Managing Money God’s Way

I will always strive to be honest with those of you reading my blog posts.  So coming from someone who is still in debt, I can tell you that it really stinks to be in debt.  I would like to give you 10 reasons why being in debt stinks.

1. God, through his word tells us that being in debt stinks.  Proverbs 22:7 states: “The borrower is servant to the lender.” Being a Christian this one really hits home for me.  I have not been a good steward of what God has given me.  My wife and I are actively working on this one.
2. Debt limits your opportunities.  Maybe you would like to make a career change, go back to school, or maybe even move to another area.  Forget it.  You are in debt.
3. Debt affects your entire family.  Your kids may not fully understand the fact that mom and dad are in debt and maybe even struggling to pay their bills, but they sure understand when mom and dad are fighting about money.
4. Debt forces you to put up with a lot of crap.  Being in debt forces you to put up with a lousy job, broken down cars, and overall lower standard of living.
5. Debt plays by its own set of rules.  If you don’t believe me, try carrying a large balance on a credit card.  One month your statement shows an APR of say 7.99%, the next is is up to 23.99%.  What happened?  You just appeared to be a high risk.
6. Debt is something you think about all the time.  If you are anything like me, it is one of the first things you think about when you wake up in the morning and it is the last thing you think about when you go to sleep at night.  Don’t we all have better things to think about?  And realizing that it is not going away anytime soon, leaves you with a feeling of helplessness.
7. Debt eats away at future earnings.  Every dollar you pay in interest on debt is a dollar that could have been saved or spent on something else, and a dollar taken away from your earnings.
8. Debt is a lousy employer.  When you are in debt, and more and more of your income is going towards repaying that debt, you might as well as consider yourself the employee of your debt.  What a lousy employer!
9. Debt sours even the best events in life.  getting married, having a baby, buying a house, taking a well deserved vacation should be some of the highlights of your life.  But if you are deep in debt, these events only provide temporary relief.
10. Debt plain STINKS!

I hope and pray you are like me and working your way out of debt, because trust me it stinks!

Most people think that the solution to their financial problems is more money.  If they could just get a few more dollars each month, they would be able to make ends meet.  Larry Burkett used to tell a story of three couples, each with different incomes and expenses, yet they all three said the same thing.  The cause of their financial problems was too little income.

Although I understand the logic behind the statement, the logic really is flawed.  The answer to the problem isn’t always more income, sometimes it is less expenses.  That’s right.  If you had less money going out, you wouldn’t need more money coming in.  Instead of buying coffee that costs $5.00 a cup, you could make coffee at home for $0.50 a cup.  Instead of paying for the extra fast internet you could cut back and go with the pretty fast internet.  Instead of paying $6.00 a day to eat out for lunch you could bring lunch from home.

What does all of this do for your “I don’t have enough money” problem? If you are not spending as much, you don’t need as much.  When you decide (and it is a choice) to cut your expenses, it is the same as getting a raise, and you didn’t have to ask your boss to get this raise.  Actually, cutting your expenses is better than a raise for two reasons. First, because you have learned to live on what you are currently bringing home, you aren’t paying more taxes. Second, when you really do get a raise you will be able to use the raise for the important parts of your financial plan, like debt reduction and retirement.

What have you done recently to lower your monthly outflow? Leave a comment and share your ideas with others.

I ask myself that question quite often as I sit down to pay my bills.  Yes, I still have credit card debt.  Yes, I am working on paying it off using the debt snowball method.  So I thought these 10 steps would be a good idea to go through.

