If you are in debt distress you must resolve to get out of debt now before it's too late. In reality, getting out of debt is much harder than getting in. Interest charges have been added each month to your outstanding debts, so the amount of money needed to get out of debt is that much greater. You will need a sound debt-reduction plan.

Ten steps to reducing your debt:

  1. Try to determine the source of the problem. How did you get into this situation? Get God involved from the start by asking Him to reveal any spiritual shortcoming that may have contributed to your debt distress. Pray for humility, forgiveness, and the strength to overcome your areas of weakness.

  2. Find those who can encourage and support you. If you are married, have a family discussion on the sacrifices that must be made and the purpose of those sacrifices. Try to establish a spirit of teamwork.

  3. Create a spending plan. A crucial aspect of this plan is determining where you want your money to go.

  4. List all your debts. This will help define the problem. List each of your loans, how much you owe, the minimum monthly payments, and the interest rate on each loan.

  5. Be ready for a lifestyle change. Try to create a spending plan that has no more than 70% of your take-home income going to daily living expenses and the rest to giving, emergency savings, and debt reduction. This will probably represent a major change in spending patterns and perhaps even lifestyle. If your income will not allow you to develop a viable debt-reduction plan, you have three choices: increasing income, reducing lifestyle, or spending less on the present lifestyle.

  6. Consolidate several debts into one large loan. A consolidation loan doesn't eliminate your debt. But it does allow you to pay off all or many of your debts and start fresh with a new one. This will work only if you have the discipline to avoid additional debt.

  7. Consider one-time approaches to increase income for extra payments on loan balances. Work some overtime, hold a garage sale, or sell stock. However, don't borrow money from your retirement plan.

  8. Adopt laddered payments. Create a plan that allows you to make all of your minimum debt payments and still have funds left for debt reduction. Apply that monthly surplus to the minimum payment of your smallest loan. Keep doing this every month. Eventually you will retire that loan (one rung of the ladder) and be able to step up to the next smallest loan balance. This will give you the momentum of success that you can build on.

  9. Contact credit counseling agencies for other creative approaches. Try Debt Zapper Kit from Bankcard Holders of America (Phone: 703-481-1110) or Debt Counselor of America (1-800-680-3328 or www.dca.org).

  10. Whatever you decide to do, do it today.

  • NOTE: Be sure to support the 10 steps with these seven biblical principles:

    1. Prayer (Phil. 4:6)

    2. Seeking wise counsel (Prov. 15:22)

    3. Planning (Prov. 16:9)

    4. Accountability (I Cor. 4:2)

    5. Discipline (Prov. 13:11)

    6. Faithfulness (Prov. 16:3)

    7. Thankfulness (I Thess. 5:18).

From Financial Freedom: Seven Secrets to Reduce Financial Worry by Ray Linder, copyright (c) 1999. Used by permission of Moody Press, Chicago, Ill., 1-800-678-6928.

Ray Linder is founder and CEO of Family Financial Concepts and the author of Making the Most of Your Money. A popular speaker, he also serves on the ministry staff of Cornerstone Chapel in Leesburg, Va. He and his wife, Christine, have two daughters and live in Sterling, Va.