‘The rich rule over the poor, and the borrower is servant to the lender.’ Proverbs 22:7
The people who benefit more from your debt are the creditors and the financial institutions getting interest and the auctioneers who eventually liquidate your assets! Debt arises from expenses that are more than income, from business failure or disasters like illness, etc. If not dealt with properly, debt can suck your emotional energy, lead you into crime, cause relationship breakdown or even ends in suicide.
Debt forces one to serve money. And you cannot two masters. You can't serve both God and Mammon (Luke 16:13). The yoke of debt always is a burden to your spiritual life.
The big question is; what do you do when you find yourself in heavy debt and struggling to make ends meet, bearing this enormous weight you were not designed to carry?
What do you do when your most valuable property is facing the auctioneers’ hammer? Do you borrow more to cover your current debts?
What do you do when your friends are now refusing to lend you money because you do not repay them?
I have come across a number of dear friends being ravished by debt. This is causing financial crisis, trust issues and even relationships are being threatened.
In response to this I have decided to put down few practical ideas on how to avoid, manage and eventually eradicate debt. I am not a certified debt counsellor, but this wisdom from my experiences and experiences of friends around me can help you turn around your ugly financial position.
Sort Out You Debts
The first thing to do is to know how much you owe. So, sort out and make a list of how much money you owe. Work out which are the most urgent debts for you to pay off and which are not. Plan to deal with the most urgent debts as a matter of priority. Make a budget and from it work out if you've got any money to pay your debts off and, if so, how much. Look at your options for dealing with the less urgent debts and work out how to pay them off.
Most financial failures are caused by lack of financial discipline and irresponsible choices. And we can all agree that reversing the past behaviour is the best way of producing opposite results. If you keep doing what you have been doing, you will keep getting what you have been getting. If you keep doing what put you in this deep financial hole, you will only get deeper.
In order to enforce disciple, budgeting is needed. A budget helps to plan your expenses against your income. It also helps to track your finances. The important rule of budgeting is to make sure expenses are always less than income!
You can use the deference to pay off some of your debt or to save and invest wisely for the future.
Ways to Reduce Expenses
You have to down grade you lifestyle a bit and change the habits that put you in this situation. Decrease expenses. Find ways to cut costs.
Below are some of the ways you can reduce costs:
- Review and change the schools which your family is attending to more affordable schools.
- Cut your rent by reducing the number of rooms you occupy or even change the neighbourhood altogether.
- If you care for the elderly relative look for the over 60 years olds benefits, like free medical treatment, etc and use them.
- Cut your food expenses to basic food stuff. Cut restaurant visits, parties and on gifts.
- Walk or cycle instead of using a bus or taxi! Use public transport instead of driving.
- Downgrade your phone to a less fancy one for a while. You can consider having only one family phone or less. You can even change from contract to pre-paid payments system.
- Reduce electricity and water consumption to minimum. Use prepaid electricity if possible.
- Buy cheaper products! Do not ever go to expensive shops! Instead buy ‘china’ for a while!!
- Do you household work yourself instead of hiring. Grow your own food, that is, fruits, crops and vegetables.
- Reconsider the family members you are supporting. If they are adults find ways they can help or request to be excluded from supporting them so that you can focus on your debt reduction. If possible they can even go and stay with other relatives, to cut costs.
Look carefully at your spending and see if there is anything you're able to cut down on. For example, you could shop around for a cheaper gas or electricity or energy provider, or look at cheaper mortgage or insurance providers.
Use the savings that you have created to pay some of your debt.
Ways to Increase Income
Extra ordinary times calls for extra ordinary measures! Increase your income by any means necessary.
Here are some of the ways to earn extra income:
- If you spouse is not working, she has to get work. It can be a low paying job or an odd job, but extra money has no label, so get it.
- You have to find extra work! Work after hours or weekends. Find people who want help with odd jobs. “It’s pride that got you into this financial mess, so it humility that will get you out, not more pride!!!”
- Draw from you natural gifts, talents and skills and commercialise them. At times you have to learn new skills in order to earn extra cash.
- Use your hands and start a small business that does not need start-up money, using your skills.
- As I said before, grow crops and vegetables.
- If possible find work for the family members that you support. Why do you drown yourself in debt keeping lazy adult people? They have to be responsible as well.
- Sell some of your possessions. First get rid of the junk and get cash in doing so. Evaluate your property and ask yourself ‘Do I really need to keep holding on to these items?’ Consider selling even the essential goods and plan to buy them later. Do not wait for the, messenger of court to come and do it for you!
This is a time to be financially creative. If you find sustainable means of earning extra income, you would have found a way to your wealth!
Use the extra income that you are getting to pay some of your debt.
To Conclude This
These lifestyle changes are painful and can be demanding. As you implement these changes, tell yourself, your family members and friends that you are doing this just for a short period, until your finances are back on feet.
You will lose some friends, but it is for your good. You may lose your community status, but you will be gaining your financial status! You will be on your road to be a financial hero!
God want you to be free from the burden of debt so that you can serve Him.
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© Copyright 2013 by It’s My Footprint, www.itsmyfootprint.com/blog .
About Taka Sande:
Taka Sande is an author, an entrepreneur and development activist. He has a passion for making a difference by influencing and adding value to people’s lives. He is the founder of the blog It’s My Footprint, http://www.itsmyfootprint.com /. You can also follow him on Twitter , Facebook and LinkedIn .