Becoming debt-free is just that - freedom

by Larry Burkett                                                                                                                        Vol. XVII, No. 4, April 2004

If you use credit cards without paying the balance monthly, owe money on a loan or are paying off a home mortgage, you're a debtor. Most Americans are in debt; if you're not, some might think you're downright unpatriotic.

Many economists believe that indebtedness keeps our country financially on the move. Some of you may remember when banks used to promote having a savings account. When was the last time you saw a bank ad encouraging you to save?

The theme of our consumer-driven economy is borrow and spend. It's not popular to suggest becoming debt-free. However, freedom from debt speaks for itself; in a word, it is freedom.

Although not a popular subject, and despite the fact that some think they're so deeply in debt they never can get out, becoming debt-free is a worthy, realistic and attainable goal. Please understand that getting rid of your debt may not be easy. However, the process is actually very simple.

You'll have to stop charging and start taking charge of your debt by:

-- Allowing no more debt. That means having no bank or family loans and tearing up the credit cards.

-- Developing a balanced budget that allows each creditor to receive as much as possible.

-- Starting to retire the debt now, beginning with high-interest debts first. If they're all high-interest, pay the smallest balance first. Once the small one's paid off, put all the available money on the next, and so on. Most families can be debt-free in three or four years.

Told you it was simple. However, it requires real determination and consistency to make it work.

If you're having difficulty paying those you owe, keep this basic concept in mind: It's always better to run toward your creditors than away from them. Creditors who've been ignored aren't very eager to negotiate. However, most creditors will respond positively to a written plan that includes how much you owe and a copy of your budget.

You'll have to create a detailed repayment schedule that shows exactly how much you're able to pay them each month. Be specific, because creditors aren't interested in what you'd like to pay them; they want to know how much you will pay.

Sometimes an objective third party might be necessary to require compliance with the agreements. There are consumer credit counseling organizations around the country that can help you do this. You may want to visit our website at www.crown.org for more information.

If debt collectors are hounding you, there is something you can do about it. The Fair Debt Collection Practices Act, passed by Congress in 1977, prohibits certain methods of debt collection. Also, you could report your problem to your state attorney general's office. Many states have their own debt collection laws, and the attorney general can help define your rights.

In my book, "Debt-Free Living," I give suggestions for dealing with creditors and the appendix contains a chapter on the Fair Debt Collection Act. Personal, family and household debts are covered under the act. This includes money owed for such things as cars, medical care or charge accounts. However, don't forget that this law does not erase legitimate debts you owe.

Remember that nothing positive will happen with the circumstances of your financial problems until you proactively stop charging and start taking charge of your debts. [BP]

[Larry Burkett died July 4, 2003. He was the founder of Christian Financial Concepts, now merged with Crown Financial Ministries in Gainesville, GA.]