Weekly Stewardship Words:
"I was once young and now I am old, but not once have I been witness to God's failure to supply my need when first I had given for the furtherance of His work. He has never failed in His promise, so I cannot fail in my service to Him."
"The safest way to double your money is to fold it in half and put it in your pocket."
"Stewardship is the act of organizing your life so that God can spend you." Lynn A Miles, Author
Getting out of Debt
Make a debt repayment plan
Next, use the information in the getting out of debt
worksheet to develop a debt repayment plan. There are
a number of ways to get out of debt. Consider each
method and decide which one(s) you’ll use.
A. Importance method.
Pay the debts that will keep
your family safe and your credit rating intact—for
example, your rent/mortgage, food, and utilities. If
you’re making payments on a house, vehicles, furniture,
or appliances, don’t risk losing that property by
getting behind on your scheduled payments. Until
you can pay more, just make the minimum payments
on your other debts and credit cards. That will keep
you in good standing with all of your creditors and
won’t damage your credit rating.
B. High interest rate method.
Check your monthly
statements for interest or annual percentage rates and
pay off the debt with the highest rate first. Pay as
much as you can on that debt each month until it’s
paid off. Meanwhile, make minimum payments on
your other debts. Then apply the payments you were
making on the highest-rate debt to the next highestrate
debt, and so on.
C. Low balance method.
Pay off the bills with the lowest
balances first. For example, if you have only four
payments left on your car or washing machine loans,
pay those bills first. Then use the money you put
toward those payments and pay off the debt with the
next- lowest balance.
D. Debt consolidation method.
You may be able to get
a single loan that pays off your other debts. The
monthly payment on this “consolidation” loan will
usually be lower than the total amount you’re now
paying on your other debts, because consolidation
loans are spread out over a longer period of time.
However, debt consolidation may cost you more in
the long run because you’ll likely pay more interest.
Negotiate with your creditors
Contact your creditors as soon as you recognize you’re
overextended. Before talking with them, use the information
from the getting out of debt worksheet and the
income and expenses worksheet to decide how much
you can pay each one. Explain your situation and try to
Even responsible credit users can get overextended.
They can get sick, divorced, or lose their jobs and fall
behind in their payments. What should you do if you realize
you have a debt problem?
The first step is to stop using credit.Don’t take on new
debts or charge any new items. Paying off debt is hard
enough; don’t add to what you owe! Leave your credit
cards at home.
Know what you owe
The next step is to figure out how much you owe. List
who you owe and how much you owe them. Fill out the
getting out of debt worksheet, page 3, supplying the following
information about each of your debts:
• Name of creditor (a company or person to whom you
owe money), their address, and phone number
• Your account number
• Annual percentage rate (APR)
• Minimum monthly payment
• Number of months or payments remaining on the
• Total balance owed (amount of debt remaining)
• Payment due date
• Amount last paid
• Date last paid
• Total amount already paid
• Whether this debt is secured by a home, vehicle, land,
or other property. In other words, can a creditor seize
that property (also called “collateral”) if you stop
making payments on the debt?
Reduce your expenses or increase your
The third step is to decide how much you can pay back.
Use the income and expenses worksheet on page 2 to
compare your monthly income with your monthly
expenses. Examine ways to reduce your flexible expenses—
the ones that vary each month—and shave your
spending down to the bare-bones level. You may need to
get a second job so that your income will cover both your
current expenses and your debt repayment.
Published September 2004
Revised February 2007
Getting Out of Debt
Making Sense of Credit, Debt, and Identity Theft BUL 841 #7
Work out a modified payment plan. Most creditors will
work with you if they believe you’re acting in good faith
and the situation is temporary. Some may reduce your
payments to a more manageable level. Make the lower
payments on time. Don’t put off negotiating with your
creditors until your accounts have been turned over to a
debt collection agency. At that point, creditors will be
less likely to work with you.
Get help when you really need it
If you’re unable to develop your own debt repayment
plan, you can get counseling in debt management from
family support centers (for Armed Services personnel) as
well as from some credit unions and churches.
A credit counseling agency can work out a formal debt
repayment plan with your creditors. It will make up a regular,
timely repayment schedule and ask you to deposit
money with it each month. It will then use your deposits
to pay your creditors according to this schedule.
Completing a program like this may take 48 months or
more. You may have to agree to stop using or applying
for more credit while you’re a program participant.
Before working with a credit counseling agency, read
Credit Cents no. 8, Where to Go for Credit and Debt Help
When all else fails, bankruptcy may be your only option.
Because it stays on your credit record for up to 10 years,
bankruptcy is a last resort.
Author: Marilyn C. Bischoff, Extension Family Economics Specialist,
UI School of Family and Consumer Sciences
Getting Out of Debt - 2
1. Money Troubles: Legal Strategies to Cope with Your Debts, 9th edition.
2003. By R. Leonard. NOLO Press, Berkeley, CA.
2. Prioritizing Debts: Which Bills Do I Pay First. 2003. Northwest
Justice Project. http://www.nwjustice.org/docs/0110.htm
Income and Expenses Worksheet
Month of ______________
Child support/alimony $
Public assistance (TANF) $
Social Security/pensions $
Unemployment disability $
Veteran’s benefits $
Other income $
Total income $
Vehicle payment $
Utilities - Electricity, water, gas, oil, garbage $
Insurance - Health, vehicle, property, life $
Other loan payments $
Total fixed expenses $
Total income $ Minus fixed Expenses $ equals Remainder $
Vehicle - Gas/oil/maintenance $
Child care/Elder care $
Personal expenses $
Total flexible expenses $
Remainder $ minus Flexible expenses $ equals income left after expenses
Getting Out of Debt Worksheet
Making Sense of Credit, Debt, and Identity Theft BUL 841 #7
*Is the debt secured by such collateral as your home, vehicle, land, or other property?
Getting Out of Debt - 3
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