God never intended for us to live in bondage. He doesn’t want us to be enslaved to credit card companies and lenders. Proverbs 22:7 says, “the borrower is slave to the lender”. Unfortunately, many people are financially enslaved because of their own doing. Although it’s very possible to get in debt overnight, yours could be the result of a number of bad financial decisions or wrong spending habits.

If you’re drowning in debt and wondering how you will be able to pay them off, keep your hopes up. Know that there are steps you can do to get free of debt. There is no shortcut though so you will need to be patient and go to God’s Word for wisdom. As the famous financial expert Dave Ramsey said, “You can wander into debt, but you can’t wander out.”

Here are five practical things you need to do right away to get on the right track financially.

1. Write down your cashflow

You can’t build a house without a plan. Recording your cashflow will help you know where you are at in terms of your actual financial situation. This may be pretty simple yet a lot of people don’t know how much they really earn and spend for each month. Writing down on paper how much you really earn and spend each month should guide you to the lifestyle you can afford.

Your cashflow basically includes the following items:

a.) Income

b.) Expenses – List them by priority. Determine your essentials for living. Identify the things you can live without. You’d be surprised how your expenses list can quickly pile up.

– Do you really need that music or movie streaming service?

– Is there a cheaper plan for your phone or Internet service?

– Is there a more budget friendly restaurant you can go to?

c.) Debt – Sort them from the one with the smallest balance to the one with the highest.

2. Stop Digging

When you’re in a hole, drop the shovel and stop digging. This means you need to stop getting additional debt. The cash you’re not spending on new debt can help you pay off the old debt sooner. Cut up some of your credit cards to avoid temptation of impulsive buying and only leave the one you absolutely need. Stop the cycle of borrowing money with interest just so you can pay other outstanding debts. Spend wisely.

3. Learn to say ‘no’

If you cannot afford to pay cash, don’t buy it. This is one of the hardest thing you need to practice. We’re living in a world of instant gratification. Shopping Centres don’t run out of reason to have something on sale. TV advertisements are on a mission to get us to desire whatever they’re selling. And with the Internet, online shopping has never been easier. You need to avoid these traps.

Proverbs 6:5 says, “Free yourself, like a gazelle from the hand of the hunter, like a bird from the snare of the fowler.”

Delayed gratification should be your mindset. Avoid going to the shopping centres just because you’re bored. There will be a better time to reward yourself but as long as you’re in debt, you need to keep purchases to what’s essential, and hold off on that expensive cruise or holiday you’ve been wanting to have.

4. Snowball your debt payment

If you have numerous credit cards to pay, find out what their balances are. Pay off the small balance debt first and here’s why: Momentum is your friend. You need to get encouragement and motivation wherever you can in your pursuit of getting free of debt.

It’ll also free up cash for you. You won’t have that debt payment anymore, so you can apply it to the debt with the second smallest balance. That’s the debt snowball in action.

5. Find Extra Income

Paying off your debt can be faster if you work harder. Perhaps you can work on a part-time job or do some freelance work to earn extra income. God has given you skills and talents for which you offer to others for a fee. If you do this properly, the Lord promised to “make you most prosperous in all the work of your hands” Deuteronomy 30:9. You’ve probably also heard the saying that “time is money” so you need to manage it properly as well. You need to sacrifice to reap the rewards of having a debt-free life. Find motivation in knowing that this challenging situation is only temporary.

Have a look at the different Health Check buttons on our website www.compass1.org.au if you need more help, as we would be happy to connect you to a professional who can help.