Consumer Debt – how we annihilate it (Part 2)

I am in a conversation with three different math wizards right now trying to “put it in a bottle” or to codify “the algorithm” so we have a nice tight sound bite when explaining our methods. We want to offer practical solutions to the slavery of consumer debt by building community trust, sharing, and providing capital to eliminate consumer debt in our community. The Debt Annihilation Team fosters a process of recovery from shame, bondage, and debt to freedom, simplicity, and community through generosity, hospitality, and trust. I admit it sounds lovely and is tremendously difficult, especially for people who are jammed up and/or dysfunctional financially. It is not a quick fix, although quicker than most people we’ve talked to who don’t have a strategy to get out.

With Galatians 6:1-5 as our backdrop, the Debt Annihilation Team (DAT) uses three components: team leaders & administrators, coaches, and DAT Groups. We form Debt Annihilation Groups out of applicants for a projected period of time when they will use seed money and an agreed upon strategy to pay off one another’s debt.

We have given covenant members of Circle of Hope preference in forming our groups because our commitment to one another flourishes in accountable discipleship environments. I’ve talked to over a dozen other faith communities over the years who love the idea but haven’t tried it yet. If you’re not able to be part of us or don’t want to be, I encourage you to use as much of this stuff that’s useful and form your own group locally. We’ll share all of our info and ideas with you.

We begin with an intake process with full disclosure – one online then a follow-up face-to-face with other potential participants where we make clear the theory and basics of the group covenant. Those who wish to proceed meet with a Personal Finance Coach before entering the group, putting together a basic budget. You might be surprised how many people want to get out of credit card debt and don’t follow basics of money management. 

Our group members agree to by DAT Group Covenant which will indicate the people in the group, the length of time, the order of annihilation, and how much money will be contributed. The length of time will include replenishing the seed money.

We use seed money – in the past given by Circle of Hope,  to jump-start a snowball effect where everyone gets their consumer debt paid off. Here’s the gist of how it works:

We discern the order of “annihilation.” If all credit lines are the same, the high interest rate needs to go first, as this strategy mostly benefits everyone because we save money and time by knocking out interest.

 

Example of “the other brand” aka people fending for themselves

For instance, let’s say five people each have $5,000 of credit card debt (and different interest rates%). If they paid their minimum payment of $50 plus $100 every month, on their own it would take…

“Laura” (29%) 69 months, paying her $5k debt plus $5,287.45 in interest.

“Starbuck” (25%) 58 months, paying her $5k debt plus $3,625.37 in interest.

“Saul” (20%) 50 months, paying his $5k debt plus $2,359.18 in interest.

“Caprica” (15%) 44 months, paying her $5k debt plus $1,508.52 in interest.

and “Adama” (7%) 38 months, paying his $5k debt plus $576 in interest.

They would pay $13,536.52 paid in interest, over three-six years. Of course most people pay bits “when they can” and try to at least pay their minimum. If a lump sum of cash comes in like a big income tax return, more goes to the card. If they continue using their card(s) it’s usually longer.

 

Using the same simplified examples…

Here’s how we do it. We use the seed money, then when the first person is paid off, all baseline funds (including those of person who is paid off) go towards the next person. The process repeats until everyone is paid off and the seed fund is replenished for a future group.

Imagine the same scenario, but this time we use the $10k seed money to knock out Laura Roslin and Starbuck’s debts. Now they each have $150 that they use to pay directly to Saul Tigh’s lender. Saul pays his own minimum ($50) plus $100 to his lender. Caprica 6 & Commander Adama pay just their own minimum ($50) and use their $100 to pay directly to Saul’s lender.

It takes 9 months to pay off Saul’s debt, paying $396.45 of interest. Then Saul joins Laura & Starbuck (debt free) with his now $150 that all go directly to Caprica’s lender. She now adds her $100 to her minimum payment ($50) while Adama maintains his minimum ($50) to his own, and his $100 to Caprica’s.

It takes 8 months to pay off Caprica’s debt, paying $271.21 of interest. She joins the others debt free, and now everyone uses their $150 to pay off Adama’s lender.

