“The rich rule over the poor, and the borrower is slave to the lender.” Proverbs 22:7
It is a brand new year, and men everywhere have stuck to tradition and made some New Year’s resolutions, a practice that dates back over 3,000 years to the ancient Babylonians.
Some of the more popular resolutions include improved fitness (48% of people), improved finances (38%), better mental health (36%), weight loss (34%) and a healthier diet (32%).
Most men have the best intentions to make these resolutions last. However, life gets busy and/or we return to our usual ways and forget all about those plans. Or, we admit to failure and say we will try again next year. The Forbes Health/One Poll survey found that the average resolution lasts just 3.74 months. Only 8% of respondents tend to stick with their goals for one month, while 22% last two months, 22% last three months and 13% last four months.
We are now partway through March—how are your resolutions doing?
New Year’s follows the greatest celebration of all: the birth of our Lord and Savior, Jesus. Bells are played to ring out the joyous news; candles are lit to remind us that Christ is the Light of the world (John 8:12); a star is placed on the top of Christmas trees to remember the Star of Bethlehem (Matthew 2:2); and gifts are exchanged to remind us of the gifts that the magi gave to Jesus (Matthew 2:11), who was the greatest gift of God to mankind (2 Corinthians 9:15).
Did someone say “gifts?”
For many, Christmas is a time for giving, where men endure the busyness of packed shopping centers, surrounded by long lines and mall Santa Clauses, regardless of the balance in their bank account.
They have spoiled that special loved one with that one-of-a-kind gift, bought gift cards for everyone they know (including that neighbor who shovels the driveway), or maybe even purchased toys for the local children’s charity.
As a result of that “giving spirit” during the Christmas season, many men have piled up significant charges on credit cards and/or maxed out their line of credit.
And now, as we move into a new year, we realize that there is a problem with our finances, as the Christmas credit card statements are starting to come in (which is likely why the second most popular New Year’s resolution is to “improve finances”).
When it comes to improving your finances, this is something that should always be on our radar and not just something we do at the beginning of the year.
Here are a few crucial reasons why men should pay attention to their debt and be motivated to reduce it or get rid of it altogether:
- Financial Freedom. Being debt-free provides a sense of financial freedom and security. With no debt, you have control over what you do with all of your money and how it is used. With no debt, you can increase your giving, and savings focused on your future (i.e. retirement).
- Reducing Stress. Debt is a significant source of stress for both the individual and his family. Paying it down alleviates this stress and contributes to your overall well-being.
- Interest Savings. Interest payments on debts accumulate over time, making it even more challenging to get ahead financially. By paying down debt, individuals save money on interest in the long run.
- Improving Your Credit Score. Managing debt responsibly can impact your credit score positively. A good credit score is essential for obtaining favorable rates and approvals on future loans, including mortgages.
There are many ways to reduce debt with the goal of being debt-free, and I would like to highlight 2 of them: the Debt Snowball and the Debt Avalanche (fitting themes for this winter season).
The Debt Snowball method is a debt-reduction strategy whereby one who owes more than one debt pays off the debts starting with the smallest balances first, while paying the minimum payment on larger debts. Once the smallest debt is paid off, one proceeds to take that payment and use it to pay off the next highest balance, and so forth, proceeding to the largest one last. Paying off the easier debts first is a helpful and accessible way to feel accomplished and gives great motivation to keep moving in a positive direction
The Debt Avalanche method is another debt-reduction strategy whereby one would pay off the highest-interest debt first while paying the minimum on all other debts. And like the Debt Snowball, once one debt is paid off, you take that payment and apply it to the debt with the next highest interest rate, and so forth, until all debt is gone. This method is valuable in that paying off the debts with higher interest rates first will almost certainly save you money overall as the higher interest payments begin to disappear faster.
Overall, our goal as men is to be wise with debt and ultimately spend less than we earn, as we know that in debt, we who borrow are enslaved to the one who loaned to us (Proverbs 22:7).
If you need help to reduce your debts, there are many financial counsellors out there who can help, including us at Kingdom First Financial; we would be happy to see how we can serve you.
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