Responsibility and Accountability - Paying Off Credit Card Debt
Wise and Faithful Management
The Christian concept of stewardship is rooted in the belief that everything we have, including our time, talents, resources, and creation itself, ultimately belong to God. We are caretakers entrusted with managing and using these God-given gifts in a manner that aligns with His purposes and glorifies Him.
Responsibility has to do with how we use and allocate the resources God gives us to manage. Accountability is about fulfilling our commitments to God, ourselves, and our loved ones. This includes wisely and faithfully managing our finances, knowing that we will one day be called to give an account of our stewardship. 1 Corinthians 4:2 (AMP) says,
In this case, moreover, it is required [as essential and demanded] of stewards that one be found faithful and trustworthy.
In today’s consumer-driven society, it is not uncommon for individuals, including Christians, to find themselves burdened with credit card debt. According to LendingTree.com, the average credit card interest rate in America today is 24.56% - the highest since LendingTree began tracking rates monthly in 2019.
[Case Study: I have clients with a $9,000 balance on a credit card currently charging 20% interest. In that scenario, they incur $1,800 of interest every year on that balance—or $150 per month of expense. Think how much less their financial stress could be if they had that $150 per month as extra to put toward their expenses in these high-inflation times rather than losing it to the credit card company!]
With interest rates this high, credit card debt can especially hinder our ability to allocate our resources effectively, so it is important for us to successfully manage and eliminate our credit card debt.
Faith-Based Underpinnings
The road to paying off credit card debt begins with acknowledging the spiritual implications of our indebtedness. While the Bible never explicitly prohibits debt, it does emphasize the need for responsible financial stewardship and cautions against debt and the entrapment it can create.
Proverbs 22:7 states:
The rich rules over the poor, and the borrower is the slave of the lender.
Broadly speaking, it may not be too much of a stretch to interpret that as a call for prudence and conscientious management of our resources. Are you ready to start down the path of reducing and eventually eliminating your credit card debt? Here are 11 steps to get you on your way.
Practical Steps
1. Seek God’s Guidance: As believers, it is essential to seek God’s guidance in all aspects of our lives, including our finances. Begin by praying earnestly about your financial situation and asking for wisdom, discipline, and strength to overcome the challenges ahead.
2. Assess Your Debt: Take an honest look at your credit card debt by gathering all relevant information such as outstanding balances, interest rates, and minimum payments required. This assessment will provide you with a clear understanding of the big picture concerning your debt and will be useful in helping you to develop a realistic plan moving forward.
3. Create a Budget: One of the most effective ways to pay off debt is to create a realistic budget. A budget helps you prioritize your spending, identify areas of excess, and allocate more money toward debt repayment. Start by listing all sources of income along with necessary expenses such as housing costs, utilities, groceries, and transportation expenses while leaving room for savings and your emergency fund.
4. Cut Expenses: To accelerate debt repayment, it may be necessary to make short-term sacrifices and cut back on non-essential expenses. Consider reducing discretionary expenses like eating out or entertainment costs temporarily until your debts are paid off. Redirect the saved money toward repaying your credit card debt. Remember, these adjustments are temporary measures to achieve long-term financial freedom. Think back to the case study mentioned earlier. To me, the long-term result of having $150/month more to spend makes cutting some discretionary expenses in the short term a lot easier to do.
5. Increase Income: Explore opportunities to increase your income through part-time jobs or freelancing gigs that align with your God-given talents. If you can generate income outside of your primary job, the additional income can be directly allocated toward paying off credit card debts more quickly.
6. Prioritize Debt Repayment: Once you have established an accurate budget and identified potential areas for expense reduction or increased income, it’s time to prioritize your debt repayment. Consider using the “debt snowball” method where you pay off the smallest balance first while making minimum payments on other debts. As each debt is paid off, roll that payment into the next larger one until all debts are cleared.
7. Negotiate Lower Interest Rates: Contact your credit card companies to inquire about the possibility of reducing your interest rates. Explain your situation sincerely and ask whether they can offer lower rates. Many creditors are willing to work with individuals who demonstrate a genuine commitment to paying off their debts. Reducing the interest rates can help you save money in the long run and accelerate your debt repayment journey.
8. Seek Professional Help if Needed: If you find it overwhelming to navigate your debts alone, seek professional help. Christian credit counseling agencies can provide guidance, debt management plans, and other helpful tools. They can also provide personalized advice and strategies tailored specifically to your situation.
9. Practice Contentment: Practicing contentment means finding satisfaction and gratitude in God’s provision and trusting His plan, rather than constantly pursuing worldly desires. True fulfillment comes from a relationship with God, rather than material possessions or status. The apostle Paul writes in Philippians 4:11-13,
I have learned in whatever situation I am to be content. I know how to be brought low, and I know how to abound…
Embracing contentment allows us to more easily live within our means and steer clear of the excessive debt accumulation that is often driven by desires for worldly possessions.
10. Seek Accountability and Support: Find someone you trust within your Christian community who can hold you accountable for sticking to your budget and financial goals. An accountability partner can furnish encouragement, guidance, and shared wisdom, all of which are much-needed support during the challenging debt-elimination journey.
11. Practice Generosity:
This step is less intuitive, but I would encourage you to embrace giving as a practical step even while working on decreasing your debt. If you practice giving on a smaller scale now, you will already be in the habit once you achieve your debt-reduction goals and can give more. Not to mention, this is also a very effective way to stretch and grow your faith!
Congratulations on taking steps to reduce and eliminate your credit card debt! The journey may require discipline, sacrifice, and perseverance. In the end, it will lead to a life with far greater financial peace and a wonderfully enhanced ability to positively impact God’s kingdom with your finances.
ANOTHER RESOURCE TO CONSIDER:
There are many excellent books written on the subject of reducing debt. This one has been around for a while, but it is still one of my favorites. It's the book Free and Clear: God's Roadmap to Debt-Free Living written by Howard Dayton. If you are ready for additional help and encouragement, it could be the best $10 you spend this year.
