12 May 2014
Declare War Against your Debt!
The amount of credit extended to individuals within the US continues to increase at an annual rate of 4.34% according to the Federal Reserve Consumer Credit-G.19 release for November 2013.* Credit card or revolving unsecured credit extended to individuals increased by .5% while secured and fixed loans for automobiles, education and personal loans increased by a 6.5% annual rate.*
Having more credit available for use does not have to equate to having more debt. Having credit does not cause debt. Debt is caused by the improper use of credit products. If the amount of your monthly debt is more than 5% of your monthly income you are in debt by my definition. When in debt, funds that should be earmarked for other areas of your everyday living are required to repay creditors for goods or services that you’ve received immediately and promised to pay for over a period of time. This can stunt immediate and future financial growth and promotion for you and your family.
You were bought at a price; do not become slaves of men.
1 Corinthians 7:23 NKJV
If you’re in debt you’re financially enslaved to your creditors. This is not a desirable place to be. Rise up and say “I’ve had enough!” Declare war against debt in your life. Here’s how to do it in 6 concise steps.1. Get mad about it!
Anger in a framework of wisdom provokes corrective action. Being in debt is not an acceptable way of life for Christians. If debt is in the equation of your current financial condition you should get mad about it. You’re not enjoying the freedom of which you’re entitled. Get mad if most of your hard earned paycheck is owed to others before you get it. Get mad if you are not in a position to plan and save. Instruction from the Christian holy bible leads us to not be enslaved to anyone yet your primary reason for earning money is to keep creditors off your back. Mad yet? Then do something about it!2. Get your debt target in sight.
Take an honest look at your current financial situation. Write it down, put it in a spreadsheet or use an online financial management tool. It doesn’t matter how you do it but get it out of your head and in a place where your eyes can see it and you can lend your voice to it. For each debt owed log the creditor name, balance owed, what was purchased, monthly payment amount, interest rate, amount past due and planned payoff date. Get totals for these key items and see them as a wall that separates you from financial freedom. When you can see the wall you can get a tactical plan to scale it.3. Build your debt defense shelter
You will need a rainy day or emergency fund. In this life there will be unplanned financial interruptions. The car breaks down, two family members gets the flu, you get a speeding ticket, your out-of-state cousin passes away. Expect it. Face it. Fund it. This the purpose of your rainy day or emergency fund. Plan to have at least $1,000 set aside for those life burps that happen. If you’re retired strive to have at least $500 set aside. Use these funds instead of adding to your debt for specifically defined emergency situations. Build and replenish this fund while paying down debt. If saving $1,000 seems impossible right now, try and contribute $20 a week to this fund. Give up something to be able to repurpose this weekly $20 from your everyday living budget. With no financial burp you will have your $1,000 emergency funds within a year!4. End your relationship with the enemy: Stop Charging!
Take your credit cards from yourself. You’re making the problem worse by continuing to use them. Canceling them could negatively affect your credit score so keep them open but stop using them. You can do this!5. Plan to pay off all non-mortgage debt in 24 months or less.
Give your freedom from debt a completion date. If the planned payoff date for any debt extends beyond 24 months using your current schedule, a more aggressive payoff strategy is needed. Getting a second job, selling stuff, getting a roommate, canceling vacations and downsizing your daily living are great places to start to find the funds to pay more on these debts.6. Protect your freedom!
When you become free from debt create a internal sensor that is triggered when it looks like you could be relapsing. Defend your hard earned freedom. Your defense is against your toughest adversary - yourself. Freedom from debt is exhilarating! This is where you belong. Don’t let anyone or anything send you back into bondage.