[caption id="attachment_951" align="aligncenter" width="600" caption="----John's $950 Saturn is $10,000 cheaper than his truck and gets double the gas mileage----"][/caption]
I had lunch with John today. We did a little financial check up on how his debt reduction was going and talked about how we could maximize his efforts to continue his journey out of debt.
I told him how his story (see his full story here) has by far been the most popular thing I’ve written about on this blog.
He was thrilled at potentially giving someone else encouragement in their “journey out of a self-dug hole”. I asked him if i could share details.
“Absolutely.” He said.
Perhaps the coolest thing about his journey is that nothing miraculous or spectacular has happened to him along the way. He’s received no inheritance, hasn’t won the lottery, and hasn’t been given a single penny from Ed McMahon and the fine folks at the Publisher’s Clearinghouse. In fact, the value of his house has gone down $10,000 and he …

Last June I posted that my friend John had been able to pay off $19,377.03 of debt by using some cool strategies we worked out when I sat down with him.  Check out how he did it here.

He emailed me this weekend with an update. He now has paid off $32,076.89.

Wow.

Way to go John!!! So proud of the discipline and sacrifice you’ve used to make this happen.

I have the opportunity to stand before leaders all over the world and talk about what God’s word says about money. One of the most potent topics that always creates lively discussion is debt.

While never calling debt sin, God does puts some boundaries in place. Our discussion usually centers around these three:

Don’t Presume upon the Future
Have Collateral You Can Afford to Lose (with more value than the loan)
Be Committed to Pay It Back

Lately I’ve been fielding a lot of questions about what role the abuse of debt played in the US housing crisis. It’s interesting how each of these were mismanaged and broken in the years leading up to the housing crisis.

Don’t Presume upon the Future

None of us can guarantee our next breath, let alone the long-term plans we’ve made. When we go into debt, we should have a clear plan for taking care of it in the event of our death, or illness. We should not make present day commitments based only on future revenue.

Home buyers violated this principle in mass in my country. They were told that although their payments …

Is the amount of debt retired by my friend John over the last 11 months. He just sent me an email to tell me about it, grateful that I helped him put a plan together.

You see, 11 months ago we met and talked about a strategy to reduce his debt.

Here’s what he did:

1. Started an Envelop Budgeting System

First he looked at his income and expenses and decided to put in place an envelope budgeting system so no new debt was created and he knew exactly how much he could put against his debt. Check out Frugal Dad’s article on Envelope Budgeting. When he would have extra money in one of the envelopes, he used it to speed up his debt repayment. As he was doing this he also decided to change his cell phone plan, drop his “landline” telephone service, and look at every other monthly expense to see if it could be reduced or eliminated.

2. Work a Debt-Snowball Method

Next, we carved out extra money that could be put against debt, which would create more monthly money available to destroy debt. This is called the “debt snowball” method. In short as debts are paid …