Deal wisely with your creditors. Don’t try to avoid your creditors, no matter how embarrassed or anxious you might be about your financial situation. Know that your creditors are far more likely to negotiate with you if you keep them informed regularly. Check in with them often and be completely honest about your finances. Offer them a written request that includes a copy of your budget, a list of your debts, and your proposed repayment plan indicating how much you are able to pay each month. Make every effort to do what’s right – paying your creditors back in full.
Use credit cards wisely. Limit yourself to no more than one or two credit cards, and make sure they offer you the best deal in terms of interest rate, annual fees, and incentives. Close extra accounts and destroy the cards as soon as you’ve paid off your debts. Refuse to carry over new balances on your credit cards; charge only as much as you’re sure you can pay off in full at the end of each month. Carefully review your monthly statements to check for errors and to see if your interest rate has been raised (which can happen without notice).
Get out of the car debt trap. Keep your car at least three years longer than your car loan. Pay off your car loan as quickly as you can, and after you make your last payment on the loan, pay the same amount to yourself by putting the money in an account to save for your next car. Buy your next car with cash, and consider a low-mileage used car rather than a new one that will quickly depreciate. Avoid auto leasing. If you must obtain a car loan, don’t automatically go with the dealer’s financing, but check with your bank for a comparative offer. Do all you can to avoid having your car repossessed; try to sell it for at least the loan payoff amount to avoid damage to your credit score.
Limit college debt. Help your children graduate from college with as little debt as possible, so they’ll be free to follow God’s direction for their careers and lives in general. Start as soon as you can to consistently save for their education, remembering that even small amounts will grow over the years through the power of compounding interest. Consider state-sponsored 529 plans, state-sponsored prepaid tuition plans, Coverdell educational savings accounts, or Roth individual retirement accounts for this purpose. Encourage your children to work at least part-time during summers and school breaks to help pay for their college costs. Ask your children to help you explore available grants and scholarships. Consider having your children attend a state school rather than a private one, or attending a community college close to home for the first two years, then transferring to a university. Also consider the educational benefits of military service. If you have more than one school loan, consider consolidating it to lower your interest rate and monthly payment.
