Day 4: Debt Be Gone!

Day 4's task is all about finances. This is an area of my life that I think most people may perceive I have in order, when in fact, there is much that needs to be repaired. I'm sure this is the case with most people, but all that matters at this point is that I work to get my finances in order so that we can achieve the goals we have set for ourselves and our family.

Now first and foremost, we have to tithe and give offering to God, because without Him, we would have nothing! It is our thanks to Him for being our provision and making a way for us no matter how our bank account may look. And let me tell you, there have been so many times that we should not have been able to make payments, but somehow, the money was there. There was literally no mathematical formula nor any logical explanation for how we made the bills or paid for the last bit of our wedding, but somehow, God made a way.

We are already pretty consistent with our tithe and offering, so the next area of finances I am being led to address is the area of debt. Our society is so reliant on debt that it is nearly impossible to live your adult life without racking up some serious debt. The issue that continues to confuse us all is that, in order to have a good credit score, you have to have credit, and one credit card is not gonna be enough! It all sounds lovely - walking around spending money without having to earn it or save what we've earned and paying small amounts every month to chip away at the balance. The problem is that once you have all these credit cards, you have to keep your debt to credit ratio in check.

A debt to credit ratio describes, for revolving credit (credit cards), how much debt you have versus how much of your credit limit you have left. For example, if you have a credit card that has a limit of $5,000 and you have a balance of $1,000, then your debt to credit ratio is 20:80 because 20% of the limit is being used. From what I've read, a good credit score is typically seen with a debt to credit ratio of 30:70 or less. The national average is 52:48. At this point, I can tell you that mine is higher than 80:20, so this is definitely an area I need serious CHANGE in!

My task for today is to set a timeline and a budgeting plan to get my debt to credit ratio to 20:80 - in essence, to flip the script on that ratio and get us into a much more favorable position as far as credit. We want to purchase a house at some point in the next few years, so this is something that we'll need to get in order ASAP! I am going to set a timeline for 5 years and calculate how much we need to pay every month to get us to that 20:80 point by the end of those 5 years. Then, I am going to budget those monthly payments into our existing budget and believe God that we can pay those payments without any problems!

I encourage all of you to take a look at your debt to credit ratio as well. I know it may seem daunting and we may feel like we can never get to that optimal ratio, but in our experience, anytime we have made a decision to do something, a way has been made!