Free Money Finance just made a post that has me thinking about how my readers can free up room to tithe.
I won't go into the biblical reasons for tithing in this post, but I will try to cover some different strategies I've seen used to get people to the 10% mark.
Strategy 1: The BIG CHECK
This method is probably the least Biblical since you are not giving of your firstfruits. Rather, when you do your direct deposit you have 10% go into a separate account that you don't normally look at. At the end of the year you write a check for the account balance, and you've tithed your 10%. This one is the easiest to adjust your lifestyle to though, since you don't see the money ever.
Strategy 2: Month By Month
If you have a budget that tracks spending, this method is fairly easy. At the end of the month move the decimal on your total income to the left one space, that is how much you write the check for. EASY!
Strategy 3: Every Week
Same as month by month, but this time you do it with each paycheck.
Strategy 4: Help I'm in a debt crisis! I can barely afford 1%!
Now would be a great time to reevaluate your budget or spending habits. Remember, what is more important, God or eating out one more night a week?
Tithing is actually very simple, and it puzzles me why people find it so hard. If you just simplify your life, it should become easy to live off a smaller and smaller percentage of income, even now.
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Sunday, June 24, 2007
Monday, June 4, 2007
Eliminate the Debt Factor
I will start with a basic situation first with this one to show how crippling debt can be.
Imagine a family with 5 credit cards, and 2 car loans. We'll say that each card has a $1000 balance and minimum payments of 2% or $20 to each card every month, so total payments of $100 a month for the credit cards. The cars both have monthly payments of $300, for a total of $600, and a grand total of $700 a month.
$700 a month in minimum payments, and this doesn't talk about a mortgage or student loans which many people will also have.
Now the average family in America makes $40000 a year, so this family with $700 in debt is spending about 21% of it's income on minimum payments. Everyone should ask the question, What could I do with that extra $700 a month?
How do I get rid of that debt? after all I'm paying the Minimum.
The key is to pay as much more than the minimum as you can comfortably afford, lets say an extra $200. Simultaneously you stop using credit cards. This prevents your debt from increasing. With that $220 ($200 + $20 minimum payment) a month you will have one card paid off in 5 months. Now you have a spare $220 to put towards the next card $240 will pay it off again in 5 months with some change left over. Your third card gets paid off in 4 months with change left over and so on.
Reward yourself after you pay off a major debt. Take the family out to eat or something, thank them for their efforts. It is important that they feel good about eliminating debt so they don't make the same mistakes you did.
Once you have all your debt paid off, you are in a great position to save, set up a CESA (Coverdell Educational Savings Account) for your kids, or set it aside in a money market for a downpayment on a new home, or make an Emergency Fund. The more money you can put towards the debt, the faster it will be gone, consider cutting back on shopping, eating out, cigarettes, and alcohol if you want to see the most dramatic results.
Imagine a family with 5 credit cards, and 2 car loans. We'll say that each card has a $1000 balance and minimum payments of 2% or $20 to each card every month, so total payments of $100 a month for the credit cards. The cars both have monthly payments of $300, for a total of $600, and a grand total of $700 a month.
$700 a month in minimum payments, and this doesn't talk about a mortgage or student loans which many people will also have.
Now the average family in America makes $40000 a year, so this family with $700 in debt is spending about 21% of it's income on minimum payments. Everyone should ask the question, What could I do with that extra $700 a month?
How do I get rid of that debt? after all I'm paying the Minimum.
The key is to pay as much more than the minimum as you can comfortably afford, lets say an extra $200. Simultaneously you stop using credit cards. This prevents your debt from increasing. With that $220 ($200 + $20 minimum payment) a month you will have one card paid off in 5 months. Now you have a spare $220 to put towards the next card $240 will pay it off again in 5 months with some change left over. Your third card gets paid off in 4 months with change left over and so on.
Reward yourself after you pay off a major debt. Take the family out to eat or something, thank them for their efforts. It is important that they feel good about eliminating debt so they don't make the same mistakes you did.
Once you have all your debt paid off, you are in a great position to save, set up a CESA (Coverdell Educational Savings Account) for your kids, or set it aside in a money market for a downpayment on a new home, or make an Emergency Fund. The more money you can put towards the debt, the faster it will be gone, consider cutting back on shopping, eating out, cigarettes, and alcohol if you want to see the most dramatic results.
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