Are You Spending Beyond Your Capacity to Pay?
Start Getting Out of Debt Now
When you have overspent for the last three or four years, chances are it would eventually catch up with you. You may go through bill consolidation loans, loans from parents, and equity loans. Still you might find yourselves unable to pay the bills again. Added to that, you may also have overdue credit card bills, but still are using credit cards just to live month by month. How do you get out of this mess?
One of the simplest economic principles ever written: "If you don't borrow money, you can't get into debt" The second simplest economic principle is, "If you don't borrow any more money, you can't get further into debt"
The first step to get out of debt is for you to say, "I'm not going to go any further into debt" It's truly a matter of deciding. Any couple in debt must start reversing the process that got them there in the first place. If you find you're overspending month after month on your credit cards, it's highly recommended that you destroy them, and mail them back in little pieces.
Second, write out a budget that would control your spending as much as possible, but be realistic about it. Do not promise to pay more than you are able to. Write each of your creditors a letter, show them your budget, and how much money you have on hand. Provide them a list of all the other creditors and separate your money proportionately.
When you are just able to pay half of what you originally promised, tell them the truth. I've negotiated with a lot of creditors for counselees, and I am able to tell you that lenders don't want anybody to go bankrupt. All they want is their money. I've never found a lender (other than some small loan companies) who will not work things out with a family as long as the family was honest and was running toward its creditors.
Running towards those we owe instead of away from them is among the principles taught in Scripture. Matthew 5:25 says, "Make friends quickly with your opponent at law while you are with him on the way; in order that your opponent may not deliver you to the judge, and the judge to the officer, and you be thrown into prison." That means doing this commitment "I'm not to go any further into debt. I'll be honest with my creditors. I'll sacrifice what I have to, and I'll pay back what I've promised."
Then it turns into God's responsibility to help. The average family must be able to be debt-free in around two years (other than those with business or investment losses).
When you have made a commitment to pay your creditors what you are able to each month, make another commitment if any additional money arrives, use at the least half of it to pay on your debts. Work hardest to pay off your smallest debt first. Then take all the money you were paying on that particular bill and put it toward the next biggest one. In this way you will see your debts start to disappear. Anyone who ever got into debt recognizes that getting there is a lot of fun. It isn't nearly as much fun getting out.