It takes 7 months to pay off Adama’s debt, paying $114.99 of interest. Then the group replenishes the seed money at the same rate, taking 13.33 mo, at 0% interest. The debt was paid off in 23mo. In 36mo they annihilated all consumer debt and replenished the seed fund for another group to start.

When they formed a group, they only paid $782.65 of interest over 36 months, compared to over $13k over 69.

Next post will be about how to get involved in the 3rd group we are about to start. We are looking for people to train as personal finance coaches as well as potential group members.

Can’t get enough? Here are a few posts about the teams.

Shalom! journal for the practice of Reconciliation here

The Christian Century, by Jesse James DeConto (p10) here

Consumer Debt – how we annihilate it (Part 1)

I love the old story that someone’s dad used to flip burgers part time to pay for college out of pocket while they attended. It sounds to me more like education in pre-Gulf War Iraq (free at all levels) than the US a generation or so ago. Every graduating class gets more debt piled on to the point that it’s normalized to have student debt as a rite of passage. If you don’t have any – a normal person might assume that you don’t have a college education or your parents paid for you – unless you are over 6’10” (then they think you should be playing for the 6ers).

It’s not just education or mortgages, which are still considered “good debt” since they are an investment that normally gains in worth or earning potential. Consumer debt, or revolving debt, has less of a noble connotation.  According to Nerdwalletthe average household in the US with a credit card has over $16,000 of credit card debt. If you include households with no credit card debt, we still average over $7,500. That’s over $918.5 billion.

For many people, credit card debt serves as a sign of financial mismanagement, economic emergencies beyond one’s means, bad spending habits, predatory lending, or the open wounds from another kind of financial crisis. Shame comes along with almost any reason – most people feel as though debt cripples them, or hangs heavy around their neck. Many people I talk to can only pay their minimum balance or just a little over, leaving them with thousands of dollars collecting interest each months at rates from 0% (temporarily) up to 29.99% if you miss a payment.

I first heard about combining debt in the late 90s at Circle of Hope when people like Will O’Brien, Randy Nyce, and Trevor Day would consider our financial power when form community. They were using some economic theory and theology that I trace back to Ched Myers’ work on Sabbath Economics – these two books are a good start. It took years to get an idea small enough to try, and then a few years to find someone to organize it -it ended up being me. Even though a recent internet IQ test put me just below genius at 137, I have few math skills. In Part 1, I’ll explore the concepts that we distilled enough to try with brave “astronauts” coming together in 2010 with five people and $22k of credit card debt, and then another group in 2013 with $26k that is almost done. When I post Part 2 next week, I’ll give specifics on our strategy as well as how to get involved. 

Handle your debt like a group, rather than an individual

Romans 13 inspired us to want to “let no debt remain outstanding, except the continuing debt to love one another.” Our shame isolates us. Our attempts to save face can isolate us. Turning to the corporation rather than the Body in distress isolates us. Forming a Debt Annihilation Group takes a lot of work up front and keeping disciples, and it happens in common – even considering the debt common.

Get coaching, and have financial transparency

Our coaches get trained by Everence to help with budgeting and by our team members on how to have healthy conflict, be supportive, and keep encouraging group members. Telling the whole truth about our money habits flies in the face of what we’ve been taught and undermines the Powers.

Change your mind about money

We have been indoctrinated to Spend, Save (if you can), and Share (if you’ve got extra). In our coaches’ training, we learn a new paradigm of Share (give from your best), Save (plan for more than the moment), and Spend. If you don’t have money to share and save, chances are your expenses are inflated and you need some help learning how to cook at home, chill with the bars/coffee shops (even the ones owned by my friends!), and honing down paid entertainment to name a few. Heal your mind.

Make a plan and stick to it

Even the best laid plans can be laid to waste by not following through. Even when it’s Christmas. Even when your car breaks. Even when you car dies. We have so many resources as a community to reduce the cost of these things – plus your cell leader can help you in crisis. One meeting we passed the hat so one group member could get a Transpass and had one less reason to borrow from the corporation again.

Enjoy freedom

Becoming debt free calls for celebration. Tell your story. Enjoy the proverbial monkey being off your back by remembering and sleep better. Be generous.

