Do not live with your eye on this world, rather live with your eye on the world to come. If you hope to become the good steward God instructs you to be and intends for you to be, then you are going to have to develop a deeper fellowship with Jesus Christ through the Holy Spirit that motivates you to follow the pathway the bible lays out for your life and financial health, wealth, and well-being.
Just like Jesus focused all His energies on obtaining the goal of the Father’s will for all mankind to have hope of salvation and a heavenly home, you too must focus and take the steps necessary to achieve the Father’s goal for you. Your focus should be on the following through which you climb the ladder of spiritual financial success one step at a time. Do not attempt to move to the next step until you are firmly established in accomplishing the task on the step you are on.
1. Tell your income what to do. Draft a 6-month giving, saving & investing, and spending plan that shows:
a. Your after-tax income each month.
b. The tithe and free-will offering to be subtracted from take home pay.
c. Each minimum bill payment that must be paid from that month’s income (mortgage, rent, credit cards, car note, etc.).
d. Other miscellaneous amounts that must be taken from the income (groceries, personal money, gas for car, phone, electric, gas, water, sewer service, monthly amount of annual property tax payment, monthly amount of annual home and car insurance premium, monthly amount of annual life insurance payment, 2 or 3 low cost weekend vacations each year, low cost monthly entertainment, etc.).
e. The surplus or deficit left over after all expenses have been paid. If there is nothing left over then you will need to work with your spouse and a close friend who is good at managing his or her money or a financial advisor to determine ways in which you can quickly and substantially reduce current expenses, determine which bills receive priority for payment at the current time, and find other work that can increase your income to get you out of the bondage you are in.
2. Build a $1,000 emergency fund. Once you have surplus, use it to build or establish, in a government guaranteed savings or money management account (MMA), an emergency fund equal to $1,000. This will help you stop turning to credit cards and loans to take care of problems and emergencies that arise in the future. You will get on the right path to using cash instead of burdening your future with debt. There may be reasons why you want to increase this amount before you engage debt elimination. For example, an impending layoff or job loss or medical emergency that will soon require you to pay a huge out of pocket expense, etc.
3. Pay off all non-mortgage loans. Start with the loan with the lowest account balance and once that is paid off then eliminate the one with the next lowest account balance. It is an easier method for tracking debt elimination and the psychological benefit motivates far more people to stick with the debt elimination process because they quickly see debt eliminated. The few people who stick with eliminating debt using the highest finance charge method only eliminate the same amount of total debt in six weeks less time with not much monetary difference in finance charges paid. The only time you break this cycle is if you have an emergency that needs immediate attention and you must use money in your $1,000 emergency fund. Then, you would take the debt elimination cash flow to build the emergency fund back to $1,000 and afterward resume eliminating your debt.
4. Build a $10,000 emergency fund. After all non-mortgage loans are eliminated use cash flow (which now should be much larger) to build your emergency fund to $10,000. For many people this will now represent approximately three-months of your expenses. Again, there may be reasons why you want to increase this amount before you engage the next step.
5. Invest at least 10% of your gross income each month. If your employer offers a 401k type plan that matches your investment up to a certain amount, start investing the amount necessary to get the maximum matching investment from your employer. Over time, begin to put away even more into investment plans, including Roth IRA’s. For the highest long-term growth, you will do well to invest money in an array of no-load low expense stock index mutual funds, such as total stock market, S&P 500, Large Cap, Mid Cap, and Small Cap Index Funds.
6. Pay off your home loans. Use the remaining monthly cash flow toward additional principal pay off until your home mortgage is eliminated. If you have a desire to purchase another home, make it a debt-free faith goal using the equity in your current home and savings you’re able to build after your current home mortgage is paid off. Contentment and deferred gratification pay off, whereas encumbering yourself in debt negatively affects your future.
7. Increase your giving, saving, and investments. At this point, your cash flow will be huge because it includes the amount you used to pay on your mortgage as well all your past debts. Increase your free-will offering as thanks to God for helping you, to a much greater degree, reach the goals of (1) total debt freedom, (2) fund the spread of the gospel, (3) help those in need, and (4) build wealth to maintain these priorities and care for yourself and family.
Funding college for kids is not a top priority when you are in debt-bondage because your kids with much research, applying for scholarships, and work can fund tuition at a reasonably priced school. In addition, when you are in financial bondage your financial plan must operate like airplane emergency landing instructions. Make sure you are safe and secure before attempting to help your children put on safety equipment. While children may not understand it during their young unwise years, later in life they will be grateful you helped them navigate far less expensive avenues for education that does not leave them with school loans and that they will not have to expend massive amounts of money to care for you.
Using the seven-step plan will help you get become debt-free and build wealth that produces enormous disposable income and assets you can use to brighten your future and the lives of other people.
Please pray for this ministry and email me with any questions. May the LORD bless you richly as you follow His plan!
Habakkuk 2:2-4, Luke 14:28-30, Proverbs 21:20, Matthew 23:23, Luke 6:38
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