What Europe Can Learn from St. Stephen of Hungary

Night after night, our TV screens are inundated by heart-wrenching images of Syrian and Libyan refugees fleeing the violence wreaked by the Islamic State upon their native land, of the bodies of refugee children washed up on the shore.

Surging into Europe, they are causing European politicians great angst:  Will the Muslim hordes over-tax their social services?  Will they change their culture?  We’re told there hasn’t been such a refugee flow since World War II.

The Europeans are getting exactly what they deserve.  They chose, willingly, to ignore Jeremiah 22:3:  “Do what is right and just.  Rescue the victim from the hand of his oppressor.”

Whether they welcome refugees or not isn’t the point.  The moral imperative is to “rescue the victim from the hand of his oppressor” — not merely to provide sanctuary for those who manage to escape the war zone.

Rescue is an active verb.  It doesn’t imply sitting around, waiting for desperate people to turn up on your doorstep and then welcoming them.  It implies going to the place where they are in danger, and ending the danger.  When it’s just one or a few suffering at the hands of an oppressor, simply getting the victim out may do the job.  When the victims are hundreds of thousands, rescuing the victim may involve eliminating the oppressor.

But wait, many will say.  Didn’t Jesus tell us that when someone slaps us, we should turn the other check?  He did.  But that begs the question:  Europe is not the one being slapped, it’s the refugees.  The refugees are doing exactly what people always do in such circumstances — try to get away from danger.  That’s why they are flooding into Europe.

Jesus also made clear that he didn’t come to repeal or repudiate the law and the prophets, but to fulfill them.  And, as noted, the Prophet Jeremiah makes it clear that the “right and just” action is to “rescue the victim from the hand of his oppressor.”

There is no way around  military action to rescue these victims from the hand of the oppressor.  Europe’s leaders — and President Obama — know it.

So why haven’t they done anything?  The short answer is cowardice.  Europe was pretty much decimated by World Wars I and II.  There’s no stomach to run the risk of repeating those disasters.

A somewhat longer answer is the same reason that you haven’t seen Arab or Muslim nations step up:  They know they don’t have the experience to be competent from the get-go.  Their troops haven’t engaged in sustained combat, and their generals and other leaders don’t have experience directing major military actions.

Only the U.S. has that sort of experience, and President Obama has made clear he hasn’t the stomach to engage and defeat ISIS on the ground, which is what is required to “rescue the victim from the hand of his oppressor.”

Which brings us to St. Stephen of Hungary. King of that nation around 1,000 A.D., he fought only defensive wars — wars needed to defend his people and their lands from others.

Catholic doctrine speaks of a “just war.”  All war is hell, as all soldiers know.    Some suggest that because Jesus said, “Blessed be the peacemakers,” war is simply prohibited.  But they conveniently ignores Jesus’s teaching, which is fully in line with that of Jeremiah:  “Let him who has no sword sell his mantle and buy one” (Luke 22:36).

And if one believes, as Catholics profess, that all Scripture is divinely inspired, how can one ignore Ecclesiastes 3:3, which tells us frankly, “There is a time to kill”?  Or Luke 3:14, which tells us that when asked by soldiers what they should do, John the Baptist didn’t tell them to lay down their arms.  Instead, he counseled: “Do not take money from anyone by force, or accuse anyone falsely, and be content with your wages.” Why didn’t he tell them to lay down their arms?  Because their job was to maintain the “Peace of Rome;” they were the peacemakers.

In Romans 13:4, St. Paul tells us that “rulers do not bear the sword for no reason. They are God’s servants, agents of wrath to bring punishment on the wrongdoer.

What has happened in Syria and Libya is a crime of the highest order.  It is long past time for the nations of the world — and especially for Europe and the Muslim nations of Arabia and North Africa — to intervene to re-establish peace and to enable the refugees to return to their homelands.

