A couple of weeks ago, I posted a quick note about how more than 80% of us get tax refunds. And my goal was to encourage and remind you to do something productive with the funds so that you could take another step forward to positioning yourself for financial freedom and living God’s best for your life.
So my question for you today is: What did you do with the money? I want to hear from you. If you paid off some bills (big or small), let’s share the success! Scripture says that “the borrower is slave to the lender” (Prov. 22:7). If you paid off any debt, no matter what the size, then you just had your very own personal emancipation day! Let’s celebrate your freedom. Forward movement is something to celebrate.
I will share mine with you. With my refund I paid off 2 credit cards in full and put a big dent in another one and paid the balance down by over 60%. #LiveFree
Be patient with yourself and understand that you did not build this debt overnight. You may have dug yourself into this hole with years of tough times, poor choices, and mis-information. Well the past is past, and now is the time to make lasting change for the better.
Here are 4 Quick Steps:
1) List out your debts by balance (go smallest to largest balance – here we will ignore the interest rates) Remember to include personal loans from family / friends. They have not forgotten that they loaned you money – so don’t get amnesia here if you value the relationship. Besides, this is about your integrity. So even if they have forgotten, or just stopped asking for the money back, it is a matter of honor that you repay them.
2) Stop digging the hole any deeper. That means stop using your credit cards and making matters worse. You will have to cut your expenses and find ways to generate more money. Sell some stuff. Have a yard sell. Pack a lunch for work. Take items to a consignment shop. Find a side hustle job to generate some additional cash (babysit, bake cakes, wait tables, work retail, check out the temp employment agencies).
3) Have a clear monthly payment plan. For each debt that you have, know what is the minimum monthly amount required to stay in good graces with the company so that you are not being charged late fees and hurting your credit. Now you know that if you only pay the minimum amount on credit card debt it will take you decades to payoff balances – and that is NOT an acceptable solution. So understand what I am saying here. We are going to build a snowball effect to tackle your debt. So the bill with the lowest balance is the one that you put all of your extra money to, and pay the minimums on the rest. So if your lowest bill has a minimum payment of $30, and a balance of $600 total. Then you will pay the minimum monthly payment due on all the other bills, and any extra money you can add to the $30 is where you put the snowball into effect. Pay extra on that until the $600 balance is paid off in full. Then next month you take the $30 that you were paying here and apply it to your next lowest balance debt, along with the extra money you saved by reducing your expenses and getting your hustle on.
4) Know that you are not on your own. It is God’s will that you are blessed and walk in His abundance. 2 Cor 9:8 “And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work”. As you are stepping towards financial freedom, God is blessing your efforts because it is His will that you are free! Be encouraged.
Remember, I want to here from you in the comments! Post your freedom moments! What did you pay off? Who were you emancipated from? Visa? Mastercard? Kohl’s? Discover?