Back from the Brink

Personal financial coach and credit expert Deborah McNaughton will be the first to tell you money doesn't buy happiness or health. And she knows from personal experience. Deborah's been financially successful (she and her husband, Hal, owned three real-estate companies in her home state of California) and she's been in debt to the tune of $300,000—all while running Professional Credit Counselors, a service she founded in 1984 to help people restore their finances. But while Deborah, 52, readily admits she was an expert on helping others manage their debt problems, she'd never experienced financial hardship herself. That was, of course, before she and Hal incurred massive debt, canceled their medical insurance, and then almost lost their youngest daughter, Mindy, then 14, to a life-threatening illness.

During Deborah's "trials by fire," she wondered where God was and why he'd allowed this to happen to her family. Yet through it all, she discovered God was providing, comforting, guiding—and, not so surprisingly, using her experiences to transform her into a more empathetic financial expert. "Been there, done that," Deborah now affirmatively says.

Today Deborah has written more than a dozen books and financial manuals, including The Get Out of Debt Kit, The Insider's Guide to Managing Your Credit (both Dearborn), Financially Secure: An Easy-to-Follow Money Program for Women, and her soon-to-be-released Ms. Entrepreneur (both Thomas Nelson). She runs numerous national and international seminars and writes a free monthly financial online newsletter (www.financialvictory.com). Deborah's also a spokesperson for the Debt Relief Clearing House (www.debtreliefonline.org) and is considered an authority on credit and finances by such heavyweights as The New York Times and Your Money magazine. But what makes Deborah such a respected expert is her ability to make eye-glazing financial concepts relatable to the nearly 40,000 laypeople she's counseled.

In this exclusive TCW interview, Deborah discusses how she and her husband dug their way out of debt, how they almost lost their daughter, and how she discovered a better way to help others with their personal finances.

You're a financial expert, yet you were $300,000 in debt. How did that happen?

In the early '90s, when the economy took a downturn, Hal and I sold two of the three real-estate franchises we owned and operated. We invested what little money we received in another real-estate partnership that unfortunately never got off the ground.

Then we followed some bad advice from our accountant. He suggested we sell our third office with a buy-out option. In others words, if the buyer wanted to get out of the deal after a year, he could get back all his money. Hal and I didn't like that idea, but the accountant pushed for it, so we did it. Of course, the economy went further south and the buyer wanted his money back in cash. But we'd already invested those funds in the other real-estate company that never got off the ground. So we had to come up with more than $100,000. We ended up getting loans and dealing with tax issues. Plus we had about $50,000 in credit-card debt—most from our business, but also some personal, because we were broke.

As owner of Professional Credit Counselors, you had your own credit-card debt?

Right. Until that point, Hal and I were able to take care of the balances each month. But our real-estate losses hit us quickly. Our incomes dropped 70 percent; we were surviving solely on what Professional Credit Counselors was earning. Suddenly we were $300,000 in debt—once you added all the interest on the loans, the late fees, and the surcharges.

So you suddenly found yourself on the brink of financial disaster.

Yes. While I worked in real estate, I did extensive research to help my clients with their credit. That knowledge helped me found Professional Credit Counselors. But I never thought I'd face some of the hurdles my clients faced! We were getting hit left and right. We had creditors calling us, and there was absolutely nothing we could do. It was just a matter of survival.

When you're that far in debt, you don't wake up one morning and it's all okay. The bill collectors and the IRS were not going away. I knew enough to realize I needed to keep open communication with our creditors, even though I couldn't pay them anything.

Where was God in this?

God always provided what we needed to survive. We never had our power turned off. We always had a place to live and food to eat. We always were able to continue tithing on what little income we did have.

Several times girlfriends who didn't know what I was going through would invite me out to eat, their treat. One time our utility bill was due and we didn't have the money to cover it. At the eleventh hour, I sold one of my business manuals, which covered the bill. It was as if God were saying, You're going to be okay. I'm here. Something always came through when we needed it, but it wasn't going to pay the loans or the credit-card debt. Hal and I had created that monster.

What do you mean?

We created our mess. We could have blamed everyone else for it: The creditors did this; the IRS did that. But we knew we'd done it to ourselves.

