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Financial Hardship seems to be the "norm" for the "Average American" today. As of this writing, Tennessee is the number one in the nation for bankruptcies. One out of every five Tennesseans are filing for bankruptcy. That is pretty alarming is it not?
Note: As 2022 Alabama is the the State with the largest amount of bankruptcies.
Is bankruptcy the only solution to our problems or is it just an easy way out? Bankruptcy is a quick fix for the immediate problem but it is only a treatment for the symptom. There is possibly a root cause that brought you into your present financial straights. Our objective is not a quick fix but to show you ways in which you can fix the root cause and work your way out from under your present situation gradually and patiently. You probably did not get into trouble overnight and you will not get out overnight.
If you are thinking of bankruptcy yourself then please consider the consequences. In a chapter 7 bankruptcy, which is a total wipeout of debts except for any taxes that you may owe, your credit report will show this negative blot against you for 10 to 14 years. It may be very hard for you to finance an automobile if you have to buy another one during that period of time. You may even have trouble opening a checking account at some banks, buying life insurance, or changing jobs. You may be treated like a second-class citizen, as I was.
Even a Chapter 13 bankruptcy, which is a repayment schedule over a brief period of time, will show up on your credit report for seven years. Negative information on your credit report will affect you're renting a new apartment or house because the apartment manager or landlord will always run a credit report on you. You may not be able to finance furniture or anything else on time unless you have cash. CASH! What is that stuff? I've known people that had most all of their debts wiped out with Chapter 7 Bankruptcy and still did not believe that they had enough money left over after paying bills to save anything. Save first and then live off the rest.
You should order a copy of our credit report(s) every year. Credit reporting agencies do make mistakes. You have the right to request an investigation of any adverse information shown on your report. If you've been denied credit within the last thirty days you can get a copy of your credit report for free. You can get a copy of your credit report from the three major reporting agencies for a nominal fee.
Before filing for bankruptcy you may want to consider making an appointment with the Consumer Credit Counseling Services or Cambridge Credit Services. Do a search online and look for a nationwide, non-profit organization that can help you avoid bankruptcy, lower your repayment schedule and lower the interest that you are having to pay.
So what happened? What is the root cause of the "Average American" being so deep in debt? Mom and Dad both work, they both have good jobs, 2.5 kids, a dog, a nice house with a two-car garage, they go to church, and they try to save a little money here and there.
They didn't plan to fail - they just failed to plan. Insurance statistics tell us that less than 3% of Americans are financially well off enough that they can retire at age 65. Most Americans will retire in poverty. Eighty-seven percent of Americans 65 and older are living on a meager income of less than $10,000 per year. Life slips by and before we know it we are approaching retirement age and we have not saved for that day. What are we to do? Develop a plan. Start today!
My mother always taught me that "It is not how much money you make that is important, it is how much you keep". That is so true. Financial difficulties are not just for the middle to lower-income brackets. There are people earning everything from $10,000 to $200,000 per year that are just barely getting by.
So now that we know that we are in a financial mess, how do we get out of it? Well, there is only one way to build a house. Before you do anything you must draw up a set of plans. It is the same with controlling your finances so that you can get out of debt. Are we wanting to get out of debt so we can go out and do it all over again? Heaven forbid! You do not build a house or a large skyscraper overnight. It takes time. Some of us may look at our mountain of debt and feel like it is impossible to overcome but Jesus said, " . . . If thou canst believe, all things are possible to him that believeth'(Mark 9:23), and ' . . . Have faith in God. For verily I say unto you, That whosoever shall say unto this mountain, Be thou removed, and be thou cast into the sea; and shall not doubt in his heart, but shall believe that those things which he saith shall come to pass; he shall have whatsoever he saith. Therefore I say unto you, when ye pray, believe that ye receive them, and ye shall have them. And when ye stand praying, forgive, if ye have ought against any: that your Father also which is in heaven may forgive you your trespasses; But if ye do not forgive, neither will your Father which is in heaven forgive your trespasses." (Mark 11:23-26)
If our blueprint for financial freedom includes faith in God, He will rebuke the devourer and make a way for us to overcome any mountain. Our plan should be written down and specific as to how we are going to accomplish this task. Once you've developed your plan stick to it. Write out some ideas that you could do to put your blueprint for financial freedom into action.
12-Step Plan For Financial Freedom
1. You are not your own, you are bought with a price. Allocate a minimum of 10% of your time each day for prayer and study of God's word. Get to know him. Write down your prayer requests and date them. Give him praise when he answers your prayers. Pray in the Spirit.
