Obviously, most people aren’t looking to get out of debt slowly today. (It’s quite the opposite, in fact.) But time and time again I’ve seen people who choose a needlessly slow, burdensome path. Sometimes it’s a good exercise to look at the alternate method to getting debt help. After all, if you know what actions are taking you in the wrong direction, you might better recognize the good decisions.

Let’s take a look at a few characteristics of those taking a slow, ineffective approach to getting out of debt (and see how to avoid them):

Ignorance

I’ve come to be sympathetic towards ignorance about debt. It’s okay to be somewhat ignorant about a debt problem as we’re all learning about money management each day. But, let’s not forget that it’s up to each of us to be responsible for our finances. Within that responsibility is learning about how to get better at personal money management and certainly recognizing when debt is squeezing your budget.

Lack of Concern

Some aren’t ignorant; they’re informed, but lack the concern. “Oh, I’ll pay off that card one of these days, but for now, I deserve to have a little bit of fun,” they can be heard saying. A lack of concern often leads to inaction in getting out of debt. Inaction leads to waking up someday and opening a credit card bill with a balance of $50,000, or getting nasty calls from creditors.

Disorganization

As a volunteer budget coach, I’ve met with several couples who use the excuse of disorganization. “I’m just so unorganized. I don’t know how much I owe, to whom or when it’s due,” they say. I once heard someone use this excuse with Dave Ramsey on his talk show.  “It’s just who I am (referring to themselves as unorganized),” they said. Dave, in his direct approach said, “Well, we’ll just have to get organized, won’t we?” I love that. Being unorganized is really no excuse for the money manager, but it will inhibit your ability to build a debt plan and make forward progress.

Living in the Debt Cycle

Living in the debt cycle hurts. It’s draining because you work so hard to pay off debt, but you find yourself easily back in debt. The car breaks down and you go take out a loan for another car. The credit card is paid off, but you don’t have an emergency savings established. So you put your emergency on the card. Getting out of the debt cycle is about making wise decisions, but also preparing for the future with adequate savings.

Lack of Vision

Some folks take it day by day. In general, I think that’s a pretty good approach when it comes to performing the steps to a bigger purpose or goal. One can get overwhelmed thinking about paying off all the debt, saving for retirement, emergencies, etc. But, a lack of vision for the future can be demotivating. It can lead to stagnation, which is bad news when it comes to paying off debt.

What is the vision? Personally, I like the vision of financial freedom. For me, one day all the debt will be paid off including the mortgage, my retirement will be funded, and I won’t need a full-time job. I can be free to do meaningful work to serve and help others on a full-time basis without financial burden.

Can You Get Out of Debt Fast?

While it’s good to look at the slow path and perhaps twist those mistakes into positive actionable steps; let’s not ever pretend that getting out of debt is easy. Nor should we unrealistically think we can get out of debt fast when the weight is particularly heavy. We can all agree that getting into debt is much easier than getting out of it.

Beyond having concern, getting organized, avoiding a debt cycle and having a clear vision, getting out of debt is very much about the willingness to say, “I need help.”

You certainly don’t have to be financially astute to get into debt, but you might need some savvy to get out of it. Learn from the slow movers and lift your hand when you need help.

What do you think about these ideas?

This is a post I originally published on the Perkstreet Financial Blog.

Name one spiritual reason to get out of debt.

Debt impacts our ability to grow our relationship with God.  The Bible never states that debt is a sin.  Rather, we learn to avoid debt when possible.  It’s wise to avoid debt because God wants to use each of us in a unique way to further His kingdom.  We can’t be flexible to God’s calling when in debt which could be to serve or give more of our resources to Him. If you’re in debt, I recommend creating a debt payment plan to begin working towards a life without financial bondage and growing in your relationship with the Lord.  OneMoneyDesign.com

“When you’re in debt it can become a barrier to your relationship with Christ.  As Matthew 6:24 says, “No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money.” When you have a large amount of debt it can cause money to become your master, at the detriment of your walk with Christ.” – BibleMoneyMatters.com

“Because it’s wise to do so. Every time the Bible talks about debt, it does so as a warning or in a negative light — debt is never presented in a positive manner. The Bible’s wisdom says to avoid debt and the soundness of that advice has been proven time and time again.”- FreeMoneyFinance.com

