debt: the curse and blessing of our times

Internet Personal Financial Planning Course 1

Published by Andrzej Manka, London, UK, 25.06.2013

Cover by Soul Production.

Designed by MiniDesign.

Copyright © 2013 Andrzej Manka

All rights reserved.

This is a part of the Internet-based Personal Financial Planning Course - “How to Get

Rid of Debts and Achieve Financial Freedom”.


How to Get Rid of Debts

and Achieve Financial Freedom?

Internet Personal Financial Planning Course

Andrzej Manka

www.andrzejmanka.com

INTRODUCTION

This Internet-based Personal Financial Planning Course - “How to Get Rid of Debts

and Achieve Financial Freedom” - is based on my own personal experience of life

and finance. It puts forward a set of patterns of thinking and specific action plans

that have proved effective in my own case. It also offers lots of practical pieces of

advice along the way.

I have been particularly interested in personal money management since I

experienced financial trouble at the beginning of the 2000s. Then I promised God

that if I could find a way to freedom from debt, I would help other people to

achieve the same. Immediately, God offered me a series of amazing jobs, as a

marketer, PR specialist, entrepreneur, event organizer and journalist in the field of

financial literacy and financial education.

From 2009 onwards, I began to write a succession of notes and reminders, initially for

personal use only. At first, my intention was not to publish a financial course or book

for others. At that time, I was only seeking to collect and implement all the most

useful insights, ideas and exercises I either found or created on the basis of my

reading on financial management and personal development, analyzing my own


situation, and asking myself these core questions: How can I get clear of my

troubles?; What is the main cause of debt?; What can I do to become rich?; What

do riches and wealth mean for me?

And I realized that the more questions you ask, the more chances you have of

development.

This course should prove helpful for anyone interested in efficient methods of debt

management and in achieving financial freedom. However, it is also a part of a

larger undertaking in financial education, which includes this Internet course, one-

day workshops and further Internet projects.

The OBJECTIVES of this online course are:

1. To equip participants with a fundamental understanding of important personal

financial management techniques.

2. To communicate a number of useful tools for planning family budgets.

3. To provide information on to make accurate short-term and long-term financial

decisions.

4. To propose ideas on how to deal with debts, and how to become financially free.

Methods and Contents

Eleven sessions, arranged in simply-constructed steps:

a) Discussion of the key session topic, explained in a clear and easily applicable

way.

b) Advice, tips and tasks.

c) Recommended literature and links.


Program Overview:

SESSION 1: The Power of Financial Statements.

Learning the skills and regular habit of compiling financial statements on a daily,

weekly and annual basis is the foundation of wealth creation, and the basis for

achieving financial freedom. This session explains in detail why you should compile

financial statements, and how you can best prepare them.

SESSION 2: Marketing: The Art of Seduction.

This session explains why you often find that you have spent more than you had

intended, and often beyond your means! It will help you to learn how to protect

yourself from irrational spending.

SESSION 3: Models of a Well-Planned Financial Life (part 1 of 5).

The first phase in the short series “Models of a Well-Planned Financial Life” presents

an effective way to harmonize and match financial planning to the most vital

dimensions of our lives: spiritual, emotional, family, personal and professional. It will

also show you how to build up proper cost structures in order to achieve financial

freedom.


The second phase in the series of “Models of a Well-Planned Financial Life” presents

the typical hierarchy of values adhered to by the rich and successful, and

demonstrates how you can gain control over your finances by exercising emotional

control. Achieving this insight is particularly inspiring, and extremely useful in

everyday life.


The third phase in the series “Models of a Well-Planned Financial Life” deals with

“three ghosts” that may haunt your thinking, and hinder and prevent the effective

implementation of personal financial goals. It will also show you a highly effective


remedy against the external and internal barriers that might block your way to

becoming rich.


The fourth phase in the series “Models of a Well-Planned Financial Life” reveals some

very serious internal obstacles to financial prosperity. It shows how proper diagnosis

can solve problems often embedded in our unconscious minds. With the help of

these insights, you will be able to overcome an enemy more dangerous than any

bailiff, and more intrusive than any illegal debt collection company.


