We’ve previously discussed (here) a little bit about what it means to be in debt, along with the picture of slavery that the Scriptures give us. If we are in debt to somebody else, we are in many ways a slave to that person. In our day, we are in so much debt that one person might be a slave to many lenders! I know that is my own case. But what can we do about it?
I’m only midway through my quest for debt-freedom, but I’ll outline a few steps I’ve taken to not only see where I need to go, but actually pay off debt. While many of these don’t have explicit Biblical principles attached to them, there are overarching patterns of wisdom and responsibility that govern these ideas.
There are a few simple methods that I have used to start getting debt free:
- Get overall finances in order
This is probably the hardest step: getting started.
The idea is to free up as much money as you can monthly to start paying things off. For me, this started by going over my monthly necessities (like rent, utilities, etc), and seeing how much I had free that I usually spend on things I don’t actually need.
Then decide on what you can do without, or even just downsize.
Do you really need Netflix, Hulu, AND Amazon Prime subscriptions all at once? Can you cut down on fast food trips?
After going through this information, I was astounded at how much I was wasting each month, and started cutting down. It certainly wasn’t easy, but it was worth it. Next you’ll want to:
- Set your Initial Monthly Loan Extra
Based on your work in the first step, it’s pretty easy to get an idea of what you’ll have extra each month to put toward loans.
- Get your Debt Information Organized
It’s hard to know what debts you have unless you can see what you have. For me, this meant creating a spreadsheet.
I know. Spreadsheets = boring.
But it really helped me see my information all at once, including remaining balances, interest rates, time remaining, etc. This allowed me to select a strategy which I could use moving forward. For me, this was to:
- Use a Debt Avalanche System to Prioritize Debt
This means to organize your loans (which is easy in a spreadsheet) by interest rate and balance. The idea is to pay off your highest interest rate, lowest balance loans first, and work your way down the list.
Not only do you save money by getting rid of high interest rates early, but you can really see your progress as you pay off each loan.
Here is where the monthly extra from Step 2 comes in. You’ll put all of the extra on the highest interest, lowest balance loan. Depending on how much extra you have, you might be paying off loans every few months! Using the monthly money freed up by paying off the loan, you can then apply it to the next one. And so on. This is why the word avalanche is used. Once it starts rolling, the debt flies away!
For me, I had some high interest loans under a few thousand dollars that I was able to pay off relatively quickly. This gave me momentum to keep going.
Using these few steps, I have been able to get rid of over $20,000 in debt in under two years (as the single wage-earner of a four-person family no less)! It definitely takes dedication, but know that you aren’t alone in your battle to get rid of your debts.
Also remember to try not to get anxious about it. I often got obsessed trying to control as much as I could of our finances, to the point that I wasn’t trusting in God to provide. We are called to “not be anxious about anything, but in everything by prayer and supplication with thanksgiving let your requests be made known to God” (Phil 4:6).
I hope this can start a few people off well on the path to financial freedom. Through it all, just remember to be content with what God has provided, knowing that He will never leave or forsake you. So we can confidently say “The Lord is my helper; I will not fear; what can man do to me?” (Heb 13:5). Next post, we’ll explore a few of these ideas a little further, including my own experiences of getting too wrapped up in money matters, to the exclusion of trusting in God.