Stansell Wealth Planning Podcast

Breaking Free: Smart Debt Elimination Strategies

• Cody Stansell • Episode 13

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What Are Smart Ways To Pay Off All Your Debts?

Feeling crushed under the weight of debt? You're not alone. The burden of financial obligations keeps countless Americans awake at night, affecting everything from their mental health to their family relationships. But there's a path forward that combines practical wisdom with spiritual guidance.

In this enlightening conversation, Cody Stansell breaks down a systematic approach to eliminating debt while honoring faith-based principles. The journey begins with establishing a proper emergency fund before tackling consumer debt – credit cards, student loans, car payments, and personal loans. Only after these are addressed should you focus on your mortgage, which comes as step six in the financial freedom journey.

The podcast explores two primary debt elimination strategies: the avalanche method (paying highest interest rates first) and the snowball method (tackling smallest balances first). Rather than declaring one superior, Cody emphasizes choosing the approach that resonates with your personal convictions. "Getting into debt wasn't a numbers issue; it was a spending issue," he reminds listeners. The spiritual dimension receives equal attention as Cody references Proverbs 22:7 – "the debtor is slave to the lender" – highlighting how financial freedom aligns with biblical teachings.

For practical application, Cody recommends a specific debt payoff sequence based on his extensive financial advising experience: first credit cards (with their shocking 23.9% average interest rate), then personal loans, followed by auto loans (to avoid being "upside down"), and finally student loans.

 Throughout the episode, the message remains clear: freedom from debt isn't just about mathematical optimization; it's about creating a life where you "owe nobody nothing" and can live with purpose rather than obligation. Ready to break free from financial bondage? This episode provides your roadmap to debt freedom with faith as your foundation.

To learn more about Stansell Wealth Planning visit:
https://www.StansellWealth.com
Stansell Wealth Planning
5550 Granite Pkwy, STE 270
Plano, TX 75024
469-606-2040

Speaker 1:

Welcome to the Steadfast Wealth Planning Podcast, where faith and financial wisdom come together. Hosted by Cody Stansel, owner and senior wealth advisor, we provide comprehensive Christian-based financial planning to help families, individuals and business owners build a life they're proud to live. From investment management and tax planning to preparing for retirement, we're here to guide you with clarity, integrity and purpose. Let's get started.

Speaker 2:

Debt doesn't have to be a lifelong burden. Cody Stansel shares practical, faith-aligned strategies so you can move toward financial freedom with purpose. Welcome back everyone. I'm Sophia Yvette, co-host and producer, back in the studio with Cody Stansel, senior wealth advisor for Steadfast Wealth Planning. Cody, how's it going today?

Speaker 3:

Hey, Sophia doing well. It is officially football season. College football kicked off. Nfl is going to start this next week. Not too optimistic in my Dallas Cowboys this year, but you never know. I'm a seasoned veteran and being disappointed by this team, so I don't think this year will shake me anymore, but looking forward to the football season overall.

Speaker 2:

Awesome, Cody. Well, it is definitely great to have you back on today. Now let's talk about something that weighs heavy on a lot of hearts Smart ways to pay off all your debts, including mortgage.

Speaker 3:

Yes, so debt is a. It's a huge topic, right. It's probably the only financial planning topic that we get into. If you think of investments, taxes, estate planning, debt management, it's the only one that truly causes people to stay up at night to lose focus. To really get stressed out is when it's an avalanche right, and that's what compound interest is. Compound interest is great when it's on your team and you're investing right and your money's doubling and doing great. But the same effect when it comes to debt if it's not on your team.

Speaker 3:

A financially sound life right after having an adequate cash emergency fund, right. So once you have good cash in place. But once you achieve that, then it's moving on to paying off all your debts. So not all debt is created the same, whether it's interest rate, how important it is to your cash flow, how important it is to having it paid off in a certain time period. It's all a little bit different that we'll get into here in a second, but yeah, it all has the same effect. We all want to be debt free, that's for sure.

Speaker 2:

Most definitely. Now, how do you prioritize between high interest debt and long term loans like mortgages?

