The letters S.T.O.P. spell stop, but I want you to use the acronym to help you get your spending and savings under control. Let’s start with “S”:
- S – stands for sit down and pray;
- T – stands for take control;
- O – stands for organize your debt;
- P – stands for plan.
S – Let’s look at each one in-depth. When we sit down and pray, we are asking God to help us to faithful stewards with His money. God owns it all and we are entrusted it with it for only a short amount of time while we are on this earth. We also need to ask Him for the strength we’ll need to tighten the belt, to cut the spending, and to stick to our budget. If we are faithful, God will help us.
T – To take control we must take all of credit cards and cut them up. We need to keep from using them in order to stop piling on the debt. You don’t want to just put them away in a “safe place” because you will have the temptation to use them. Take those cards and shred them. Use a shredder if you have one. If not, take scissors to them and cut them into several pieces. You can put them in the lit fireplace or in the lit grill. Your main objective is to take control by removing the temptation of having those cards easily available. You cannot close out the account because you still owe money on them. Cutting up the card does not wipe-out the amount you owe.
O – When I say organize your debt, this means take only the current statements of the bills you owe, shred all the past bills. The current statement tells you exactly what you owe. Then, write down the amount owed, the interest rate, and the minimum payment amounts. Then, sort them on another list by the highest to lowest interest rate. You are going to start paying the most that you can on the debt with the highest interest rate and the minimum amount on the other debts. Once the debt with the highest interest rate is paid, then you will take all the money you were paying on this one and add it to the minimum amount you were paying on the debt with the next highest interest rate. You will continue to do this each time you payoff a debt. Each time you payoff a debt roll the money you paid on the high interest rate debt to the next highest interest rate debt. This is known as the debt snowball method.
P – To make a plan means make a spending plan, also known as a budget. Start with your gross salary and any other income you receive during the month. Then, subtract out all of your involuntary expenses, federal income tax, state income tax, FICA, workmen’s comp., etc. This gives you your discretionary income or net income. Your next expense is your tithe. Then, housing, food, transportation, clothing, and utilities. After that comes your savings. You need to put something away each month to cover any unexpected expense, like a car repair or an appliance repair. Then, you start paying your expenses.