A typical household has $15,000 in credit card debt. How did we get into that? Nobody just woke up one morning with a stack of bills. There are four factors that lead to debt.
First, lack of knowledge: Most people have not been trained to handle money God’s Way. We have done what was modeled to us or what we thought was best based on what we were told.
Second, lack of discipline: Many people spend impulsively because they have no written plan or budget to ensure that spending does not exceed income. They live from check to check without really knowing where all their money goes.
Third, lack of planning: We can get into debt quick simply because we don’t plan ahead. Credit cards allow us to skip the planning process and just pay as we go. The problem is that it can easily spiral out of control.
Fourth, circumstances: Sometimes we use debt when we experience unexpected emergencies, such as an illness or loss of a job. Sometimes circumstances dictate that we either go without or buy on credit. Credit cards can be awesome in times of emergency.
The problem is most of us don’t just use credit cards in emergencies, we use them all the time.
Now that we know how we have gotten into debt, let’s talk about how to get out of it.
How to get out of debt.
Step 1: Pray. I believe that God loves you and wants you to work towards becoming debt free and is willing to help you do it if you take a step of faith.
In 2 Kings 4:1-7 a widow was deep in debt and her creditor was threatening to take her two sons as slaves to cover her debt so she cried out to Elijah for help. God miraculously provided for her. The same God can supernaturally provide for you if you trust Him and surrender your situation to Him.
Step 2: Know what you make. Most people don’t know exactly what they make. You need to know what you make every month as a baseline. For those in sales or small business owners this can be a little tricky to figure out but you can look back over the years and get a really good estimate based on the past.
Step 3: Know what you owe. How much money do you really owe? List out all your bills on a piece of paper or a spreadsheet. Have you ever tracked what you spend your money on for a week or a month? You will be blown away at where is all goes.
Step 4: Create a budget. A budget is an itemized list of where the money is supposed to go and knowing where all your money is spent.
Step five: Stick to your budget. This takes discipline. Tell your friends about your budget, tell your family. You need support if you are going to shed the debt. Don’t binge spend. Change your habits to fit your new lifestyle.
You cannot lose all your excess debt overnight but you have to start someplace. If you want to get involved in a small group to help you start the debt diet process we are launching one. The focus of this small group is to help you come up with a plan and stick to it. This week I challenge you to go online and find a budget worksheet and fill it out. You can write this web site down if you want a great place to start.
How you handle money is a reflection of your faith. Whether you are just starting this process today or are years into it, you can master your money, lower your stress, and increase your joy if you are willing to stick with God’s financial plan.