It would help immensely, of course, for much of the fighting to be done by the refugees themselves.  They need training on an immense and urgent scale.  They need leaders who have been in battle, who can provide the example.  People learn quickly in combat, but casualties can be greatly reduced if inexperienced troops are accompanied by experienced soldiers.  That means, unfortunately for Europe and the U.S., there will need to be “boots on the ground.”

Finally, it is not adequate to war war to simply quickly destroy ISIS and similar elements.  There must be a concrete plan and a commitment to return the refugees to their homeland and to rebuild the society ISIS has destroyed.

We had that plan in World War II, which is why within five years of the end of the war Germany and Japan both were functioning reasonably normally.

By destroying ISIS, other Muslim countries, Europe and the U.S. can “rescue the victim from the hand of his oppressor.”  By having a massive plan to quickly rebuild Syria and Libya, the U.S., Europe and Muslim allies can be the peacemakers of whom Jesus spoke in the Beatitudes.

St. Stephen of Hungary would have understood that.  One can only hope that the hardened hearts of today’s political leaders in Europe, and, yes, the U.S. can also come to understand.


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Does a Decent Income Lead to ‘Hardness of Heart’

Yesterday, in “What I’m Reading,” I noted a Michelle Singletary column in the Washington Post in which a reader complained that “life is expensive even for the top 5%.”

Interestingly, the column ran just a day before the Gospel reading at Daily Mass was about the good young man who observed all the commandments, but wanted to know “what good I must do to gain eternal life?”

St. Matthew recounts Jesus’s response:  “If you wish to be perfect, go, sell what you have and give to the poor.”  The reading tells us the young man went away sad, because he had many possessions.

There are a couple of things to note about this reading.  First, the young man was good.  He observed all the commandments.  It’s very important to understand this point.  He wasn’t the rich man who stepped over Lazarus.

But when challenged to “sell what you have and give to the poor” he couldn’t bring himself to do it.  This is why Jesus, in another reading, remarks how hard it is for the rich to enter the kingdom of heaven.

Jesus’s response to the good young man was an invitation to poverty.  That call is embraced by religious, who own nothing and share all they earn or have with the community to which they belong.

But what about us, ordinary laypeople with families?  Or who hope to have families?  Most parents live that same spirit — they view what they own as being held in trust for their families.  If they are fortunate, they hope to be able to pass some of that along to their children.  So the evangelical concept of poverty embraced by vowed religious isn’t that different from what is practiced in families rich and poor.

But poverty as a spiritual counsel, especially as it applies to ordinary laypeople, is about more than what’s in the bank, or the size of one’s home.  It’s about detachment from the desire for riches, from avarice. It’s about not forgetting the poor.

“Our culture does a poor job of schooling us” in how to deal with abundance, says Msgr. Charles Pope.  “We’re repeatedly told we can never have enough.”  For the most part, he says, we simply don’t know how to tell when we have “reached the point at which we can say, ‘My family and I have what we need, and even a good bit of what we want.  Now it’s important to give out of our abundance.”

It’s important to “cultivate what we call the spirit of poverty, to learn to be content with and grateful for what we have,” Msgr. Pope adds.  “By the spirit of poverty we learn to be detached from the excesses of this world. By living more simply, we are able to be more generous both with our children and with the poor.”

And that’s what made the family Michelle Singletary wrote about so interesting.  Certainly, they had budgeted every penny left over after paying their taxes.  One can argue that they don’t need a house that requires a $2,500-a-month mortgage payment.  But in the Washington, D.C., area that doesn’t indicate an excessive house.

It’s also worth noting that the family is more generous than many in its income bracket, giving 5% of their income to charity.  This is a good family, working hard to be generous and to meet their responsibility to their children, budgeting $16,500 for college savings and $2,648 for various school expenses and tutors.

But, this family, Singletary notes, is “spending more money on recreation, travel, gifts and entertainment than some families have in annual household income.

“I’ve heard from parents who have saved adequately for their kids’ college education yet complain that poorer families are eligible for need-based financial aid,” she says, adding:

“They say things such as, ‘I’m being punished for saving.’  Or they protest, ‘Why should families that were irresponsible get rewarded?'”

