One of the greatest myth’s people have bought into is the benefit of bankruptcy. This idea brings us to the fourth Biblical Financial principle, which is the understanding that there is Life after Debt.
- Understand God’s Ownership (Psalms 24:1)
- Learn to Save Money (Proverbs 21:20)
- You Must Live on Less Than You Make (I Timothy 6:7-8)
- There is Life After Debt (Proverbs 22:7)
- Establish an “On-Purpose” Cash Flow Plan (Luke 14:28-30)
- Prioritize Your Plan Around the Four Walls (I Timothy 5:8)
- Giving is the Goal to Financial Freedom (II Corinthians 9:7)
It is unfortunate, but a lot people feel that they can simply use bankruptcy as a way to walk away from the debt they have accumulated. As Christians, the Bible is very clear that we are responsible for the repayment of our debt. Even for non-Christians, the idea of following through on your promise is something that everyone should understand is a good thing.
Personal Control? Lost or Given Away?
When you sign your name on a contract, a loan agreement or even on a credit card receipt, you are promising to pay back the money that is being extended to you.
“The rich rules over the poor, And the borrower is servant to the lender.”
When you borrow money, the lender gains a level of personal control over you. When you have borrowed yourself up to your financial limit, you have lost almost all control of what you can do with your finances. You have sacrificed your financial freedom. When we think of the sacrifice that Jesus paid on the cross to free us from the bondage of sin, we get a small picture into what God thinks of His children being in bondage, and yet for the thrill of the moment we are willing go out and tie ourselves to stuff. We need to understand that debt cannot be a long-tern way of life, however, no matter how deeply in debt we are, there is a way out. It is not going to be easy, but there is life after debt.
Sick and Tired of Being Stuck
Before you can get out of debt you have to get sick and tired of living the way you are. Maybe you are tired of seeing all of your money go out with no real enjoyment from all the ‘stuff’. Maybe there are bigger things you want to be doing, but because of the debt you can’t move toward your dreams. What ever the reason, deciding to get out of debt is the first step.
When you look at the new bankruptcy laws, things are a lot tougher now than they used to be. Each state is a little different, but the one thing that is common, is that it will cost you to file and declare bankruptcy. In addition to the big black mark on your credit, most states will force you to liquidate things to help pay off the debt. You can no longer just walk away from the problem. If it is going to hurt to go through bankruptcy, you might as well go through some pain and get out of debt the old fashion way; pay it back.
Getting out of Debt
There are a lot of differing opinions on how a person should start paying off debt. Some think you should always pay-off the debt with the highest interest rate first. Others thinks you should start with the smallest balance and pay them off smallest to largest. This is the method Dave Ramsey suggests and I think it works very well. It isn’t the most efficient mathematically, but it will give you positive satisfaction and will provide the results that will keep you motivated.
There is still one problem. Where are you going to find the money to start paying off your debt? That is a great question, and if you missed it, I answered that question in the third Biblical Financial principle. Make sure you check it out. In the next principle we will look at establishing a budget that will help you live on less than you make.
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