I did not have my debts paid off and have an emergency fund I would be in a bad situation.

(Though please note, I get a pension since retiring from the city in 2016, and I am also a part-time tax preparer now so I am not totally out of income. You can find my site here if you live in the Ohio area and need assistance – ThomasTax1040.com)

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  1. Petra March 25, 2020 at 6:46 AM

    Given how I’m not a Christian, (I’m just trying to be a good person, that’s my philosophy), I was curious what the specific “Christian” part of his view would be. I guess it’s being expired by wise words in a specific old book. I guess to each their own.

    If you get inspired: good! Get going, fellow human-being, and make your own life and that of your loved ones a bit better! (And who knows, if you find yourself with heaps of wealth one day, you can even improve the lives of those you don’t know by charity).

  2. whiskey March 25, 2020 at 7:53 AM

    Dave’s mentor was Larry Burkett. I was given a book of his which was financial in nature. (Coming Economic Earthquake) and then a couple of years later heard Dave on the radio.
    I like a lot of what Dave says although I’m not always a fan of the delivery. But wise words are wise if you apply them. It helped me and the missus through a rough financial patch.
    I recommend DR to anyone looking for help and have run into many DR fans over the years. Some have come out smelling like a rose, others not so much.
    Whether you’re a Christian or not, there’s still much to learn in what he says.

    1. J. Money March 25, 2020 at 2:25 PM

      Yep yep – at the end of the day he’s helping a loooooot more people than not, and most importantly the people that *need* the most help! I.e the ones in deep debt!

  3. Paul March 25, 2020 at 9:14 AM

    Dave Ramsey often gets dismissed because of a trending societal aversion to religion (specifically, Christianity). Generally speaking though, if you look at the baby steps in a vacuum what he has done is written down a path to success for the lowest common denominator. I think generally speaking his methodology is something that a lot of people need.

    He would also be better served to add realistic return rates in his calculation scenarios. The thing that really gets me is the not taking out a home loan over 15 years. Great in theory, or if you live in a LCOL area but for those of us in the DC metro, unless you were lucky enough to marry an ambitious partner, that is just not doable. The lowest price house is $500k and that is for a piece of garbage. I guess you can poke holes in anything when it comes down to it… Use of credit is also something I don’t agree with. My SIL follows Ramsey blindly, she closed all her credit cards and now has a terrible score. Barely could get a loan for a vehicle.

    The point of all that is that DR should be used as a starting point and as a person becomes more fiscally responsible they should graduate to something more in keeping with reality.

    1. J. Money March 25, 2020 at 2:28 PM

      *clap* *clap*

    2. Alaska49 March 26, 2020 at 7:40 AM

      Larry Burkett used to have a financial radio program on the Moody Radio network. After his death the program still continued with hosts Rob West and Steve Moore. It’s called “Moneywise Living”. It airs M-F, 12-1….live stream…https://www.moodyradio.org/programs/moneywise-live

      1. J. Money March 27, 2020 at 3:16 PM

        hey thanks!

  4. Caroline March 25, 2020 at 10:12 AM

    Dave Ramsey was life changing for us! I grew up w/ a Dad that had a BS in management but was all about low interest loans on things. I heard quite often “it’s like free money!”
    Had my daughter in ’04, read Total Money Makeover when I was pregnant, hubby’s 22yr. Navy career was ending, debt was normal! We turned it all around baby stepping . I love envelopes whether actual or sinking fund savings accts. People get caught up when “Bible” is mentioned- we try to explain it as a book of some good ideas, 10 commandments= 10 pretty good ideas for a society! Always learning and yes, DR is a great starting point! Be well everyone!

    1. stephanie t March 25, 2020 at 11:18 AM

      I still carry my envelopes with cash.

      1. J. Money March 25, 2020 at 2:29 PM

        I like that – “a book of some good ideas” haha…

  5. Debt Free in RVA March 25, 2020 at 12:29 PM

    So, I loved the post and comments. I am a Christian too! Eastern Orthodox, which is not as common in America.

    Someone up in the comment section mentioned Larry Burkett. Yes, Dave learned from Larry! I want to put a plug in for my Christian mother who gave me the book “Debt Free Living” by Larry Burkett when I was 18 years old. What a great gift that KEEPS on Giving!!!! :-) My Mom gave it to me because my Dad and Mom were not good stewards of their money for the first 15 years of marriage. In fact, my Dad used to buy a new car every year……

    In our modern, consumeristic society we are SLAVES to debt. The Bible teaches how horrendous debt is with passages like “A debtor is a slave to the Lender”. Larry Burkett mentions this. If anyone here knows someone who is drowning in debt, I highly recommend “Debt Free Living”. the case stories in that book are still applicable today.

    yeah, Dave Ramsey and Larry Burkett are not perfect, but there is a lot of wisdom in minimizing debt. Think about it today – who wins with debt!?! We DO NOT win. The greedy banks win. Anyway, I know I am preaching to the choir here on J. Money’s blog, but if we can help others let’s do it.

    1. J. Money March 25, 2020 at 2:33 PM

      Amen, brother…

      And thanks for the recommendation. I’d heard of it before but didn’t realize it was so powerful! (Or that he was the guy who inspired DR!).

      Really cool it shaped your finances like that. Going now to read more about it :)