Ten Steps to Paying Off Credit Card Debt

1. Save three months of expenses in an emergency fund.  You may be saying, “why is this on the list of steps to take to pay off my debt?”  You need this fund for when unexpected expenses come up, like when your air conditioner breaks, or your car breaks down.  This will keep you from using your credit cards to pay for this stuff.
2. Take an inventory of your debt.  In this step you list all of your credit card accounts.  Include the account number, current balance, interest rate, minimum payment, credit limit and contact number.  This may shock you when you see how much you really owe.
3. Contact each credit card’s customer service number.  What you are going to do here is explain that you are in the process of consolidating cards and would like them to review your account for a lower interest rate.  If they decline, ask to speak to a supervisor and repeat your pitch.  If that fails, thank them ad hang up.  Whatever you do, DO NOT close the account at this point.
4. Consolidate balances to credit cards with the lowest interest rate.  Move as much and as many of your high interest debt to cards with the lowest rates.
5. Get real angry.  I mean get really really angry and the debt staring back at you.  Take a look at it and remember all the nights it has kept you up, or all your dreams that have been put on hold.
6. Cut up all but the card with the highest available credit.  You are in a hole and you need to stop digging it deeper.  Get your scissors out and start cutting.  Take that card you kept with the highest available credit, put it in a plastic cup of water and freeze it.  You will only need it in case of an emergency.
7. Reorder your list of debts, putting the smallest debt at the top.  Put a big #1 next to that sucker.
8. Put every single dime you can find at debt #1.  You want every single extra penny you can scrape up to go to paying this debt off.
9. Snowball to the next smallest amount.  When the balance reaches zero and you have paid off the entire balance, you will then take the monthly minimum you were paying on that card along will every extra penny and begin to pay off the next credit card balance.  You will rinse and repeat this step until all your credit card balances are paid off.
10. Celebrate.  I think it is time to celebrate a great victory in your life.  Do something good for yourself.

If you are like me, you have probably been accumulating debt for years.  It is time to get it paid off and start living a life debt free!

One of the greatest myth’s people have bought into is the benefit of bankruptcy.  This idea brings us to the fourth Biblical Financial principle, which is the understanding that there is Life after Debt.

1. Understand God’s Ownership (Psalms 24:1)
2. Learn to Save Money (Proverbs 21:20)
3. You Must Live on Less Than You Make (I Timothy 6:7-8)
4. There is Life After Debt (Proverbs 22:7)
5. Establish an “On-Purpose” Cash Flow Plan (Luke 14:28-30)
6. Prioritize Your Plan Around the Four Walls (I Timothy 5:8)
7. Giving is the Goal to Financial Freedom (II Corinthians 9:7)

It is unfortunate, but a lot people feel that they can simply use bankruptcy as a way to walk away from the debt they have accumulated.  As Christians, the Bible is very clear that we are responsible for the repayment of our debt.  Even for non-Christians, the idea of following through on your promise is something that everyone should understand is a good thing.

Personal Control? Lost or Given Away?

When you sign your name on a contract, a loan agreement or even on a credit card receipt, you are promising to pay back the money that is being extended to you.

Proverbs 22:7
“The rich rules over the poor, And the borrower is servant to the lender.”

When you borrow money, the lender gains a level of personal control over you.  When you have borrowed yourself up to your financial limit, you have lost almost all control of what you can do with your finances.  You have sacrificed your financial freedom.  When we think of the sacrifice that Jesus paid on the cross to free us from the bondage of sin, we get a small picture into what God thinks of His children being in bondage, and yet for the thrill of the moment we are willing go out and tie ourselves to stuff.  We need to understand that debt cannot be a long-tern way of life, however, no matter how deeply in debt we are, there is a way out.  It is not going to be easy, but there is life after debt.

Sick and Tired of Being Stuck

Before you can get out of debt you have to get sick and tired of living the way you are.  Maybe you are tired of seeing all of your money go out with no real enjoyment from all the ’stuff’.  Maybe there are bigger things you want to be doing, but because of the debt you can’t move toward your dreams.  Whatever the reason, deciding to get out of debt is the first step.

When you look at the new bankruptcy laws, things are a lot tougher now than they used to be.  Each state is a little different, but the one thing that is common, is that it will cost you to file and declare bankruptcy.  In addition to the big black mark on your credit, most states will force you to liquidate things to help pay off the debt.  You can no longer just walk away from the problem.  If it is going to hurt to go through bankruptcy, you might as well go through some pain and get out of debt the old fashion way; pay it back.

Getting out of Debt

There are a lot of differing opinions on how a person should start paying off debt.  Some think you should always payoff the debt with the highest interest rate first.  Others thinks you should start with the smallest balance and pay them off smallest to largest.  This is the method Dave Ramsey suggests and I think it works very well.  It isn’t the most efficient mathematically, but it will give you positive satisfaction and will provide the results that will keep you motivated.

There is still one problem.  Where are you going to find the money to start paying off your debt?  That is a great question, and if you missed it, I answered that question in the third Biblical Financial principle.  Make sure you check it out.  In the next principle we will look at establishing a budget that will help you live on less than you make.

