Pay it down, pay it off

I began a conversation with David Briggs in last week’s column, about Americans and our staggeringly high and steadily increasing consumer debt (find it at We Americans are awash in it.

This week — it’s what to do about it.

David Briggs is the head of the Good Sense Financial Stewardship Ministry at Willow Creek Community Church in South Barrington, Ill. He spent almost three decades as a finance manager at General Electric before being called to minister to folks on how to handle their money wisely and practically (he’s often a guest on my radio show.)

Last week was the problem. To sum up, Briggs says, we’re a "not my fault" generation — "This financial problem isn’t anything I caused, so I had to use my credit card!"

I hate to admit it, but inevitably as David Briggs talks, I find myself saying "check, check, yeah, I do that too, check. . ." Ouch!

But Briggs has a way for me or anyone to better handle money. He said it’s not about any big "financial tips" any more than a fad diet is the answer. He said for anyone who wants to better handle — and in the end enjoy — their money, they have to start "thinking" about it differently.

Here I’ll focus on the expenditure side of the question (versus savings and income) for which Briggs offers four suggestions, the first two of which alone could change one’s life:

First, he says, write down every single expenditure. Every one. What you bought, and how much it cost. For those who are really serious about this exercise, don’t write down "groceries" but "lettuce, two gallons of milk," etc. This cuts spending because it’s a pain. And, there will now be a record of frivolous purchases, and worse, frivolous and expensive purchases. Briggs says you’ll automatically cut back without actually "losing" anything.

But here’s where the rubber meets the road for anyone serious about nixing unnecessary purchases and thinking more carefully about necessary ones: Briggs said to start paying cash for absolutely everything for which one can technically pay cash, and studies show we will cut our spending by 26 percent over someone who consistently uses a credit card for such purchases.

26 percent!

This means gas, groceries, that new computer you are getting at Best Buy, everything.

By the way, this means real, green dollars, not a debit card or check. Briggs said that studies show spending has a huge emotional component to it. While using a debit card (which withdraws the money from your bank account at the point of purchase) will limit spending somewhat, when we see ourselves shelling out those green bills we have an immediate and tactile sense of what’s going out the door, or rather the wallet.

What a huge pain (though perhaps only for a short time while we learn to change our spending habits) and that’s the point. If we have to go to the bank, get a wad of bills, but not carry too much so that it’s not safe (maybe go straight from the bank to Best Buy) go back to the bank and replenish, etc. — wow, is that going to curtail our spending on stuff we don’t really need and we’ll think more carefully and wisely about purchasing the stuff we do need.

The third suggestion, a budget, is key of course. But the first two are what will really cut spending.

Finally, know the difference between credit and debt. "Credit" is something you control, because you have the ability to pay off that loan at any time; i.e., you could sell your house if you had to and come out of the transaction with cash. "Debt" is something you can’t repay (an over mortgaged house, credit card bills that add up) — it controls you. Avoid it.

So maybe it just all comes down to the age-old advice of Mr. Micawber in Charles Dickens’ "David Copperfield." Micawber learned the hard way that it’s not so much about what income comes in, but what goes out. And so we have the "Micawber Principle:" "Annual income 20 pounds, expenditure 19 pounds, 19 shillings and six pence — result, happiness. Annual income 20 pounds, expenditure 20 pounds and six pence — result, misery."


(Betsy Hart hosts the "It Takes a Parent" radio show on WYLL-AM 1160 in Chicago. Reach her through