The final phase in the series “Models of a Well-Planned Financial Life” shows the

impact of time on your money, and answers the question whether God cares about

your wealth and financial welfare.

SESSION 8: Financial Freedom, or a Life on Loan?

Why it is so easy to get into debt? When should you look to take on credit, and

when it should be avoided at any cost? How and when should you take out a loan

to maintain your personal financial security?

SESSION 9: Debt: the Curse and Blessing of our Times.

What should you do when you are sinking in debt? How can you plan the way

forward, what strategies should you implement? Why is the nightmare of debt often

an unexpected pathway to wealth and financial freedom?

SESSION 10: Cash Never Rests: Compound Interest.

This session will introduce you to the extraordinary world of wealth that proceeds

from developing skill and creativity in financial mathematics. We’ll see how money

creates money, and look at the mechanisms of compound interest. By using these

mechanisms wisely to your advantage, you will be able spend the rest of your life

accumulating wealth that will eventually build a legacy for your descendants.

SESSION 11: Decision Time for You.

“But be doers of the word, and not hearers only, deceiving yourselves”


After I had drafted a first version of this course, I realized that one of the most

intriguing questions in this context concerns God's attitude towards wealth and

money generally. That is to say: what is God's will? Does He want me to be rich, or

rather, stay poor?

God owns everything: “All the earth is Mine.” (Exodus 19:5). But what might the

Creator of the world and the universe, of heaven and earth, and of all wealth,

want? What might The One to whom everything belongs, and who made man

according to His own image and likeness, and instructed man to take possession of

the works of His creation, want?

The answer might appear straightforward. God wants me to be rich and happy: this

is surely the obvious conclusion. However, this is not God's first priority. The most

significant issue, and the essential thing, is God's desire for me to spend the whole of

eternity with Him. If enriching myself and those around me serves this ultimate goal, I

should certainly enjoy life properly, collect and manage resources according to the

entirely unique, timeless, wondrous and effective rules which God has laid down for

us. If, however, such wealth proves an obstacle to spending eternity with God, I

would do better to abstain from this endeavor. “For what is a man profited, if he

shall gain the whole world and lose his own soul? Or what shall a man give in

exchange for his soul?”(Matthew 16:26)

The Bible is the best possible manual and guide to all we know about ways of

achieving worldly success. Furthermore, the most valuable bestsellers discussing

ways to personal, financial and business success build on biblical principles, even if

the authors prefer not to acknowledge this fact, or simply do not realize it. The most

significant, long-lasting and precious accomplishments in the history of European

and American civilization spring from the inspiration of the Bible. Instead of

repeating a long list of commonly-known facts, I wish to propose one deeply

inspiring testimonial from outside Christianity, given by the journalist Matthew Parris to

honor the role of Christianity in Africa:

Now a confirmed atheist, I’ve become convinced of the enormous contribution

that Christian evangelism makes in Africa: sharply distinct from the work of secular


NGOs, government projects and international aid efforts. These alone will not do.

Education and training alone will not do. In Africa, Christianity changes people’s

hearts. It brings a spiritual transformation. The rebirth is real. The change is good.

Anyone who is honestly seeking answers to the profound question of the way to

complete human welfare on earth must see in the fascinating work of the Bible

God's powerful tool for the achievement of sustainable and multi-dimensional

success. True, anyone who is looking for simple recipes for success and undertakes a

reading of the Bible straight after perusing glossy, best-selling magazines, or

completing a training course on the lines of “the law of attraction”, is likely to sense

a tremendous feeling of frustration due to the intellectual and spiritual requirements

demanded by the Scriptures. Yet the Bible is in fact a work of such compelling

power that, once you have opened up your mind and your heart to the wisdom of

its words, you will find your life changes suddenly and dramatically, and the priorities

of your life will turn around completely. Paradoxically, you can then accumulate

wealth more quickly and effectively than you would have possibly expected:

although your heart, and goal, will already be elsewhere.

