Overcoming Debt with Practical Solutions from Randy Parlor
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Randy Parlor’s journey from debt to multi-millionaire status offers a roadmap for anyone looking to take charge of their finances with a focus on faith and stewardship. Over the past three decades, Randy has dedicated himself to teaching financial principles grounded in biblical values and empowering others to achieve financial independence. In this interview, Randy shares his insights on debt elimination, values-driven budgeting, and the power of giving, providing both practical steps and spiritual guidance for those seeking financial transformation.
In this article
A journey to financial freedom
Joy Wallet: You’ve taught financial stewardship since 1993. What inspired you to start sharing your journey, and what were the key turning points in your financial transformation?
Randy: I believed that other people could benefit from knowing how I intended to get out of financial turmoil so they too could believe they could also undo financial bondage in their lives.
Avoiding pitfalls
Joy Wallet: What are some of the most common financial mistakes people make when trying to live a debt-free life, and how can they avoid them?
Randy: Many don’t have an emergency fund and a small personal money entry, a grocery entry, and a household toiletry entry in their budget each month to spend on anything they’d like to enjoy. Somehow, many think they can go from spending lots of money on “who knows what” to spending no money at all on some enjoyments, thus putting all their discretionary income on debt elimination. Granted, the amount of these entries should be far smaller than what they’ve been spending and will have to last for the entire month, yet it’s necessary; otherwise, they’ll lose motivation when they don’t get to have some enjoyment, treats, and rewards while being on the debt-freedom journey.
Values-based budgeting
Joy Wallet: You emphasize budgeting as a foundational tool. How can individuals create a budget that is both practical and spiritually aligned with their values?
Randy: Some of this is explained in item two. I have a sample budget at www.kminfo.org/ministries/financial-freedom that people can use to craft their own budget. I believe the simple act of crafting and using a budget is practical and aligned with spiritual values, for as the Bible says, “What man would attempt to build a house without first counting the cost to know whether he has enough to complete it?”
I believe people should be motivated by the will of the Lord who created them and His purpose for their lives. Those who don’t know Him may be motivated by something else (crushing financial condition, etc.).
Yet, for both groups, the budget should outline all income against fixed and variable expenses expected each month, so the person knows exactly what his / her financial situation and condition look like in order to know what corrections to make (right-sizing expenses, earning extra income, building increasing discretionary cash flow, etc.) to move into the financial freedom they want. The person must employ discipline, sacrifice, contentment, and self-control to stick within the budget parameters for each entry so they can have discretionary cash flow to save, eliminate debt, and invest.
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The debt-free lifestyle
Joy Wallet: What are the first steps someone should take to start living a debt-free lifestyle, especially if they are struggling with high-interest debt?
Randy: I’m a proponent of the snowball method of debt elimination because it gives most people the psychological wins they need early on to see that the process works by reducing the number of creditors and small debts from the person’s ledger.
Yet, if someone has a compounding interest rate (finance charge at 25% or more) on a particular account that is not allowing them to have enough cash flow to reasonably build emergency funds and pay a lot extra on debt to get rid of it within a couple of years, then that person could move onto paying off the high-interest debt after gaining a few small wins using the snowball method.
Also, there are some situations where people can consolidate high-interest debts into a much lower-interest loan, save big on finance charges, and have more cash flow available to pay off that debt and others down the line.
Staying on track
Joy Wallet: In your experience, what are the key strategies to quickly eliminate debt, and how can someone stay motivated throughout the process?
Randy: Again, the snowball method with the combination of the avalanche method (when necessary due to high-interest debts). Also, make sure all the estimated monthly budgets contain those variable expense entries described above in item two (personal money, entertainment, household toiletries, etc.). These budget entries allow the person to have some enjoyment and reward along the way, so the process does not seem unbearable. There are no-cost/low-cost things to do that can bring much joy to people (daily walking around your neighborhood or in nature, hiking, camping in tents with your kids in your backyard, biking, learning to paint, etc.).
