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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


Further reading:

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.

Income and Expenses Worksheet

Fixed expenses

My income

Month of ______________

Wages $

Tips/commissions $

Child support/alimony $

Public assistance (TANF) $

Social Security/pensions $

Unemployment disability $

Veteran’s benefits $

Interest/dividends $

Other income $

Total income $

Rent/Mortgage $

Vehicle payment $

Utilities - Electricity, water, gas, oil, garbage $

Savings $

Insurance - Health, vehicle, property, life $

Other loan payments $

Other $

Total fixed expenses $

Total income $    Minus fixed Expenses $ equals Remainder $

Flexible Expenses 

Food $

Clothing $

Health/Medical $

Vehicle - Gas/oil/maintenance $

Phone/Cell $

Household $

Child care/Elder care $

Personal expenses $

Education $

Entertainment/Recreation $

Cable/Internet $

Other $

Total flexible expenses $


Remainder $ minus Flexible expenses $ equals income left after expenses


My expenses

Getting Out of Debt Worksheet

Making Sense of Credit, Debt, and Identity Theft BUL 841 #7

Creditor's Name


Phone Number










Number of

months or








due date


last paid


last paid






*Is the debt secured by such collateral as your home, vehicle, land, or other property?

Getting Out of Debt - 3


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