Debt – consequences and solutions

Debt is a huge problem for many throughout the world. Statistics show that millions of consumers are in arrears on their debt repayments. Debt erodes cash flow. It prevents one from being able to save. The bondage of debt seems to crush dreams and leaves many feeling overwhelmed and stressed out.

“The rich rule over the poor, and the borrower is slave to the lender.” (Proverbs 22:7)

“The wise man saves for the future, but the foolish man spends whatever he gets.” (Proverbs 21:20)

You do not have to face your debt alone. God wants to do life with you.

Psalm 34: 4-6 says, “I sought the Lord, and he answered me; he delivered me from all my fears. Those who look to him are radiant; their faces are never covered with shame. This poor man called, and the Lord heard him; he saved him out of all his troubles.”

I want to encourage you to surrender your burdens to God.

You can squash your debt burden and build towards becoming financially free.

Today we want to share what the CONSEQUENCES ARE TO BEING IN DEBT and offer a few practical SOLUTIONS TO DEAL WITH DEBT.

Debt is often brought on by poor discipline and bad spending habits.

The consequences of being in debt

Debt leads to pressure, stress, and much heartache.

If you are in debt, you may find your income being quickly depleted after paying off debt, thereby leaving you with no money at the end of the month to put food on the table. You may feel like you are putting your money into pockets full of holes.

There are serious consequences if you don’t meet your debt repayments. If you default on your repayments, your creditors may have the right to repossess your home/car and to sell it on auction to the highest bidder. They will not necessarily be interested in selling it at market value, but will try to get as close to the outstanding loan debt. Any shortfall, and interest and administration fees will be for your account. This could ruin you financially and result in you being sued for the outstanding debt, resulting in additional cost to you (interest, legal fees, etc.).

If you don’t pay your bills, you may also receive a bad credit rating. You may be blacklisted or receive a judgement that will also affect your ability to get credit in the future.

Furthermore, if you don’t pay your bills, you may be deemed dishonorable. If you want to be a person of integrity, you should manage your money well.

“The wicked borrow and do not repay, but the righteous give generously.” (Psalm 37:21)

Another consequence of debt is that you will have no savings and therefore no cash flow to bail you out in the event of an emergency.

If you get into debt and you are unable to pay, you could be forced to sell assets in order to settle your debt.

You could also face bankruptcy and be liquidated.

If you miss your insurance and healthcare premiums (due to their debt woes) and then have an accident, your claim may be repudiated due to non-payment.

• Imagine your car is stolen and you don’t get paid out because you have missed a payment
• Imagine if your child can’t have their operation because your healthcare contributions are in arrears
• or worse, your life insurance policy lapses due to non-payment and you die leaving your wife and kids destitute.

Furthermore, debt can leave you feeling defeated and can rob you of your peace and joy. Debt adds pressure, and seems to stop people from daring to dream. It is difficult to dream and thrive, when one is stuck in debt and battling to survive.

“A cheerful heart is good medicine, but a broken spirit saps a person’s strength” (Proverbs 17:22)

Debt causes bondage.

The consequences of being in debt can be serious.

It is time to break the debt cycle. It is time to declare war on your debt. Be disciplined. Debt can be a major problem for most people. It is like a “financial cancer”, if you don’t get it treated early it could have severe consequences.

Get determined to say NO to debt. Set up a new plan. Dare to dream. It is time to put a plan in place to squash your debts.

Solutions to deal with debt

I want to share a few practical solutions on how to deal with your debt. If you apply a few of these simple tips, I am sure that you will be able to shrink your debt and set yourself on a new road towards financial freedom.

1. GET DETERMINED TO DEAL WITH YOUR DEBT

Deal with your debt. Be disciplined. Face your fears. Don’t bury your head in the sand and pretend you don’t have a problem. Draw a line in the sand. Enough is enough! Look your debt in the face and make the decision to manage your money differently. You cannot do the same thing the same way and expect a different result. Manage your money better. Do something differently. If you want change, you must do something about it.

2. BUDGET, BUDGET, BUDGET…

• Budget – if you can’t afford to buy it for cash, don’t buy it. You need to live on less than you earn.
• Budget – if you are spending more than you are earning you are in trouble.
• Budget – if you need a loan to buy a home, make sure you can afford to make the repayments especially if the interest rate increases. Live within your means and build a buffer into your budget.
• Budget – plug spending leaks. You will be surprised if you keep a record of everything you spend.

3. SAY NO TO DEBT…

• Avoid taking out new debt, like store cards, etc.
• Stay away from “interest free” schemes – it is merely a ploy aimed at getting you to think that you can ‘buy now and pay later’. If you can’t afford it now, how will you afford it later?

4. DARE TO BE DIFFERENT…

• The average person just “follows the crowd” and is cash strapped and debt ridden. Choose to be different. Instead of getting deeper into debt, consider doing things differently.
• Build a positive cash flow. It will take the pressure off.

5. DREAM AGAIN…

When in debt it is easy to want to give up and quit.  It is easy to let go of your goals and aspirations when times are tough. But don’t stop dream.

Stop. Take a step back. Look at the big picture. Get perspective.  Lift your weary head.   

“Where there is no vision, the people perish” (Proverbs 29:18)

“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty” (Proverbs 21:5)

6. SAVE FIRST…

• Save – if you want something that badly, then save for it and pay cash.
• Save first, and then only spend what is left over. Most people spend first and then have good intentions of saving what is left over. The problem is that there is never anything left over to save.

7. SET UP A FINANCIAL PLAN…

Although we all know that we should have a FINANCIAL PLAN in place in order to manage our finances, the reality is that many people don’t have a plan in place. Set up a strategy to deal with your debt.

I would suggest that you:

• Get determined to deal with your debt
• Set up a budget
• Say no to debt
• Dare to be different
• Dream again
• Save first
• Set up a financial plan

Debt puts you in bondage, and short-term satisfaction by buying something on credit may leave you broke, debt ridden and stressed out over the longer term. Before you buy items you cannot afford, ask yourself – is it worth it?

When it comes to debt, be smart. If you are seriously planning to get out of debt, and to stay out, then you need to plan how to use your finances wisely.

You can get rid of a few bad habits and introduce a few new effective habits that can help avoid the debt trap and turn your financial affairs around!

Above all, look to God for help. He wants you to bother him with your problems. He wants to walk the journey with you …

God can supply your needs

In Philippians 4:19, Paul assures us that “God shall supply all your needs according to His riches in glory by Christ Jesus.”

According to Isaiah 43:19, God can “make a roadway in the wilderness” and God can even turn your “desert into a life-giving river”.

Give God your burdens

1 Peter 5:7 says, “Cast all your anxiety on him because he cares for you.”

Ask God for help

In Matthew 7:7-11, Jesus told us, “Ask and it will be given to you; seek and you will find; knock and the door will be opened to you. For everyone who asks receives; the one who seeks finds; and to the one who knocks, the door will be opened.

Are you lost?

Is the load too much to bear?

Have you drifted away from God?

Is your eternity at risk?

God loves you. He paid a huge price for you. He wants you to surrender your burdens to him. He wants to forgive you. He wants to help you.

Come back to God. You can start afresh.

Let’s pray

Dear Heavenly Father. I give you my life along with my burdens and failures. Lord Jesus, I ask you to be my Savior. Be the central part of my life. Today I put my life in your hands. Lord, please help me to manage my money well and to live a life that pleases you. I ask you to please pour out your favor on my life. In Jesus name. Amen.

Wrap up

Deal with your debt. You can fix your finances. With God at your side and with some discipline, you can build good financial habits that can help you to break the debt cycle and help you to build towards a brighter tomorrow.