If we cultivate a spirit of detachment, we’re more likely to be grateful for what we have, and to be more generous with those who have less.

And we should never begrudge assistance to those in genuine need.  After all, we might find ourselves in that position too.  A recent Pew Research Center poll found that over a 40-year working life, 60% of Americans spend at least one year on a poverty-level income.

The challenge the good family Singletary wrote about should undertake, especially if they are Catholic, is to increase their donations over the next five years to 10% of their income.

That’s doable:  To increase their giving next year to 6% from 5%, they would need to simply trim the $32,598 they spend on recreation, travel, gifts and entertainment by 7%, or $47 a week. . . one fewer latte’s a day at Starbucks.


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What I’m Reading

The Seven Deadly Sins, by Kevin Vost, Ph.D., Sophia Institute Press

We’ve all heard of the Seven Deadly Sins.  But can we name them?

Kevin Vost has done a great service in writing this book.  Not only does he name them — actually, there are several different lists, depending upon who is compiling the list — he gives us their history, going all the way back to Evagrius Ponticus, who lived as a monk in semi-isolation in Egypt in the late Fourth Century.

After giving us the history of each of the Deadly Seven, Vost notes that St. Thomas Aquinas describes the three stages of spiritual perfection as the avoidance of sin, which consumes the effort of beginners; the pursuit of virtue, which is “the focus of proficients” and the enjoyment of God by the perfect.

He lays out seven steps toward conquering the seven deadly sins — examination of conscience, embracing the sacraments, watching the steps of our movements toward sin, practicing prayer, cultivating virtue, immersion in the world of the spirit and the imitation of Christ.

And then he gets down to work.  Analyzing each of the seven deadlies, Vost not only details the elements of each sin but also its “daughters.”  For instance, the death-dealing daughters of sloth are malice, spit, faintheartedness, despair, sluggishness about the Commandments, and wandering of the mind after unlawful things.

Each chapter contains questions that can be the basis for an examination of conscience, making the book a particularly valuable tool in developing the (in Matthew Kelly’s phrase) better version of ourselves.

After reading the book once, the best way to take advantage of it is to go back and focus on each of the seven deadly sins, one per week, as the basis for examining our conscience and developing habits and virtues to counteract the sin.

It’s a book worth getting.  And using.

Other things I’m reading:

What’s at the Root of the Financial Favoritism Debate? Plain Old Greed.  Michelle Singletary, personal finance columnist of The Washington Post is becoming the hairshirt of the well-paid, well-fed in the nation’s capital.  In this column, she recounts a family making $240,000 that complains “life is expensive even for the top 5%.”  That’s especially true when one has a $29,932 house payment, spends $12,203 on travel and $12,202 on utilities and telephone.

That’s fine, Singletary says.  “Your responsible money habits have rewarded you richly.  njoy the results of your labor.  Even be proud of your self if you like.”  Just don’t begrudge assistance given to those who are less blessed.  “Stop looking at what those less fortunate or less responsible than you have.  You don’t need what they’re getting,” she writes.

Pope Francis on the Divorced and Remarried:  10 Things to Know and Share.  By Jimmy Akin.

Do You Really Agree? Or Are You Following the Herd?  David DeWolf writes about the dangers of snap judgments.

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Americans View Debt as Necessary, But Hate It

“Owe nothing to any man, but to love one another,” St. Paul told the Romans (Romans 13:8-10).

That little piece of advice is ignored by eight of 10 Americans. Not that they are happy about it, a Pew Research Center study found. Half of Black and Hispanic GenXers as well as Millennials regret owing so much for student loans.

The study also found that GenXers mortgage debt tops other generations’ at similar ages.

We generally feel conflicted about debt, the study found. Indeed, 69% of Americans indicated debt was a necessity in their lives, but they wished they didn’t have to have it. But almost exactly the same percentage (68%) said loans and credit cards have expanded their opportunities, allowing them to make purchases or investments their savings and income along couldn’t support.

