According to Proverbs 22:7, “The rich rule over the poor, and the borrower is slave of the lender.” (NRSV) Does the word “slave” ever have a positive connotation? Not in any situation I can think of. But, when you owe money to someone else that is what you are, a slave. I think we can all agree that debt is not a good thing. It increases your personal financial risk, limits your options, and can create an enormous amount of stress… and stress can take its toll on you in many forms.
This Lending Tree video of “Stanley Johnson” is humorous, but is representative of the vast majority of Americans. In 2010, the U.S. census bureau reported that U.S. citizens have over $886 billion in credit card debt and that figure was expected to rise to $1.177 trillion in 2011. More specifically, the report states that each card holder had an average credit card debt of $5,100 and this number was projected to reach $6,500 by the end of 2011.(source: www.money-zine.com/Financial-Planning/Debt-Consolidation/Consumer-Debt-Statistics) This is just credit card debt!
Debt is dumb. I have contributed my share to the stupidity; car payments, credit card balances (personal and business), personal loans… all to have a “lifestyle” that I thought might impress my friends, co-workers, or family. Not only was I a slave to the “lenders,” I was also a slave to a job that helped support my debt habit. Once I realized I was a slave, I had to make a change. When you don’t have any debt, you have options. You do not have to continue to do something day after day that you do not enjoy. I think they call that… freedom.
How Do I Get Out of Debt?
My wife and I walked through Debt Snowball Plan, which is Step 2 in the Seven Baby Steps that we teach in Financial Peace University and in personal coaching sessions. Before you start Baby Step 2, you must do the following:
- STOP BORROWING MONEY! – Cut up the credit cards! We talked about Baby Step 1 in a previous post, which is where we put a $1,000 in the bank as quickly as possible to give us some room to handle emergencies.
- PRAY! – Your heavenly Father likes to hear from you every once-in-awhile. I’m sure he’d like to help.
- SELL SOMETHING! – If you haven’t used it in a year, you probably don’t need it. Got a car payment that’s more than your mortgage? Sell the car. Have a garage sell. It is crazy what people will buy on Ebay.
- PUT IN SOME OVERTIME OR GET A PART TIME JOB! – It is only temporary, not forever.
- BABY STEP 2 (THE DEBT SNOWBALL PLAN) – List your debts smallest to largest and attack the smallest first with extra income from the steps above. Continue to pay the minimum payments on the other payments. Don’t worry about paying off higher interest credit cards or loans first. This is about behavior, not math. Once you kill the smallest debt, apply what you were paying on the smallest debt to the next biggest along with any extra income from getting intense and working the steps above.
Working this plan, most families pay off all of their debt except the mortgage in 18-24 months.
QUESTIONS: Are you slave to debt, or a job you hate that you go to day after day just to make ends meet? Do you have a plan or are you going to keep doing the same dumb things over and over?