Are You Drowning in Debt?! Here Are Some Practical Strategies to Get Your Way Out of It.

Debt, a four letter word so powerful can devastate a human life if not prevented. It's a cancer in the society, in family, in marriages, in the individual who has it.

Take a look at these statistics:

Average credit card debt per household with credit card debt: $16,007.
Average total debt in 2009 (including credit cards, mortgage, home equity, student loans and more) for all U.S. households: $16,046.
Total U.S. consumer debt (which includes credit card debt and noncredit-card debt but not mortgage debt) reached $2.45 trillion at the end of 2009. (Source: Federal Reserve's G.19 report, March 2010)
About 56 percent of consumers carried an unpaid balance in the past 12 months. (Source: "The Survey of Consumer Payment Choice," Federal Reserve Bank of Boston, January 2010)
Total U.S. revolving debt (98 percent of which is made up of credit card debt): $852.6 billion, as of March 2010 (Source: Federal Reserve's G.19 report on consumer credit, March 2010)
About 43% of American families spend more than they earn each year.

Is the current economy to blame? Is the government to blame? Is the media to blame? My personal answer is none of the above. Credit card spending is a decision and some purchases for which many Americans have gone into debt were just options.

Is debt really a part of the American life? Is it the cost to acquire the American dream? Does it really "build" your life? Unfortunately, no. Debt enslaves and destroys.

This weekend, our church (Lakewood Church) had the opportunity to have Dave Ramsey, a personal money-management expert, an extremely popular national radio personality, and the best-selling author of The Total Money Makeover.

At the age of 26, Dave built a $4M real estate portfolio only to lose it at the age of 30 into foreclosure and bankruptcy. It is through this experience that Dave has learned to handle his finances and get out of debt through a strategic plan.

I would like to share these 5 Steps to Getting and Staying Out of Debt that he shared. You will find that these are very practical but require a total lifestyle and behavior change.

1. Set a Budget
On paper, on purpose. Every dollar should have its name, as Dave advised it.
Know your regular monthly income and write down your expenses for the coming month but do it before the end of the month. Seems like the most simple thing to do, isn't it? But how many Americans actually do it and live on budget?

2. Act Your Wage
The price to pay in living beyond our means is debt. Yes, that dreaded four-letter word! Surely there are things we buy on credit that we can't live without. That's why I said previously…some of the purchases we made were just options. Live on less than you make.

3. Get Out of Debt
It's only rational that if you set a budget and live within your means, you should be able to have the money to slowly pay off your debts. As you change your behavior in spending, you will see your debt going down. Dave Ramsey advised to do the snowball strategy which means to attack the smaller debts first. It's always encouraging to see smaller victories and work your way on attacking the bigger ones. He also advised to make sacrifices. Cut off on unnecessary spending such as dining out.

4. Save Money
Rainy days do come. Have an emergency fund that will at least carry you through 3-6 months. The ideal is to set aside at least 30% of your income every month for your savings.

5. Giving/Tithing
Tithing is a biblical principle mentioned in Malachi 3:10. It is the tenth of your income that you give to your local/home church. For example, if you make $450.00/week, you give $45 to your church. Now, there's different teachings/opinions on whether you should pay your tithe based on your net or gross income. I will leave it up to your conviction.

He also talked about creating a lifestyle of giving to other people. This is putting the principle "You will reap what you sow." into a positive direction.

There you go folks! Simple practical steps as advised by Mr. Dave Ramsey and have been used by thousands of people in America and have gone out of debt.

Until then!…

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Comments (1)

Gina Alagata says:

November 1, 2010 at 3:04 PM

I love Dave Ramsey’s material. I read his book a few years ago and it is great, practical advice. Live below your means! Thanks for sharing this with everyone.
Gina Alagata´s last [type] ..A Self-Made Woman

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