3 Steps to Debt Management by Pamela S Thibodeaux (c) 2015
The number one cause of divorce and one of the toughest spots to get out of is DEBT. Even the thought makes us cringe and yet, many folks slide into this pit without intent or realization that's where they're headed.
Getting out of debt is not hard, but it does take discipline and the biggest question is Where Do I Start?
Dave Ramsey is one of America's leading money experts and he has devised seven baby steps to get out of debt and build wealth. Mr. Ramsey's plan is full proof but can still be overwhelming especially when you can't figure how to save or which bill to pay off or any number of obstacles that rear their ugly heads. Building a savings account up to $1000 and then 3-6 months of living expense sounds impossible when you can barely get by on what you make. And giving? Ha! Can barely make ends meet how on earth can you give?
My advice: Despise NOT small beginnings!
The first and most important step to getting out of debt is to figure out where your money is going. For 1 month keep every receipt and write down where and how much you spend. Once you have a clear picture of your spending habits and expenses, figure where you can cut back.
Step 2 - start small but save AND give - People are taught the principle of tithing but many times that is coupled with guilt - "If you don't tithe a FULL 10% of your gross income you're robbing God." Baloney. Start where you’re at with what you have and watch God work! Even if you don't go to church and you can only commit $10 a paycheck save $5 and give $5 somewhere (charity, needy family) and remember you CAN'T outgive God.
Mr. Ramsey says pay off the lowest debt first because it gets you excited about the next one and this may be true but I say; pay off the highest interest debt first. You're not really saving a lot of money paying off that small debt because you've already paid in most–if not all–of the interest, especially if you've had this note for a while. You may do this to free up some cash but then think long-term, high-interest bills and pay extra toward those.
Mr. Ramsey says once you pay off a debt to take the FULL amount and apply it to the next bill. I say take a portion and increase your savings and giving, keep a little for yourself, then apply the rest to the next bill. Why? Because if you apply EVERY penny to the next bill you'll feel like you never have any money to enjoy. Yes it is important to be disciplined and get out of debt but if you're steadily working toward that goal then congratulate and reward yourself. Even if you only do this one time after paying off that bill then knuckle down and pay off the next one–take the time to congratulate and reward yourself.
Either way works so do what's best for you!
Step 3 - Divide by 3 all extra or unexpected income (bonuses, raises, tax refunds, etc) and apply to giving/savings/bill. For instance you get a $30 raise on your paycheck: Increase your savings by $10, your giving by $10 and add $10 to the bill you are paying down.
Mr. Ramsey is an expert and I'm not, but one thing he left out of his plan is your thought process. Remember: Wealth is a mindset so change your mind!
If you're constantly thinking debt and lack–you’re going to constantly have lack and debt. Learn to love money–not fear it or dread those bills. Read books* on wealth, find bible scriptures and/or money affirmations and change your thinking to wealth and abundance. Once you feel better about money getting out of debt won't seem like an impossible task. Oh, and, be GRATEFUL for every ounce of provision. Gratitude is one of the highest forms of praise and opens you to receive more to be grateful for.
Whether you choose the expert way or my way–getting out of debt is the most rewarding thing you can do for yourself and your family.
Award-winning author, Pamela S. Thibodeaux is the Co-Founder and a lifetime member of Bayou Writers Group in Lake Charles, Louisiana. She has over twenty years experience in bookkeeping, insurance and tax preparation. Multi-published in romantic fiction as well as creative non-fiction, her writing has been tagged as, “Inspirational with an Edge!” ™ and reviewed as “steamier and grittier than the typical Christian novel without decreasing the message.”
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