Financial Freedom Series: The 7-Step Debt Attack Strategy

Welcome back to our Financial Freedom Series, where we’re looking into God’s Blueprint for Building Wealth and Managing Your Money Well!

We dive into biblical principles and cutting-edge money management wisdom to help you…

• Honor God with your money
• Build wealth
• Shrink your debt
• And build toward financial freedom

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

“But remember the Lord your God, for it is he who gives you the ability to produce wealth.” (Deuteronomy 8:18)

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

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

“I will guide you along the best pathway for your life. I will advise you and watch over you.” (Psalm 32:8)

So many people are…

• Battling to make ends meet, 
• Living above their means,
• Cash-strapped,
• Debt-ridden,
• Just trying to survive,
• Going through the motions, and
• Disillusioned with life.

Over the last few weeks, we have looked at various aspects of DEBT.  

So far, we have… 

• Looked at the horrific statistics on debt,
• Encouraged you not to give up but to surrender your debt to God,
• Looked at the difference between good debt and bad debt,
• Encouraged you to face your debt and examine your current financial position,
• Motivated you to act and deal with your debt,
• Shared how you can avoid the debt trap,
• Looked at the consequences of being in debt,
• Shared 21 practical steps to break the debt cycle and build toward financial freedom.

Today, we will start STEP 1 in our 7-STEP DEBT ATTACK STRATEGY. 

I can tell you that this strategy works. Over the years, I have heard many testimonies of people who were deep in debt and who applied this strategy and could settle their debt and turn their financial affairs around. Moreover, most who used the strategy ended up settling their debt faster than they could have imagined. Many of these once stressed-out people are now on the road to financial freedom while honoring God along the journey. 

The 7-STEP DEBT ATTACK STRATEGY will help you implement a workable solution to obliterate your debt and regain control over your financial affairs.  

You can wipe out your debt, and you can also build towards financial freedom.  

When in debt, it can feel like you are leaking money.  

You can turn this around! You can discard the old bad habits of debt and start a new lifestyle, building towards financial freedom.  

Meet Sino and Sarah 

I want to introduce you to Sino and Sarah. I will use their example of how you can deal with your debt.

I am sure that you can resonate with Sino and Sarah’s position. Please do not get too fixated on their numbers. You may be earning way more or considerably less than they are, but we will use their example to show you how to deal with your debt. 

How to Stop the Rot… 

Debt is like any other trap. It is easy to get into and many think it is difficult to escape from. But I have good news for you: If you are prepared to take an honest look at your situation and implement a plan, with God’s help, you can blow up the debt trap and build toward financial freedom.  

My advice to you is the same advice I would give Sarah and Sino…

• Face your fears.  
• Call a family meeting.  
• Draw a line in the sand.  
• Invite God in.  
• Start the process of turning it all around.  
• Choose to get out of debt and build towards a fruitful future.

7-Step Debt Attack Strategy

Step 1: Know Your Numbers!

To attack your debt, you need to know your numbers and have a clear view of your overall financial position.  

Once we know where you are, you can set up a strategy to attack your debt.

I want you to EXAMINE 3 numbers… 

When you know what your overall ASSETS are worth and what your DEBT amounts to, you will know what your WEALTH PORTFOLIO looks like. 

WEALTH PORTFOLIO (CASH FLOW) = ASSETS LESS YOUR DEBTS 

When you know what is happening in your budget, you can clearly understand what you are EARNING and where you are SPENDING your money. 

BUDGET = YOUR INCOME LESS YOUR EXPENSES  

So, let’s break it down… 

Please list all your assets. This includes everything you have that has a value that can be converted to cash.  

Once you know your assets and their value, you can possibly free up some cash to pay off your debt. 

Draw up an inventory of your assets… 

• You need to draw up an inventory of everything you own. 
• Including a full list of your savings and investments and a complete list of all your possessions is essential.  
• You should also include any unused goods possibly gathering dust in your cupboard or garage.
• Do you possibly have any assets that you could consider selling? If so, you could sell your unwanted goods, which, in turn, could free up some cash flow that could be used to wipe out some of your debt.  

Let us look at Sarah and Sino’s assets… 

Sarah and Sino do not have many assets, but they have an old bike in the garage that is gathering dust. They have decided to sell it on gumtree.com to free up some cash flow and attack their debt. 

You need to know what you are earning (flowing IN) and where you are spending your money (flowing OUT).

Draw up an overview of your income and expenses… 

• You need to set up a budget, including all your income and expenses. 
• Ensure you have a running total to see whether you are in a credit or debit situation.
• Record everything you spend your money on (even your daily coffee and snack at the coffee shop).  
• Try to get into the habit of tracking your spending as it happens. Please write it down in a notebook or store it on a computer. You can also make use of an app on your phone (try to use a format that works for you).

Let’s take a close look at Sino and Sarah’s budget…

In a nutshell, Sarah and Sino are earning R40,000 p.m.

Their monthly expenses are currently at R47,520 p.m.

They are, therefore, running at -R7,520 p.m. 

This is causing significant stress, and their debt seems to be spiraling out of control. But I encouraged them to take a deep breath. They are facing their fears, and there is a way out! 

“Annual income, twenty pounds; annual expenditure, nineteen pounds; result,  happiness. Annual income, twenty pounds; annual expenditure, twenty-one pounds; result, misery.” – Charles Dickens 

You need to get the complete information on all your debts.

You need to know… 

• What do you owe? 
• What is my term on the debt? 
• What is the interest rate? 
• What is the minimum repayment I need to make? 

List all your debts… 

• List all your debts on a schedule. 
• Arrange them in descending order, smallest to largest. 
• You need to take an honest look at your debt.  

Let’s look at Sino and Sarah’s debts…

 A Quick Re-Cap 

Step 1: You need to EXAMINE your… 

• ASSETS 
• BUDGET 
• DEBT 

Once you know your numbers, we can go on to STEP 2. 

In STEP 2, you will be given the tools to analyze your situation and devise a few practical solutions to attack your debt. 

Next week, we will examine a few innovative ways to earn more and cut unnecessary expenses from your budget. This will help you develop a strategy to wipe out your debt as quickly as possible. 

Next week, you will see that it is easier to get out of debt than you realize.  

If you follow the 7-STEP DEBT ATTACK PLAN, I know you will be surprised at how much debt you can eliminate. 

If you can measure it, you can manage it. 

It is time to wipe out your debt! It is time to break the debt cycle, and it is your time to build towards financial freedom.  

Don’t be an ostrich. Don’t bury your head in the sand. Face your debt! Examine your numbers. This is the starting point to turning your financial affairs around for the good!

This week, I want to encourage you to do some homework. You need to know your numbers!  

1. ASSETS 
2. BUDGET 
3. DEBTS 

Next week, we will have you ANALYZE your situation and implement a STRATEGY to help you DECLARE WAR on your Debt and BREAK THE DEBT CYCLE. 

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