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Editor's Note: The following is a report on the practical applications of Michelle McKinney Hammond's new book, Recover from Financial Setbacks Well, (Tyndale House Publishers, 2010).
If you're broke, don't despair. You may not have enough money in the bank, but you'll always have enough help from God to grow beyond the challenges you face.
Whether you've lost your job, shopped yourself into debt, or suffered some other kind of financial setback, you can still live well without much money and recover with God's help. Here's how:
Consider your financial background. Think about the money habits that your parents modeled while you were growing up. Consider what you learned about how to manage money from them, and what financial decisions you may have made as a result. Learn from your parents' successes and mistakes, and ask God to help you move forward managing your own money wisely.
Assess your current financial state. Total all the numbers that indicate everything you have financially (your resources) and all the money you owe (your debts). Record these figures so you can clearly take stock of your current financial situation.
Confess your mess. Be honest with God and yourself about the true state of your finances. Confess whatever sins you committed that contributed to your financial problems. Pray for the wisdom and self-control you need to make better financial decisions from now on.
Reach out for help. Get professional financial counseling or at least financial advice from someone you trust who manages money well. Ask for prayers and emotional support from family and friends as you recover.
Deal with desires. Realize that, while desires themselves aren't bad, they become a problem in your life if you give them the power to rule you rather than keeping them in check so you can follow where God leads you. God doesn't want you to feel deprived; He wants you to be free to enjoy the good gifts He gives you. But desires that run wild and put you in debt take away that freedom. So pray for the right perspective on your desires and the discipline you need to control them so they won't control you.
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Get out of debt. Prioritize your debts so that you plan to pay off the debts with the highest interest rates first, and then move on down the line through the others. Set a specific time for when you hope to pay off each debt.
Set a budget and stick to it. Create a budget that will help you make sure that you don't spend more money than you have, going forward. Remember that it's better to live below your means with dignity than it is to live above your means in embarrassment. List all the ways your money flows in, and all the ways it flows out. Be specific, and pay close attention to those details from now on and separate your wants from your needs. Make sure that you give the first 10 percent of your income to God through a tithe and save (or save and invest) another 10 percent. When figuring out how to best live off the remaining 80 percent, total how much you'll need to meet your regular bill obligations and how much you can realistically allocate to other costs beyond your bills. Trust God to provide all you need and to empower to make the right financial decisions to manage what He gives you.
Use credit cards wisely. Eliminate all credit cards except for one card, unless you own a business and need a second card for business expenses. Use credit only when necessary, and use cash for all of your daily living expenses. Track your spending and pay the balance in full each billing cycle so you don't accrue interest. If you find that you can't control your spending well, use only a prepaid credit card.
Control your shopping. Commit to avoid buying anything you absolutely don't need or haven't run out of, and if you slip and make a purchase that's not necessary, give something away to compensate for that item. Plan menus before going grocery shopping, research high-ticket items thoroughly before choosing the right products to buy, use coupons and reward points, negotiate with merchants when possible, and buy generic products instead of name-brand products when possible. When buying services, get to know the people who are helping you and be nice to them so you can establish relationships where they look out for your best interests. Get your hair cuts, manicures, massages, or dental work done at a school where students perform these services at a fraction of what they'd normally cost. Be resourceful about using what you already own - such as your clothes - rather than buying more when it's not necessary.
Reduce your home expenses. Downsize your home if you need to, save energy to cut back on your utility bill, and eliminate unnecessary costs, such as cable TV services.
Reduce your activity expenses. Save money you would have spent on expensive restaurant meals by eating at home more often. Consider free or low-cost fun activities, such as hiking at a park or visiting museums.
Form a support system. Get together with some other friends who are currently going through financial struggles and share your knowledge and resources to support each other and meet needs like household repairs and rides to and from place. Be generous about helping your friends with what they need, and let them know what you need so they can help you.
Give thanks. Instead of focusing on what you don't have, focus on what you do have, and express your gratitude to God regularly to keep the right perspective on your finances. Trust Him to continue to meet your needs - sometimes in unexpected ways - and look forward to the good future He has planned for you.
July 23, 2010
Adapted from Divanomics: How to Still Be Fabulous When You're Broke, copyright 2010 by Michelle McKinney Hammond. Published by Tyndale House Publishers, Wheaton, Ill., www.tyndale.com.
Michelle McKinney Hammond is the author of more than 30 books on living, loving, and overcoming. She is the President and Founder of HeartWing Ministries, which hosts annual DIVA Weekend Getaway Conferences. As a relationship and empowerment coach, internationally known speaker, singer and television co-host, it is Michelle's mission and passion to help women and men to first be intimately connected to God and then empowered to become their personal best in order to experience victory in every area of their lives.