Throwback Thursday: Four Steps to Debt Elimination


With all the discussion in the news of student loan forgiveness, the financial strain caused by the pandemic, and debt elimination struggles among working-class people, with thought it appropriate to share this gem from the Message Vault. Still applicable? You be the judge. -Online Content Manager

During the past two decades, we have seen the ease with Americans have acquired large amounts of debt. A significant amount of debt has been related to homeownership and college education. Those who may not have a mortgage or student loan may be struggling with a car note and mounting credit card debt. Unfortunately, this has become a regular part of our American culture.

In Proverbs 22:7 (NIV)*, the Bible says: “The rich rule over the poor, and the borrower is servant to the lender.” Other translations of the Bible say the borrower is a “slave” to the lender. With our troubled economy, there is no better time than now to become debt-free and remove the shackles of financial bondage. Here are the steps to eliminating debt:

1. Make the Commitment

Make a verbal and written commitment to yourself and God that you will become free from debt. If married, husbands and wives should strive to have absolute unity with this commitment. Ask God to bless you with the self-control and wisdom in making good financial choices. This is necessary for success. God will honor your request. The objective is to get out of debt and stay out of debt.

2. Establish a Monthly Budget

Creating a detailed personal or family budget is necessary for achieving freedom from debt. We all have to make an accurate and complete assessment of where our money comes from and where it will create a plan of action. The budget should be divided into two sections: income and expenses. The budget should first contain all income sources, whether from work, retirement, government, investments, or other sources. The expense section of the budget should include all money spent on housing, utilities, food, personal care, charitable contributions (tithe and offering), debt repayment, education, transportation, taxes, insurance, health care, savings, and all other miscellaneous expenses.

If you have access to a personal finance software program with built-in budgets, this is a helpful tool. If not, you can create a budget with simple pen and paper, build a spreadsheet, or download free budget templates offered on many Web sites. All income and expenses must be accounted for in this budget.

If purchases are routinely made with cash and receipts are not issued or kept, it is best to track all spending for 30 days to identify your actual spending patterns. Otherwise, the budget will not be an effective tool.

3. Evaluate Spending Practices

Once spending has been tracked for 30 days and the results have been recorded in the budget line by line, begin evaluating where overspending exists. Perhaps it is in clothing purchases, eating out, or beauty and nail salons. Simply taking lunch from home each day can save hundreds of dollars each year for working persons and students. Those saved dollars can be used toward paying down existing debts.

The first course of action should be to immediately stop making any credit purchases that are not necessary and cannot or will not be paid off right away. If it helps to leave credit cards at home, please do so. Create a “wants vs. needs list.” This involves looking at your budget and actual spending practices and identifying the areas where spending routinely occurs on things wanted rather than things truly needed. This is where the sincere prayer for self-control and wisdom will be answered. The Holy Spirit will clearly show you where overspending exists.

4. Pay Off Debts

Prepare a list with the names and amounts of all debts, placing them in order from the most significant debt to the smallest. Often, a mortgage is the most significant debt and a credit card the smallest. Once you have identified expenses that can be reduced or eliminated in a systematic approach, apply those funds to the smallest debt first. After paying all monthly payments, you can also use those additional funds for the smallest debt if you have money remaining. If this is done consistently, you may be surprised to see how quickly the smallest debt is eliminated.

Once the debt at the bottom of your list is paid in full, take all money previously directed to paying that smallest debt to now paying the debt on the line above it, and so on until the only remaining obligation is the most significant. Money once used to pay all debts is now solely directed to eliminating this final debt.

Once God has blessed you to achieve debt freedom, praise Him for this victory, and continue to model a lifestyle of financial discipline. Determine in your heart that by God’s grace, you will not enter into the bondage of debt again.

*Texts credited to NIV are from the Holy Bible, New International Version. Copyright © 1973, 1978, 1984, International Bible Society. Used by permission of Zondervan Bible Publishers.

Originally published in Message Magazine’s September/October 2010 Edition by Cynthia Timpson Brame

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