Debt, do us part

Debt, do us part

by: Dante Barlow

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Think about the last time you made a purchase. Was it for something you needed or something you wanted? How did you pay for it? If you didn’t use cash, did you say ”Oh, I’ll just use my credit card.”

Stop. Before you defend your decision, let me say I know how you feel.

Maybe you bought something you’d been thinking about for a while. Perhaps you thought “I deserve it,” and “It’s calling my name.” Or you could be different. If none of those feelings hammered the nail into the coffin of your decision, maybe one of these did:

It’s on sale! What if it sells out? I can’t pass up on this opportunity.

These are just a few things we tell ourselves as we buy more and more of what we can’t afford. Shoes, clothing, toys, cars, electronics + more of anything we believe we need.

Think about all the times that you’ve purchased what you (1) didn’t need, (2) couldn’t afford, or (3) bought on credit.

Now, try to total it up.

When I think about this for myself, I cringe remembering all the money that I’ve borrowed just to pay back with interest.

Debt keeps you in the past because you’re stuck paying off what you spent yesterday instead of sowing that money into your future. This is the pitfall of living with debt.

What’s good debt?

A 2017 survey from the National Foundation for Credit Counseling records, nearly two in ten American adults carry over $2500 or more monthly in credit card debt. (Source: 2017 Consumer Financial Literacy Survey)

Pause.

Now, think about what you could do with an extra $2500 a month. Does it make you sick or angry? Good. Seeing debt for what it really is, a thief of the present and the future, is the only way to get out of it and stay out of it.

Common types of debt

• Home
• Auto
• Student Loans
• Medical
• Personal loans
• Credit Cards

Although credit card debit is viewed as the worst type, in reality, all debt is bad debt.

Let’s make a plan to ditch your debt.

People act like living with debt is normal by continuously using credit, racking up debt on top of debt, and then hanging onto it for years. But you can be different. In your world, debt does not have to be normal.

God does not want you to live your life in debt. God wants you to be successful and to have the financial freedom to live the life you want.

Here’s the plan

1. Know your finances. Financially you need to know where you stand. What do you earn? What are your expenses? How much debt do you owe and who do you owe it to?
2. Visualize a plan. Write everything you owe out on paper. The paper helps you get more of a visual on the total amount of what you owe and the best way to prioritize paying it off. Once you’ve done this, you can set goals and build a plan to accomplish it.
3. Build your budget. You cannot begin to save money or make plans to take down your debt until you master your spending. Reign in your spending by writing out your budget, every month before the month begins and documenting where every dollar is being spent.
4. Create emergency savings. In Dave Ramsey’s book Financial Peace, he recommends having at least $1000 available in your emergency savings fund. Which many don’t. According to a 2017 survey by the Federal Reserve, four of ten Americans would have to borrow or sell something to cover a $400 unexpected expense. (Source: Report on the Economic Well-being of U.S. Households in 2017)
5. Optimize your income. Per Dave Ramsey, “Your most powerful wealth building tool is your income. When all your income has other people’s names on it, you have no money muscle.” To optimize your income you need to keep as much of it as you can. So if you’re not in debt, once you have the emergency savings, save or invest. And if you are getting out of debt, the emergency savings will help you work with a little more peace. Some reports will tell you to pay off higher interest accounts first, but you may find starting with the smallest amounts work better for you. Paying off small accounts vs big accounts. Paying off smaller accounts will give you a quick confidence boost and help you to be more optimistic about the rest. Like myself, you may become more driven to make it happen faster and look for additional ways to pay it off such as getting a second job, working overtime, or pushing your side hustle. See Dave Ramsey‘s How the Debt Snowball Method Works.

Live like your future matters.

In Rachel Cruze‘s book Love Your Life Not Theirs, she writes “The bottom line is, it doesn’t matter how much money you make; it matters how much you keep. Debt actually moves you backward in your financial life, enabling you to spend more than you make.”

If you want to live like your future matters, then decide to hang onto more of what you make because wealth doesn’t equal what you earn, wealth equals what you actually keep.