Debt |
Balance |
Payment |
Rate |
---|---|---|---|
Family Loan |
$0 |
$0 |
0 |
Credit Card 1 |
$0 |
$0 |
0 |
Credit Card 2 |
$0 |
$0 |
0 |
Credit Card 3 |
$0 |
$0 |
0 |
Credit Card 4 |
$0 |
$0 |
0 |
Credit Card 5 |
$0 |
$0 |
0 |
Credit Card 6 |
$0 |
$0 |
0 |
Student Loans |
$620.34 |
$196 |
4.7 |
Auto |
$6,496.26 |
$450.00 |
7.5 |
Totals |
$7,116.60 |
$646 |
Using the numbers in this example, the snowball method could save someone $1,173 and reduce the time it took to pay the debts by almost seven years.
No matter what approach we take to debt reduction, an attitude change and firm commitment to reject debt is the most valuable action we can make. It's about overcoming the accepted cultural norm of attaching debt to everything we buy. Words of our prophets6 that are decades old are now being verified by the opinions of countless personal finance experts who agree that only three types of debt are wise or economically justifiable:
A mortgage on an affordable house.
Loans for college degrees or training that are accompanied by higher expected earning increases.
Loans for certain well-thought-out business plans.
Even in situations where debt may be economically justifiable, you will likely be better off including the debt in your debt snowball and paying it off sooner rather than later.
We live in a day when the adversary is using his most cunning tools in an effort to destroy our spirituality. Debt could put us into predicaments of choosing either to honor debts to our fellow men or to pay tithing, for instance. No man can serve two masters (see Matthew 6:24), and in trying to do so, we can hinder our spiritual growth.7
On the other hand, as we permanently remove debt from our lives, we will find that a portion of our agency has also been restored. Our Father's plan of salvation is also a plan of agency. We should never willingly forfeit even a portion of that agency by being bogged down by unnecessary debts.
Editors' note: For more ideas and tools—including a debt-elimination calendar and other family finance resources—to help you get and stay out of debt, please visit providentliving.org.
radio.lds.org/programs/mormon-identities. Look for episode 56, "Living Debt Free."