Do You Have Financial Peace - Part 3

August 14, 2015, 12:00 am


Debt Elimination Plan

The Book of Proverbs tells us that the person who borrows becomes a slave to the one who lends.  Today’s blog challenges you to get out of debt. I often tell people that it is a lot easier to get into debt than it is to get out of it.

Interest fees can become a very troublesome issue when you’re in debt. Three classic areas where you’re likely to accrue interest are car payments, mortgages, and credit cards. When you consider how much money can add up in interest alone over a long period of time, you realize you’re paying quite a bit more than the original purchase price.  I have talked to too many people who tell me they never pay off their credit cards.  Because they are paying a really high interest rate on everything purchased with a credit card, as that interest compounds over a period of time, they end up paying more than double the original purchase price. It’s basically like throwing money away.

Then there are those ninety days-same-as-cash offers. Hardly anyone pays off the purchase in ninety days and then they’re stuck paying a high interest rate. Let the buyer beware when it seems like a good deal.

Being in debt can be stressful. Sometimes those monthly payments push people to their  financial limit.  If there is hardly enough left at the end of the month to pay for necessities, stress can certainly develop.

The best way to get out of debt is to have a plan. The essential part of that plan is to stop buying on credit. Commit to paying cash for purchases. That way you won’t be tempted to spend more than you earn.

The next step is to start a debt reduction plan. The plan is to start paying off debts. Start with the smallest debt. Pay it off. Then, take the amount that was being paid each month and add it to paying off the next largest debt. Keep doing this until everything is paid off, even the car and mortgage debt. Take the money you were paying on debt and put it into an account to save for future purchases. You will be able to pay cash rather than going into debt for future purchases.  What a sense of relief you will feel when you no longer have debt to stress about. It won’t be easy, but with God’s help you can do it.

Talk to you next week.

Tom

  

Posted by The Chaplain's Corner at 12:00 am
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