Control Your Finances

The rich rules over the poor, And the borrower is servant to the lender.

Are you still in control of your finances? If not, who is?

I'm grateful that we do not owe money. We don't have to pay off credit cards or loans each month. We are not in debt. That hasn't always been the case, though. By God's grace, we managed to get out of debt and so can you. In my post Debt I have mentioned that I will share more on how to tackle debt. 

Meanwhile, I'm taking a course on Home Economics which includes a workbook called The ABCs of Money Management. One of the books recommended for reading is called Kingdom-Focused Finances for the Family. It reveals truths about the way we are using money that I have never thought of before. In chapter 6, What Is a Financial Statement, Gary Miller explains using a financial statement. In it he is giving an example of buying a sofa and then updating his statement. This has been a real eye-opener for me. He deducts the amount he has paid for his new sofa from his checking account. Then he gets into the value of the piece of furniture after he has taken it home. He points out that buying this sofa just dropped his net worth a couple of hundred dollars. 

Another thing that I keep bumping into during this study is debt. We need to stay in control of our finances even when we are borrowing money. There are times when we will have to get into debt, e.g. by getting a loan, but we will have to carefully discern our motive behind it. Do we need a new car or would a used one do as well? Did we borrow because we need a mortgage to buy a home? Or, are we in debt because we have made a couple of unwise decisions? Perhaps we kept spending money, charging our credit card/s again and again, on things we couldn't afford to pay cash for? Have we ignored that fact and bought them no matter what the consequences?

So, how do we tackle debt?

• First of all, staying within our means; we need to spend less than what our income is.
• We no longer put anything else on our credit card/s. (Leaving them at home or cutting them up if we have to!)
• Paying off debts, focusing on one at a time. Putting all extra money toward paying off the one with the highest interest rate. As soon as one is paid off, we will put all our extra money (including the payments we no longer need for the former loan) toward paying off the next. As soon as that one is paid off, we will put all toward paying off the next. Soon we will see that, in time, it will become easier and easier and, hopefully one day soon, we will be able to celebrate - having made the last payment toward our debt.  

Be in control of your finances. Don't waste money. Don't spend it on paying high interest rates and making payments over a long period of time. Be content. Don't give in to every wish you might have, especially whenever that wish will cost a large sum of money. Instead, plan ahead: Set aside money each month, saving up for the day of purchase.