I spent hours praying for God to give us wisdom to know how to deal with each situation that arose. I also prayed that he'd give us ideas on how to pay this back. But if I needed $10, I never prayed for $10. I didn't pray for sums of money. I said, "Lord, help. You know the need." And that survival money always arrived right on time.

Did you have a plan to reduce your debt?

We did—it was waiting for the next big deal, which never happened! In the meantime, Hal and I decided to cancel our medical insurance because we were healthy. It was an extra expense we just couldn't afford.

Just 30 days later, the unimaginable happened. Our youngest daughter, Mindy, had to have emergency brain surgery and almost died.

What happened?

One Tuesday, Mindy complained that her head hurt. Wednesday morning she woke up violently ill, vomiting every 10 to 20 minutes, and holding her head in pain. I assumed she had the flu. But after I observed her for a couple hours and noticed she had no temperature, something didn't make sense to me.

Hal and I took her to an urgent care center. When we got there, Mindy was so sick they put her in a wheelchair and wheeled her in from the car. The physician examined her, then said, "She's probably got the flu or food poisoning." And he gave us a prescription to stop the vomiting.

Meanwhile, Mindy sat in the wheelchair, nodding off like she was falling asleep, which looked weird to me. I asked, "What's she doing?" The physician broke open some smelling salts and put them under her nose. Mindy jerked her head and he said, "She's just tired." Then Mindy nodded off again.

That doesn't sound like the flu.

You're right. The doctor misdiagnosed her. She was slipping into a coma, but we didn't know that at the time. So we went home, and Mindy couldn't even walk up to her bedroom. We had to carry her upstairs and put her into bed. When Hal and I went downstairs, I heard Mindy vomit again. So I went upstairs to discover she'd passed out after throwing up in the bed. Neither Hal nor I could wake her, so we rushed her to a trauma center.

What happened once you got there?

They prepped her for a C.A.T. scan.

Was she conscious?

No, she never woke up. The physician kept trying different things to wake her, but nothing worked.

The whole time I kept thinking, We have no medical insurance. Are they going to refuse Mindy medical treatment?

But they did the C.A.T. scan, and afterward the physician told us, "There appears to be a tumor, a blockage in her third ventricle. We have a neurosurgeon coming right down. We have to get her into surgery immediately."

I asked him, "What does that mean? Is she going to live?" He replied, "We don't know."

That must have been devastating.

It was. Then the neurosurgeon came down and told us they were going to insert a shunt into her brain to release a build-up of fluid. He didn't know what state she'd be in once she came out of surgery or if she'd even survive. When he left, Hal and I immediately went to the chapel to pray. Mindy's my baby. I cried and cried.

A while later, the surgeon returned and said they'd released some of the pressure and Mindy was alert. They let us see her before she went in to surgery.

So this might have been the last time you'd speak to her.

Yes. I didn't know if I was ever going to see her again.

What does a mom say to a child to help her to keep fighting, if you don't know if she's going to survive? All I could do was pray.

Mindy asked, "Mom, what's going on?" I said, "Mindy, you know the headaches you've had? They're going to fix that for you, but you've got to fight like you've never fought. And know Jesus is here with you."

"Okay, Mom. Bye," she said. They rolled her away.

My daughter Tiffany had come immediately to the trauma center and had taken charge. Hal and I couldn't function. By this point our whole family was there—grandparents, nieces, nephews, siblings. But nobody could take away the pain.

Did your prayers comfort you?

While Mindy was in surgery, I replayed the horrible words the surgeon threw at us: tumor, blockage, may not live. Then God put this little song in my head, "Whose report will you believe? I believe the report of the Lord." It kept playing in my mind. Finally, I told our family and friends who were there about it, and they started to sing it. Not long after, the surgeon came out and said Mindy had survived.

That was definitely an answer to prayer!

Yes! After three hours in surgery, they moved Mindy to intensive care, but she still wasn't out of the woods. She was very sick; she could hardly raise her head.

When Mindy became alert, she said, "Mom, this has been a strange day. But you know what? It's going to be better tomorrow." When we had bad days, I used to tell my kids, "It will be better tomorrow." And here was Mindy telling us this! Her words carried us that night.

What caused Mindy's medical condition?

The surgeon told us she'd been born with hydrocephalus, a condition in which an abnormal accumulation of fluid in the ventricles causes them to enlarge and compress the brain.

