So How Do You Beat Debt? 10 ideas.

Well, that is the question that has plagued Americans for decades. Do I file bankruptcy? Do I stop paying on credit cards and wait and settle? Here are some ideas gleaned from Crown, Dave Ramsey and others to help you.

1. Pray and Repent. Ask God to help you get out of debt and ask Him for help in the process and to turn away from it. Our culture is so debt driven that we think it is normal to have debt. But since no one has helped me with my Challenge (see post below) I will conclude as others have said, that God has nothing good to say about debt. In fact, I dare say, He thinks (at least consumer debt) is a sin. And when we have sin, we are called to repentance.
2. Stop borrowing money. You cannot borrow yourself out of debt. So no Home Equity Loans (which if you use to pay off credit cards like we did is moving unsecured debt to secured debt. In other words, before all they could do is sue you, now they have ownership in your HOUSE!). Put the credit cards away or better yet chop them up. No more trips to the cash advance (loan shark) store. And you may ask… “But what if I have an emergency?”
3. Build a cash emergency fund. Not a line of credit, but a real amount of money. Some say $1,000, some say more. Whatever amount is right for your situation, that is what you should do (within reason).
4. Look for ways to increase your income. Maybe it is a pizza delivery job. Maybe it is helping at more weddings and funerals. Maybe it is throwing papers in the morning. I am good with computers. And during our struggle, I did computer work for extra cash.
5. Do a cash flow plan. This is a budget. Plan out what you will spend this month on paper. Every dollar has a purpose. How much are you spending on groceries? How much on gas? How much on dining out? Plan it out and then …
6. Look at ways to reduce outgo. Do you NEED the fastest Internet and highest cable package or sat? Do you have to have so many minutes on your cell phone package? Do you have to go out to eat 5 times a week and for lunch. Pack your lunch it is healthier too. Buy specials, use coupons etc.
7. The Latte factor. $5 a cup coffee can kill your budget (or drinks from the machine or other things that you pay too much for). Think about about it 1 cup a day during the week with 4 weeks in the month equals $100! Now that doesn’t sound like much, but if you invested that money each month for the 40 years that you work, you would have over $1million! HOPE YOU LIKE THE COFFEE.
8. No more Late fees. If you are doing your budget then you will know where your money is. Figure out which paycheck pays which bill. Those $25 (if your lucky) to $39 late fees and over the limit fees and NSF fees are killing you one mosquito at a time. Pay your bills early (not weeks, just days). Know that credit card companies have been known to (and this is documented) change their address, change your due date and even give you a due time, by 3pm on the 15, so if you pay at 3:01 guess what?! YOUR LATE! If you are not current on everything, get current.
9. Once you have your house in order by doing 1-8 now you are ready for the snowball (this is what Dave Ramsey is famous for).

• List out all your debts except your mortgage. Now re-order them regardless of interest rate from smallest to largest (the only exception here is IRS settlements and loans to family, pay those first!)
• Pay minimums on all your debts except the smallest and pay that off as fast as possible (have a garage sale, sell on ebay, whatever it takes).
• When you pay off your smallest, move to the next one and use the money you were paying on the first debt too, so here is an example.

Debt                Minimum    Payoff

Credit Card #1      $20               $200

Medical Bill           $30               $500

Credit Card #2      $50               $2000

So in our example here, when you pay off Credit Card #1 you take the $20 a month you were paying to it and apply it to the medical bill, then when you pay that off, you move the $50 to the Credit Card. PLUS whatever else you were able to find in your budget to pay it off. So it is like a snowball, and every time it rolls over it picks up more snow.

• I know sometimes you look at an interest rate and say, that 39% one needs to go first and that 0% needs to go last. But you need some early victories. And if this were all about math, you wouldn’t be in this bind in the first place.

10. Never stop giving to God and His work. I know what your numbers say, but God is not bound by numbers. When you start being a good steward of His money, then He may decide to bless you with more, IF, you are a faithful steward. Remember, your mess is not His fault. And your faithfulness will help you have a right view of money on the other side of your ordeal.