In a curious, but wonderfully creative way, the power of the Bible is clearly

demonstrated in an excellent movie called “The Book of Eli”. The reputation of the

Book, its power and glory, and not least its miraculous properties that enable the

construction of a sustainable system and enduring civilization, make it a great

object of desire in a post-apocalyptic world: where, at first glance, there may seem

many more time-critical and crucial issues than reading the Bible.

Originally, this course did not show its biblical context so prominently. In fact, one

might say that the Bible still now remains more in the background than the

foreground of the course, implicitly rather than explicitly present. Be that as it may,

as I was looking through and editing the course for this new, revised edition in

English, I realized that my choices and decisions were fitting into place in


accordance with a very clear, although not always directly named key and

scheme.

God's principles are the foundation of all that is good on earth, and all of our most

valuable and challenging achievements. It is a human being's biblical vision that is

the life-giving source of his happiness and strength. It is Christ who rose from the

dead who is the greatest inspiration for our indomitable, magnificent life.

In God's world, nothing is ever completely lost, it is never too late for us to change,

there are no falls from which we cannot recover, no ultimately hopeless situations,

nothing is impossible. And this perspective guarantees us an incredible quality of life,

which eludes mere rational knowledge.

In today's world, so very uncertain and perhaps more ephemeral than ever before,

with its almost unintelligible financial system, where almost everyone may seem well-

off – or, at the speed of light and with the flick of an electronic signal, almost

everyone may be (at the same time!) plunged deep into debt - an awareness of

the authentic presence of the living God in our life is the premise and starting point

of truly rational, bold and creative action.

That's why the motto of this course is: Seek the Kingdom of God above all else, and

live righteously, and he will give you everything you need. (Matthew 6:33)


ACKNOWLEDGMENTS

I owe the emergence of this guide to financial management to an exceptionally

large number of people. The idea of preparing something for an English-speaking

audience germinated a few months after I moved with my wife Kasia, daughter Ola

and son Krzyś to London in the second half of 2012. Inspired by a meeting with the

Pastor Thabo Marais of the Christian Revival Church (CRC London), I started to

translate my Internet Personal Financial Planning Course, which I had prepared and

launched in its original Polish version in 2010-11.

In fact, this was not so much a translation, but rather a new (re-)writing of an English-

language text on the basis of observing and taking note of specific cultural, societal

and linguistic differences. The specific features of the UK market (and similar

markets), also a style both of thinking and writing in English which are rather different

from "the Polish way" familiar from my homeland - as well as a natural, continuing

need of any author to update and improve an existing text - resulted in this version

of the guide becoming a new write: my first adventure at writing in a new

language.

We have all lived in a “global village” for at least 10 years, so it is no longer so

important where you come from originally. It doesn’t matter what your mother

tongue is, or your academic or non-academic background. We really live in the

world that is both breathtaking and very difficult to understand. What therefore

matters is the individual’s ability to adapt quickly to changes and earn new skills fast.

So I thank Pastor Thabo for encouraging me to embark on this project, and having

the goodness to promise me substantive and distributional backing for the finished

project.

Certainly the book and the course would not have arisen had it not been for the

personal involvement also of Bertus van Bergen from CRC London. After reviewing

the first version, Bertus joined in, especially handling the complex organizational


issues and logistics of publication of the course. I thank him for being a key figure in

the formation, promotion and distribution of this text, and the project generally.

I thank Kate Vice for her very useful comments on the first part of my course. Her

work was very important to me, because it encouraged me to invest further effort

and take greater heart in the success of my project.

Paweł Białek is a friend of mine going back to the 1990s and the first decade of the

new century, when I lived and worked in Warsaw, and would spend some

weekends back in Lublin, my hometown. Paweł comes from Lublin as well, so during

our shared journeys by car on the route Warsaw-Lublin-Warsaw, I experienced one

of the most valuable discussions in my life concerning God and His meaning in our

lives. Particularly valuable, since Paweł is a wise philosopher, who has explored the

great mysteries of our existence for years. Hence, once I started working on the

book and the course, and engaging in the complexities of undertaking a

comprehensive financial education project in the United Kingdom, and considered

where best to entrust a translation of a key part of the text to someone well placed

both to comprehend it and render it faithfully, I did not hesitate for a moment. I

wrote to Paweł - and subsequently, I have come to be grateful to him for translating

more than half of the English version of this project.

