Day 5: Breaking Free—Debt Freedom & The Snowball Effect

Just as the rich rule the poor, so the borrower is servant to the lender.

-Proverbs 22:7 NLT

Owe nothing to anyone—except for your obligation to love one another. If you love your neighbor, you will fulfill the requirements of God’s law.

-Romans 13:8 NLT

Debt Freedom

What is debt?

An amount of money borrowed by one party from another is generally used to make large purchases that could not be afforded under normal circumstances.

Debt can be a financial burden that limits generosity and freedom. Many people in debt typically got there by substituting saving for a large purchase with acquiring debt (swiping that credit card, signing up for low introductory rates, trying the "same as cash" payment plan, etc.).

Before getting yourself into a debt situation, ask yourself:

1. Can I afford it?
2. If I cannot afford it, then do I really need it?

One of the biggest reasons people go into debt is discontentment—wanting something immediately instead of waiting. But the Bible teaches us to be content with what we have (Philippians 4:11-13). Contentment doesn’t mean we never improve our financial situation—it means we don’t let comparison or impatience drive us into unnecessary debt.

The true cost of debt

Debt isn’t just about numbers—it affects our emotions, relationships, and spiritual peace. Both of us have lost good friends by simply allowing them to borrow money. It changed the relationship’s dynamic even when we agreed to forgive the debt. That's because many people feel trapped, overwhelmed, or even ashamed because of their financial obligations. But here’s the truth: no financial mistake is beyond God’s redemption. With a plan and discipline, you can break free.

Aside from the spiritual and emotional aspects, many people underestimate how much debt actually costs them over time.

Compound interest works against you in debt. Every dollar spent on interest is a dollar that could have been saved, invested, or used for generosity. Debt doesn’t just cost the amount you borrow—it costs you interest and lost opportunities. Let’s say you borrow $10,000 at a 20% interest rate. If you only make minimum payments, you’ll end up paying nearly double what you originally borrowed! That’s money that could have gone toward building wealth, giving, or securing your future.

It’s soul-searching time! It is important to see yourself as debt-free to be debt-free.

Take a moment and imagine life without debt…

• How would you feel if you had absolutely no debt?
• What would you do with your income if you had zero debt payments?

The Debt Snowball and Debt Avalanche

The “Debt snowball” method helps eliminate it step by step. This method worked for us, so that is what we recommend. Here is how https://www.ramseysolutions.com/ explains it: “The debt snowball method is a debt-reduction strategy where you pay off the debt in order of smallest to largest, gaining momentum as you knock out each remaining balance. When the smallest debt is paid in full, you roll the minimum payment you were making on that debt into the next-smallest debt payment.”

While the Debt Snowball focuses on small victories to build momentum, another approach is the Debt Avalanche—paying off the highest-interest debt first to minimize costs. Both methods work—the key is picking a plan and sticking with it!

Good Debt Versus Bad Debt

The Bible generally warns against debt. It also acknowledges wise financial decisions that can lead to prosperity and sustainability.

Bad debt (reckless borrowing) leads to financial slavery and stress. It can be described as debt used to purchase things that do not bring value or take money from your household. Good debt (strategic investing) can lead to growth and provision. It can be defined as debt you use to acquire assets that give a return on investment that exceeds the interest rate on the debt. Additionally, these assets appreciate in value.

Here's the key: The Bible warns against unnecessary debt but acknowledges the wisdom of leveraging resources for a return. Here's a biblical example from 2 Kings 4:1-7 that describes a widow who was instructed to borrow jars to fill with oil, which she then sold to pay off debt and generate income.

[3] And Elisha said, “Borrow as many empty jars as you can from your friends and neighbors. [4] Then go into your house with your sons and shut the door behind you. Pour olive oil from your flask into the jars, setting each one aside when it is filled.” [7] When she told the man of God what had happened, he said to her, “Now sell the olive oil and pay your debts, and you and your sons can live on what is left over.”

-2 Kings 4:3-4; 7 NLT

This mirrors leveraging debt wisely—borrowing for something that increases value rather than drains resources.

Family Moment

Remind your child of a time he wanted something at the store. He wanted it so badly that he wanted you to buy it on a promise that he'd pay you back later–regardless of whether or not he actually had a plan to pay you back. It's a good thing you started helping him exercise that “delayed gratification” muscle on Day 3! This concept applies to debt, and it teaches children to wait to buy something instead of using credit.

This is also a great time to teach them what it is like to use a credit card. Have them calculate: If they borrowed $10 and had to pay back $12 next week, is that a good deal? Some children may answer, “If it's something I really want? Yes!” Others may almost knock the chair over as they scream, “Noooo!” Either way, helping children understand interest early builds smart financial habits!