Personal Finance Basics: Debt



Do you feel the burden of debt—the constant payments, the rising interest, the lack of margin? Debt is a tool that can become a burden that limits generosity and future potential. Many of us use debt to make it through the month and if that is where you currently are, that’s OK.  Let’s continue to learn more about personal finances.  

First we learned about our income and how  it is a powerful wealth building tool that God uses to provide for us.  We then discussed our expenses and how as stewards it's up to us to make wise decisions with the money God has given us.  Now what happens when we spend more than we make at any given time?  Often time that leads us into debt.  

Some common causes of debt are lifestyle creep, keeping up with the Jones’s, purchasing a house, purchasing vehicles that are more than our budget, medical bills, furnace goes out, student loans, signature loans, payday loans, having poor insurance coverage, and retail therapy.   Some of these causes are completely avoidable while others may be avoided with proper planning and some are completely out of our control.  

When you have debt you owe money to someone or some entity.  If you owe a family member it can be a strain on your relationship.  If you owe a bank or credit card company they are earning money from you.  You are helping them make interest and compounding interest is working for them and not you. 

As we are reminded in Ecclesiastes 6: 12 “For who knows what is good for man while he lives the few days of his vain life, which he passes like a shadow? For who can tell man what will be after him under the sun?”  We do not know what will happen in our lives.  Many times I have been surprised to learn that my initial understanding of a position or relationship is not what actually came about.  Financially speaking it is good to have some important insurance products in your life.  

Other Good Reads:

Classifying Debt: Good vs. Bad (And Why We Treat It All as Urgent)

Some people classify debt as good debt and bad debt, while others see all debt is bad debt.  How you see debt will dramatically change your approach to it.  

"Bad" Debt (The Ropes or Chains) 

  • Definition: High-interest, unsecured debt used to purchase items that depreciate or are immediately consumed. This is your primary target.

  • Examples: Credit cards, payday loans, store credit, medical bills, unsecured personal loans.

  • Mindset: This debt is driven by consumerism and lack of discipline. These debts must be attacked with the highest intensity.

"Good" Debt (The Tools)

  • Definition: Debt for assets that typically appreciate or help generate income, usually carrying a lower interest rate.

  • Examples: Mortgage (debt on a primary residence), Student Loans (investing in income potential), business loans.

  • Mindset: While often seen as necessary, we still treat these as temporary. The goal is to pay these off early, too, for total financial peace.

The Most Powerful Strategy: The Debt Snowball

You need a strategy that changes your behavior and keeps you motivated through the long fight. The Debt Snowball is the method that achieves this.

  • Concept: List all debts from the smallest balance to the largest balance, ignoring the interest rate.

  • Action (The Roll): You pay the minimum payment on all debts except the smallest one. You attack that smallest debt with everything you can find in your budget.

  • Why It Works (Behavioral): This method builds momentum and creates quick, psychological wins. The triumph of paying off that first debt gives you the emotional drive to keep fighting the rest. It's 80% behavior, 20% math.

Good Resources:

Actionable Steps: Gearing Up for the Fight

Before the Snowball can roll, you must prepare the ground.

  1. Stop the Bleeding: Cut up your credit cards and commit to not taking on new debt. You cannot fill a bucket with a hole in the bottom.

  2. Inventory Your Enemy: Create your Debt Snowball list (smallest to largest balance). Knowing your enemy's size is the first step in defeating it.

  3. Find the Fuel: Launch your Zero-Based Budget to identify the extra cash flow that will be the "Snowball" you throw at your smallest debt every month.

Conclusion: Freedom for a Purpose

Eliminating debt is not the finish line; it’s the launchpad. When you break the ropes or chains of debt, every dollar you earn is redirected from banks and creditors to your own household—freeing up massive cash flow for generous giving, aggressive investing, and living out your God-given purpose without compromise.

Ready to untie the ropes?  Click here and complete the communication from to begin your Debt Snowball plan today.  P.S. Listen to the podcast Financial Coaching Kingdom Men, for more encouragement!

Comments

Post a Comment

Popular posts from this blog

Beyond the Budget: Cultivating a Safe Space for Money Conversations

Image
  Beyond the Budget: Cultivating a Safe Space for Money Conversations Money. It's one of the most common topics that can spark tension, misunderstanding, and even outright conflict in relationships. We all know we should talk about it, but often, the conversations we have feel more like a battleground than a common ground. Just today, I heard a familiar story unfold. I was at a coffee shop, chatting with a group of friends. One of the men mentioned he’d recently received a raise and was eager to discuss with his wife how they could best use these new funds. He brought it up, hopeful for a collaborative discussion, only to be met with, “I don’t want to make that decision now.” He sighed, resigned, expecting that he’d likely just have to make the decision on his own. His story hit me hard because it echoed a significant failure from my first marriage, one I hope I've learned from deeply. In that relationship, my wife was truly the backbone of our home. She managed the household,...
Read more

Building a Legacy Beyond Wealth: The Power of Biblical Financial Coaching

Image
In a world obsessed with accumulating more, the constant pursuit of wealth can often feel like a treadmill – endless, exhausting, and ultimately unfulfilling. But what if there was a different path? What if managing your money could be about more than just numbers in a bank account, but about aligning your life with a higher purpose? Welcome to the world of Biblical Financial Coaching . This isn't your average financial advice. While it certainly covers practical aspects like budgeting and debt elimination, it does so through the timeless lens of Scripture. It's about understanding that every dollar you earn, save, and spend is an opportunity to honor God and build a legacy that extends far beyond material possessions. What Exactly Is Biblical Financial Coaching? At its heart, Biblical financial coaching is about integrating your faith with your finances. It's a journey that helps you: Understand God's Principles of Money: The Bible has over 2,350 verses on money, ...
Read more

Beyond Riches: How Essentialism Unlocks True Financial Freedom (and Purpose)

Image
  Introduction: The Fleeting Pursuit of Wealth This morning, as I spent time in God's Word, a passage from Proverbs 23 :4-5 resonated deeply: "Do not toil to acquire wealth: be discerning enough to desist. When your eyes light on it. It is gone, for suddenly it sprouts wings, flying like an eagle toward heaven." Have you ever felt caught in the relentless pursuit of more, only to find that wealth, when made the sole focus, can feel incredibly fleeting? It's a powerful reminder that if growing our net worth is our only life goal, we might be chasing something that "suddenly sprouts wings." Investing in What Truly Lasts Proverbs 23:23 offers a profound contrast: "Buy truth, and do not sell it; buy wisdom, instruction, and understanding." This verse challenges us to consider what we're truly using our wealth for. Are we simply accumulating it, storing it in silos, and deriving our self-worth from account balances? Or are we leveraging the blessi...
Read more