“While debt itself is not evil, it can be a sign pointing to a deeper problem in our lives.  The typical person in thousands of dollars of credit card debt gets there by being focused on consumerism and materialism rather than pursuing God’s kingdom first.  (That’s not always the case, but it is very common.)  So a good spiritual reason to get out of debt is to break that cycle of buy, buy, buy and free yourself from valuing your life based on your possessions.  For many people, getting out of debt can be a first step to passionately pursuing God’s kingdom.”- ProvidentPlan.com

“Self-control is a fruit of the Spirit (Gal. 5:23).  Avoiding and getting out of debt requires self-control (to say the least!).  Therefore, I think we learn a lot about this fruit when we start steering away from debt.”- DollarsandDoctrine.com

“Debt can hinder our ability to hear God’s call on our life.  We can have so many bills to pay that if God calls us to some type of work that pays less that what we’re currently making we may think we have a fuzzy connection.  Living free from the bondage of debt frees us to hear and respond to whatever He calls us to.” – MattaboutMoney.com

“Wonderful opportunities to serve the Lord are jeopardized when debt obligations demand our constant attention.  It’s awfully hard to purchase airline tickets and the supplies needed to go on a missions trip when monthly payments for the Visa and line of credit consume most or all of our income above the basic necessities.  Imagine how great it would be to hear of a need for help and be able to pay cash – not only to visit that country to work – but to generously give to the individuals who stay there serving the Lord when we return home!  Financial freedom from debt not only releases us from repayment bondage but it allows us to answer God’s calling when asked to serve Him.” -StewardshipWeekly.com

For more on the Christian Financial Alliance (or to join our team) click here.

I have been searching on your site for a reputable Debt Settlement Company?? I am afraid of getting ripped-off and paying them a big fee instead of settling my debts. My creditors closed my account for a year, to help me get on track, but now the year is up and they want the original monthly payment,and they are not working with me to lower the payments because I already came off a program , so Debt Settlement seems to be my only recourse, even Credit Counseling only can negotiate but so low.  Can you please advise?

Share your advice for this reader in the comments.

Do you want to get out of debt but are having difficulty getting organized and setting up a debt payment plan?  Maybe you don’t even know the total debt you owe, the interest rates, minimum payments, due dates, etc.  Would you like to know when you can be debt free whether you pay the minimum towards your debts or pay extra each month.  There are different ways of paying off debt. Will paying the smallest debt first or highest interest debt first be best for your situation?  DebtGoal helps you solve all of these problems.

DebtGoal is not debt settlement, credit counseling, debt relief or debt consolidation.  In fact, that’s why we like it. It’s for people who can make payments on their debts and are motivated to pay them off.   Research shows if you don’t have a well-defined plan for reducing your debt, you’re likely to make minimum payments.  Of course you’ll pay extra from time to time, but it’s typically easier to make minimum payments.  DebtGoal is a planning tool that steers you away from making minimum payments and debt consolidation.  The tool will help you reduce extra costs from the interest and decrease the amount of time you spend in debt.

How it Works

Getting started with DebtGoal requires a few simply steps that only takes a few minutes.

1.  Sign up for an account and get started for free!

2.  Add a debt.  You can automatically link an account from your financial institution or add your account manually.  Automatic linking updates your accounts in DebtGoal as they change.

3.  Enter the information for the debt such as the type of debt (credit card, mortgage, car, etc.), interest rate, payment due date, etc.

4.  Create the DebtGoal SmartPay Plan.  You’ll choose between making minimum payments constant until the debt is paid off or a custom amount each month.

5.  Choose your debt pay off strategy which includes:  Debt Stacking (highest APR first), Debt Snowballing (lowest balance first), or your own customized strategy.

6. Finally, confirm your plan.  You now know  the total interest you’ll pay, your debt free date, monthly commitment, and have a strategy.

Benefits

Debt Free Date - Knowing your debt free debt is motivating!  It helps you realize you can accomplish your goal of becoming debt free. You can also adjust your plan to see how making extra payments can impact your debt free date.

Track Progress - DebtGoal does a nice job of helping you track your progress.  You can view your balance over time graphically and view a summary of your progress which includes your balance and payments made.

View Your Savings – The bottom line is debt costs you money.  Someone is charging you a fee for the loan whether it be a credit card or a home mortgage.  DebtGoal helps you save money and get out of debt sooner and it shows you how much you’re saving in interest payments.

