Seven Ways to Get Your Debt in Formation

“. . . To whom much is given, much is required . . . ” Luke 12:48  

Guess what? God has a purpose when it comes to your finances. Was that a groundbreaking statement? No, but it baffles me when I hear people talk about their finances with no mention of the Lord because he is in the details. He did not call us to be slaves to money or debt. In fact, financial freedom is attainable and easier than you think. This series will help empower you to take hold of your finances and make financially sound decisions in the future. I mean, how can God trust you with $100 if you can’t handle $10?

1. Establish your budget.

So you’re in debt but brunching every Sunday after church service. Don’t forget the unlimited mimosas. Yikes. Be honest with yourself about your financial situation. Where is your money going? Create a budget and hold yourself accountable. Actually, have your friends hold you accountable too. “Hey, I can’t brunch today ‘cause you know, this credit card debt is not gonna pay itself, but why don’t you come over and we can cook something?” Snap. Snap.

2. Know who and how much you owe.

This one may seem elementary, but when was the last time you made of a checklist of the debt you owe? Do you know who owns your debt? Due dates? Amount owed? How much of the debt is principal? Interest? You can confirm this list against your credit report, which is free to obtain, and this also gives you a chance to make sure there are no mistakes on the report. Keep your list as a guide, checking periodically, especially as you are making bill payments. This becomes a working document (meaning it’s constantly evolving), not something set in stone like the 10 Commandments.

3. Get your debt in formation.

After making your list of who and what you owe, prioritize your repayment. Credit cards usually get first dibs because of their high-interest rates. The one with the highest interest rate costs you the most money so try to pay that one down first. That’s a pretty aggressive approach, but I’m a pretty aggressive person. If you’re more into baby steps, start off with the one with the lowest balance.

4. Pay your bills on time

Did you know your payment history is a determining factor of your FICO score? I’m pretty sure if someone owed you money you wouldn’t want to hear, “Can I pay you next month?” multiple times. Make your bills a priority because with late payments come late fees, higher interest rates, and finance charges, oh my.

5. Make at least the minimum payment, and then some

I get it. Sometimes the minimum payment is all you have. I like to do little trick of rounding up to the nearest hundred when paying a bill. Ex: The credit card minimum payment for the month is $89.07. I will pay $100.00.  This helps me finish paying off a bill just a little but faster than expected. May not seem like much, but a little goes a long way.

6. Get Social

If you’re reading this, it’s 2017, and there’s this pretty cool thing called an app. If you’re a millennial who is completely stuck to your phone, why not download a couple of financial apps to make your finances a little easier to manage. Some free ones: CreditKarma, Mint. Follow a couple of finance gurus on Instagram for daily motivation: @myfabfinance @thefinancebar If you’re on your phone 24/7 why not check your account balance every morning, so you’re aware of pending items? Or set up notifications when a credit inquiry hits or when a bill is paid. Just saying.

7. C.R.E.A.M – Cash Rules Everything Around Me

Hmmm. Was Wu Tang Clan on to something? Unlike many current rap songs, this song stressed the importance of obtaining money, as opposed to spending it.  Halt credit card spending. Delete credit card information from online stores, so you’re not tempted to indulge in BOGO sale from Bloomies at 8 AM in the morning. Form a habit. Try to use cash, as your primary method of payment for one month, and you’ll see how much you have available.  You also won’t be able to spend more than budgeted.

Let’s face it. Talking about money is tough. Being in debt is even tougher. It takes patience, focus, and determination to overcome debt and to be in a position where you feel secure and stable. I hope this article was at least a stepping-stone to propel you in the right direction.

Next up in the series: Credit Management