2. Have faith in God that his words are true - hold fast to the word and refuse to fear no matter how bad things may appear to be. Do not be moved by what you see. The world says I'll believe it when I see it. The faith-filled believer believes that God is able to do what he has promised long before his eyes see the result. When you plant a seed you know that it will come up and produce 30 to 100 times itself. It does not happen overnight but you know that it will do what it was designed, by God to do. When we plant seeds of faith they too will produce a harvest 30, 60, or 100 times when we wait patiently and let the seed grow to maturity. Take a stand, refuse to fear and God will deliver you.
3. Plan Your Giving. You may not think that you will be able to pay a tenth of your gross income in the beginning. You may feel that you can only pay a tenth of the bring home. You may be so deep in debt that feels you cannot pay either. That's between you and God but I recommend that you pay your full tithe and let God help you with the rest. God expects us to tithe because He only asks for a 10% return on the money that he has given us and he opens the windows of Heaven when we do give. We are managers, not owners of the 90%. If we do not give we are stealing from God. When you know a thief is around you lock your doors and windows don't you. God closes His windows of blessings when we do not tithe We hinder our own financial blessings by not giving.
4. Pay yourself next. Deposit a set amount in an account designated as an emergency fund. I recommend that you save up to a minimum of $1,000. We must plan for those unexpected emergencies. When we are not prepared for them, we will find ourselves going deeper and deeper in debt. Once you've built up your $1,000 take the money you were putting into the savings account each month and apply it to your smallest debt until you pay it off. Start out saving what you can - $2, $5, $10, $50 - just get started.
5. Use the debt snowball method to work your way out of debt. Once you have saved the $1,000, apply that money you were saving to the smallest debt until it is paid off. Then take the amount of money that you were paying on that debt and apply it to the next smallest one and so on until you are out of debt.
6. Once you have done this then start saving again until you have built up your Emergency Fund to around three to six months of your living expenses.
7. Start a savings program for other purchases, i.e., a car, a house, furniture, or whatever needs that you may anticipate.
8. Take on a second job. The right part-time job can easily bring in an income that can make a major difference in eliminating debt.
9. Adjust your priorities. If you are like most people you spend money on things that you do not really need. Or, you do not really manage the money you do have; you just spend as expenses come up. Do not feel bad about this. We have all done it. It takes a little more time to develop a management attitude about your spending habits, but it's essential that you "get control" of your spending. Set up a budget. Put a dollar limit on what you will spend for each item. We will have a complete lesson on that later. Adjust your lifestyle. Along with controlling your money comes the matter of priorities. And along with setting priorities comes one tough rule of life: you can not have everything. If you want to achieve financial freedom, you may have to make sacrifices for a period of time.
10. A part of the budgeting process is distinguishing between what you need and what you want. For example, you might need a second car, but you might want a Cadillac. Too often purchases, even major ones, are made on the basis of want. If you're really ready to get serious about your financial future, you may have to postpone some of your desires and wants. It's a kind of trade-off - do without something now so that you can have more later. If you usually stay a week on out-of-town vacation trips, trim the time away to three days and plan enjoyable family activities at home for the balance of the time.
11. Give! Not only does God expect us to tithe but he expects us to be generous with others. We do not have to give just money. We can give of our time, talents, and abilities. This is a way that God provided for us to build treasures (riches) in heaven. (Matthew 6:19-21) "Give and it shall be given unto you; good measure, pressed down and shaken together, and running over shall men give unto your bosom. For with the same measure that ye mete withal it shall be measured to you again. I have discovered the true secret to wealth, success, and happiness. God's will for us is to be prosperous and in good health (3 John 2). If we are beaten down, broke, and in poor health are we in God's will? No, I don't think so. The enemy wants you there so that you will not be an effective witness nor will you be able to give to those in need. Does God get any glory when his children are buried in debt and just barely get by? No! God gets the glory when his children have overcome the love of money and give above and beyond the tithe. This is when God pours out his blessing on His children. God's perfect will for you is to have a surplus so that you may give away your money (expecting nothing in return). When we do this God multiplies it back to us some 30, 60, or 100 times what we have given so that we can do it again and again. Can you see the "Big Picture"? When we, the church, finally get hold of this we will virtually eliminate all debt in a short period of time. Start today! Even if you are in debt. Give something to someone else that is less fortunate than you and you will see miracles start happening in your life. Be diligent, persistent, and patient and you will see God move.
12. Re-align your assets.
1. Get a check-up on your auto insurance, life insurance, health insurance, homeowner's insurance, and renter's insurance. Financial Aid For College
2. Savings and investment strategies
3. Reduce personal expenses, i.e., groceries, eating out, utilities, telephone bills, clothing, etc.
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Our Next Lesson is Chapter 3 "Does God Want Me To Be Financially Independent?"