Organized Payment Plan - Everyone’s situation is different.  You might choose to use Debt Stacking or Snowballing or a combination of the two.  The important thing is DebtGoal provides the flexibility to choose the strategy best for you with an organized payment plan.

Accelerator Actions  - Accelerator Actions are recommended steps you can take outside of your debt plan. By following these actions you can modify your debt plan with a one – time payment or increase your monthly payment. One example of an action is negotiating credit card interest rates. DebtGoal will provide recommended steps to take associated with each action.

Final Thoughts

The first step of setting up a debt payment plan is getting everything organized. This is the hardest part for most people.  DebtGoal definitely helps you solve this problem as they take you through the process step by step.  The only drawback of DebtGoal is the monthly subscription cost after the free 7 day trial is over which is $14.95 per month.  I initially thought this amount seemed high, but considering the interest savings people see in creating and following a debt payment plan, the fee is minimal.  If I had a lot of credit card debt or other debt I wouldn’t question paying the fee. The benefits and savings of DebtGoal far outweigh the cost.

Have you had any experience with DebtGoal?  Let us know your thoughts in the comments.

In biblical times, slavery was more like indentured servitude.  (The Bible condemns chattel slavery—i.e., the African Slave trade of the 1700-1800s.  Exodus 21:16.)  For a variety of reasons, a person who could not pay a debt had to honor that debt by working it off as a “slave”.  Hence, the proverb:  “The borrow becomes the lender’s slave.”  (Prov. 22:7, NASB) When you couldn’t honor your debts financially, you were forced to pay it off by the sweat of your brow.  In the book of Nehemiah, we see this practice first hand:

“We are mortgaging our fields, our vineyards and our houses that we might get grain because of the famine.’  Also there were those who said, ‘We have borrowed money for the king’s tax on our fields and our vineyards.  Now our flesh is like the flesh of our brothers, our children like their children Yet behold, we are forcing our sons and our daughters to be slaves, and some of our daughters are forced into bondage already, and we are helpless because our fields and vineyards belong to others.” (Neh. 5:3-5, NASB)

There are a lot of things going on in this passage.  The people of Israel have fallen on tough times (famine and heavy taxes), they are trying to rebuild the walls of the city, and God’s commandments for usury have been ignored.  While there is a lot we could gain from digging deep into this Old Testament book, today I want to focus in on one aspect:  “behold, we are forcing our sons and our daughters to be slaves.” Taxes, famine, and high interest put the average Israelite in a bind.  As was the practice of the day, they had borrowed all they could on their land, productivity, and houses yet still were unable to put bread on the table and pay the king’s tax.  Therefore, they were up against the only remaining possibility:  sending their kids into debt slavery (indentured servant-hood).  Their children had to help carry the weight and consequence of their parent’s debt.

At this point, a lot of Christians may have objections due to cultural context:  complaints like it was the royal tax, famine, and abusive usury that sent their kinds into a life of debt slavery.  In this, protestors would be correct.  There is a lot in this passage that, contextually, does not hit home for us.  But, I think we move on too quickly if we do not challenge ourselves with the same principle:  Am I sending my children into “slavery”?  Am I sending them into a life of paying off debt?

This begs the question:  How does a parent send their children into the snares of debt? I came up with a few thoughts (but certainly not an all-inclusive list):

1. Student loans

Sometimes parents pressure their children to go to college, but then unload the financial burden on their departing adolescent.  I am not implying that parents have an obligation to pay for their child’s college education, but there is something wrong with assuming your child will go to college and pay for it, and not giving them the tools or knowledge to take on that challenge with wisdom.  They will simply borrow their way through school (without much consideration of the consequences), and will spend the next several years buried in debt.  Help them navigate these waters, most likely their first major financial decision, with wisdom.

2. Keeping up with the Jones’ kids

Parents can often rush their children into financial “success”.  They want their children to drive a nice car, live in nice neighborhood, and on, and on.  This level of expectation often sends young adults rashly into a lifestyle leveraged to the hilt.  Allowing your children to start modestly (most likely how you started out!) will help them in the long run.

3. Apples falling near the tree

Often, a child’s pathway into deep debt is simply following after the example set before them.  As parents, we must fix our own finances before we are ever able to help our children.  Then, we must do our best to give them the financial skills to be successful.

Certainly there are others, but I felt a few examples would give hands and feet to the principle I am trying to get across:  Do not send your children into a life of paying off debt. I challenge parents to consider the financial legacy (be it debt, discipline, or knowledge) that they are passing on to their children.  You want the best for your children—do all you can to not “send them into debt slavery”.

