by Pastor Kregg Hood
January 16, 2015
Need help with your finances? Here is a quick overview of a personal financial freedom plan. Give it time, stay on track and trust God to help you.
In fact, this content is an abbreviated version of what is also in my book, “From Debt to Life” (available on our Thrive page to download at no charge). Follow these 10 steps, use the forms and worksheets and you can develop your own program.
1. Determine why you’re in debt.
Financial freedom starts with spending less than you earn. If you can’t do that, then you need to know what’s stopping you. There is no doubt that the devil has figured out a way to tempt you. So let the Lord show you the way out. Remember, your debt SPENDS your future income.
2. Stop going deeper in debt.
Cutting expenses can be the fastest way to reduce your debt load. As expenses are removed or reduced and your finances heal, your attitude, relationships, emotions and sense of humor start getting better, too!
Also, look for ways to bring in more money to offset your expenses. For example, can you find a better job? If not, could you get a second, part-time job? It could be the smartest way to get caught up. You might also try to sell something you own or have equity in. Use the money to pay down your debts and steer clear of new debt. This option may also work to reduce spending if the thing you sell is something that actually costs you money each month.
3. Find out how much you owe.
Check all your debts and know exactly what you owe, to whom you owe it, how long you have left to pay and how much you’re paying for interest. Write everything down.
4. Know your income and expenses.
Now, take a look at your checkbook and figure out what you have coming in each month. See where you’re spending your money. Keep track of this information by categories so you’ll be able to move to the next step.
5. Make a spending plan.
If you’re spending less than you make, you’re in good shape to pay off old debt or save and invest for the future. If you spend more than you bring in, you need know exactly where and why. Make your spending plan a road map for your financial future. There’s a lot more to say about this step, so I’ll save it for a future article. These forms and worksheets will be a big help here
6. Develop a written repayment plan.
If your spending is out of control, you need to pay off your old debt first. Write down your plan to do this for two reasons. First, it helps you clarify exactly what you need to do. Second, human nature and experience show that you’ll stay more committed if you write it down.
7. Develop a savings plan.
It doesn’t matter if the amount is small at first. Just get started! Put any amount away each and every month.
8. Set goals.
Ask yourself these questions:
- What would be different for me if I were financially stable?
- Where do I want to be one year from now?
- Where do I want to be five years from now?
- Where do I want to be 10 and 20 years from now?
The answers will help you to stay motivated and on track for the future.
9. Keep simple, accurate records.
Record your income as it comes in and all of your expenses as they go out. Always write down what you spend in your checkbook and keep all credit card receipts for at least a year. Throw them away when you’re sure you won’t need them for warranty reasons or to make sure the charges were accurate.
10. Practice good money management.
These 10 steps form the basics for both your present and future money management. Learn and practice them, and you’ll gain the experience to effectively manage all of the financial resources that the Lord puts into your hands. He wants to trust you. That’s what being a steward is all about. Decide to be a good one.
For more help, check out these resources:
Book: "From Debt to Life"
Book: "Escape the Debt Trap"