The Queen of Katwe, the Threat of Debt, and the Mindset for Getting Out of It

Sometimes the place you are used to is not the place you belong. You belong where you believe you belong. Where is that for you?

Robert Katende, The Queen of Katwe

Last night, Zuzzy and I had the pleasure of screening The Queen of Katwe (set for release 9/23/16) with her chess program. I knew it was a movie about chess. What I didn’t know is that I’d be thinking about debt the whole time.

The slums of Katwe don’t have paved roads, and the ones they have are where human waste is dumped. When the rain comes, it floods the town with dreck and people die. The “houses” are loosely held together and look like they’d be blown down by a strong wind like a house of cards. Girls don’t go to school and are expected just to grow up and have children. If you are born in Katwe, you die in Katwe. There is almost no out. Yet somehow, out of this condition, a chess champion arose.

The movie is based on the true story of Phiona Mutesi who rose from these slums to become the Ugandan National Junior Chess Champion. I generally don’t like these kind of feel-good movies (they’re oftentimes too packaged and formulaic), but I liked this one. In general with these sorts of movies, you already know the main characters are going to experience a trial but triumph in the end so the middle sections can drag on a bit.

Queen of Katwe had some of that, but it was a great movie to watch with Zuzzy. It reinforced a lot of what she and I have been discussing, and sometimes you need to hear things from sources other than your dad. On the ride home, we had a pretty good conversation about the role of luck, hard work, and mentors. Overall, I recommend it (there are some adult themes in the movie, though, so be aware of that).

But I’m not really into doing a review. I’ve been talking to many friends about debt these days and saw the movie through that filter: that’s what I want to talk about here.

Chess and Debt

Imagine your finances are a chess board.* Your assets are the pieces you play with. Your liabilities, or debt, are the opposing pieces. If you maneuver correctly, your assets can overtake your debt. If not, then you go into a debt spiral.

What is a debt spiral and how do you know you’re in one? A debt spiral happens when you need to borrow more to pay for debt. In other words, your credit card bills keep rising but the money you have after paying off these bills keeps dwindling. Turn by turn, you have fewer of your chess pieces left.

This happens to many Americans. Nerdwallet finds that the average household has $132,086 in debt, or 175% average income. The average American uses $1 out of every $10 they make on interest payments. If debt is just a monthly bill to you, those statistics look like numbers on a page. Let me give you some context by comparing a person to a company.

Our Debt Slum

The government deems it risky to have debt more than 400% (or 4.0x) of a company’s cash flow (what’s called EBITDA—I’ll explain it in a later post). So if a company has $100 million of sales, and say $7.75 million of cash flow, that means the government thinks it’s risky if a company has $31 million in debt or more. Debt like that has an interest rate of around 7%. So 7% interest on $31 million of debt is $2.2 million, or 2.2% of sales. Contrast this to the Average American (I’ll just call him Average Joe), who spends 8.8% of income, or 406% more than what the government thinks is risky for a company to be paying!

Want me to keep going? Think of a company’s sales like your income. A company’s cash flow is like your income minus food, clothes, shelter, and utilities—I’ll use savings rate as a rough proxy, which is around 5%. So if the government thinks that it’s risky for a company to have 4x cash flow, what does it think of Average Joe’s 35x?

Company Average Joe
Sales 100,000,000 75,591 Income
EBITDA 7,750,000 3,780 Savings Rate
Total Debt 31,000,000 132,086 Total Debt
Total Debt / EBITDA 4.00x 34.95x Total Debt / Savings
Interest Payments 2,170,000 6,658 Interest Payments
Interest Payments / Sales 2.17% 8.81% Interest Payments / Income

If Average Joe were a company, we would label his debt “junk” because of the high risk that Average Joe won’t pay back his debt. Junk. It’s no wonder we feel so much shame about our debt—the average American is stuck in a debt slum.

There is a way out. And before we can get into tactics, you need the mindset or else you won’t get there. Here’s how to get it, based on what I learned from the movie:

  1. Go on the offensive—early. Many of us hope away the debt by closing our eyes and pretending it doesn’t exist. This strategy never works. Instead, attack it. Phiona was lauded for her aggressive playing style and described as a python that coils around its prey and chokes it off. She lost when she played timidly. How do you play aggressively? In general:
    1. Attack the opponent’s most powerful pieces…** (i.e. highest interest rate credit cards)
    2. But don’t ignore their pawn. Left untended, it can be promoted into a queen like a low, teaser credit card rate that increases after a year.
  2. Change the voices around you. The voices in Phiona’s life can’t see beyond life as it is in the slums. Her mom doesn’t dare dream of a life beyond selling corn in the market because she doesn’t want her children to be disappointed. And because there is such a silent shame around debt, the only voice you hear is your own condemning voice.