Some of them are fair in their practices and some not.  Many of collection agencies try to get people emotional and scare them into paying.  However, fair debt collection practices establish that a debtor cannot be harassed by a debt collector.  If you’re being harassed, take action by reporting them to the Fair Debt Collection Agency before doing anything else!

So, how do you handle a situation in which you owe, but cannot pay and your account is in the hands of the collection agency?  Let’s look at some tips to use to help you through such a situation.  However, don’t use these tips in place of working with a qualified financial counselor or from discussing your situation with a legal expert.  Especially, if you think you’re about to be sued.

Take Responsibility

The first thing to remember is that it’s your responsibility to pay.  You accepted the loan, or purchased on credit.  It’s not ethical, moral, or Biblical to ignore this important obligation and responsibility.  Most people, who have the motivation to pay, even though they are challenged to do so, will come out with a positive result.

Organize Your Finances

Make sure your financial situation is in order.  This includes a well written budget, financial statement and debt repayment plan.  If you can’t build these tools yourself, it’s time to reach out to a trained financial counselor who can help you do so.

Don’t Run Away From The Problem

Keep in mind it’s never a good idea to run away from your problem.  If you ignore the situation, you’ll most likely end up getting sued for the debt.  So, the advice here is to be motivated to do the right thing and run at the problem to get it resolved.

Write A Letter

Even if you plan to pick up the phone and call the creditor, you should write a letter explaining your situation.  The letter can be used as a script for the phone call as well as for follow up after the call.

Make sure you always follow phone calls with a letter in the mail that states exactly what was discussed and agreements reached (as you understand them).  Always keep a copy of the letter and after you sent it.

Credit cards.com provides some great tips on how to write a problem and solution script.

Call Or Write?

Should you call or write?  Some will tell you to never talk on the phone with creditors.  I think it’s a judgment call based on the situation.  If the discussions can be productive, it’s probably okay to talk on the phone.  But if they become unproductive, harassing or emotional, it’s best to use mail correspondence.  Dave Ramsey often mentions you should refuse to talk to creditors that can’t have adult conversations.

Have Regular Conversations With Creditors

Talk often, but not too often.  Dave Ramsey says to don’t talk to creditors more than once every two weeks because your situation won’t change enough in that time period to provide updates.

Agreements with creditors

Get an agreement or a settlement in writing.  Never give electronic access to your bank account or provide post dated checks.  Make sure you receive the payment arrangement in the mail before taking action to pay.  You might consider having a lawyer review it.

Honor Your Commitment To Pay Off Debt

Stay committed to the plan. If you agree to the payment plan make sure you stay committed.  Again, it’s your responsibility to manage money wisely and if you’ve made the payment agreement, stick to it!

Final thoughts

What if you can’t pay?  You’ll have to make some tough decisions.  Most likely, you will need to get an extra job to generate more income, sell stuff, or even downsize your house to get back on track.

Money management boils down to addition and subtraction.  You need more coming in than going out.  If you have a lot of debt and owe creditors, you’ll definitely need to look for ways to make extra money.  It may result in less free time and more hard work, but it’s your responsibility to pay off the debt and get back on track.

Still, there are some situations which are broken beyond immediate repair.  Good organizations to contact in this case are Crown Financial Ministries or Financial Hope.

What do you think about dealing with or talking to creditors?

This is a post I originally published at Bible Money Matters.

These words are communicated by people all over the country on a regular basis.  You’d know this to be true if you listen to the Dave Ramsey show on a regular basis.  People call in seeking help for their debt problems and are trying to determine the best way to change their financial life.

There are typically more debt problems now the holiday season is over.  So, that’s why it’s important to revisit the key principles and steps to overcome debt which I believe work whether it be credit card, medical, school or other types of debt.  I love revisiting steps to get out of debt at the beginning of the New Year because so many people are highly motivated and focused on getting the job done!

A Christian Perspective on Debt

You’re reading a Christian finance blog, so I’m going to start with the most important principles on debt reduction, in my opinion.  They are Biblical and make a lot of sense.  If you’re a Christian, understanding what God has to say about money and debt is key to living in financial peace.  They should be the foundation to any decisions regarding money and provide the right motivation for overcoming debt related problems.

