Family Matters

My wife and I have struggled with debt constantly for the last 10 years. Just as it seems we are making progress on reducing the credit-card balances, a major expense comes up that we have to put on the credit card. We are getting weary of being in this bondage. Can you show us how to get off of this seesaw?

I recently came across the statement, “Personal debt has given America three distinct classes of people: the haves, the have-nots and the haven't-paid-for-what-they-haves!”

It's a funny line — and a sad commentary on the state of family finances in America. Even during “boom” economic times, a majority of Americans continue to struggle with credit problems and the emotional bondage that comes with them (see Proverbs 22:7). By eliminating your consumer debt, you'll go a long way toward achieving financial peace. Here are the keys to becoming debt-free.

Make a commitment to go no further into debt. If you can't muster the discipline to avoid credit-card purchases you can't pay off immediately, cut up your credit cards.

Develop a realistic budget, one that incorporates an amount to repay your existing consumer debt. Use a software program such as Excel or Quicken to help calculate a debt-repayment schedule. Make sure your budget balances.

Review your budget for spending habits that can be changed to allow for a more rapid debt repayment. While it won't be easy, eliminating some of your “wants” in the short term will allow you to get out of debt much more quickly. In the long run, you'll be happy you made this decision.

Be accountable to someone. Preferably, this can be your spouse — but if you don't have the discipline to stick with the plan on your own, bring in a friend, family member or pastor to help you stay on track.

Set up a visual system to show your progress, such as a chart on the refrigerator that shows your declining debt balances. Depending on the circumstances, it's not uncommon for a debt repayment plan to take from one to five years. A visual aid, which tracks your progress, can help you persevere.

Here is one more tip that will be critical in your situation, given the “seesaw” effect you mentioned. Too often, families fail to plan for what I call “irregular expenses.” Just when they think they are making progress, a major “problem” takes them by surprise, whether it's the transmission on the car or the washing machine breaking down. These aren't really surprises; it's just that they don't occur as regularly as most other bills. The solution to this problem is to include a reasonable amount for these items in your budget and to set the money aside so it will be there when you need it.

While becoming debt-free takes time, the rewards of financial freedom are worth the short-term sacrifice. God love you!

Phil Lenahan is director of media and finance for Catholic Answers in El Cajon, California.