Dealing with debt effectively

Just about 6 years ago in the state of Maharashtra, India, an average of 10 suicides were committed by farmers every day. Most of these farmers killed themselves by drinking pesticides due to their inability to repay loans mostly taken from landlords and banks.

Since the 1990s, farmer suicides in India has been a national catastrophe of farmers committing suicide. Between 1995 to 2013, the National Crime Records Bureau of India reported that a total 296,438 Indian farmers had committed suicide as a result of debt.

This statistic may appear startling but that is the situation in many countries. It shows that debt is a problem, a problem so big that it affects everything about you.

While debt is a common problem in our society, it has a way of growing faster than we expect. We live in a debt-ridden society where debt is considered normal. “Don’t worry,” people tell us. “Everybody has it!” ‘‘Even the government owes’’.

It is said that debt is just like a trap – it is easy enough to get in but hard enough to come out.

We are also bombarded with numerous credit offers that portray the message that we cannot live without loans. But before we know it, debt starts weighing us down. It keeps us up at night. It causes us to spend more time worrying than praying. It causes fights in our relationships and marriages. It just isn’t healthy.

How Serious Is the Debt Problem?

According to Jesse Jones, ‘One of the greatest disservices you can do a man is to lend him money that he can’t pay back’’. It is a fact that debt puts you into slavery and bondage. Even the Scriptures confirm this.

Proverbs 22 :7 says ‘‘The rich rules over the poor and the borrower is a slave to the lender.’’ Again, relationship statuses change when debt step in.

The moment debt comes in, a friendly relationship turns to a master-slave relationship and the creditor always has the upper hand over the debtor.

According to the great French writer and statesman Victor Hugo, ‘’a creditor is worse than a slave-owner; for the master owns only your person, but a creditor owns your dignity, and can command it.’’

Excessive debt is perhaps the worst part of poverty. It is just disheartening what debt can do.
Debt brings stress in life.
Debt badly affects your relationship.
Debt can cause you to lose your hard-earned property.
Debt can bring about disgrace.
Debt can undermine your integrity and reputation.
Debt can turn an honest man into a liar.
Debt brings sadness to your soul.
Debt can kill.

What Leads People into Debt?
1.Unwise or reckless borrowing
To borrow in itself is not a bad thing though it is always better not to. There is debt financing which is a source of raising funding for business. Lots of businesses thrive and flourish with credit.

There is a good debt and a bad debt, and the two are not the same. A good debt is a well-managed financing that provides value to the individual and can be easily repaid. In effect, a good debt is a debt with a good plan. However, a bad debt is one that cannot be realistically repaid.

A bad debt provides very little or no value to both the debtor and creditor. Whether a debt is good or not largely depends on what you take the credit for, when to take it and how to manage it.

2.Carelessness
Being careless about your spending and your business can plunge you into an unimaginable debt burden. This is especially so when you take credit supplies without a reasonable budget.

3.Buying what you cannot afford
Pursuing a lifestyle that you cannot afford will push you into debt. A lifestyle that is beyond your pocket can lead you to cutting corners and borrowing to keep up. The first step of living a debt-free life is to know what you can and cannot spend.

4.Get-rich-quick mentality
Wealth is not built overnight and certainly not by shortcuts. Rather, wealth is built progressively. The mentality to get rich quickly will lead you to make highly risky decisions without thinking them through properly.

This brings about the tendency to use other people’s money with the aim of making a quick return to pay back. More often, when this does not materialize, their hopes are dashed and they run into debt which in turn puts a lot of mental stress. And the cycle continues.

5.Poor planning
Poor financial planning can lead you to debt. It is important to properly plan before you embark on any project or activity that requires financing. If you do not plan well and there are cash flow problems, it may lead you to debt. An example of this is mortgage repayment

Co-signing a loan can also put you in a needless debt situation you never planned for. As a rule of thumb, do not guarantee loans for people you do not know very well in terms of their financial discipline and personal integrity.

6.Greed also propels multiple borrowing.

How to Get Out of Debt
Make a Decision
1.You have to decide not to be indebted to anyone and for that matter pay off all your debts. You can actually avoid debt situations if you make up your mind too.

You’ve got to face the music! If you've been trying to make your bills vanish by throwing them away unopened, then you are heading for more trouble. You must own up to your mistakes and make a conscious decision to correct them.

2.Have a written plan
List all the people/institutions and how much you owe them. Besides, it is important to prioritize. Not all debts are created equal. In making your plan, you'll need to establish a hierarchy among your debts and make a plan of attack.

You target the high-interest debts first; non-deductible, low-interest debts next; and tax-deductible debts last.

3.Determine your income – calculate how much income you make per month.
4.Focus on essential living expenses and cut down all needless expenditure. You got to save more to pay your debt.
5.Practically determine how much you can pay regularly.
6.Determine the appropriate time to pay off.
7.See your creditor(s) to renegotiate interest & penalty, if possible.
7.Commit yourself to the payoff plan.
8.Avoid taking further loans/credits.
9. Avoid multi-borrowing.
10. Avoid consumer loans if you don’t have a sure regular income.
11.Avoid borrowing to pay off another loan no matter the pressure.
12. Establish your tithe.
13. Seek to generate extra income
`14. Stay focused and positive.
15.Commit yourself to prayer for God’s grace to help you overcome it.