Maybe you can relate. At some point in your life, some of you have been, are still or will be… in debt. Is this good or bad? It depends.
A debt can be good if your life or present situation becomes better. This could mean that you borrowed money to invest in something to give you a good income like buying a profitable franchise. However, it is a bad debt if it would mean incurring more liabilities instead. In other words, a bad debt could make your life miserable, not better. The most common way of incurring a bad debt is using your credit card to the max and making minimum payment every time it is due. This will generate more interests over time if you do not know when to cut your losses early.
Why do we incur debt? For one, we borrow money due to lack of it. It could be from a bank (for big item purchases like a house or car), a relative or friend (for your medical or other needs like tuition fee), or even from using credit card (for your needs or wants usually). A debt becomes a problem when it starts to balloon over time due to non or late payment on a regular basis and you are helpless to end it. A typical stop-gap remedy is you borrow money to pay off your debt. This only triggers a never-ending cycle and debts pile up one after the other.
But the deeper reason for incurring big debts is that we are unprepared for unplanned expenses or worse, emergencies. When something unexpected happens, we are forced to borrow a huge amount of money if we don’t have enough money to pay for this unexpected expense or emergency. That’s perfectly understandable.
However, it is a different story when someone is unprepared for something that is supposed to have been budgeted in advance like tuition fee, insurance payment (common reason for lapsed policies) or monthly amortization expenses, to name a few.
So whether the event is by accident or the payment date is expected, the key is preparation to avoid getting in debt.
So, how do you solve a problem like DEBT?
If you find yourself perennially paying your debts, then most likely you need help.
Allow me to share with you how I tackled my debt-problem:
1. Acknowledge that you have a debt problem and be serious in ending it at the soonest possible time.
2. Renew your mind. Get all the help you can. Seek financial advice by attending a financial education seminar. What? You must be saying I’m already deep in debt and you want me to spend for a seminar? Yes but if you can’t afford it, look for a generous sponsor. Investing in financial education will give you more insights on how to tackle your debt-problem step-by-step. It’s a good investment and will lead you to a debt-free life if you commit to follow the necessary steps to be debt-free. Remember, ignorance is more expensive then education. If you still can’t afford the seminar, buy a book instead that can help you solve your debt problem. There are many books that can help you with. I highly recommend the following books: Dave Ramsey’s Total Money Makeover, Chinkee Tan’s Til Debt Do Us Part or Randell Tiongson’s No Nonsense Personal Finance guide.
The second and I believe more important option is this: Renew your mind by reading the Bible. Do you know that the Bible has more to say about money than spiritual terms such as prayer or faith?
The Bible contains about 500 verses on prayer and a little less than 500 verses on faith, yet over 2350 verses that address in very practical, specific ways how to earn, save, spend, invest, and give money. Two-thirds of the parables deal with money.The Word of God contains timeless financial wisdom. Do not only read it. Commit to obey biblical verses that tell something about financial stewardship and your plans will succeed. Want to know what the Bible says about debt?
Romans 13:8 (NIV) – Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.
Don’t know where to start? Start with the Book of Proverbs or the Gospel according to Matthew. Either book contains timely financial wisdom to change your life for the better.
Lastly, renew your mind by praying and in humility, ask God to help you deal with your problem. That’s how it is to some people I know who acquired huge debts. Some of the people I know were led to others serendipitously who generously helped them. In other cases, a business opportunity came their way enabling them to pay their debts in full or by installments.
So, whatever the solution is, trust God to pull you out of your financial mess. God will make a way when there seems to be no way.
3. Find ways to increase your cash flow. There are many ways but I believe it would depend on your comfort level in generating additional cash. Know where you’re good at and market yourself and offer your services, if applicable. You could also consider selling on the side like getting into a part-time job or even selling some unused stuff at home. The main point is that your income should be greater than your expense. That way, you can pay off your debts gradually over time. And while you’re at it thinking of ways to increase your income, change your lifestyle. Do not spend as if you don’t have any debts to pay. Cut off unnecessary expenses. Usually, these are mainly wants. Some people I know behave as if they are debt-free. In spite of their debts, they continue to buy branded shoes, the latest gadgets or clothing items. Why not delay these things and pay off your debt first? Sacrifice is not optional. It is necessary if you are in this kind of situation.
When you have reached a debt-free life, you are now on your way to building a better future. Start saving and investing for your future. You owe it to pay yourself first. Seek advice from a reliable financial expert to get you started.
God desires that each one of us should have an abundant life and becoming ingrained in debt stifles God’s plan for your life which is to bless us so we can bless others.
If you can relate, commit to be debt-free as soon as possible so you can have a better financial future.