Ilse-Marie Kritzinger also made a wonderful editorial contribution to the project,

without which no one can seriously contemplate publication these days: that of

stylistic and linguistic tuning of the text. Her fine sense of style and linguistic

imagination helped me to make many significant fixes and improvements.

Also a great inspiration for me was working with Peter Shaw, who, as English

language consultant, checked through this short work for stylistic consistency and

idiomatic impact. A series of notes by Peter to each of the sessions, explaining his

suggested amendments, choices or options, but leaving all decisions open to me,

proved invaluable "fine tuning" of the final work - and also provided me with further

practical lessons in the many subtleties of the English language.


I would like to thank Dr Andrzej Fesnak, who first was my mentor and then also

became a friend of mine. In particular, I am grateful to him for preparing a draft of

Session 10.

Many thanks also to my wife Kasia, for her everyday support. Working on this course

together has been an unforgettable and extremely uplifting experience. Kasia

arranged and supervised the ongoing work on the project perfectly, coordinating

the efforts of our team with great insight and astuteness.

I thank God for the original idea for this Guide, and for the courage, determination,

patience and creativity to carry it through to completion. If a unique spirit touches

this short course, if over particular sections there hovers an extraordinary aura and

blessing, this is thanks to the Holy Spirit.


Session 8: Financial Freedom, or Living on Credit?

Life on credit is the most common lifestyle choice of our civilization. This is due to the

habit of acquiring a wide variety of goods, in quantities greater than actually

needed. This civilization and its accompanying mindset continue undiminished. The

bizarre paradox of our times - the deeper we are in debt, the better it is for our

economic and financial system - dates back to the 19th century, if not earlier. We

incur debt up to certain limits, of course. These limits, however, continue to expand.

And more and more virtual money seems available. Money, however virtual it may

be, gives us very practical, tangible benefits.

How then are we to avoid credit traps?

The easiest way is to not take on credit at all. This resolves the problem, 100%. It also

stops any further agonizing about loans. The point is, however, that the vast majority

of us make liberal use of credit offers. Credit has become an integral part of our

lives, and our system of thinking. When we need money, our first thought and

reaction is usually to find out from where, from whom, and how quickly we can

borrow that money. At the same time, we are definitely less likely to look for a good

investment idea, or other ways to generate money.

If we are forced to take credit at all, let us observe a few simple, but effective rules.

1. Thanks to Crown Financial Ministries, we know that credit makes sense only if

we borrow for education, property or a business proposition (see session 7

"Models of a Well-Planned Financial Life"). Such loans should be treated as a

kind of investment, and in the case of business, purely as an investment.

However, the term investment should be interpreted in its literal, most

authentic sense: "putting to use", for later fruition. Investing is the opposite of

consumer expenditure. An investor seeks to defer the term of expected

benefits, to foster the emergence of later pleasures; whereas, in the mind of a

typical consumer, pleasure and enjoyment must be immediate.


This table contrasts the two sorts of expenditure, with some characteristic examples.

Investments

Real estate (for rental

to others)

Investment funds

Bank deposits, stocks,

bonds

Precious metals

Expenditure

House (to live in) or

other residence

Holidays, vacations

Clothing

Private healthcare

Car for private use *

* A car for business use is very often to be seen an investment, when used to facilitate increased

revenue. In addition, its running costs can often be offset against tax. (Note: this is one of many

examples where the usefulness of an expenditure depends on its actual purpose.)

We do not actually invest in our appearance or clothes, despite the common

suggestion in the media. It is an expense. Admittedly, it is (within reasonable

boundaries) a necessary outlay, but it is still to be regarded as an expense, rather

than an investment.

Similarly, do not be fooled into thinking that you invest in interior decoration, or a

holiday trip. Though it is important to live in a place that suits our preferences, or at

times to go on holiday to regenerate and recharge the batteries, these are

expenses, not investments.

