Key Steps You Can Take Now To Get Out of Debt
Romans 13:8 – Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.
Let’s face it, getting out of debt requires a great deal more time and effort to get out of debt than it does to get into debt. Getting out of debt is not an easy or quick process. To be honest, it seems to take forever and it’s hard…real hard.
Contrary to popular belief, the bible does not teach that debt is evil or sinful; however the bible is pretty clear that debt is not advised. In Romans 13:8 it says we should “let no debt remain outstanding“. Here are some some key steps you can take right now to “let no debt remain outstanding“:
1. Cut up your credit cards
If you don’t have them, you can’t use them. If you keep using your credit cards, and keep racking up debt you can’t pay back. Cut up your cards. Matthew 18:8 – If your hand or your foot causes you to sin, cut it off and throw it away.
2. Pay more than the monthly minimum on one card
If you pay on the minimums on yours cards each month, it will take you a very long time to payoff your card. Not to mention you will pay an incredible amount of interest. Trust me, the credit cards companies know this, and they love people who pay minimums.
Let’s say you have a $5000.00 balance on an 18% interest rate card and you pay the minimum of $200 per month (about 4% of the balance). It will take you 12 and half years to payoff this card completely. You will also pay the credit card company almost $3000.00 in interest when all is said and done.
Here’s the catch though, that’s assuming you don’t use those cards anymore and that you pay on time. If you don’t pay on time, your rate can significantly go up. If you continue to use the card and pay minimums you’re just making a bad situation worse.
At the very least double or triple your payment on one card. Even better, establish a debt snowball and work it aggressively. Be as passionate about paying off that debt as you were when you bought that big screen TV, new suit, furniture, etc. I would suggest paying on your card whenever you can.
If you want to see what your true cost is of paying the minimum, use this calculator.
3. Reduce your interest rate
Like most things in life, interest rates on debt are negotiable. Banking is very competetive right now. You can often get a reduced rate by just calling the credit card company or lender. Reducing your rate will reduce your payment, so don’t start paying less. What you are doing here is reducing the total amount you will pay, not the payment. No guarantees though, as some credit card companies won’t reduce it.
4. Transfer your balance to a lower interest rate card
If you are like me, you get at least 3 or 4 0% interest rate offers per week. Moving your balance from a high interest rate card to a low interest rate card is a good move. Be careful though, a number of credit card companies these days charge balance transfer fees around 3%-5%. Also be warned, that if you miss a payment during the 0% time frame your rate will go up to 18%+ rates immediately.
I advise moving to a new 0% card in under one condition, when you get the new card, you cut it up immediately.
5. Pay your debt bills on time
As i have already mentioned above, not paying your bill on time can really cost you. Not only will the credit card companies frequently increase your interest rate, they will also charge you a late fee. If you miss payments too many times or not pay within 30 days, your credit can be effected.
Regardless of whether it is a credit card, or utility bill, car payment, or mortgage make sure you pay your bills on time. Late fees are just a tax on not being organized. There is really no excuse in today’s world with electronic calendars, cell phone reminders an online bill pay services.
6. Don’t blow your windfall money
Receive a big tax return, or get a surprise bonus from work? Don’t go and blow it on the latest gadget, clothing, or whatever else you want (but don’t need). Use it to payoff your debt. Taking these unexpected (or even expected) windfalls and paying against your debt can make huge dents in something that often seems overwhelming.
If you are in debt and use cash that you have to purchase something, it’s the same as purchasing it on credit. “Huh?” you say? Well, you are keeping that amount money in debt and you continue to pay interest on it, rather than paying it off, it’s the same as borrowing the money off the card. No different.
7. Increase your income
To free up money in your budget, you have two options: 1) Decrease expenses or 2) Increase your income. Given you are in debt, while you might be able to decrease your expenses some you might make a much bigger difference increasing your income.
Some ideas to do this are: Get a second job, have a yard sale, sell stuff on eBay or Craigslist, make money blogging or business, start a small side business with your hobby. Proverbs 14:23 says “All hard work brings a profit, but mere talk leads only to poverty“. So go work hard and apply those profits to your debt!
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