First, you’re not a bad person in God’s eyes or have committed a sin if you’re in debt [the Bible never says debt is a sin).  We’re all sinners and we fall short of God’s glory.  God still loves you even if you’re in debt and you haven’t been the best steward of His resources.   God’s principles on debt simply say to avoid it.  You’ll find a lot of people in society trying to tell you it’s okay to be in debt (from a leverage standpoint), but God compares debt to slavery.

The rich rule over the poor, and the borrower is servant to the lender. (Proverbs 22:7)

You were bought at a price; do not become slaves of men. (1 Corinthians 7:23)

Why does God consider debt slavery?  It goes back to the fact that he loves you and wants to bless you.  Debt, as I’ve mentioned several times here on the blog, is limiting to your financial well being.  It doesn’t provide leverage to do more.  It’s limiting to what you can do with God’s resources and in fulfilling His plans for your life.  Obeying God’s financial principles on debt will position you for His blessings!

However, there should be no poor among you, for in the land the LORD your God is giving you to possess as your inheritance, he will richly bless you, if only you fully obey the LORD your God and are careful to follow all these commands I am giving you today.  For the LORD your God will bless you as he has promised, and you will lend to many nations but will borrow from none. You will rule over many nations but none will rule over you. (Deuteronomy 15:4-6)

Debt Reduction Starts with You!

Dave Ramsey says getting out of debt starts with you.  He says many people look for quick fixes and try using credit repair companies, debt consolidation, debt management or bankruptcy.  But, the real problem with money issues starts with the people who are managing it.

I know there are a lot of reasons people end up in debt and I’m not going to explore all of them in this post.  But in general, I believe Dave’s point to be true.  To get out of debt, you have to be willing to change your attitude about money and start managing it better.

There are two steps you can take to do that today.

1.  Use a Budget to Get Out of Debt

Creating a budget and following it will help you get out of debt.  A budget helps you manage your spending, find money you didn’t think you had and it provides peace of mind in having a plan for your money each month.  Many people think creating a budget means you have a money problem and is the necessary fix to it.  I don’t think so.  Everyone needs a budget to some degree and should watch their money closely in areas that can be problematic for them each month.

Here are three resources from the One Money Design archives and the Budgeting and Spending page to help you get a budget started this year:

• How to Create a Budget
• Budgeting 101 – 3 Easy Steps to Create a Budget (Video)
• How Do You Maintain Your Budget?

Once you have a budget up and running and are following it each month, you’ll soon learn the peace that comes with following your plan.  You can review your spending habits each month (depending on how you’re tracking them) and see where you need to make necessary spending adjustments to stay on track and avoid spending on a credit card.

2.  Create a Plan to Get Out of Debt

Finally, once you understand a Christian perspective on Debt, have started with yourself to fix money problems and created a budget; it’s time to create your plan to get out of debt.  I’ve written a lot about creating a debt plan here on the blog and you can find a number of resources on the Get Out of Debt page.

Overall, I think creating a debt plan involves three simple steps:

1.  Organize Your Debt

To get your debts organized you need to collect information about each of them which will help you in building a debt plan and understanding your starting point:

• Whom owed
• Contact name/phone number
• Pay off amount
• Payments left
• Monthly payment
• Due date
• Interest.

To help organize all this information, download this debt list template which was created by Crown Financial Ministries.

2.  Measure Your Debt

You need to understand the impacts of your debt on achieving other monthly expenses in your budget.  A high debt ratio may indicate that your monthly expenses are becoming unmanageable.  This should motivate you to put your debt plan in motion and make some sacrifices to contribute as much as possible to it.  Check out this good debt ratio tool from MSN Money.

3.  Create Your Debt Pay Off Plan

Finally, you will find a lot of debt pay off calculators and spreadsheets on the internet today.  I like DebtGoal as a tool to help you build and manage your plan.  However, you can find plenty of other tools on the Get Out of Debt resource page.

At the end of the year, will you still by asking for help because you’re in debt?  Will you be debt free?  Or, will you have a plan in place that’s getting you on the right track with your finances?

Getting your finances in order and out of debt isn’t out of reach for you!  You can live debt free by putting all the above practical steps in place.  It takes sacrifice and can be a long road, but the light at the end of the tunnel is God’s promise to bless you for following His principles.

Do you have a goal to get out of debt this year?  If so, what steps are you taking today to accomplish that goal?

