Debt
According to www.consolidatedcredit.org the average household in America has a debt of more than $16,000. (Metro Creative Connection)
Posted: Thursday, December 27, 2012 7:30 pm | Updated: 9:43 pm, Thu Dec 27, 2012.
OWATONNA — Stephanie Cole and her husband put in the work to get themselves out of debt once, and were quite successful at tightening budgets and clearing that debt away.
This year, they’re looking to do it again.
On Jan. 1, Cole will join millions of American’s who will try and make 2013 the year where they get out of debt and manage their money better.
For Cole, it will not be the first time she has tried to get out of debt. She said she and her family had accumulated debt from credit cards, car loans and medical bills among other things — a debt that reached into the five figures.
“We were actually about $20,000 total in debt but we were able to pay off about $10,000 while saving just over $1,500 over the course of just under a year,” Cole said in an email to the People’s Press.
Cole and her family aren’t the only people to experience debt. According to consolidatedcredit.org, the total consumer debt in America in 2011 was $2.43 trillion, or about $16,046 per household.
Debt is a problem affecting people at a younger age. According to the same website, one in five people between the ages of 18 and 24 qualify themselves as being in debt hardship.
The Rev. Dean Smith of Trinity Lutheran Church in Owatonna teaches a class on financial responsibility through a program called “Financial Peace University,” developed by Dave Ramsey.
“The easiest way to get out of debt is to not go into it,” Smith said. “(The course) primarily focuses on debt reduction along with saving. Really the big thing is not spending money that you don’t have.”
Smith said the program teaches people to use a cash-flow budget, where a person or family knows exactly where all the money they earn is going, a principle Cole started using in her family.
“We learned how to manage our money better, where our money was going, where we wanted it to go and why,” Cole said. “We figured out that we, as a couple, used cash, we managed our money a lot better than using checks or debit cards.”
One of the easiest ways to fall into debt is by using credit cards. According to consolidatedcredit.org, the average household has $6,600 in credit card debt with more than 178 million credit card users in the U.S.
Smith said using debit cards and checks is fine, because they are attached to cash. Credit cards however, can bring a lot of problems to their users.
“Credit cards are where people get into trouble,” Smith said. “A debit card, as long as you know what it means is fine.”
Smith said one of the studies referenced by the “Financial Peace University” program shows that when people spend cash, they actually experience a pain response, while using a credit card does not.
“On average, someone using plastic will spend between 5 and 15 percent more just because it doesn’t hurt,” Smith said. “Our brain doesn’t make the connection between what that piece of plastic means.”
It isn’t always easy to stay out of debt, something Cole found out this year. This year, a family vacation to Disney World set them back in their quest to get out of debt. But, Cole said she still used tips from the class she took at Trinity when paying for the vacation.
“We had paid for everything in cash except our airfare. We put the airfare on a credit card and that’s where it started,” Cole said. “So, starting with the new year we are going back to our cash envelopes and hoping to sit in on another Dave Ramsey class to have our accountability again. It helps so much.”
The class is being offered again at Trinity in January and is open to anyone. The course is nine weeks long and costs $95, Smith said.
Cole’s experience shows that it doesn’t always take professional help to get out of debt. She said other than an accountability partner from the course, she and her husband found success working on reducing their debt on their own.
Cole said when used to think that debt was just part of everyone’s life. Once she took the course at Trinity, her mentality towards debt changed.
“After taking the class it clicked that we don’t have to be in debt. We can live debt free,” she said. “So thinking now about debt, it overwhelms me some, yet I am excited at the same time because I know we are working hard on not being in debt for long.”
Reach reporter Al Strain at 444-2376 or follow him on Twitter.com@OPPalstrain
This year, they’re looking to do it again.
On Jan. 1, Cole will join millions of American’s who will try and make 2013 the year where they get out of debt and manage their money better.
For Cole, it will not be the first time she has tried to get out of debt. She said she and her family had accumulated debt from credit cards, car loans and medical bills among other things — a debt that reached into the five figures.
“We were actually about $20,000 total in debt but we were able to pay off about $10,000 while saving just over $1,500 over the course of just under a year,” Cole said in an email to the People’s Press.
Cole and her family aren’t the only people to experience debt. According to consolidatedcredit.org, the total consumer debt in America in 2011 was $2.43 trillion, or about $16,046 per household.
Debt is a problem affecting people at a younger age. According to the same website, one in five people between the ages of 18 and 24 qualify themselves as being in debt hardship.
The Rev. Dean Smith of Trinity Lutheran Church in Owatonna teaches a class on financial responsibility through a program called “Financial Peace University,” developed by Dave Ramsey.
“The easiest way to get out of debt is to not go into it,” Smith said. “(The course) primarily focuses on debt reduction along with saving. Really the big thing is not spending money that you don’t have.”
Smith said the program teaches people to use a cash-flow budget, where a person or family knows exactly where all the money they earn is going, a principle Cole started using in her family.
“We learned how to manage our money better, where our money was going, where we wanted it to go and why,” Cole said. “We figured out that we, as a couple, used cash, we managed our money a lot better than using checks or debit cards.”
One of the easiest ways to fall into debt is by using credit cards. According to consolidatedcredit.org, the average household has $6,600 in credit card debt with more than 178 million credit card users in the U.S.
Smith said using debit cards and checks is fine, because they are attached to cash. Credit cards however, can bring a lot of problems to their users.
“Credit cards are where people get into trouble,” Smith said. “A debit card, as long as you know what it means is fine.”
Smith said one of the studies referenced by the “Financial Peace University” program shows that when people spend cash, they actually experience a pain response, while using a credit card does not.
“On average, someone using plastic will spend between 5 and 15 percent more just because it doesn’t hurt,” Smith said. “Our brain doesn’t make the connection between what that piece of plastic means.”
It isn’t always easy to stay out of debt, something Cole found out this year. This year, a family vacation to Disney World set them back in their quest to get out of debt. But, Cole said she still used tips from the class she took at Trinity when paying for the vacation.
“We had paid for everything in cash except our airfare. We put the airfare on a credit card and that’s where it started,” Cole said. “So, starting with the new year we are going back to our cash envelopes and hoping to sit in on another Dave Ramsey class to have our accountability again. It helps so much.”
The class is being offered again at Trinity in January and is open to anyone. The course is nine weeks long and costs $95, Smith said.
Cole’s experience shows that it doesn’t always take professional help to get out of debt. She said other than an accountability partner from the course, she and her husband found success working on reducing their debt on their own.
Cole said when used to think that debt was just part of everyone’s life. Once she took the course at Trinity, her mentality towards debt changed.
“After taking the class it clicked that we don’t have to be in debt. We can live debt free,” she said. “So thinking now about debt, it overwhelms me some, yet I am excited at the same time because I know we are working hard on not being in debt for long.”
Reach reporter Al Strain at 444-2376 or follow him on Twitter.com@OPPalstrain
Reach reporter Al Strain at 444-2376 or follow him on Twitter.com@OPPalstrain
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