Mindy had been a walking time bomb. There had been symptoms, but they'd always disappear, so nobody knew. Her brain swelled four times the size it should have been. They drained off a tremendous amount of fluid and put a shunt in her brain. She recovered with no side effects. Since then she's had three more surgeries; one was a new procedure that's allowed her to go without the shunt. She seems to be doing really well.

God's hand was on Mindy every step of the way. The surgeon said if we hadn't reacted as quickly as we had, she wouldn't have made it.

I felt God had healed her. But then the bill came! A $50,000 medical bill in addition to our other financial problems.

So you owed $350,000 at that point?

Yes, but two miracles happened. The first was that Mindy survived the surgery. The second was that the hospital had a special program for trauma children. We learned several weeks later that Mindy qualified for the program. It covered the whole bill.

One hundred percent?

One hundred percent. This trauma center informed us that because of the special nature of Mindy's case and the level of our income, we'd be charged a reduced amount. Then one day, they called and said, "Mrs. McNaughton, we're waiving the amount." I don't understand how it happened except to say God was watching out for us. But in the meantime, we experienced another trauma.

Hal's father had loaned us some money to pay our survival bills—the house, utilities, food—that Hal had deposited into our bank account. During the week Mindy had her surgery, the IRS swooped in and took out all our money. I thought I'd made an arrangement with them, but I didn't get it in writing. So we arrived home to find all our bank accounts had been cleaned out.

What did you do?

I called the IRS. I broke down, cried, and explained what had happened that week and that they'd taken money loaned to us just to survive. The woman I spoke to was sympathetic. She said, "I'll return all your money except $100." That's why it's important to communicate with your creditors. If I hadn't communicated with her, nothing would have happened.

That seems like another miracle.

Well, I needed that, because as Mindy recovered, my grandmother broke her arm in the nursing home. Since I was the only family close by, I had to take care of her. Then my mother had to have surgery. My husband got violently ill and had to be rushed to the emergency room. Everything happened in a six-week period. I thought, What more can happen?

Enough is enough!

Exactly. I wailed at God, "What's happening here? I can't take one more minute. Where are you, God?" After I cried myself dry, I opened my Bible. Here's what I read: "Then you will call, and the LORD will answer; you will cry for help, and he will say: here am I" (Isaiah 58:9). I'd asked, "Where are you?" And God said, "Here am I." That was all I needed; I just needed to know God hadn't left me.

How did your life change from that point?

After all this happened, Hal and I said, "We've got to make some changes. We have no insurance. We have a child who just had brain surgery. She's going to need follow-up medical care." Hal decided to go to work for someone else as a financial planner. They had group insurance—and they took Mindy.

And I decided to take the advice I'd given others through my Professional Credit Counselors!

Did you ever feel hypocritical being in debt and still running Professional Credit Counselors?

Yes and no. Sometimes I wondered, What would people think if they knew I was going through this? But I also realized it was a poor economy and we had made poor choices.

Our game plan was to take bits of money, contact creditors, and negotiate with them. We finally got everything paid off, but we were in debt for about six years.

I didn't know you could negotiate with creditors!

You can. Creditors know getting something is better than nothing. They realize you could file for bankruptcy. So I'd contact the creditor and say, "Okay, I have this much money. I can settle this with you and have it to you by the end of the month." Then they'd take it or leave it. Typically, creditors will work with you—but you can't be late or default. You even can contact the IRS to do what's called an offer in compromise. They'll work with you on a payment schedule or reduce the original amount owed. Hal and I saved about two-thirds on some of the debts.

How were you able to do that?

They negotiated on a reduced settled amount. We had tax specialists advising us to file for bankruptcy. I'm glad we didn't. We got the majority of the debts settled—and kept our credit and financial reports clear. Many times people file for bankruptcy because creditors are intimidating them. That's the worst reason to do it. People don't realize when you file for bankruptcy, it's on your credit report for ten years. I didn't want that.

You're now debt-free?

We're debt-free.

What advice would you give other women in debt?

Stay focused. Make a plan to get out of debt. Seek advice from a debt management company that will negotiate with creditors on your behalf to lower your interest and your payments. I learned through this hardship that things can get better. God will give you the wisdom and strength you need. And once you're on the other side, you'll have a ministry! God's been able to use my experiences, because now I can empathize with women struggling under the weight of debt.