I would like to put “Easy” in the title of this post, but then I think we would be fooling ourselves.  The steps themselves are easy, but they are difficult to follow through on.  It will take determination, and a lot of sacrafice, to see all those credit card balances go to zero.  There is something I would like you to do before you begin to follow the steps below, and that is what I call Step Zero.  Identify why you want to be debt free.  Saying you want to be debt free is not enough, you need to know why.  For me, it is because debt is forcing me to stay in a job longer than I would like.  It is limiting my opportunities.  Once you have identified the “why” move on to the steps below.

Ten Steps to Paying Off Credit Card Debt

1. Save three months of expenses in an emergency fund.  You may be saying, “why is this on the list of steps to take to pay off my debt?”  You need this fund for when unexpected expenses come up, like when your air conditioner breaks, or your car breaks down.  This will keep you from using your credit cards to pay for this stuff.
2. Take an inventory of your debt.  In this step you list all of your credit card accounts.  Include the account number, current balance, interest rate, minimum payment, credit limit and contact number.  This may shock you when you see how much you really owe.
3. Contact each credit card’s customer service number.  What you are going to do here is explain that you are in the process of consolidating cards and would like them to review your account for a lower interest rate.  If they decline, ask to speak to a supervisor and repeat your pitch.  If that fails, thank them ad hang up.  Whatever you do, DO NOT close the account at this point.
4. Consolidate balances to credit cards with the lowest interest rate.  Move as much and as many of your high interest debt to cards with the lowest rates.
5. Get real angry.  I mean get really really angry and the debt staring back at you.  Take a look at it and remember all the nights it has kept you up, or all your dreams that have been put on hold.
6. Cut up all but the card with the highest available credit.  You are in a hole and you need to stop digging it deeper.  Get your scissors out and start cutting.  Take that card you kept with the highest available credit, put it in a plastic cup of water and freeze it.  You will only need it in case of an emergency.
7. Reorder your list of debts, putting the smallest debt at the top.  Put a big #1 next to that sucker.
8. Put every single dime you can find at debt #1.  You want every single extra penny you can scrape up to go to paying this debt off.
9. Snowball to the next smallest amount.  When the balance reaches zero and you have paid off the entire balance, you will then take the monthly minimum you were paying on that card along will every extra penny and begin to pay off the next credit card balance.  You will rinse and repeat this step until all your credit card balances are paid off.
10. Celebrate.  I think it is time to celebrate a great victory in your life.  Do something good for yourself.

If you are like me, you have probably been accumulating debt for years.  It is time to get it paid off and start living a life debt free!

I will always strive to be honest with those of you reading my blog posts.  So coming from someone who is still in debt, I can tell you that it really stinks to be in debt.  I would like to give you 10 reasons why being in debt stinks.

1. God, through his word tells us that being in debt stinks.  Proverbs 22:7 states: “The borrower is servant to the lender.” Being a Christian this one really hits home for me.  I have not been a good steward of what God has given me.  My wife and I are actively working on this one.
2. Debt limits your opportunities.  Maybe you would like to make a career change, go back to school, or maybe even move to another area.  Forget it.  You are in debt.
3. Debt affects your entire family.  Your kids may not fully understand the fact that mom and dad are in debt and maybe even struggling to pay their bills, but they sure understand when mom and dad are fighting about money.
4. Debt forces you to put up with a lot of crap.  Being in debt forces you to put up with a lousy job, broken down cars, and overall lower standard of living.
5. Debt plays by its own set of rules.  If you don’t believe me, try carrying a large balance on a credit card.  One month your statement shows an APR of say 7.99%, the next is is up to 23.99%.  What happened?  You just appeared to be a high risk.
6. Debt is something you think about all the time.  If you are anything like me, it is one of the first things you think about when you wake up in the morning and it is the last thing you think about when you go to sleep at night.  Don’t we all have better things to think about?  And realizing that it is not going away anytime soon, leaves you with a feeling of helplessness.
7. Debt eats away at future earnings.  Every dollar you pay in interest on debt is a dollar that could have been saved or spent on something else, and a dollar taken away from your earnings.
8. Debt is a lousy employer.  When you are in debt, and more and more of your income is going towards repaying that debt, you might as well as consider yourself the employee of your debt.  What a lousy employer!
9. Debt sours even the best events in life.  getting married, having a baby, buying a house, taking a well deserved vacation should be some of the highlights of your life.  But if you are deep in debt, these events only provide temporary relief.
10. Debt plain STINKS!

I hope and pray you are like me and working your way out of debt, because trust me it stinks!