Minimum Payments

Minimum payments can leave you paying 200% or more of what your original loan was. Depending on the size of the balance, you could be paying as little as a dollar or two towards your principle. This could take you 20 years or longer to pay off. That doesn’t look like a viable option to me…so on to the next one.

Bankruptcy

While many people think bankruptcy is the easy way out, it really isn’t. It leaves an impact on your credit report for at least 10 years. Also depending on your line of work (especially if you work in the financial or securities industry), it can make it hard to get a job. Let alone the fact that Bible tells us to repay what we owe and bankruptcy violates that. So only in extremely rare and dire situations would I even begin to consider this option. Out of the thousands of people I have worked with, there has only been one legitimate case that I offered this as potential to and that was an older widow who had 50%+ in debt payments and needed her income solely to survive. So on to the next option.

Debt Settlement Company

I call this “let’s see how many people can fall for the same trap” companies. Almost all of these companies are out to scam both you and the credit card companies. They promise to settle for pennies on the dollar, but first, you begin by paying them a monthly payment in order for them to have money to settle with the credit card companies. If they even do what they say, by the time you have saved enough to settle, the credit card company has been coming after you for quite a while with harassing phone calls and any legal measure they can get away with. As I recently shared with a coaching participant, 99% of these companies are not good and most of them have F ratings with the Better Business Bureau.

Debt Management Company

A Debt Management company does just what it sounds like – helps you manage your debt. They charge you a small fee to negotiate your interest rate down to a more reasonable rate and allow you to pay your creditors back more quickly. On one of their plans, the average person can pay off their debt in 3-5 years compared to the 15-30 years it takes just paying minimum payments. This is an excellent viable option. I’ve worked with both CredAbility and Money Management International and been very pleased with the service they have offered as I coach people and the coaching participants themselves. I would encourage you to either pursue this option or the next one – snowballing.

Snowball

Our final option is the do it yourself method. This is where you take an extra amount each month, let’s say $20 and put it towards your smallest balance with the highest interest rate. As soon as you have paid it off, you take that monthly payment, let’s say that was $50 a month, plus the extra $20 and put it towards the next smallest with the next highest interest rate in addition to the minimum payment you had been doing. You continue this cycle until you have paid all your debts off. The power of compounding now works in your favor! This is the other viable option that I would recommend and hopefully you will soon be heading for that debt free sign.

Note from Jason:  We now have a debt resource page with links to more articles and tools to help you become debt free!

What has been your experience with these different options for getting out of debt?

Many people tend to look for quick and easy solutions to get out of debt.  People typically want debt to go away as quickly and subtly as it appeared.  But as many of you know, getting into debt isn’t all that hard.  Getting out of debt is much more difficult and takes some work.

Today I’m going to explore two common debt situations and some thoughts for overcoming them.

I need a reliable car.  I’m going to apply for a five year loan so I can afford the payments.

Often people accumulate auto debt through the purchase of a new or even a used car.  I think this is probably one of the quickest ways to get into debt.  In fact, everyone knows you can end up with a sizeable loan simply by spending an afternoon at the dealership.  Have you ever signed the papers and felt the anxiety set in as you completed the process?  Then you wondered if it was really the right decision.

Needing a reliable car is a valid reason to start looking, but it may just not be a good enough reason to go into debt.  Too often we are quick to solve the problem ourselves without turning to God to provide for our needs.  Personally, I’ve been there and unfortunately it has extended the time required for our family to become debt free.

Consider this approach

Try to slow down the process.  Are there other modes of transportation you can use until finding a reliable car?  Could you take public transportation or even work from home?  Perhaps you could borrow a car from a friend at church?  The idea is to brainstorm every possible option that will keep you from having to make a quick decision and end up with a loan!

Most importantly, turn to God to provide to provide for your needs.

You can be sure that God will take care of everything you need, his generosity exceeding even yours in the glory that pours from Jesus (Philippians 4:19, The Message).

That’s a powerful scripture to remember.  God will take care of everything!  I love that God can take care of our situations and needs in ways exceeding our expectations and in unforseeable ways.  Just remember it might not be in the exact way you have planned.

It’s a good money making opportunity.  I’m going to borrow the money required to get started from my retirement account.

If you have entrepreneurial spirit, you know the feeling you get when a new opportunity is presented.  Your mind begins working.  Could this really be possible?  I’d certainly like to look at this a little closer!  Oh, it requires an initial investment?  But the return on this investment seems highly likely and the rate of that return looks to be pretty quick.

