New Year’s Resolutions are rife this time of year. It seems we’re all making them. We’re all making an effort to get healthier, wealthier and happier.
Sadly, not many resolutions end up sticking but that’s a topic of conversation for another time. What I want to chat about today is how to get out of debt this year.
Millions of people are drowning in debt and there’s a vicious cycle of “robbing Peter to pay Paul” that seems to have no end in sight.
That doesn’t have to be you. You can get out of debt and this is your year to do it! I recently watched a brilliant seminar from Dave Ramsey on Financial Fitness. We’ve begun implementing some of his points in our household and it’s been super helpful. Start with number one and move down the list as soon as you can.
- Save up R10,000 (or your country’s equivalent) as soon as possible – This way if your car breaks down or your water geyser bursts, you’re not reaching for your credit card.
- Pay your minimum payment on all your debts but pay down the smallest debt first – this creates the debt snowball effect where once the smallest debt is paid off, you then take what you were paying on it and put it towards your next smallest debt. You keep doing this until all your debts are settled.
- Have 3-6 months worth of living expenses in a savings account – this is there to help you if someone gets retrenched or loses their job until you can get back on your feet.
- Put 15% of your income into a retirement annuity – this may seem like a lot of money but once you have no more debt payments, this will be much more doable.
- Start saving for your children’s university education
- Pay off your house bond early – do you know that paying R500 a month extra on a R600,000 loan can shave 4 years off your bond!
- Build wealth and GIVE – I know it seems contradictory but money is like seed. The more seed you sow, the more there is to harvest. Give to the poor, give to your church, give to charities. Just find a way to give and do it.
It’s easier to get started on something than to continue to see it through. Once you have your initial R10,000 saved up, leave it there. If you do need it for an emergency, be sure to put that money back as soon as you can. And once those credit cards are paid off, cut them up. With your money in savings, you should never have to use them again. And if you’re tempted to put that beautiful handbag or new sound system on your credit card, just remind yourself how hard you worked to pay it off the first time. Don’t put yourself back in that position again.
One of the reasons this plan is fairly easy for us to follow is because we trust God with our finances. We believe He is our provider and if we put Him first, He will take care of us.
If you would like to know more about God in this way, we would love to chat with you. Click on the banner below or on the pop up.