Nancy Luquette
16 October 2020
Personal finances is one of the hardest topics to talk about; it creates tension in many families. We’ve all done stupid things with money at some point in our lives. But you don’t have to be a victim of those bad choices for the rest of your life. For some of you, it may be hard to imagine what your life would look like if you didn’t have any debt. Perhaps you were told that it was okay to have student loans. Or you might think you need to have credit cards to build up your credit score. You may be a person that says, “I pay my credit cards off every month anyway, and I use them to earn points.” Unfortunately, these are all myths that cause us to incur debt unnecessarily. Having debt should not be a way of life. Proverbs 22:7 says, “The rich rule over the poor, and the borrower is slave to the lender.”
But if you want to feel better about your financial situation and get out of debt, you can’t do what you’ve always done. You need to have a plan that works for you – created by you. And it requires focus. You have to be intentional with every step you take. It must be a conscious decision to make changes in your life, and when you do, you must be ALL IN!
In my last blog I talked about how to take a fresh look at your spending and create a budget that will help you manage your expenses. I encourage everyone to create some financial goals for yourself.
Why is goal setting important?
- Gives you focus
- Allows you to measure progress
- Keeps you on task; it’s easy to get distracted
- Helps you overcome procrastination
- Provides motivation to take action
In a recent Daily TLC blog by Amorel Sheppard, she shared some helpful information about setting goals.
Your first financial goal should be to establish an emergency fund if you don’t already have one. Many of you may feel that you can’t “afford” to have money just sitting aside. But having an emergency fund is like paying for insurance; you pray that you don’t need it, but when you do, you are happy that you have it. I’m sure you can recall when an emergency happened, and you needed money you didn’t have to cover it. So, you probably used a credit card to pay for the emergency expense. Having an emergency fund turns a crisis into an inconvenience. Everyone should have a “starter” emergency fund before you work on paying off debt. But you may be thinking, “How can I set up an emergency fund when I have monthly bills and debt staring me in the face?”
Photograph via Canva
This requires real discipline. But you tackle it one step at a time, one day at a time, and whatever you do, don’t quit. Decide that you will be victorious with your finances! You need to find ways that you can save money daily, weekly and monthly to create your emergency fund. It’s all about those small, but intentional changes to your spending. You can also sell some things that you don’t really need to get some extra money or work additional hours at your job. Find creative ways to get your emergency fund set up.
As I mentioned before, it’s important that you need to get your emergency fund set up before you start tackling paying off debt. So, for the debt you have, pay the minimum that you are required to pay until you get the starter emergency fund established. Once your emergency fund is set up, don’t touch it unless you have an emergency event that occurs.
The next step is to create a plan to pay off your debt except your home mortgage. Make a list of your debt (student loans, credit cards) from smallest to largest balance. Start by paying off the smallest debt balance first; make the minimum payment on all other debt. Once you pay off the first debt, you move to the next smallest one. Take the money that you now have from the debt you just paid off and apply it to the next debt on your list.
You will be amazed at how much personal stress can be released by getting rid of debt. I encourage you to pray every day for your financial situation and ask God to help you make wise decisions.
TIPS:
- If you need to use your emergency fund for an unplanned event, build the fund back up as quickly as possible, then get back to paying off debt.
- Once you pay off a credit card, cut it up so you won’t be tempted to use it anymore. Call the company and have them cancel the account. Don’t fall for their gimmicks to try to convince you to keep the account open.
Helpful Resources
1. “30 Easy Ways to Save Up to $1,000,” Ramsey,
https://www.daveramsey.com/blog/save-100-to-1000-minimal-effort
2. Amorel Sheppard, “Take God at His Word When Saving for College,” Daily TLC (Blog), October 9, 2020,
https://dailytlc.org/take-god-at-his-word-when-saving-for-college/