Not only that: While most Americans view debt as a necessity in their own lives, they view it as a negative force in the lives of others. In a finding that reminds us of Jesus’ warning about seeing the splinter in another person’s eye while ignoring the beam in our own, the Pew study found 79% of Americans believe other people use debt irresponsibly and mainly to live beyond their means (85%).

Among young Americans, the study finds, debt is part of a more complicated story; the “virtuous cycle” of debt fueling asset accumulation may be indicative of healthier balance sheets among the more financially secure, while having less debt may indicate lower incomes, less financial security, and the prospect of shakier balance sheets in the future, it says.

When everything works well, debt can be helpful in building one’s nest egg. It can let you buy a house, make investments, have a second home.

But things don’t always go well. Another study recently found that 60% of American adults will spend at least one year with a poverty-level income. If your income is at a poverty-level, even for a year, debt can become a burden crushing one’s spirit.

To own a house has almost always required a mortgage, and often the total cost of housing — mortgage, property taxes and insurance — is no greater than the out-of-pocket cost of renting.

For the most part, it’s a good bet that the value of a house will increase overtime, even as regular mortgage payments reduce the mortgage balance, meaning a home owner comes out ahead.

That’s far different than running up large amounts of credit card debt to pay for 60″ TV screens, $150 headphones for one’s iPod and similar things. That sort of debt can justly be considered as just pure evil.

What about student loans? They are every bit as dangerous as credit card debt, and perhaps more so. There’s no guarantee that the student who has a student loan will be able to find a job that enables them to pay off the loan. I know several teachers who came out of college owing $25,000, only to see their student loan balance balloon to over $100,000.

St. Paul had it about right, it seems. We should “owe nothing to any man.” But if we have to borrow, it should be for a mortgage because we have to have a (modest) roof over our heads.

But we really don’t need those things acquired through credit card debt — the 60″ TVs, the Club Med vacations, etc. — and so we should have an iron-clad, no-exceptions policy: Never use a credit card if one cannot pay it off immediately.

In today’s society, that would be tough, a real penitential act, at least at first. But a few years of not paying high interest on credit cards and other consumer debt will result in most people coming out ahead.

What to do:

  1. Pay off credit cards.  Off up the TV you don’t buy, or the exotic vacation you don’t take, as a prayer for those families who seldom have enough to eat, who never take a vacation or buy a fancy TV.
  2. Don’t use credit cards if you cannot pay them off immediately.
  3. Pay off student loans and home mortgages as quickly as possible.



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What I’m Reading: The Seven Deadly Sins (Book Review) and More

I’ve never been a fan of those checklists of sins that you find in pamphlets on confession.  Yes, I understand the idea is to help someone who hasn’t an idea of what a sin might be to identify how their actions, thoughts or words offended God.

But at least for me, I would go through those lists and sometimes not check off a single one.  Made me feel like the pharisee, able to say to God, “I thank you that I’m not like other men . . . ”

That’s one reason I really appreciate Kevin Vost’s excellent new book, The Seven Deadly Sins.  It gets right to the heart of the matter.

Why did I get put on a 1,400-calorie diet by my cardiologist?  Because I committed the sin on gluttany, eating and drinking entirely too much.  Why did I manage to run up a $250,000 debt?  Envy.  Envy of other publishers who were building substantial empires.  I could have been content with what I had, but no.  I envied them.  The wages of sin is debt.

When I pound the steering wheel in anger at the drivers on the Washington Beltway, I’m committing the sin of wrath.

(An aside:  None of those checklists I’ve seen talks about eating too much, or seeking to be a mogul, or getting angry at other drivers.  But I’m very sure these are real sins.  Maybe not as soul-killing as abortion or denying the faith, but sins none the less.)