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Emergency fund essentials
Joy Wallet: You mention building a $1,000 emergency fund as a key step. Why is this amount important, and how should someone prioritize it?
Randy: It’s important because it helps when an emergency occurs, so the person doesn’t immediately run back to credit (loans and revolving charge cards) to take care of the costs. This should be funded before one starts eliminating debt.
For very short periods of time, debt elimination may have to be paused to replenish the emergency fund. Although $1,000 is the first-tier emergency fund, the amount put into an emergency fund account could be higher when people have immediate circumstances that warrant it (impending layoff, expected uncovered medical bills that are likely to occur soon, etc.).
The emergency fund should only be used for true emergencies where the costs thereof cannot be avoided and you don’t have enough discretionary cash flow to take care of the emergency.
Mortgage vs. investments
Joy Wallet: How should people prioritize paying off their home mortgage versus saving for retirement or other investments?
Randy: Paying off your home mortgage should be the last item you put in the rotation for debt elimination. It should be prioritized after the non-mortgage debt is eliminated, the second-tier emergency fund is established (at least $10,000), and after the person has started putting at least 10% of gross income into investments (likely 401k and Roth IRA retirement plans for most people).
The additional peace of mind that people gain after they pay off their homes is phenomenal. That more than makes up for what they think they could have earned via investing the cash flow they put toward the debt.
Investment markets have short-term downturns that negatively motivate people to take money out of the market after they’ve already lost it on paper. This solidifies the loss and makes them apprehensive about putting money back in the market, especially when they still have a larger debt like a home on the books, even though the rate of return going forward on this money is often less than the interest rate on their mortgage. Never be afraid to put your extra discretionary cash flow toward mortgage payoff when the time comes. You’ll be immensely blessed for doing so.
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Diversification and risk management
Joy Wallet: What are some practical steps for diversifying assets, and how can people ensure they’re not taking on too much risk?
Randy: I generally guide people to use a simple passive method that doesn’t require them to be financial gurus. Over a century of historical stock market data has proven that it provides great long-term annual average growth near 11%. Putting investment contributions into a combination of no-load low-expense stock index mutual funds (of the S&P 500 and total US stock market index variety) and no-load low-expense fixed-income funds (stable value accounts, intermediate-term bond funds, etc.).
These are very diversified by their nature, having hundreds of different company stocks and/or bonds/commercial paper assets in them. I think the “one-hundred minus your age method” can be a good starting point for beginning the process, where the percentage contribution to stocks would mimic your age, and the percentage contribution to fixed-income funds would mimic one-hundred minus your age.
That being said, younger people in their twenties and thirties, when they start, could have a risk tolerance where they feel comfortable putting 100% of their contributions in stock index funds because they will have much longer to allow the stock market to work to their advantage before they start withdrawing funds in their retirement and senior years.
It’s possible that older people’s risk tolerance would also make them comfortable keeping a higher amount in such funds after they have been investing for many years, have millions of dollars in investments, and are emotionally comfortable dealing with the short-term market downturns that occur from time to time.
I definitely let people know that a past history of returns is no guarantee of future results.
Beyond a million
Joy Wallet: What advice would you give someone looking to manage their finances more effectively after reaching millionaire status?
Randy: I believe in largely keeping the process the same as what got you there. However, you may choose to engage in other types of investments that you can get debt-free with 5% to 10% of your investment assets (real estate, private placement offerings, angel investing, an entrepreneurial effort, etc.). But, one should first research them to see if they’re sound investments and very likely to pay off for you overall. Also, you should know that if the investment were to not pay off, you would not be put into financial bondage and hamper your ability to care for your family and other financial responsibilities (like abundantly monetarily supporting your local church fellowship and missionary endeavors).
It should be noted that some people who use this process may, from the start, be deriving their income from self-employment, and the budgeting process is in no way intended to shut businesses down unless they truly are unprofitable and have no near-term hope of becoming profitable enough to provide money to pay your bills and care for your family.
