Take These Steps to Conquer Debt

Last week the newspapers and internet news sites all warned about credit card rules changes. New laws passed by Congress last year, intended to protect credit card users, went into effect on February 22.

I believe that when used wisely, credit cards can be a helpful financial tool. I am impressed that far too many people do not understand with each swipe of a credit card, a loan is being taken out. And oh my goodness, what interest rates the borrower is paying for these loans!

Shakespeare, in Hamlet, gives the classic advice of “Neither a borrower nor a lender be.” The wise person will use credit cards prudently, paying them off in full each month if at all possible. Otherwise, real financial struggles are bound to ensue.

Another adage I have heard for most of my life, and that I have used frequently in sermons or counseling, is “These three things avoid: dirt, debt and the devil.” I’ll write about dirt and the devil another time. Today is the time to address the problem of debt.

Encouraged by government and advertising, debt is devouring America. I have my honest doubts about the survivability of our country because of its debt. Basic financial and Biblical principles are being violated. While I cannot do anything about the government’s appetite for debt, I can do something about my own. And you can take steps to get your own debt under control. Howard Dayton, cofounder of Crown Financial Ministries states, “Are you drowning in debt? The truth is, if you don’t control this area of your life, it will control you.” He then goes on to offer some action steps. I share them here and have added a step or two in the hope of making the plan clearer.

1. Complete a Debt List and a Financial Statement. On the Debt List, write down everything you owe, including credit card balances. These forms may be downloaded free at www.crown.org
2. Place this information into the Financial Statement as “Liabilities.”
3. Then list your Total Assets, including real estate values, cash, chattel, etc. Put this information into the Financial Statement as “Assets”. Be honest with yourself, and do not inflate estimated figures.
4. Look at the Financial Statement to see if there is anything you don’t need that can be sold to eliminate debt.
5. Track every penny you spend for the next 30 days. Take paper with you wherever you go and write down everything you spend. Each night review what you spent and record it in a notebook.
6. If married, both husband and wife need to track spending. Each night meet together to record and review what was spent. Begin these daily meetings by praying for God’s peace and for each other.
7. Eliminate credit card debt first. Pay off the smallest balance first, and when that is done, apply what you were paying on the smallest balance to the second smallest balance. REMEMBER: you must stop accumulating new credit card debt in order for this to work.
8. After paying off the credit cards, pay off consumer debts, like car loans. Then, begin making extra principal payments on your mortgage.
9. Finally, complete a Monthly Income and Expenses form. This is a spending plan that tells your money where you want it to go instead of you wondering where it went. This form, too, may be downloaded free.
10. Once a spending plan has been drawn up, maintain it weekly.

Take these steps to conquer debt!