2. Through a series of "Rich Dad" by Robert & Kim Kiyosaki, we can all grasp the

following key differences:


a The concepts of good debt, where we incur debt to earn money

(the objective being profitable investments), versus bad debt, where we

spend money on living.

b Liabilities (anything that "takes money out of our pocket"), as

opposed to assets (essentially, any investment that generates money by

creating passive income).

Out of this comes a simple and very practical conclusion: do not take out a loan, for

example, just to raise your standard of living at any cost. Do everything possible to

obtain money in a different way. Such loans exert a negative effect on:

a your finances,

b your creativity. In other words, when I need money, if I resort to taking

out a loan, I am closing down the more creative route of searching for

additional revenues, or alternatively improving my spending discipline and

giving up an occasional pleasure.

Look at the following table, and see how consumer loans can ruin your finances.

Let's take as a base figure a $30,000 bank loan, to be repaid over 10 years. Such

loans are one of the most widespread ways voluntarily to surrender tens of

thousands of dollars over a period of years.

Rate of Interest 11% 15% 19%

Monthly Installment ($) 410 478 551

What you end up paying after 10 years

of repayments ($) 49 140 57 360 66 155

NOTE: these amounts exclude inflation and other credit costs.


After ten years, at an interest rate of 11%, if you manage to cope with such a loan,

you will have paid back almost $20,000 more than you borrowed - and (see table)

this figure may rise to over $35,000 as the interest rate increases. As this simple model

does not take into account inflation and other costs of borrowing, the total amount

could in fact be much more. Is it worth bearing such high costs for what, in many

cases, is a badly thought-out decision, or even a whim? Surely it makes much better

sense to focus all your energy on seeking ways of multiplying your money, not

borrowing and thereby crippling your finances.

3 If you take on credit, first apply the rules of financial security.

Revisit Session 3 of the course, and calculate how your loan will affect the structure

of your expenditure: that is, how far will it increase your monthly spending by

servicing the debt.

4 Apply the universal “rule 3:2” proposed by Dr. Andrzej Fesnak.

Regardless of what the bank decides regarding your credit rating, calculate

monthly installments that you can afford to pay regularly within your budget.

Suppose that amounts to $900: take out a loan with $600 monthly installments, and

invest the balance by opening an investment account. The loan will have interest of

11%, 15%, or 19%, and the investment only, say, 4-6%. And yet, over the long term,

this will have a staggering effect. After some time, despite the significant difference

between the interest rates of the loan and the investment, the profit from the latter

will align with the amount of the credit which remains still to be repaid. When this

happens, keep on investing the $300 each month. In effect, you will not only

effectively protect your credit by balancing it with investment profits, but finally you

will get rid of the debt, and the sum of money in your account will still increase.


This is the magic effect of compound interest. Make sure you take advantage of this

effect, and not only the bank!

5 I would now suggest one more model, which echoes the structure of

expenditure presented in Session 3 (part 1 of the series "Models of a Well-

Planned Financial Life")

Look for the most profitable ratio of loan installment to invested amount that you

can find – in the model just described, the ratio was 3: 2. (We spent about 66% on

the loan installment, and 33% on the investment.) We would urge you to seek an

even more favorable model:

● Wherever possible, with more like a 50:50 ratio of loan installment to

invested amount,

● Search generally for loan offers with a low interest rate,

● When investing, seek out for financial instruments such as investment

funds, which will earn more interest than if you deposit your money in a bank.

(Please note however that this type of investment requires considerable levels

of competence.)

Now complete task 1 (take a separate piece of paper):

1. Visit two or three banks and financial institutions, and ask a financial advisor

about their best current offers in these areas:

a. Mortgage credit,

b. Consumer credit,

c. Bank savings accounts, and any other 'financial instruments' designed to

multiply your money.


2. Ask for a schedule of loan repayments (for a and b) and levels of savings

(for c).

3. Select one of the credit options, and also one of the investment proposals.

Calculate, on the bank's suggested base, how long it will take for the profit

from the investment to balance the outstanding amount of the loan.

This concept of balancing gains favorably against losses - technically known as

financial leverage - is one of the golden rules to safe lending and earning on

borrowed money.

