In 2005 my wife and I were in the middle of a financial catastrophe that we created for ourselves. We were $70,000 in debt (not including our mortgage) and the financial strain was having a profoundly negative impact on our family and our ministry.
Then we made a drastic change. At the urging of my father, we enrolled in Financial Peace University (FPU), a program created by Christian money guru, Dave Ramsey. It was a game changer!
Within 3 years, my wife and I became debt free and began saving for the future. I cannot stress how important this was for our marriage, our family, and our ministry. I highly recommend FPU for anyone that is struggling with money, however, if you don't have the time to attend the class then here's are six steps that can help lead you to financial freedom.
1 – Make A Decision…No More Credit!
In Romans 13, the Apostle Paul takes time to stress the importance of paying what you owe. He shares this encouragement within the greater context of paying government taxes but the principle can be expanded. “Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.” (Romans 13:8)
When it comes to spending money, it's simple. Don't borrow. If you want to change your financial future you have to change your mind. You have to decide that you will never borrow money again. Period. Get rid of those credit cards. Say no to those credit offers from Target. Shred the endless credit card applications that you receive in the mail. This type of hardened resolve is what will provide the strong foundation for steps 2-6.
2 – Make A Budget and Stick To It
I love the story that Jesus tells in the gospel of Luke. He says, “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?” (Luke 14:28) Of course, Jesus is actually talking about the cost of discipleship, but there is an obvious financial implication in this parable. A half-built tower sends a message to all who pass by–the man failed to budget properly.
If you desire financial success you need to know how much you can spend each day, each week, and each month. That's called a budget. A good budget will help you reach your goals and most importantly a budget will inform you when to stop spending.
A couple things to remember when starting a budget. First, it won’t start working right away. It takes time— at least a few months—so don’t get discouraged. Second, simplicity is good. Sometimes the best way to start is with a pencil, pen, and a yellow pad. Fancy software based budgets and apps tend to overcomplicate the process and cause failure. Keep it simple!
3 – Make A Backup Plan
Budgets can only handle the costs that you are expecting. Unexpected costs, or emergencies, will break your budget quickly. Dave Ramsey recommends putting $1,000 in an emergency fund in order to cover emergencies. If you can’t do that right away, make at least 5-10% of your budget available for emergencies.
In Proverbs, Solomon illustrates this idea by pointing out the diligence of the ant. He says, “Though the ant has no ruler or chief, she prepares her bread in summer and gathers her food in harvest.” (Prov 6:8)
The ant knows that winter is coming and that means she has to save for a time when disaster is imminent. For this tiny creature, emergencies are regularly occurring events. It’s the same for us. We should expect emergencies too. Tires wear out, people get sick, jobs can be lost, etc.
4 – Pay Off Your Debt
Drive downtown in any major city and look at the tallest buildings. What do they all have in common? They are almost always banks. Banks are in the business of lending money and let me tell you, business is good! At an average interest rate of 16.31%, banks know that you are a great investment. As long as you are someone else’s investment you will never get ahead.
According to The Motley Fool, the average American family carries more than $90,000 not including mortgage debt. That’s an incredible statistic. Even if those numbers are inflated by half it’s still a big problem.
When most people look at their mountain of debt they say, “I’ll never be able to pay that off.” But it’s not true. What you need is resolve and momentum. Cut back on all unnecessary expenses. Your mobile plan, cable bill, restaurant tab, and entertainment costs are good places to start. Remember this, you don’t have to give up the fun stuff forever, you just have to give it up while you are paying off debt. You can do anything, no matter how difficult or painful, if you know you don’t have to do it forever.
5 – Work, Work, Work
My friend has a bumper sticker on his car that says, “I owe, I owe, so off to work I go.” It’s funny and it’s true. The key to getting out of debt and staying out of debt is to work really hard. Proverbs 14:23 says, “In all toil there is profit, but mere talk tends only to poverty.” It’s time to stop talking about making a change and get to work.
Changing your financial future means working harder than you ever have before. Ask yourself, can I get extra shifts? Get an extra job? Get two extra jobs? People do it all the time. Of course it’s not fun but it won’t last forever.
Plus, the extra effort is good for you. When you realize how much work it takes to get out of debt on your own, you be less likely to climb into debt again. It’s important to “feel the pain” of your own bad mistakes. You dug the whole, you’ll have to climb out of it on your own.
6 – Set Aside God’s Money First
Truthfully, this is the most important factor when it comes to financial freedom. It’s something you need to consider doing first–before you take any other action financially.
How you spend your money says a lot about who you are spiritually. When you spend everything you have, borrow more, and pile up a load of debt, you’re being less than a good steward of what God has entrusted to you. Look no further than Jesus’ parable of the talents for instruction in this matter (Matthew 25:14-30).
Everything, and I mean everything belongs to God (Psalm 24:1) and he has blessed each of us with a small portion of it. Are you able to give back to him—first? Are you able to say, “Yes Lord, I trust you enough to give some of my blessing back to you, knowing that you’ll provide for me no matter what?”
When you can cheerfully give to God first you’ll unlock the secret to financial freedom. See, wealth is not the acquisition of lots of money, it is the freedom from having to worry about acquiring a lot of money. See the difference?
In conclusion, let me say this. I know it’s hard. I’ve been there. At one time my life, family, marriage, and ministry were on the brink of collapse. But God changed me through the power of his word. If I did it, you can too.