Vost gives us the history of the Seven Deadly Sins, tracing them back to pagan times.  He notes how the theology was developed by St. Thomas Aquinas, St. John Cassian and others.  He identifies the “daughters” of each of the Seven Deadly Sins.  The daughters of Lust, for instance, are blindness of mind, thoughtkessness, inconstancy, rashness, self-love, hatred of God, love of the world, and despair of a future world.

There are material for examining your conscience scattered throughout the book.

In the future, I’m not looking at those checklists.  Instead, whenever I feel I’ve been oh-so-perfect, I’ll pick up this book.  That should send me running to the confessional.

The Seven Deadly Sins is a book worth getting, worth reading and worth keeping.

I’m also reading:


Amy Morin, 13 Things Mentally Strong People Don’t Do (review next week)


Planned Parenthood

Stacy Trasancos, Ph.D., takes a look at what’s been happening elsewhere.  The bad news, even if Planned Parenthood was shut down, abortionists would keep harvesting body parts from babies.  Read more here.

Other Issues

Communities with Beautiful Scenery, Weather Have Lower Rates of Religious Affiliation

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‘Planned Parenthood Could Shut Down, but Use of Aborted Body Parts Would Continue’

Given the controversy involving those Planned Parenthood videos from the Center for Medical Progress, I thought it was providential that the second reading in today’s Office of Readings (part of the Liturgy of the Hours) was attributed to Barnabas and dealt with, among other things, abortion.  Here’s a link to the reading, and I’ve pasted it below.  You know Barnabas from many readings of the Book of Acts in Church.  I thought this reading was an excellent summary of the moral life, and as relevant and practical today as it was in the first century.

Also on the Planned Parenthood controversy:

— My friend, Stacy Trasancos, a Ph.D.chemist, has written a detailed analysis of some scientific literature from the 1970s.  If the articles in peer-reviewed journals are to be believed, Stacy writes, “abortion clinics have indeed provided whole live fetuses for research, even live ones handed over to be used, killed, and dissected as a part of an experiment that feeds an industry.

“Apparently for decades the use of fetal material has been a research tactic that is 1) considered ethical and legal, 2) coordinated across continents if necessary, 3) funded by governments and private foundations, 4) demanded by industry, and 5) applauded by the scientific community. Planned Parenthood could shut down completely tomorrow, but the use of aborted fetuses and fetal body parts will not stop.”

The full article is here.

Ave Maria Radio’s resource page is here.

Bishop-elect Robert Barron’s column, “The Death of God and Loss of Human Dignity” is here.

And Here’s a link to CMP’s site, if you want to see the investigative videos themselves.  They run longer than the snippets you may have seen on TV.

Here’s a link to the Senate’s roll call vote on defunding Planned Parenthood.  No surprise that both Maryland senators voted against defunding Planned Parenthood.

Finally, here’s the text of the letter attributed to Barnabas from today’s Office of Readings:

From a letter attributed to Barnabas
(Cap. 19, 1-3. 5-7. 8-12: Funk 1, 53-57)

The way of light

Consider now the way of light; any man who is bent on reaching his appointed goal must be very careful in all he does. Now these are the directions that have been given to us for this journey: love your Creator; reverence your Maker; give glory to him who redeemed you when you were dead; be single-minded but rich in spiritual treasure; avoid those who travel down death’s highway; hate whatever is displeasing to God; detest all hypocritical pretense; do not abandon God’s commandments. Do not put on airs, but be modest whatever you do; claim no credit for yourself. Plot no evil against your neighbor, and do not give pride an entrance into your heart.

Love your neighbor more than your own life. Do not kill an unborn child through abortion, nor destroy it after birth. Do not refrain from chastising son or daughter, but bring them up from childhood in the fear of the Lord. Do not set your heart on what belongs to your neighbor and do not give in to greed. Do not associate with the arrogant but cultivate those who are humble and virtuous.

Accept as a blessing whatever comes your way in the knowledge that nothing ever happens without God’s concurrence. Avoid duplicity in thought or in word, for such deception is a deadly snare.