Perhaps you’re not entrepreneurially inclined, but the thought of making some extra money after investing a little money may sometimes become quite enticing.  In either situation, there is a danger in borrowing money to fund investments.  More dangerous is borrowing from retirement accounts to fund investments.

Why is it so common to cross over into savings marked for other purposes and use the money for something else?  Borrowing against retirement, is running up debt because it must be repaid.  You’ll also end up paying a penalty or fee for the loan and it’s considered taxable income (see your tax advisor for more information).

What’s your motivation for the opportunity?  Seek some Biblical guidance.

When such investment opportunities are presented, we must consider the reason we are engaged in opportunity and know that borrowing from money marked for retirement is never a good idea.  Don’t let the idea of making money lead you to unwise decisions.  Invest in such opportunities with money saved for doing so and avoid the pursuit of money as your primary focus.

For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs. (1 Timothy 6:10).

How have you avoided these common debt situations?  Are there other common debt situations you’ve done well to avoid?  Let us know about them in the comments.

This is an article I originally published at ChristianPF.

The choice to get out of debt

One of the choices we have in life is how we spend and manage money.   For example, it’s our choice to go into credit card or auto debt  and it’s our choice to get out of debt.  For the latter, we have to want it bad enough.  We have to be at the turning point in our lives in which we’re tired of serving lenders.

The rich rule over the poor, and the borrower is servant to the lender. (Proverbs 22:7)

When I think of servant in this context, I think of being constricted or locked into something in which I have little mobility.  I think that is why the Bible also speaks about debt being a form of slavery.

You were bought at a price; do not become slaves of men.  (1 Corinthians 7:23)

When debt gets heavy enough, most people feel the pressure, stress and strain it causes on their lives.  Some run at it with enough passion to run through a brick wall when they want to become debt free.  It’s the kind of passion I see from a fellow personal finance blogger at Debt Free Adventure in his article, The Debt Steamroller- I WILL FIGHT to reach my goals!.

Yet, others choose to slip their debt under the covers and try to hide it.

If I don’t think or talk about it, I won’t worry about it.

Unfortunately, we know that’s not the case because debt impacts our lives and our ability to make decisions.  And if not “steamrolled” as Debt Free Adventure puts it, it will impact our future generations because their choices will be limited too.

The choice to change

And even as we may have made choices that are not in our best interest and have put us in a relationship of servitude with lenders, we still do have the choice to change.  We can change behaviour that got us there to begin with and look towards the freedom that being out of debt brings with it.  Without the burden of debt, wealth will be built, God given opportunities will be seized and financial peace and prosperity will become reality.

Are you intense about getting out of debt?

Wanting more now, trying to keep up with neighbors and greed are just a few reasons why society has lost sight of true financial freedom. Others, who mean to manage financially wise, encounter financial storms with medical expenses and other unfortunate emergencies they can’t afford.

Popular talk show hosts like Dave Ramsey are working hard to educate people on how to correct their problems, get out of debt and live in financial peace. The debt free dream can be a reality for every American family and that is the goal our family is pursing.

Why get out of debt?

Starting Sunday, June 21st (Father’s Day) I’m going to be writing a five part series entitled, Live Debt Free. In this series I’ll be writing about four reasons why our family is pursing the debt free goal (including our house).  I plan to end the series with a fifth article that will include some tools to help people become debt free.

1. Live Debt Free – Biblical Advice
2. Live Live Debt Free – Fulfill Your Life Purpose
3. Live Debt Free – Avoid the Stress of Debt
4. Live Debt Free – Help Your Children
5. Tools to Live Debt Free

This was a question asked on a recent Dave Ramsey show. I can completely understand why someone might ask this question in the spirit of trying to manage wise and become debt free.

Dave mentions the problem with cashing out an IRA is that you will pay a 10% penalty. On top of the penalty you’ll have to pay taxes equal to your tax bracket. For example, if you’re in the 25% tax bracket you would pay a total of 35% in penalties.

Given that you’re paying penalties and taxes you could equate this to taking out a loan at 35% interest to pay off your car. It doesn’t make much sense when you look at it that way.

Dave tells us not to cash out those retirement accounts to pay off debt. The better approach is to keep your money invested and let it do some work for you earning interest. Rather, build a good debt pay off plan and put the car loan behind you as soon as you can.