Phiona would still be in the slums if not for her Coach’s dominating voice. He saw the possibilities in her that she dared not believe for herself. Share about your debt situation with a trusted friend to break the shame, receive encouragement, and keep you accountable.

There’s a point when Phiona loses at the Chess Olympiad in Russia and, undone by all the pressure and losing, runs out into the snow. When her coach finds her, she collapses in his arms and cries, “I sell maize. I sell maize.” She was trying to build this new identity but when challenges came, her identity reverted back to being just a slum girl who sold corn. By this point, the coach and audience see she’s way more than that—but she can’t. Challenge your self-definition.

“You Belong Where You Believe You Belong.”

You are not just someone stuck in a spiraling debt slum. It doesn’t define you. And just because you have it does not mean that you’ve been checkmated. What it does mean is that the first step is changing your mindset. You can win. Do you believe it?

Next: More Advice on Dealing with Debt.

*Chess teaches life. That is not in dispute. However, it’s different in one crucial way. In Chess, each player starts off with 16 pieces—an equal playing field. However, some are born in the game of life with their pieces “giving check” (meaning, they’re born with only a few moves away from winning) and some are born “checked” (meaning they’re a few moves away from losing). Phiona and her sister, Night, are in the latter position. Night serves as a contrast to Phiona. Night gets caught up in the usual path—seeking the only way out by securing a “sugar daddy.”  Night is a player who assumes that it is what it is and loses. Phiona is the player who studies every move until there’s a way out.

**This might not be the right way to describe aggressive chess, but it is how you attack debt.

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  • NothingImportant2Say September 17, 2016 at 9:41 am

    Great piece! Too many Americans just view debt as another monthly bill. They think in monthly cash flow and the duration of payments seems unimportant. I see this as our greatest weakness and what will drown us as a nation. I have tried to teach my kids the importance of living below your means (in contrast to what most people do) and stay away from debt. I believe this leads to a life of less stress and more happiness. I see so many that seem to think the opposite.

    • justmakingcentscom September 17, 2016 at 11:04 am

      Thanks! Totally agree — you must’ve read my mind because that’s partially what I’m writing about Monday.

  • amileinmyshoes September 18, 2016 at 3:29 pm

    I hate debt. Looking at the interest rate of our mortgage is depressing. I’ve overpaid over the years to bring it down. We’re not in a position now but I’m glad I reduced it by a lot when we earned better money. I love the chess example. So true. Many are born close to winning but others start way back.

    • justmakingcentscom September 19, 2016 at 12:20 am

      I get you. Here’s the twist — I love debt. I kind of think of it like a wave. It’s great if you know how to surf it, but scary if swimming’s not your thing. I wrapping up a post for tomorrow that goes in depth on the beast.

      Re: mortgage. Would refinancing be an interesting option for you? I’m in the middle of one that will increase my monthly payments by a little but be paid off 6 years sooner.

      • amileinmyshoes September 19, 2016 at 6:53 am

        Yes if you are able to manage the debt then it’s nice to see it going down quicker. Re my mortgage, at the moment it’s a great deal. It’s basically run out and we’re paying the lowest of interest and can overpay as we please and reduce the term/interest payments. Keeping a close eye on interest rates though and will switch if things start moving up.

  • amileinmyshoes September 19, 2016 at 8:54 am

    Hey, if you put ‘hike’ in your blog post today you could link it to the daily prompt of ‘hike’ If get a few of my readings by doing the word prompts 🙂

    • justmakingcentscom September 19, 2016 at 8:57 am

      Thanks for the tip! I never think to do that since I try to write the day before. Plus, I’ve hardly checked the WordPress feed these last few days as I’ve been also trying to learn everything I can about eCommerce.

  • Everything You Wanted to Know About Debt: Keep Your Friends Close and Your Enemies Closer – just making cents September 19, 2016 at 2:47 pm

    […] continues the series on debt. In the last post, I talked about how consumer debt levels are much riskier than a company’s debt levels and the […]

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    […] in your credit card bill. Month by month, the cycle will grow stronger and stronger, and your chess pieces will overtake the opponent’s pieces.  Want to increase your chances of actually getting into and staying in a virtuous […]


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