And my final, extremely important, piece of advice in this session is: read all

agreements before signing them. Make the time to read them very carefully,

including the small print. If they raise any concerns, seek legal advice. Also

remember that you can negotiate with banks for better terms. There are many

banks and financial institutions on the market, and the vast majority of them actively

seek our custom. Make use of this fact. Never forget that you too have the right to

earn interest on your money.

In the next session, we will talk about debts – a great curse, and our chance of a

lifetime!

Finally, please complete the most profitable task of this session:

Focus on ENTREPRENEURSHIP as you read through the following quotes and meditate

on the timeless wisdom of the Bible:

1 John 2:15-17


Do not love the world or the things in the world. If anyone loves the world, the love

of the Father is not in him. For all that is in the world—the desires of the flesh and the

desires of the eyes and pride in possessions—is not from the Father but is from the

world. And the world is passing away along with its desires, but whoever does the

will of God abides forever.

Proverbs 22:29

Do you see someone skilled in their work?

They will serve before the kings;

They will not serve before officials of low rank.


Session 9: Debt – Curse or Blessing of Our Times?

As we discussed in the previous session of this Personal Financial Planning course, our

debts are the result of rushing into ever-increasing levels of borrowing. Other

important causes of the accumulation of debt can be found, among others, in

Session 2 ("Marketing. The Art of Seduction"), where we showed how irrational

financial decisions may be if you are being swayed by a consumerist ideology. We

opposed this mentality with a series of 10 models of financial life: in the process, we

have constantly reminded you, and would now once again encourage you, to plan

your personal finances systematically by using financial statements. In this session,

we will now set about trying to find as many practical solutions for those of us who

have fallen into financial trouble.

In one of my first publications (see www.financialcourse.co.uk) in 2013, I wrote the

following:

Did you know that consumers divide into 3 financial categories?

1. The largest of these categories (up to 50% of society) are those consumers who

are permanently in financial trouble. In this group, a few million people are not able

to regularly pay off their loans!

2. The second category (about 45%) consists of those consumers who get by in life,

but sometimes they teeter on the edge. Although they ultimately manage to

overcome the crises, their lives are marked by money-related fears.

3. The third category (not more than 5%) are people who at some stage of their lives

had a bit of luck and have had a thorough financial education. Some of them are

entrepreneurs or representatives of the so-called liberal professions (less frequently

holders of full time jobs).

Today I have good news for you. If you belong to Category 1 or 2 and feel you are

suffering unduly because of debt, I believe I can help you see the light at the end of

http://www.financialcourse.co.uk/


the tunnel and give you a chance to turn your life into something extraordinary. But

how can your troubles become an opportunity for you?

You might have heard that in Mandarin Chinese, the word for crisis is composed of

two logographs (Chinese characters): one meaning crisis, and the other

opportunity. The exact meaning depends on the context. However, this is not the

only reason to look at your difficulties in a new perspective, and draw hope from the

depths. You will find a constant source of strength and courage, as well as

exhortations to resist the temptation to despair, in many places in the Bible. You can

also find extremely helpful literature in the field of personal development. Such

guides can offer a multitude of inspirational ideas and down-to-earth insights, and in

many cases supply effective troubleshooting tools that can help us transform even

the most fraught situations into a fund of invaluable experience. In hindsight, this

may be a great turning point: the start of big dreams and practical plans.

What is there to be said about debt?

1 You should avoid debt wherever possible.

2 You must pay off debt whenever you incur it.

These are, in my view, the two fundamental truths about debt. However, in what

follows we will have to proceed beyond these truths to deal with cases where

someone has run into such severe debt that it starts to ruin his or her life. And make

no mistake: debt can indeed ruin your whole life. This is another reason why financial

operations should not only be based on sound calculating skills, but also, crucially,

stem from a holistic and coherent philosophical life system. This is a point I have

emphasized from the outset of this course.

Now complete task 1 (take a separate piece of paper):

By the end of next week, take stock of your current financial position. Is

everything in good shape? Do you face any threat of bankruptcy due to


excessive debt load? This sort of bankruptcy can often remain unseen to us

up to the moment it strikes - unless we have exercised proper control over our

finances. If you find even the slightest symptom of trouble imminent, get to

work immediately planning and implementing adjustments to your life

strategy and/or repairing your personal finance structure. This course has

already introduced sufficient tools to help you achieve this end.

