Getting out of Debt

How does the thought of debt make you feel? In my own life I have experienced many emotions with debt. Usually, the thought of debt doesn’t bother me much when I am considering a new purchase that I really want. The payments and term of the loan seem manageable to me, because really I am focusing on buying something I’d enjoy. However, it doesn’t seem like it is that long after the purchase that I start to feel the burden of the debt. Many clients I have worked with have expressed similar feelings.

We go into debt for a variety of reasons. We get a mortgage to buy our home. We have student loans for our education. We borrow for our vehicles. We have emergencies like medical events, auto accidents, unplanned repair bills, etc. that we borrow to pay. Before we know it we can have a very large amount of debt.

Here are the steps I work through with clients when we are getting out of debt:

1. Recognize Debt as a Burden, Not a Blessing

We have to start with recognizing how debt is holding us back. Proverbs 22:7 says, “The rich rule over the poor, and the borrower is servant to the lender.” Debt can trap us in a cycle of servitude, making it harder to live the life God has called us to live.

When we’re in debt, we may struggle to be generous, serve others, or pursue the purposes God has for us because a large portion of our income goes toward paying off what we owe. Recognizing that debt is a burden rather than a blessing is the first step toward breaking free.

Action step: Acknowledge the weight of your debt. Start by making a list of all your debts, including the creditor, total amount owed, interest rates and monthly payments. We need to understand the entire debt picture.

2. Pray for Wisdom and Guidance

God promises to give wisdom to those who seek it. James 1:5 reminds us: “If any of you lacks wisdom, let him ask of God, who gives to all liberally and without reproach, and it will be given to him.”

As you begin your journey to getting out of debt, seek God’s guidance. Ask Him to help you make wise financial decisions, give you the discipline to stay on track, and show you areas where you can cut back or earn more. Ask Him to provide you the resources to get out of debt.

Action step: Start with prayer. Commit to seeking His guidance throughout the process.

3. Create a Plan (Budget)

The Bible encourages us to be intentional and to plan wisely. Proverbs 21:5 says, “The plans of the diligent lead to profit as surely as haste leads to poverty.” God calls us to be good stewards of the resources He has entrusted to us, and creating a plan is an essential part of being a faithful steward.

We need to create a plan to get out of debt, which really means we need to have a budget. A budget is nothing more than a spending plan. We need to tell every dollar we have where it is going to go.

If you have never created a budget before there are some helpful budgeting tools that are available online either for free or for a fee. But, you also can do this with pen and paper or a spreadsheet.

Action step: Create a budget. Start with all of your sources of income for the month.List all of your monthly expenses, including housing, utilities, groceries, transportation, medical, entertainment, minimum payments on debt, etc. Find areas where you can reduce spending (e.g. dining out, subscriptions, shopping). The goal is to have as much extra money in the month to put towards debt repayment.

4. Choose a Debt Repayment Strategy

There are two major strategies for paying off debt. Choosing the right one is personal. The main thing to remember when choosing a strategy is which one will you be able to stick with or which one will give you the most motivation to keep doing!

Debt Snowball Strategy: Focus on paying off your smallest debt first while making minimum payments on larger debts. Once the smallest debt is paid off, you move on to the next smallest, and so on. The momentum of ticking off smaller debts can keep you motivated.

Debt Avalanche Method: Focus on paying off the debt with the highest interest rate first, while making minimum payments on the others. This method saves you more money in the long run, as it reduces the amount of interest you pay.

Action step: Decide which method resonates with you. Pray for God’s wisdom in choosing. He knows you better even than you know yourself! Start paying extra on the first priority debt (either smallest balance or highest interest) and commit to paying it off as quickly as possible.

5. Look to sell things!

In addition to living within your means and cutting as many monthly expenses as possible, I recommend looking for items you can sell. We all have extra things that we don’t really need. I encourage you to sell them and use the money from selling to put it on your debt!

Action step: Go through your home and find what you don’t need and sell it. Put those dollars towards your debt repayment strategy.

6. Avoid New Debt

Once you start making progress on paying off your debts, it’s vital to avoid accumulating new debt. Proverbs 22:26-27 warns against co-signing loans or borrowing beyond your ability to repay: “Do not be one who shakes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.”

As you work toward debt freedom, make a commitment to avoid using credit to fund purchases. Use cash or debit cards, and if you need to make a major purchase, save up for it.

Action step: Commit to living without adding to your current debt. Avoid the temptation of new credit cards or loans, and take proactive steps to live within your means.

7. Stay committed and celebrate milestones

Paying off debt is a marathon, not a sprint. You will need to find ways to stay motivated and focused on your goal. Track your progress and set milestones that you will celebrate. Every time you pay off a debt you’re one step closer to financial peace!

If you’re not working with an advisor to help you on your journey, I recommend finding a close friend who you can share your goal with. They can help encourage you to stick to your plan and help you celebrate your successes.

Action step: Stay committed to your plan by having an advisor help you stay on track or have a friend who can help you stay accountable to your goals. CELEBRATE along the way!

8. Embrace Generosity

Generosity is a key aspect of biblical stewardship. While it might seem counterintuitive to give when you’re in debt, Scripture teaches that generosity opens the door for God’s blessings in our lives. Proverbs 3:9-10 says, “Honor the Lord with your wealth... then your barns will be filled to overflowing.”

God calls us to be generous even in times of financial struggle. As you work on paying off your debt, look for opportunities to give back to God’s work, whether through tithing, supporting a charity, or helping others in need.

Action step: Find ways to give, even in small ways, as a step of faith and obedience. Trust that God will provide for you as you honor Him with your resources.

9. Trust God for Provision

Ultimately, trusting God for provision is at the heart of financial freedom. Philippians 4:19 promises, “And my God will meet all your needs according to the riches of his glory in Christ Jesus.” God is faithful, and He knows your needs. He will provide for you as you remain faithful and obedient to Him.

As you work toward getting out of debt, trust that God is with you every step of the way. While it may be challenging, remember that God’s provision is always sufficient.

Action step: Remain in prayer and trust God with your finances. Remember that your ultimate security doesn’t come from your bank account, but from God’s provision and care.

Remember… your financial situation doesn’t define you. You have an opportunity to respond to it in a way that honors God and ultimately leads to greater peace for you. He doesn’t want you to be burdened with anything, including debt, that will impair your ability to be the person He made you to be doing the “good works He planned for you long ago.”