Disclaimer: I am just presenting some principles to get out of debt, but I am not a professional financial planner. If your case is severe or bad, I advise you to seek professional help.
Hello my fellow Progress 31 women in progress!
In the part 1 of this article about debt, I was examining the dangers of debt on a Biblical perspective. Today, I will give you some tools to get out of debt which, I hope, will be useful for you.
Getting out of debt is a question of faith, but also a question of discipline and training of the will. If you don’t do anything, nobody will!
God will give you the strength and the ability to get out of your bad situation. However, you must act and do everything to get out of this slavery.
Let’s start to examine the principles by which you may get out of debt.
Step #1: Commit yourself to follow God’s principles about money, including avoiding debt
- Humble yourself and ask God for forgiveness in getting into debt and for not trusting Him to provide for you and to be dépendent of the world’s eyes
- Recognize God’s sovereignty over your finances. Remember that you are a steward of all the resources and talents He gives to you, including your finances!
- Commit yourself not to get into additional debt and to flee it as if you were avoiding some kind of huge disease, like AIDS!
- Make a covenant with God that from now, you’ll pay off your debts in priority if God blesses you financially
- You can ask a friend of yours or a member of your family to be the witness of your commitment, so that you’ll be accountable to someone
Step #2: Elaborate a plan to pay off your debts
I would recommend you to list the type of debts you have from the largest to the smallest. Here is an example of debts:
- home mortgage
- credit line
- student loans
- car loans
- family loans
Source: G. Edward Reid, It’s Your Money, Isn’t It?
Start paying the smallest debts and end with the biggest one (the mortgage). As far as the mortgage is concerned, you can use the money you use to pay off your other debts to get out of your mortgage as quickly as possible.
You may also see with your banker if it’s possible to renegotiate your interest rate/to refinance your debt.
You may also think about getting another temporary job if your current income is not enough to fit your debt reduction plan.
Step #3: Change your habits towards money
Changing your mindset and your habits is essential to stay away from debt. I am aware that it might be difficult to change, but when you allow God’s Word to transform you, you’ll become a new creature and you’ll have a new way of thinking.
Here are some habits I encourage you (and myself because I also need wisdom) to take.
- Establish a budget
A budget will help you to identify your spending patterns and to discipline yourself. It will also help you to avoid linving above your needs.
- Destroy your credit cards
“And if thy right eye offend thee, pluck it out, and cast it from thee: for it is profitable for thee that one of thy members should perish, and not that thy whole body should be cast into hell”. Matthew 5: 29
If you think that you won’t be able to discipline yourself in using your credit cards, cut them! You’ll be better without them and you won’t fall into the trap of debt again.
I know it will be hard, because credit cards allow us immediate self-gratification when you use it to buy something. You’ll feel bad not to get it out to buy some luxury thing.
Don’t worry, you’ll be fine. Just think from now that if you need to buy your luxury thing, you’ll have to save money for it! The budget you created will help you to save money.
- Set financial goals
As many books about finance teach, you need to start treating yourself/your family like a business. You must think of yourself as the CEO of your life.
I have already talked about the necessity to set goals for your life. Financial goals must be part of these goals. Here are some questions you can ask yourself when you set goals about your finances:
What are the goals I have for my finances in one year? In 2 years? In 5 years?
What are the debts I need to pay off this year? What is my plan?
What are my financial priorities for this year?
What kind of assets do I want to acquire?
- Educate yourself and never stop learning
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