For the past two weeks, we have been talking about how to begin to have financial freedom in your life. If you haven’t read the earlier posts yet, you can find them here and here. The questions that we are discussing in regard to finances are:
How do you master money when you feel like money has actually mastered you?
How do I get in the black with my finances when I am always in the red?
How do I get out of debt?
For our last post in this series today, we will be working through living by a monthly budget and the HOW of getting out of debt. As you can imagine, they go hand in hand and I pray these steps will help you to begin to see a light at the end of the debt tunnel!
Last week, we talked about the Law of Stewardship where you were urged to resolve to live by a monthly budget. It is easy for someone to TELL you that is what you should do, but hard to put in place if you don’t know the HOW. Here are four steps to get you started:
- Determine your total monthly income: add up your salary, dividends, trust income, interest, or any other sources of fixed income.
- Determine spendable income: subtract your tithes and taxes.
- Determine your fixed monthly expenses (look at the prior year’s expenditures; divide yearly totals by 12 for approximate figures) and your discretionary expenses (money spent at your discretion.) Your total expenditures must not exceed net spendable income.
- Determine if you have a debt or surplus lifestyle.
- Refuse to live your life drowning in debt
- Debt is bondage to another
- Debt dishonors God
- Debt reveals lack of self-control
- Debt brings God’s judgement
Now that you have done this, it is time to take a look at how to cancel debt. Proverbs 6:5 says “Free yourself, like a gazelle from the hand of the hunter, like a bird from the snare of the fowler.”
First stop…. You must identify your debt situation:
Make an inventory of your assets:
- What do you own?
- What is the approximate value of the things you own (car, house, property, insurance policy… large items)?
Identify your income:
- How much money do you make?
- How much time per week do you work to obtain this money?
- Do you have any investments?
Describe your debts:
- What do you owe?
- When is it due?
- What interest rates are you paying on each debt?
Approximate your monthly bills:
- What do you pay for utilities, gasoline/ transportation, food, phone, clothing, insurance, entertainment?
Next…. consider your lifestyle….
- Why do you live the way you do? Is it for career advancement, to impress family or friends, or to live comfortably?
- Were you brought up living this way?
- How do your friends, family and co-workers live?
Consider what you could do without:
- Do you have expensive items you don’t need that, after the initial purchase, have high maintenance costs?
- Do you pay others to do something that you could do yourself?
- Do you eat out when you could eat less expensively at home?
Look for what you can substitute:
- Can you substitute less expensive items for premium products or services you currently use?
Reconsider gift giving:
- Do you disregard budgets and savings plans during holidays and gift-giving occasions?
- Can you give fewer and less-expensive gifts?
- Does it mean that you love your friends and family any less if you live within your means?
- Would your loved ones want you to go into debt to buy them presents?
Moving on to establishing financial goals…
List future expenditures:
- What future expenses do you anticipate?
- Are you looking to buy a home, pay for a daughter’s wedding, or replace a vehicle?
Consider future career changes:
- Are you considering going to school or starting your own business?
- How will these plans change your financial situation?
Prepare for family changes:
- Are you expecting a child?
- Are children leaving the home?
- Do you have elderly parents in poor health?
- Prepare for how these changes will affect your finances
State your future financial goals:
- Financially, where do you want to be five years from now? Ten years from now?
- What are realistic expectations?
Finally, it is time to take action with your finances!
Pay extra on your debts:
- Which debt has the highest interest rate?
- What amount of money can you pay each month on that debt?
Stop feeding your debt:
- What lifestyle habits contribute to your debt?
- Have you stopped using credit cards and started paying cash?
Change your lifestyle:
- What items can you do without that you really do not need?
- What expensive assets can you sell that would be financially profitable to sell?
Establish a savings plan:
- How much should you plan to give to God?
- How much money are you setting aside to help those in need?
I walk in the way of righteousness, along the paths of justice, bestowing a rich inheritance on those who love me and making their treasuries full.
Remember…. just as the Bible has predetermined YOUR purpose… it has also predetermined your money’s purpose:
It is ALL for the glory of God!