Feel free to add your thoughts or stories to this post in the comments, or questions you might have about the concepts and philosophy. Next week we’ll have more practical application and opportunities to be involved in the third round we’re getting going by the end of the year. 

When Philly Jesus makes real Jesus confusing

Maybe you haven’t heard of Philly Jesus (PJ). Mike Grant found the LORD as he describes as the stone that found me when I was at the bottom. From musical theatre to hip hop, dude has been into public performance for a while and into being a born again Christian lately. Stories differ on how/why this white boy put on the “Jesus jersey” but a following of 11k on Instagram and 3.7k on Twitter and pieces by the BBC point towards people paying attention to his antics.

This morning, he retweeted this Philly.com article that got me thinking more about how not cute I think PJ’s schtick has become. I thought a goofy white dude at Black Lives Matter protests or playing hockey at City Hall was endearing. Just imagining Jesus showing up in Philly is kind of cool. I also think Black Jesus is funny – especially parts with King BachI quickly went from “eh, that’s kind of interesting” to “SMH” for two big reasons. He began a $70k Gofundme campaign so he can buy a fancy car and go on tour to other cities. No doubt connected to likely funders, he went from mooching off of SCOTUS decision celebrations to deleting all his gay friendly posts describing his new rather rugged position against homosexuality (see that Philly.com article).

I think I’m learning:

People have to do a lot of work to take real Jesus seriously. PJ’s antics seemed to have swung people from “Heyo – Jesus is kind of cool” to “Oh, yeah. Christians are judgmental and they want money for fancy cars.” To spend time listening in prayer, studying the Gospel, or devoting your life to the Way of Christ is totally awesome. Did it just become harder to access in Philadelphia?

People will give money to something because it’s funny, because they think it’s cool, but are often challenged to share their heart and wallet with what’s most important to them. I’m grateful to be among so many dedicated partners in Circle of Hope who generously make love happen. I do not take it for granted.

If you want to be a Christian, you represent others with your opinions. If you try to be a public person or persona who claims to be a Christian, you probably represent more people than gave you permission to. Your political profile pics or memes that you share are more than personal expression. Feel the good that goes with being part of the Body and be as generous as you can as the nation processes change.

I talk to people whose only perceptions of Christians are Jimmy Swaggart, George Bush, the Pope, and/or some celebrity like Shia LaBeouf. Drawing closer to the heart of God through being formed into a people with a common purpose might sound more confusing than someone condemning immorality and asking for money to build their special building nowadays. Let’s keep demonstrating what it’s like to find our true selves in Christ. Let’s keep sharing the love that fills us. Let’s keep walking in the way that brings healing, justice, and peace in the land with our Creator who very much wants to keep the Redemption Project going.

 

 

college becomes less fun…

1.  when it’s exam time.

2.  when I have 2 exams in the same day, like tomorrow, for instance.

3.  when I don’t have as much time to study as I would like.

Last time around I did a lot of crammage.  That seemed like a good idea.  Nowadays I like to do all the reading when it’s assigned and take a lot of notes.

I still haven’t quite made up my mind for which essay to write for my History class.  Here’ my choices.
1.    History of African societies of Southern Africa
a.    Identify the three major groups of people in Southern Africa (San, Khoi Khoi, Bantu)
b.    Write an overview of their history from the beginning until the 20th Century.  Or after you describe them you can focus on one or all three.

2.    History of Europeans in Southern Africa
a.    Which groups came and why, how, and who did they become?  Dutch/Afrikaner
b.    Focus on one of them or each one in detail.

3.    History of interaction between Africans and Europeans in Southern Africa.
a.    mid 17th century to the present
b.    peaceful, amicable relations between the two based on trade, treaties, alliances.  It could be particular to Zulu/English relations.  Gaika taking the English to fight against Makanna, for example.
c.    1838 Afrikaner-Zulu conflict
d.    1879 British-Zulu conflict.

They are all nice and open-ended.  However, I don’t know if I can remember all these names and dates, and I have 50min in which to write it so I really have to focus.  I’m leaning to the first one because I’m most interested.  The second one I think is the easiest, though, and the third has too many possibilities and I’m afraid I’ll not give enough detail.