Speaker 3:

Yes. So how we view it? Have a good cash position in your emergency fund. Pay off all your consumer debt, everything besides the mortgage. So when I say consumer debt credit cards, student loans, car payment, personal loans, all of those things that's really where we want to focus our cash flow as the second step in our financial journey.

Speaker 3:

Number three is save enough for retirement. Four save enough for college. Five is save enough in a brokerage account for other goals. And then number six is actually pay off your mortgage. So number two is paying off everything but your mortgage. Six is actually paying off your mortgage. So when you're looking at your debt load, it's not, you know, don't be as aggressive paying off your mortgage if you still have credit cards, car loans, those kind of kinds of things. So, um, how should we pay them off? Right, there's a lot of different methods that we'll get into here in a second. That really depends on interest rate and what your personal goals are. Everyone's debt situation is a little bit different. Take student loans Some are federal loans, some are private loans, and that definitely determines when and how aggressive to pay those off.

Speaker 2:

Most definitely. Now can you explain the difference between the snowball and avalanche methods and which you prefer? I know I've heard of the snowball, but I don't think I've heard of the avalanche.

Speaker 3:

Yeah, avalanche is a little bit more, which I'll back up here a little bit. There are, no matter your strategy. So a lot of different options. You know, pay. A lot of people say pay off your high interest rate loans first. Right, line them up. What's your highest interest rate? Try to pay that one off first, and that is true. That will save you the most money, the save you most dollars and interest doing it that way. And then there's the snowball effect, right Common in the industry, dave Ramsey has kind of coined that one. And that's where line up all of your debts, smallest to largest.

Speaker 3:

So if you owe 500 bucks on a personal loan here, and then 1200 bucks on a random thing here, then 8,000, they want he wants you to line them up smallest to largest, and there's pros and cons of that too. I always advise clients go with the strategy that you feel convicted in and that you think will work for you and do it. It doesn't matter if it's the one that saves you most interest or okay, that gets this paid off. It's something matter if it's the one that saves you most interest or okay, that gets this paid off. It's something that you feel convicted in. Because even Dave Ramsey has a saying getting into debt wasn't a numbers issue, it was a spending issue, right? So until you take it seriously and you say, if you're married, you look to your spouse and say I've had enough, let's not keep adding to our debt. We need to start paying this off.

Speaker 3:

Sitting down with clients and really going over, I'll present those two options lining up interest rate and then the smallest to largest, and sometimes they feel really convicted oh, that makes sense. Let's do smallest to largest because of X, y and Z, and I'm like great, let's do it, I love it. Smallest to largest because of x, y and z and I'm like great, let's do it, I love it. Then the other ones are no, we've had enough. We want to save the most in interest. Let's line them up. Interest right now. That sounds great too. It's deciding between those two is a good problem to have, compared to ah, I'm not worried about my debt, let's go buy another sea dew or something crazy. Right, it's like a good problem to have deciding which one of those two most definitely now.

Speaker 2:

How does faith-based financial planning influence your approach to debt reduction?

Speaker 3:

yes, uh, great question. So in proverbs 22, 7, the debtor is slave to the lender. It's even in the bible. Lord doesn't want you to borrow a lot of money, right? And that's a slippery slope because, oh, what about a mortgage? And what about a house? And American capitalism is blended into that and there's a lot of what about this, what about that? But in its core, I think, debt kind of like what we talked about.

Speaker 3:

Just open the podcast with the burden and the blanket that it feels on your life and on your finances. The Lord never, you know, you never created mankind to feel that kind of heaviness, right, something that you've created on your own. So, using that as our tool. Once again, we're a faith-based firm. We don't want you to be in debt. We want you to be debt-free, especially mortgage-free, especially mortgage-free by the time you retire, because of the cashflow and I tell this to clients all the time when they've just paid off their mortgage and that's the last piece of debt that they've ever had, and just you can tell the weight on their shoulders it just feels good to owe nobody. Nothing is what I say, and they just nod their head and say you're exactly right, even if it was costing them only 300 bucks a month. Just having I'm not relying on anybody else's debt load for my life is a great feeling, and I know that's the Lord wants us to feel that way as well.

