I have been through times when we have had plenty, and times when we haven’t. But we were able to get through, and that was not by accident. We are big fans of Dave Ramsey. For anyone who might not know Dave, he hosts a radio show, where he gives financial advice. So we have gleaned good information from him. Some of what I have to share, is based on what he tells people everyday. These are things that I have shared with friends, in some tough spots.
Pray- We believe in God and through Him, doors are opened and closed, so that we can be blessed. We pray together for our finances. And we also ask God to give us the things that we need, and that He wants us to have. We have seen Him turn things around in our lives, whenever we have faced adversity. We pray about paying the bills, buying cars and houses, finding things for our home, buying the groceries, and giving money back to Him. We do tithe, because we want to give back to God. We also think that it helps us to prioritize the money that we have to spend. God helps us to be good stewards of what He has given us.
Live to Fight Another Day- When you are living under financial pressure, it can be difficult to think straight, and come up with any kind of plan. So remember this, you and your family need the basics, food & shelter. You have to consider those needs first, so that you can live to fight another day.
- Pay the rent or mortgage where you are living.
- Pay for the food you need. During these times, buy the basics: rice and beans, canned soup, veggies, bread, peanut butter and jelly, cheaper meats. Shop at Aldi’s, Food-4-Less, and other discount stores.
- Pay for your water, and electric bills- the necessities first.
- Make a goal to get out of debt, not charge on credit cards, and to have financial freedom. If you can, whittle your debt down to a manageable house payment, and your regular manageable monthly bills, that’s a great start. Aim for that first. Of course to have everything paid off, every month is the ultimate financial goal.
Cut Expenses- You are going to want to cut way back on everything that you can. Move to a cheaper house or apartment if you are able. Cancel subscriptions, cancel cable, Dish, or Direct TV. Adjust your thermostat, eliminate activities that require lots of gas money, wash your car at home, mow your own lawn or find a kid in the neighborhood that mows. Consider Net- Flix at a low cost, or one of the other Movie/TV companies that are cheaper. You can even watch them on your computer. If you do better when you work with cash, then take out cash, and sort it into envelopes for the month. Label them for gas, food, babysitter, etc.
Create an Emergency Fund- You will want to raise a fund for minor emergencies. Set back at least $500-$1000. This will help you to get through. You might be working 12 hours a day, seven days a week for a time. You have to remember that this will be for a short time. God will sustain you and bless your efforts. And this season in your life, can cause you and your family to draw closer. Here is some good advice from the Word of God. “There are precious treasures and oil in the dwelling of the wise, but a self-confident and foolish man swallows it up and wastes it.” Proverbs 21:20 Amplified Bible
- To get the emergency money that you need, round up whatever you can sell, and have a garage sale, or put it on Craigslist. Do you have extra furniture, appliances, pictures, dishes, and other household goods that you could sell? How about golf clubs, bats and baseball gloves, tennis rackets, guns, bows, or other sporting goods items? Clothing that the kids have outgrown? Are there things in your basement, garage, spare drawers, that you aren’t using or you could part with?
- Work a second job or have your spouse get a job. Here are some ideas: baby sitting, delivery jobs, delivering phone books or newspapers, pizza delivery, drive a semi truck, painting, mowing, landscaping, garden work for a greenhouse, clean houses or offices, restaurant jobs, apartment repair and fix up.
- If you have kids that are High School age, they may be able to help you do some jobs. Or your teenager may need to get a job to help pay for their clothes, and activities. We had several acres, and we had a large mower to mow it. We started a mowing business on the side. It was a logical choice, because we already had what we needed to do that.
Don’t Consolidate Loans- It sounds good to consolidate your loans and have one lower monthly payment. Don’t do it, it’s a bad idea! It’s better to pay off your loans as they are. When you consolidate, they charge you more for their service, over a longer period of time, and then they are going to put interest on top of what you are paying now. This is really a trap. The consolidation companies are making big money, or they wouldn’t do it. It’s better to call the places that you owe, and ask them to lower your payment, and pay them for a longer amount of time. Keep in touch with the people you owe money to, they will usually help you. They want to be paid back, they have no way of getting their money if you go under.
Credit Cards are Unsecured Debt- If you have to let some bills go, because you can’t pay them, then let your credit cards go for a time. Credit card debt is unsecured debt. The credit card companies do not make you put up any collateral. So there is nothing that they can come take away from you. They take a risk when they issue you a card, that you will buy something on credit and then not be able to pay it back. If you are unable to pay them for a while, you can call them later, and tell them you are in financial distress. You can negotiate with them when you do have some money, or think you will be able to pay them off soon. They will often negotiate with you to pay a lesser amount, in order for you to settle your debt to them. You will need to call them at the time you are ready, and work that out with them.
