Becoming a Financial Steward 5: Breaking Up With Sallie Mae

Welcome back!  I’m super proud of you for creating a budget!   As I said last week, it may take you a little while to figure out the right type of budget for your personality - that’s ok!  You can explore more budget types by clicking the link at the bottom of this page.

Take a moment to assess your budget and your spending habits.  When you plugged in your numbers from your spending data, did you find that you spend more than you earn?  Are you paying for things you don’t want to be paying for?  Are you paying for things you bought a while ago on a credit card, and you maybe don’t even have anymore (like clothes that no longer fit, or got a stain that wouldn’t come out, or you got rid of them away)?

That’s called debt.  You go into debt the moment you make a purchase that you don’t have the cash for, and instead, you pay for it with a loan or put it on a credit card.  Our entire culture is a culture of debt - starting with our government and going right down to every TV commercial that hooks you into thinking that you NEED a WANT.  The beautiful imagery and music tells us that we deserve something, and that status will provide happiness.

What they never show us is the cost of debt.  They don’t show us the couples fighting over the car payment they now owe on that beautiful Jeep or Mercedes - you know, the one with that big red bow on it at Christmas that told their neighbors they are now the “Joneses.”  Commercials don’t portray the anxiety, the blaming, the fighting, and everything else that truly accompanies stress from debt.  But if you have debt, you know the truth of what it costs you.

Now, in case you’re wondering if Jesus addresses debt in the Bible - YES HE DOES!!! Check out the following scriptures, these are your scriptures for the week: Proverbs 22:7, Deuteronomy 28:43-45.

Let’s have another heart to heart.  
It’s time to break up with Sallie Mae.

If you are going to experience financial freedom in your life, you MUST get rid of your debt.  I’m talking about your consumer debt, not your mortgage. If your situation is extreme, selling your home to get free from debt may be a last resort solution, but it is not the go-to because your house is also generally your greatest asset and you would want to speak with a financial coach or advisor before making a decision like that.
 
So, you have a budget and you are tracking your spending every month.  If you are in the red or you have debt here are your next steps:
1. If you are in the red:  you need to cut out any spending possible to reduce your monthly expenses and balance your budget (i.e. cutting cable, eating out, clothing purchases, your gym membership, etc)

2. You may need to work more, find a part time job

3. List your debts in order, smallest to largest, regardless of the interest rates on it, using the printable debt list sheet below.

4. Time to use the snowball strategy! This is a plan that accelerates your debt payoff as much as possible using all of the “extra” you have in your budget (now that you’ve cut expenses) and adds it to the payment of your smallest debt.  When that debt is paid off, you take that whole payment amount that you were paying on that debt and add it to the minimum payment of your next highest debt. You continue this over and over until you have gotten rid of all your debt! See a debt snowball calculator below.

5. Last and MOST IMPORTANT - CELEBRATE, CELEBRATE, CELEBRATE!!!  You need to celebrate every debt you pay off and every goal that you reach! Here are some options to consider…
           a). Get take out and a dessert for an evening
           b). Splurge on Starbucks one morning
           c). Take one month of your extra and set it aside in a celebration fund for when you’re all done
          d). Whatever is within your budget and will motivate you the most!

I am so proud of you for taking this next big step in your money management!!  Your Father in Heaven, who provides all your needs, is watching and filled with joy at you making the hard choices and using His proven principles.

Next time we will talk about saving, and this is where it really starts to get fun. :) See you on the next post!

Would you like to talk with someone who can walk alongside you confidentially with your personal finances?  Please know that there is FREE coaching available for you to take advantage of from our Financial Ministry!  Just email: [email protected], I look forward to hearing from you.

-Sarah Bateman, Director of Community and Finance
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