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 having debt?

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 wisely.

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 want?

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 biblical principles.

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 become priorities.

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 card?

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 do.

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 better.

E-mail your comments to tpe@ag.org.