Americans have an average credit card balance of $7,150. If you’re one of those that fits into this mold, understand that living in debt is not God’s will for your life. The only way out is to get drastic. We put together 15 quick and drastic ways to get on the path to a debt free life. Is it really that important to be debt-free? God thinks it is and so should you.
“The rich rule over the poor,and the borrower is slave to the lender.” - Proverbs 22:7
1) Make a Budget- Making a budget isn’t enough. You have to make drastic budget and stick to it. A budget is only as powerful as your adherence to the plan but if you follow it, you will get out of debt faster. Make a commitment to follow the plan regardless of how tough it gets.
2) Stop Spending- You can’t just slow your discretionary spending. You have to stop it. It’s a drastic change but that’s what it’s going to take. No Starbucks, no restaurants, no expensive food at the grocery store, no cable TV, and only enough of a cell phone plan to make essential calls. Sound way too drastic? It’s possible. Take a look at this page for proof
3) Cut Up the Cards- If you were a recovering alcoholic, you would remove all alcohol from your home. Those with a spending problem have to remove all credit cards from their wallet. Don’t put them in a drawer. Cut them up or put them through a shredder. If you don’t have them, you can’t use them.
God’s plan for your life involves debt free living.
4) Stay Busy- Have you noticed that when you’re busy, you don’t have time to spend? Find a (free) hobby. Go for a walk or a run, spend time with friends, sit on the porch and read God’s word, spend quality time with your kids, or form a small group of people that share your interests.
5) Moonlight- Another way to stay busy is to get a second job. Of course you need to keep God commanded balance in your life but a second job not only keeps you from spending money, it also allows you to earn more money. Don’t spend that money. Put 100% of it towards your debt.
6) Transfer the Balance- Don’t be one of those people that constantly transfers their balance from card to card to take advantage of the introductory rate but if you’re close to paying off a credit card, a balance transfer could make sense. If you do it, there’s no turning back. You have to pay the balance before the rate expires or you may end up paying more.
7) Cash in Investments- If you have an investment account that isn’t earmarked for another purpose like retirement or your children’s education, cash it in and pay your debt. The 20% you’re paying on your credit card is far more than what you’re earning in dividends.
8) Don’t be Late- NEVER be a late payer. It damages your credit, triggers late fees, and the card company may raise your interest rate.
9) Pay High Interest Credit Cards First- The card with the highest interest rate is the card you should pay first. Pay the minimum on the others until the card is paid. Then, move to the next highest card and pay that off. (Now that one card is paid, you have more money to put towards the second card.) The more debts you pay the higher your payment will be on next card. Read more here.
10) Use Your Savings Account- Just like an investment account, your savings account is making you much less money than the interest you’re paying on your debt. You need an emergency fund but extra money should go towards debt.
11) Borrow Against Your Life Insurance- If you have a life insurance policy with cash value, you can borrow against it. Borrowing from yourself comes with much lower interest payments but you must repay it. This is drastic but use this as a last resort.
12) Get a Gift- If family members were going to leave you an inheritance or other gift, ask them if they would consider giving it to you early. Alternatively, you could ask for the gift and pay it back at the IRS mandated interest rate to avoid gift tax implications.
13) Borrow From your 401(k)- Some employers allow you to borrow from your 401(k). The catch is that you have to pay it back in a certain period of time with interest or you have to pay income taxes plus a penalty.
14) Talk to your Creditors- As a last resort, talk to your creditors. As Christians we have to pay what we owe but asking them to reduce your interest rate in order to get to a payment you can afford is not unethical.
15) Tithe- How God will assist you with paying off your debts is between you and Him but if you aren’t faithfully tithing, you’re not allowing Him to pour out blessing upon you. We don’t tithe expecting to get something in return. We do it because we have the heart of God but over and over, God has proven that He multiplies.