Padre’s Corner: Conquering post-holiday debt
By Padre Capt David Ferguson,
Christmas fun has been had and now you dread the credit card bills. Your truck will be paid in two years but your car needs replacement soon. Spousal and child support are due, your eldest needs braces, and your student loans are still hanging around like an unwanted in-law.
Unsecured debt is a form of western slavery that we sell ourselves into. Proverbs 22:7 states: “The rich rule over the poor and the borrower is slave to the lender.” Financial author Dave Ramsey is a tad more blunt: “We buy stuff we don’t need, with money we don’t have, to impress people we don’t like.”
If this describes you, don’t fret! I too have struggled with student loans and credit debt, squeezing the very peace out of me. Losing debt similar to losing weight: You need to make a solid plan and stick to it. You must want to be debt-free with both determination and intensity. If you are in a relationship your partner must share this intense desire. The sooner you commit yourself seriously to pay off debt, the better off you will be in the future. We all have a beginning. Today is yours if you so choose.
The show Till Debt Do Us Part claims up to 90 percent of couple separation is due to debt. Finances appear on every list of ‘reasons for divorce’ that I have seen. Debt and marriage don’t do well together. Desire, knowledge and determination will help you become debt-free again. There is no secret to becoming debt-free. Spend less that you make, save money, and keep an emergency fund. These steps to becoming debt-free have worked since Biblical times.
Dave Ramsey advocates a seven-step process to becoming debt-free and retiring with dignity. They are:
STEP ONE: Save $1000 in a rainy day fund. Use this rather than credit cards in an emergency.
STEP TWO: Start a debt snowball. List all your debts (except your home
mortgage) and pay them off in the following order: Family and friends first (to keep away anger, resentment, and bitterness), then smallest to the largest. (PayDay loans fall into a separate category that require special attention. See SISIP immediately if you have PayDay loans).
Make minimum payments on all debt but your smallest, and pay everything extra you have left from your paycheque on the smallest debt until it is gone. Then add all of that smallest payment plus the minimum payment to the next debt until it too is all gone. When you get to your last debt, the payments are very large as all previous debt payments are added making a debt snowball. Many find this step the most difficult as it requires discipline to follow your budget. It can only be completed by making a budget and sticking to it.
STEP THREE: Finish your rainy day fund by saving three to six months of salary.
STEP FOUR: Maximize retirement investing. SISIP can help with this.
STEP FIVE: Establish post-secondary education savings for your children.
STEP SIX: Pay off your home mortgage early.
STEP SEVEN: Build and share wealth.
If your finances are spiralling downward, seek advice from your chaplain or your unit sentinel, and visit your local SISIP office. You can conquer debt!