This was the stumbling block for me personally that led to bankruptcy. In my story, if you remember, I racked up so much debt in order to “build my credit,” it broke me and crushed me all the way to the bottom.
Everywhere you look, there’s “credit.” The infamous word that tickles our ears and tempts us to spend money that we don’t really have. If you also remember when we talked about budgeting one of the main rules of a budget is to not spend what you don’t have.
Then enters credit and debt. It whispers “it’s ok, even though you don’t have this money…we’ll give you money…and you can just pay us later.” It’s a frustrating battle to know what debt really is and what we need to do with it. Luckily, there are answers.
Is It Bad To Be In Debt?
Here’s the reality for the follower of Jesus and I’m telling you ahead of time, this is going to be hard to hear (or read I guess). Whether it’s me, you, or anyone, when we go into debt, we are telling God that He is an insufficient provider.
We are saying we want it now, can’t wait, and that He isn’t enough. Plus, it would also point out the fact that most of us don’t have a plan or a budget, which is another reason why we find ourselves in debt.
People want to borrow trouble from tomorrow because they can’t see how to take care of things today.
And when I’m talking about debt, I’m talking about everything including cars and students loans, with the only exception being a house (because in general, housing appreciates in value, meaning we can sell it and pay it off without remaining in debt).
So Then, How Do I Pay Off Debt?
There’s two main ways I want to talk about when it comes to paying off debt. There’s the debt snowball and the debt avalanche.
The debt snowball means that all things being mostly equal, pay off the lowest balance first. “Mostly” equal means within $1,000 balance and 5% of interest. For example, item A with a balance of $750 and interest rate of 12% and item B with a balance of $1750 and interest rate of 9% are equal. Pay off the $750 first.
When the first item is paid off, move that monthly payment into the next lowest balance and now pay that one off, and go from there. A “win,” aka paying off a card or loan, gives us encouragement and incentive to keep going so we will want that “win” as quickly as possible.
The other method (debt avalanche) means to pay off the highest interest balance first, and continue paying your debt down until it’s all gone.
Either way, the goal is to be completely out of debt as quickly as God allows it. Because God IS a sufficient provider.
Remember, one of the primary goals of making a budget is to define how much is enough. By defining how much is enough, it allows us to have plenty to give to those who don’t have enough, and to increase our other giving budget lines. This helps paint a picture to the world as well that God IS a sufficient provider to those who have doubt because God is providing through His church (followers of Jesus).
What We Do
After I filed bankruptcy, I still had to pay my car loan and all student loans. As I started making a budget before getting married, debt was high up in my budget plan so I would see the lines very quickly each month and I started aggressively paying down the debt. When I got married, we both had debt to take care of so for the first 18 months of our marriage, we did everything we could do to pay this down.
We were convicted that at the end of the day, we believed that we were treating our finances like God was an insufficient provider for us so we wanted to get rid of 100% of our debt immediately. We also had plans for my wife to stay home if/when we started having kids and realized this was never going to happen if we still had debt. We said no to a lot of events and entertainment that cost money. We tightened our remaining budget lines to spend on a “need” basis. And after 18 months, all of our debt was paid off!
The opportunities afforded to us because of not having any debt are too many to list here, but it opens the door for so many things that God puts right in front of you. You’re able to say YES much more often than no because you’ve financially available. Plus we wouldn’t trade the peace of mind and the fact of being obedient for anything.
It’s amazing how difficult it felt to “slay the debt monster,” and not only that, but to keep him down at all times. There’s been numerous times we’ve been tempted to utilize debt and we’ve remembered how hard (but worth it) those first 18 months were, so we say no. Most of all, as Christians there’s zero reason for us to be in debt so it’s never going to be a thing for us.
We DO use credit cards (because we pay these off 100% every week or so) for all of our spending. We figure that if we manage God’s money well, there’s no reason not to take advantage of bonuses and offers if we were already going to spend that money anyway. It’s a slippery slope for many and if you’re just getting out of debt, I would not suggest it. And if you can’t control your spending, don’t do it. But after some time or if you’re already out of debt, discern if you’re able to use credit cards and I think you can use wisdom to earn rewards and steward that well.
Call To Action
If you have debt, list out all of your debts and decide whether to approach debt with the snowball or avalanche method and begin today to make extra payments. Before you know it, those balances will decrease and your debt will be gone!
The Money Series
- Part 1: An Introduction and My Story
- Part 2: What Is Money?
- Part 3: Make A Budget
- Part 4: Tithes And Offerings
- Part 5: Paying Off Debt
- Part 6: Savings, Investments, And Retirement
- Part 7: Action Steps And Growing In Generosity
Thank you Mike for writing this series. I’m plagued by the “debt monster,” I’ve often wondered as a Christian how can I have allowed myself to get into debt. I’ve been trying to get out of debt but it has not been easy for me. I’m disabled, loving on disability benefits. I’m not able to work and so the debts piled up. The difficulties come in paying the debt back on a really low income. It’s so easy to go down the slippery slopes into debt. I thank you for this article, as I read it I felt God meant… Read more »
Hey Janice, thanks so much for sharing and for reading. It’s a slippery slope and super difficult so don’t beat yourself up too much about it. Everywhere we look we are told debt is the answer and it’s a really hard battle. Love that God is moving and showing things like this to you and with a budget, even with low income, there are steps you can take towards being debt free. Sure it might be slow and it might take awhile, but it is WORTH it 100%. Get help with your local Church and friends to help hold you… Read more »