Houses–Short Sale & Foreclosure- If you are in trouble where your house is concerned, it’s better to have a short sale on your house than a bankruptcy. A short sale is when you sell your house for less than your loan is at the bank. If you have tried to sell your house or property, and have not been able to get that done, then you need to go the bank and get them to agree that you can sell your house for less than you owe against it. That means that you list for the amount that is owed, and you and the bank are willing to take less, or you list for less, in order to get the property sold. The bank will have the final say so on this. But if you have tried to sell your property unsuccessfully for a time, the bank is most likely going to approve. They don’t want your house back.
Also when you settle the deal on a short sale, the bank will always try to get you to pay the difference, that the sale of the house didn’t cover. It is a lot of pressure when you are in their office, and they tell you that’s the only way they will do it. This part of the negotiation, might take several days. We recommend that you tell them you will not take on the debt that is not paid. They have to get you to sign the paperwork to take on the debt. You have to think about the survival of your family. The bank is going to do what’s best for them, and you have to do what’s best for you. You will need to pay rent at your new location, and provide for your family, be strong and hold your ground. Don’t sign anything that gives you more debt. Tell the bank ,”No.” You want to settle “without recourse” to you, this is the legal term to use. Tell them that if they won’t do it, you’ll let them foreclose on the house, and they’ll just get the house back. They should take the offer that you have, because getting most of their money back, is better than getting nothing. But decide ahead of time, that you aren’t going to take on the debt that you can’t pay. We know people who have done this both ways. Those who have signed paperwork with the banks, to pay the difference, have been forced into bankruptcy. Those who refused to pay the difference came out of the situation, and were able to clear their debt.
Foreclosure of a property happens, when you do not pay your monthly payments, and fall behind until the bank takes the property back. This is a process that takes place over several months of non-payment. The bank will tape a packet on the front door, and send out an inspector to access your home. They may work with you on catching up on your payments, with you paying a fee, if you are able to do that before the foreclosure is complete. Usually a person can continue to live in the home until a day or two before he bank takes it back. Or the tenant can find other accommodations, and give the bank back the key. If you can make all of your payments, except your house payment– then this might be the right choice for you. We think it is wise to try to sell the house, because someone may still come in and buy it, even if they buy it as a Short Sale. If the bank takes it back, you will have a hit on your credit, but it’s not the end of the world. Someone who can’t sell their home, but has to move elsewhere for work, may be able to make all of their payments without the debt of the old house. Our suggestion is have it up for sell, if there is a buyer, you can always do a Short Sale. If the bank has to foreclose, then you have done your best to get the bank’s money back. A foreclosure won’t necessarily cause a person to have a bankruptcy. However you won’t be able to buy a house for a time.
Other Property- Take a look at other property that you own. If you have expensive cars, sell or trade them in for less expensive cars. If you have 2 cars, but are able to make things work with one, then sell one. Do you have motor cycles, dirt bikes, racing cars or trucks, ATV’s, boats, trailers, campers that you can sell? Sell whatever you can. Do you have land or property, other than where you live that you can sell? If you are looking at bankruptcy, then it’s time to sell off those other things that you have, and get out of debt.
If you are Forced into Bankruptcy- If you are praying and letting God lead you, there will be a way to get work, still have a place to live, and to eat– for you and your family. We know many people who have come through it, and things turned out alright for them in the end. It was a struggle, it was rough, but they got through it. If you have to go through it, you may want to check and see if you live in a state, where you can file in a different county, than where you live. In Missouri you can do that. I say that, in case you don’t want the people where you live, to know about you filing bankruptcy. There used to be strict rules about waiting 7 years to buy a house after bankruptcy. But the rules have changed a lot. We know people who have been able to purchase homes about 3 years later. We have also heard of people selling things such as cars or trucks when they were in bankruptcy mode, and later they had to pay on those things, and wished they hadn’t sold them. So be sure to check that out with an attorney, before selling those big ticket items, right before or while in the bankruptcy process.
Better Days Lie Ahead- No matter what you are facing, if you reach out to God, He will help you. We believe in the power of prayer, and God giving us direction. When we have prayed, God has given us new ideas, and direction when we didn’t know what to do. God has given us peace when we had to walk through really hard things. Remember that you won’t be in this situation forever. This is a temporary phase that you are going through. Things will be better in the future.
- “No temptation (or trial) has overtaken you except what is common to mankind. And God is faithful; he will not let you be tempted beyond what you can bear. But when you are tempted, he will also provide a way out so that you can endure it.” 1 Corinthians 10:13
- “Peace I leave with you; my peace I give to you. Not as the world gives do I give to you. Let not your hearts be troubled, neither let them be afraid.” John 14:27
References: Dave Ramsey http://www.daveramsey.com; Chris Brown’s article, “3 Ways to Kickstart Your Emergency Fund”