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Teaching personal finance
Joy Wallet: How do you approach teaching others about the importance of saving and investing, especially those who are new to personal finance?
Randy: The importance of saving emergency funds is mentioned in question six above. I also tell people that when they can contribute the required percentage of their pay to get their employer’s retirement plan match and still pay off their non-mortgage debts in a reasonable fashion, they should make their minimum contribution to the plan to get the match. This is free money and represents a 100% return on their money. This is higher than pretty much any interest rate (finance charge) they have on their debts, and it is higher than any annual return they will get on their investments.
In order to do this, some people are not only going to need to right-size (cut) expenses via budgeting but also find extra sources of income (via second jobs, GIG work, profitable no-cost / low-cost entrepreneurial efforts, etc.) to add to their budgets that will increase their discretionary cash flow.
Lessons from experience
Joy Wallet: What lessons have you learned from your own journey out of debt that could help others struggling with financial setbacks?
Randy: I needed the Lord Jesus to be my Savior & Lord, Bible instruction, and the Holy Spirit’s power in me to walk the path of good financial stewardship. With Him, anyone can get out of any amount of debt and financial bondage as long as they set their mind to it and take steps to bring to pass what they believe — God wants them financially free and prosperous.
Though you will encounter obstacles along the way, you’ll find that many different forms of help will also come your way to allow you to overcome the obstacles, break the financial bondage, and move on to build wealth. Find someone who has walked out of this type of process and let them be your accountability partner/mentor.
Good stewardship, debt freedom, and greater wealth bring levels of peace into your life that allow you to do more good with your money than you otherwise would be able to do!
It must be noted that I’ve seen some unbelievers also released from financial bondage and building wealth when they had a long-term commitment to similar good stewardship processes/methods. My only concern for them is related to the question Jesus asked, “What does it profit a man to gain the whole world, yet lose his soul?”
I am very happy for their good fortune on Earth, but I very much desire that they accept Jesus as Savior & Lord and thus share the Heavenly home that awaits only Christians on the other side of our deaths on Earthly. I want them to be motivated by His purpose and will for their lives, to engage in good financial stewardship processes, and to use an abundant portion of their money to do things in ways that glorify the Lord and serve others.
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Raising financially literate kids
Joy Wallet: You’ve emphasized the importance of financial literacy and stewardship in your family. How can parents teach their children about money and responsible financial habits in a way that’s both practical and meaningful?
Randy: From an early age, let them hear you talk in general about good work habits, budgeting, giving, saving, and investing. Put them to work doing household chores, some for which they could earn money.
When you start giving them allowances, show them how to budget the money into giving, saving, and spending entries. After a short time of using piggy banks, open credit union accounts for them to put savings into so they can start seeing how compound interest works.
When they start getting enough or earning enough by working for others, you should help them open a brokerage account to invest a portion of the money each pay period (10% or so) into a no-load, low-expense stock index mutual fund for long-term investing.
At an appropriate age (say 10–12), start giving them simple books to read about good stewardship, saving, and investing to get them interested in the subjects so they can eventually grasp how important this is for their future. Ask them questions and answer all questions they have about money and stewardship.
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Finding joy
Joy Wallet: On a personal note, what brings you the most joy in life, and how does it influence your work as a personal finance teacher and consultant?
Randy: I get the greatest joy from the intimate relationship I have with my Lord & Savior, Jesus Christ, and second most from loving my neighbors as myself. He gives me the strength, ability, humility, and integrity to pursue the calling He placed on my life to instruct people on biblical principles, associated practices, processes, and tools.
When used, this can help them get released from financial bondage and move on to build a level of wealth that satisfies them and the calling the Lord has on their lives. I certainly enjoy His calling for my life and the various things I employ pursuing it (social media presence, book sales, consulting, speaking, etc.).
I also enjoy incorporating evangelism and disciple-making into my work and day-to-day endeavors to lead people to the Lord while helping them get free and enjoy the kind of greater peace and joy He desires for their lives.
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