Share with your neighbor whatever you have, and do not say of anything, this is mine. If you both share an imperishable treasure, how much more must you share what is perishable. Do not be hasty in speech; the mouth is a deadly snare. For your soul’s good, make every effort to live chastely. Do not hold out your hand for what you can get, only to withdraw it when it comes to giving. Cherish as the apple of your eye anyone who speaks to you of the word of the Lord.

Night and day you will bear in mind the hour of judgment; every day you will seek out the company of God’s faithful, either by preaching the word, earnestly exhorting them, ever considering how you can save souls by your eloquence, or else by working with your hands to make reparation for your past sins.

Never hesitate to give, and when you do give, never grumble; then you will know the one who will repay you. Preserve the traditions you have received, adding nothing and taking nothing away. The evildoer will ever be hateful to you. Be fair in your judgments. Never stir dissension, but act as peacemaker and reconcile the quarrelsome. Confess your sins, and do not begin to pray with a guilty conscience.

Such then is the way of light.

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Paying Down Debt Won’t Automatically Boost Your FICO Score

Realizing my finances were a mess was the easy part.  How to pay down — and ultimately pay off — those credit cards was the hard part.

The banking community doesn’t make it easy to figure out the correct way to proceed.  The easy step is to simply pay off a credit card and close it.

But if you do that, Fair Isaac & Co. — the people behind the FICO score — will give you a low score because the ratio of what you owe to what you could charge would be too high.

You want a high FICO score, because FICO scores are used by everyone from banks deciding whether to give you a loan to insurance companies to rental agencies

Here’s a simple example:  Assume you have three credit cards:

  • Card A has a $10,000 credit limit and a $9,000 balance.
  • Card B has a $10,000 limit and a $7,500 balance, and
  • Card C has a $10,000 limit and a $5,000 balance.

Overall, you have a $30,000 credit limit and a combined $21,500 balance.  Your debt ratio — the amount you owe divided by your total credit limit–  is 71.67%.

Suppose you pay off and close the card with the $5,000 balance.  Then you owe $14,500 and have a $20,000 credit limit.  Divide $14,500 by $20,000 and you have a debt ratio of 82.5%.  The way Fair Isaac looks at things, you’re more risky now that you owe $5,000 less.  So you’ll have a lower credit score.

That makes no sense, but that’s the way it is.

The smarter way to play the system is to pay off that $5,000 balance, but keep the card open.  If you do that, you then have a 55% debt ratio.

But if you pay the $5,000 balance  card off and don’t charge something, the bank will after a few months close your account.  So you’ll be right back where you were with an 82.5% debt ratio.  (We’re ignoring the fact that you paid down your other cards a bit.)

Here’s Lesson No. 1:  If you pay off a card, then charge something once every few months.  Just make sure you pay it off so you don’t end up paying interest.

Or, if you get one of those low-rate balance transfer offers, accept it, applying the amount you transfer to your highest rate card. We’ll talk about balance transfer offers in a future post.

When dealing with credit card companies in particular, we are like “sheep in the midst of wolves.” So as our Lord said, we need to be “shrewd as serpents and innocent as doves.”


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Most Americans Live in Poverty At Least Once

The likelihood of experiencing relative poverty at least once in their lifetime is surprisingly high for most Americans.

Between the ages of 25 and 60, 61.8% of the American population will experience a year below the 20th percentile of the income distribution, and 42.1% will experience a year below the 10th percentile.

“The numbers we found are higher than those we originally expected to find,” says Mark Rank, a professor of social welfare at Washington University in St. Louis.

Rank and Thomas Hirschl, professor of development sociology at Cornell University, are coauthors of the 2014 book Chasing the American Dream: Understanding What Shapes Our Fortunes that analyzes social mobility at the lower end of America’s economic spectrum. Their latest findings appear in the journal PLOS ONE.

“Our previous work has shown that the typical American has a 1-in-9 chance of joining the wealthiest 1 percent of the income distribution for at least one year in her or his working life,” Rank says. “We knew that there would be a large number of Americans on the other end of the spectrum, but this research shows specifically how wide that income gap really is.”