How can women protect their finances?

Learn how to balance a checkbook. That sounds so simple, but you can't believe how many women don't know how to do that. Start putting aside money.

What you don't know can hurt you. If you're married and your spouse handles your finances and he dies, for instance, not only are you mourning your loss, but now you're stuck with a checkbook you've never balanced, bills you've never had to pay, retirement, investments, and life insurance you know nothing about. And what if your husband put you into debt? You're now responsible for that, too. It's enough to push you over the edge. You don't have to read all the books, but at least communicate.

But what about the single woman who feels fairly confident financially?

Want a good wake-up call? Contact Social Security and find out how much you'll be paid upon retirement. Can you live on $500 a month? Probably not. When you discover you're hardly going to make anything, you'll start putting money aside.

And there are so many different ways you can save money! A lot of people think they can't pull out one more dime. Well, married or single, journal all your expenditures.

So if you buy a Coke, write it down? You write: "Coke: $1.25." Do this for 30 days. Make columns. This is for my Cokes. This is my coffee. Fast food. Clothes. Gasoline. Every dime you take out of your ATM, write it down. When you total the columns, you'll be surprised to find out how much you've spent. Hal and I have done this when we're trying to strengthen our budget. It's helped us see what we can cut back on.

What if you're married and you want to journal, but your husband isn't interested?

Do it without him. One problem married couples have is tracking ATM withdrawals, because if it's a joint account, whoever's taking care of that checkbook needs to have all the withdrawal slips.

I had a woman tell me her husband takes money from the ATM for gas and miscellaneous things but never gives her the receipts, so they're always short about $300 a month. If he forgets to give you the receipts, go online or call your bank's hotline and check your account every few days.

Once you tally your expenditures, then what?

Open an emergency-only savings account and start depositing. Or talk to a financial planner who can give you direction on mutual funds or money market accounts for the amount of money you can invest. If you give them the goal, they can put the plan together. If it's to retire by the time you're 65 and you're 35, they can calculate how much you need to save per month.

Shouldn't we trust God to supply our needs?

You're good. I think we should wait until the money tree grows in the backyard. [Laughs] When Hal and I were going through hard times, I can't tell you how many times I hoped I'd wake up to find a tree with money on it!

Seriously, if you're short on money, find a way to create money. A lot of professions don't pay a lot. So you have to live within your means. It's not God's fault if you live outside your means, go into debt, and don't save for retirement; it's your fault.

How can we cope with these unsettling economic times?

The first thing is not to panic. Pray God will give you a peace to walk through the storm and to come up with a plan quickly. Make an extra effort to tithe. In Malachi 3:10, God says, "Bring the whole tithe into the storehouse. … Test me in this. … and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it."

Concentrate on paying your survival bills first—your home, utilities, food. After you've paid these, go to the next mode—credit cards, car. But you have to put everything in the right order. If you mess up and pay your creditors first because they're screaming the loudest, you're going to take food from your children, you're going to have utilities turned off. Creditors can be ferocious, but try not to let them rankle you. I know, I've been there.

Do you think you're now better able to help other people who are encountering tough financial times?

Absolutely. What you've gone through becomes your ministry.

There were so many times I'd think, If this is going to help somebody, I'll go through it. I won't like it, but it's okay. If I hadn't experienced that debt, or if God had simply wiped it all away, I couldn't minister to others who are experiencing financial hardships. And the same goes for what happened to Mindy. God's used those experiences to help me understand the pain others feel.

What else have you discovered?

God is faithful. He's proven himself to me again and again. I've learned never to lose faith; even when the reports might be one way, God has his own report.

Psalm 37:5 says, "Commit thy way unto the Lord, trust also in him; and he shall bring it to pass" (KJV). And 2 Corinthians 12:9 says, "My grace is sufficient for you, for my power is made perfect in weakness." Those verses have sustained me many times. During times when I wonder, Why do these things happen? God reminds me that his grace is sufficient.

I look back over my life—the different developments that were so tragic at the time—and I see how God's using those things to better me and to help other people. He's grooming us to reach out to others. Everything we go through in life is a stepping stone to who God's perfecting us to be.

Ginger Kolbaba, managing editor of sister publication Marriage Partnership, lives with her family in Illinois.

Read more articles that highlight writing by Christian women at ChristianityToday.com/Women