7 Steps to Getting Out of Debt
We believe wholeheartedly that debt is destructive to your financial future. All of the advice that we give is centered around the importance of getting out of debt and staying out of debt. Why? Because the absence of debt frees up your income and your time so that you are able to spend your resources doing the things that God has created you for, and the things that you love to do.
We have identified seven steps necessary to follow in order to get out of debt. This can be a long and difficult journey, but following these steps will help ensure your success.
Communicate with your spouse
Two, working together, can accomplish much more than one.
Make it a point to sit down with your spouse and dream. Imagine together what you would do if you had financial freedom.
Come up with, and agree on the reason that the two of you are beginning the journey towards financial freedom.
Success will be much more difficult than necessary without the cooperation of your spouse.
You must both commit to focusing your efforts towards one common goal.
Hate debt
You have to hate debt intensely. It isn't enough just to dislike debt, or think that debt is a bad idea, but you have to hate debt and remember the effects that it has had on your money and on your life. Without a strong enough hatred for debt, you will likely find yourself back in debt. Commit to not using debt for anything, and not creating any new debt.
Create monthly budget
List all of your income and all of your expenses
Make a plan for how to use all of your income
Gives you control over where your money goes and how your money is spent.
Empowers you to make decisions to choose to spend money on what is important to you.
Save an emergency fund
Having an emergency fund will prevent your form using debt for an emergency
Starter emergency fund of $1000-$1500
Unexpected events will occur, and you need to be prepared.
Without an emergency fund, how would you pay for a flat tire? A broken washing machine? A broken pair of eyeglasses?
Set Priorities
Understand the difference between wants and needs
Be honest with yourself about what you actually need.
Don't be afraid to deny yourself some of your wants according to your priorities.
Assign a priority to every expense, relative to your other expenses.
Cut expenses and increase income
Based on your priorities in step 4, reduce or eliminate lower priority items
This allows you to free up some of your income to be used towards debt repayment
Reduce or eliminate eating out, hobbies that are not free, cable tv…..
Take a part time job or a side hustle
Debt snowball
Make a list of all of your debts from smallest to largest
Make minimum payments of everything except the one with the smallest balance
Take all of the money that you cut out of your budget, and all of the extras income earned in step 6 and add it to the minimum payment the debt with the smallest balance,
After the 1st debt is paid, move to the second smallest balance, add all,of the money that was paid to the first debt and add it to the payment of the second debt
Continue this process until all of your debts are paid.