Speaker 2:

Most definitely feel that way as well. Most definitely Now. Are there any tools or apps you recommend when it comes to tracking progress and staying motivated along the way, or do you just open your Bible and get the motivation from there?

Speaker 3:

I will never say that opening your Bible or praying is not a good strategy because it is in any aspect of your life. But if you need a little help with apps or your own flow, I think just a budget tool in general is the best way. What's the way that we're going to get out of debt? Is spending less than we make. There's nobody that's going to get out of debt by still spending more than what's coming in right. So we have to know our budget. We have to know what we're spending, and that $200 a month or $2,000 a month that we're saving, that we can throw at some of these debts, is going to help you out a lot more in that realm. So there's a lot of apps out there for budgeting tools. I would just Google budgeting tools, ynab. So Y-N-A-B is you need a budget. It's a very popular one, very easy, low cost. Intuit has a good one. I've seen a lot of clients use Intuit and a lot of things payroll taxes but they do have their own budgeting tool.

Speaker 3:

But honestly, a spreadsheet good old fashion. I'm obviously a numbers guy with my profession and I just have a spreadsheet and I go through okay, where's my money going? And everyone. What I want to warn clients don't fall into the trap of oh, I Googled it and Google says I should be spending 10% of my money on groceries and we're spending 15. I would say use that as a helpful guide, but don't necessarily feel convicted, because everyone is different. My family we have three kids Our grocery budget is probably a lot more than some of my clients who are 20 years older than me and don't have kids. So don't worry so much if that's 10% of our income or 15. It's just, at the end of the day, what are we able to save, because everyone's different. Some people love the travel. Some people don't really travel's not their big thing, it's just where their money is going, not necessarily how much is going to those particular ones.

Speaker 2:

So, cody, can you sum up all of those points that we covered today for us before we wrap up?

Speaker 3:

Yes, so there's a lot of methods out there. Should I do the high interest rate first? Should I line it up smallest to largest? What I've seen, once again sitting down with clients and not to give a generic answer of depends, but honestly sitting down with the client, going through their particular debt load and just seeing what makes sense for their personality type, for their cash flow. But in general I've been doing this 13 years In general, without knowing your particular situation, what I see most often is we always want to pay the credit cards off first. Most likely it's your highest interest rate and credit card debt is the worst. The national average credit card interest rate. What do you think it is, sophia?

Speaker 3:

Oof I have to put you on the spot.

Speaker 2:

Numbers are not my thing.

Speaker 3:

It's 23.9%. So if you put a thousand, if you buy something for $1,000 and don't pay it off in a year, that's $239 of interest. So you basically just paid $1,239 for that $1,000 item, right? So, once again, if we can have the credit cards at the top of the list of paying off first, that usually makes sense for a lot of clients.

Speaker 3:

The second one is any personal loan from a bank. Hey, cody, I just got engaged. I took a $10,000 personal loan to buy an engagement ring or whatever it may be. Those usually their interest rate levels, those usually the second one we recommend paying off. Third one is paying off your car. So we mostly because we never wanna be upside down on a car is what it's called. That's where you owe more than it's worth. You still have 20 grand on your car, but you could probably only sell it for 13 grand. That $7,000 difference is not good, especially if you're going to wreck or some reason. You needed to sell it. Oh, now we have to make up that seven grand difference, right? So getting on a plan to paying that off is really big too. And then, last one, what we see for clients are those student loans, right, usually interest rates a little bit more reasonable Usually, the terms a little bit more forgiving, but we do want those definitely to be paid off.

Speaker 2:

Wow, Cody. Well, thank you so much for that incredibly encouraging and practical ways for showing us how to approach debt with wisdom and hope. We'll catch you next time on the Steadfast Wealth Planning Podcast.

Speaker 3:

Thanks, Sophia.

Speaker 1:

Thanks for joining us on the Steadfast Wealth Planning Podcast. Ready to take the next step in your financial journey, visit steadfastwealthplanningcom for a complimentary consultation or call 469-606-2040. Smart planning, christian values, a life well lived. We'll see you next time.