Income gap

Instead of using the generally accepted measure of the U.S. federal poverty line, Rank and Hirschl focused on a relative measurement for this study.

“Our use of relative poverty addresses a gap within the research literature—a gap that has arguably become more important to investigate given the emphasis upon income inequality,” Rank writes in the study. “Whereas the logic of absolute poverty is derived from a needs standard, relative poverty measures relative depravation, a concept that has greater salience in the context of rising inequality.”

In order to assess the life course dynamics of relative poverty over time, Rank and Hirschl used the Panel Study of Income Dynamics (PSID). The PSID began in 1968 as an annual panel survey (biennial after 1997) and is nationally representative of the non-immigrant U.S. population.

In addition to the figures on the number of Americans falling below the 20th percentile, Rank and Hirschl also found that 24.95 of the population will encounter five or more years of poverty, and 11.4% will experience five or more years of extreme poverty.

“Relative poverty is an economic condition that will strike the majority of Americans,” Rank says.

Those who were younger, non-white, female, not married, with 12 years or less of education, and who have a work disability were significantly more likely to encounter a year of poverty or extreme poverty.

“Just as there is a great deal of fluidity at the top of the income distribution—70 percent of the American population will experience at least one year in the top 20th percentile of the income distribution—so too is there substantial fluidity at the bottom of the income distribution,” Rank writes in the paper. “Taken together, these findings indicate that across the American life course there is a large amount of income volatility.

“Rather than a rigid class structure, the top and bottom ends of the income distribution are fairly porous. This finding provides an interesting and important caveat to the overall story of rising levels of income inequality across the past 40 years.”

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My Strategy for Paying Off My Credit Cards

There are a couple of effective strategies to pay down debt quickly.  All involve paying more than the minimum payment.

One is to list all your debts and pay off the smallest amount first, then the next largest amount, and then the next largest amount.  It has the psychological benefit of letting you see the number of debts disappear quickly.  The is called the debt snowball.

The debt rolldown is some what different.  Again, you list all your debts.  But here you pay off the highest interest rate debt first, followed by the second highest, etc.   All other things being equal, the rolldown should let you pay off your debts quicker and save you more interest expense.

But over the years, I had accepted several lifetime balance transfer offers.  On just one card, for instance, two different rates applied — 27.64% and 3.99%.  On another card, three different rates applied:  7.90% ($2671), 5.49% ($1659)  and 5.99% (5,000).

That meant that highest rate card might differ from month to month.  When I began, the highest rate card had a 27.64% interest rate.  But after nine months of payments, that 27.64% balance had been paid off.  What was left was a promotional balance transfer with a rate of 3.99%.

It would make no sense to make big payments on a balance with a 3.99% interest rate while making a minimal payment on a card with a 16.24% interest rate.

My goal was always to make an extra payment — around $650 a month extra — on the highest interest rate balance, regardless of what card that balance was on.  As one high rate balance was paid off, I would then shift to the next highest balance.

To manage this, I created a spreadsheet with the following columns:

  • Card name
  • Highest current rate on that card
  • Credit Limit for that card
  • Current balance on that card
  • Interest paid on an annual basis

Interest paid on an annual basis is calculated simply by multiplying the highest current rate on that card by the current balance.

Each month I would review all credit card statements as they came in, entering the new current balance and verifying the interest rate that applied to that balance.

I would then use the spreadsheet’s sort function to put the highest interest rate at the top of my page.  It wasn’t strictly necessary to do so, but since I had eight cards with balances, it made it easy to see what the highest rate card was.

Each spreadsheet column was totaled.

I then created two additional calculations:

  • Current balance to maximum credit.  This is a simple calculation:  divide the total current balance by the total of the maximum credit column.  It will give you a percentage figure.  When I began, the ratio was about 85%.  As I write this, it’s now down to 69.95%.
  • Effective annual interest rate.  This, too, is a simple calculation:  divide the total annual interest paid by the total current balance for all cards.  When I began, the total interest I was paying was about 18% of my balance.  A year later, the effective annual interest rate is 9.34%.

