Debt is not necessarily sinful, but it is a burden, and God wants us to live freely. How do you release that debt burden and make it disappear? It will take a simple plan, a new mindset, and diligence over a period of time.
Simple Debt Elimination Plans – Which One is Best?
The most simple plan is the plan that you will stick to completing. It's a plan that keeps you on the right path up the mountain, and safely down the other side. Here are some of the more popular debt elimination plans.
Snowball
List all of your debts, order them by the lowest amount to the highest amount, and pay off the debts in that order. Do whatever you can to pay off the first debt as soon as possible (second job, gig work, yard sale, etc). Apply the paid off debt’s monthly payment to the next debt on the list, and so on. PRO - The idea here is to have quick success paying off the small debts and use their payments to help attack the largest debt. CON – Debts with high interest rates will keep growing quickly, possibly faster than you can get them paid off.
Avalanche
List all of your debts, order them by the highest interest rate to the lowest interest rate, and pay them off in that order. Like the Snowball, pay the debts off as fast as possible and apply the payment to the next debt. PRO – Preventing interest growing so much so fast that it dwarfs the original principal debt. Credit cards, student loans, and variable rate loans are notorious for this. CON – Tougher to gain momentum quickly with easy success, this plan takes more determination.
Reduction
Renegotiate your debts with your creditors to get repayment plans with lower monthly payments. Christian Credit Counselors can help with this; as a non-profit they only charge at-cost monthly fees. PRO – The Reduction plan can get you out of high-interest, variable debt and into lower interest, fixed debt. It’s still debt, but it will cost less money in the long run. CON – You will save money, but it will cost you more time.
Consolidation
Combine your debts using a personal loan from a bank or credit union, or a home equity loan or home equity line of credit (HELOC). Cut up all of your credit cards and use cash only. Then make one debt payment each month at a fixed interest rate over a period of time. PRO – The consolidation plan breaks the credit card dependency cycle and gives you a clear payment plan, like a car loan. CON – Not every type of debt can be consolidated (federal student loans, car loans, and others) and you may be paying more in the long run for a longer time than you expected. Using your home equity to pay debt hurts your investment and makes your home collateral on the debt – if you can’t make the HELOC payment, you lose your home.
A Renewed Mindset
Go ahead, pick a debt elimination plan, any plan. How much are you willing to bet that you will successfully complete the plan? What will it take? If you don’t renew your mindset about money and debt, you won’t be successful.
Forgiveness – Ask God to forgive you for any debt that was from sinful decisions. Then forgive yourself for those sinful decisions. And forgive yourself for carrying the debt burdens for so long.
Restitution – Make your debt payments a matter of restitution. You have a spiritual responsibility to eliminate your debts. Essentially you are paying God back. It is a spiritual act of worship. This is a trial – a test – for you to pass.
Perspective – This debt plan will have an end. It is a season. It may be a long season. But there is an end. Determine the finish line. Then mark celebration points along the way.
Commitment – Decide that the debt elimination plan will be your top goal. Commit to doing whatever it takes to beat the timeline for each celebration point. And commit to praying and asking God to do what you cannot do.
Thanksgiving – Thank God for what He will do during the debt elimination plan timeline. Thank Him for providing for you already.
Due Diligence – Staying the Course
In Philippians 3:13-14, Paul says he forgets the past, looks ahead to the future, and presses on in the present. He stays the course spiritually for the prize of seeing Jesus Christ. We can use the same principle to stay on course every day to eliminate our debts. Each day remind yourself of one way that you are eliminating debt. Forget how you got into debt – don’t do that again! Hopefully look forward to the future without debt, and to achieving the next celebration milestone. And each day do one thing to accelerate your debt repayment plan. Whichever plan you choose, stay the course.
If you need help determining the best debt elimination plan for your income situation, contact us for a financial counseling session. And if you need help getting started and staying on course, set up a financial coaching plan. We’re here to help you release your debt burdens and experience financial freedom.
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