I decided my focus would be on that effective annual interest rate.  My goal was to drive it as low as possible.

The first card I tackled was a card with a 27+% rate.  But when I closely examined the statement, I noticed that it had a substantial balance transfer with a 3.99% rate for life.

So I focused on paying that card down.  On all other cards I made the minimum payment.  After several months, the 27+% portion of the card was paid off.  Now, I was being charged 3.99% on about $13,000.

So that card went to the bottom of my spreadsheet, something that’s easy to do by using the spreadsheet’s sort feature.  I simply highlight the interest rate column and sort all cards so that the highest rate card is at the top of the page and the lowest rate card is at the bottom.

In essence, what I set out to do was apply the “credit card rolldown” principle to a situation where the interest rates on various cards changes from month-to-month.

I then turned to the next credit card, which has a 16.24% rate, a rate that doesn’t change.  Every month, I pay $765 on this card.  Sometimes, if the checking account is flush, I make an extra payment.  This card will be paid off in about five months.

I expect to get a balance transfer offer the very next month for this card.  If the rate is acceptably low — perhaps 0% or 1.99% —  I’ll use it to pay off the 15.24% American Express card.  We’ll talk about balance transfer deals in the next chapter.

That will eliminate all my super-high-rate cards.  The next card will be one with a 10.25% annual interest rate and a $65,000 balance.  I’m currently paying $888 a month, the minimum payment, on this card.  I’ll continue paying $888 a month — plus what I had been paying on the two highest rate cards, less whatever I’m paying on the balance transfer.  For example:

  • On the highest rate card (Card A) I was paying $765 a month.
  • On the card I paid off with a balance transfer (Card B), I had been paying $105 a month.
  • The two together total $870 a month.
  • But as a result of the balance transfer of $4,500 to pay off the 15.24% card, I’ll repay that card $450 a month.  That will leave $430 to apply to the next highest rate card (Card C), on which the interest rate is 10.25%.
  • So, the amount I will apply to Card C will be $1318 — the total of $888 that I’ve been paying  plus $430 from the two highest rate cards.

When Card C is paid off, I’ll turn to Card D, which has a 9.24% interest rate, applying exactly the same approach.  Except Card D will have an even higher payment each month, because in addition to Card D’s minimum payment, I’ll also pay what I had been paying on all higher rate cards.

My spreadsheet was necessary in order to identify which card had the highest rate.  But if your cards have the same rate — no promotional rates, balance transfer rates, etc. — there’s a dandy calculator at Dinkytown.com that will show how quickly your debt will be paid off.

In addition to the Dinkytown.com calculator, which is good to use once a year, I’ll continue to use my spreadsheet because that will show me both the effective interest rate and my debt ratio.

Dinkytown tells me that if I simply continue to make minimum payments, it’ll take 17 years and $60,443 in interest before all the debt has been paid off.

But using the debt rolldown approach, it will take less than five years to become debt free — and total interest paid will be just $26,306.


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What I’m Reading

Books (reviews will be coming):

12 Things Mentally Strong People Don’t Do, by Amy Morin

The Seven Deadly Sins, by Kevin Vost

Blog Posts:

Brent Seales’ Research Team Reveals Biblical Text from Damaged Scroll.  You don’t have to be a believer to be in awe of what technology has accomplished.

Three Words That Can Change Your Life.  Msgr Charles Koch on three words describe the well-being he has discovered in his physical, emotional, and spiritual life.

All Have Fallen Short of the Glory of God — A Reflection on the Need to Remember Heroes Are Still Human.  In the wake of the controversy involving Bill Cosby as well as statues of Confederate generals, this is a post worth reading.

The Marks of the Church: The Church is Apostolic.  A reflection by Donald Cardinal Wuerl on the marks of the church.

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