From personal experience, I know that anyone who gets into debt usually takes one

or other of two very different strategies:

1 Regardless of the size of the problem, they deal with the situation on a

rational basis, and get to work systematically repairing the damage. They look

for suitable solutions to the problem until they find them, and use these to

eliminate the problem.

2 They avoid the problem in the hope that it will somehow resolve itself.

What then actually happens is that the debt increases, and the problems only

multiply.

The former strategy is the only sane route out of debt. What is more, the urgency

and impetus this can give you often becomes the start of your road to financial

freedom!

Reliance on the (disastrous) second strategy may occur for a number of reasons:

a Many view debt as if it were a final apocalypse, and sink into

depression, physical and/or psychological breakdowns, and may even end

up taking their own lives

b They tend to be ashamed of their problem, and are thus unwilling to

share it with anyone, and as a result, also shun opportunities of advice and

support.


c They generally find they become unable to ask for any sort of help

anywhere.

d They often start to come under violent pressure from debt collection

companies.

e They do not know how to give up their lifestyle of physical and

psychological comfort, and thus seek additional loans to shore up a lifestyle

they really should change.

All the attitudes and behaviors that characterize the second strategy are, sooner or

later, harmful and potentially fatal. For this reason, if you can identify with the

mechanisms of this strategy, keep on reading until you have found effective

methods to change your direction.

Here are my 11 key tips for those in debt

1 First of all – and most important of all – keep your spirit and mind calm.

Panic and fear are the worst advisors. Are banks and debt collection

companies harassing you with phone calls? Will your family not leave you in

peace? Do you have a recurrent feeling of impending doom? Here's what

you can do:

a Find an hour a day alone which you can use to banish fear and despair

by visualizing a situation where you have paid off some debts. Imagine

yourself as a creative person who is resourceful and enterprising, and who

can be released from debt step by step. Think how much you will gain, how

much you will learn, and how much stronger you will be once you emerge

from the dark night. Envisage how much you will change personally by solving

the problem. And how your future can look thanks to this turnaround. This

simple technique will not only bring temporary relief, but systematically

strengthen your vitality, and protect against distorted perceptions of reality


where debts appear a form of curse or nightmare from which there is no

awakening.

b Find someone who can support you emotionally. This is yet another

reason why finances should be an unbroken part of family life. If, for example,

husband and wife, boyfriend and girlfriend or parents and children regularly

talk about money, they take courage and learn to plan budgets and

collectively make up a powerful advisory council at home. If you have

neglected this area, or if it is not available, you should look for support among

trusted family friends. You may have to look for advice and support from

strangers - often also a good solution, because two heads are indeed usually

"better than one" when a problem is serious. It is better to seek other people’s

advice than try to deal with your demons all on your own.

2 Immediately start preparing a solid, written action plan. The quicker you

do this, the better. When you make a plan and take the first steps right away,

you will feel a certain relief. This is because taking the initiative gives you a

heartening sense of control over the situation. Do not wait until you get a

phone call or a letter with a payment demand. Be proactive. This will also

help to increase your reliability. Banks, companies, or individuals you owe

money have no idea what is going on inside your head and in your life. If you

just ignore them, they will simply come to the conclusion that you have no

intention of paying them back. The sooner you respond to them, better still,

approach them, explaining your situation and asking for more time, the better

and faster things can start to progress to your desired release from the burden

of debt.

3 Organize the information. Allocate a file or a drawer to keep all

documents concerning your debts in order, and easily accessible.

4 When you put together the financial facts about the size of your debts,

make an initial diagnosis. Calculate how much you owe, and to whom. Make

a list of priorities. In the booklet “ Your financial development" by Crown


Financial Ministries , in the section “Escape from the debt trap" we can read

the following:

"Pay your debts quickly by using the snowball effect. Increase your smallest

debt installment by as much as you can. When you have paid it off

completely, add the value of its installments to the installment of another

larger debt to increase that installment. Continue until all your debts have

been settled."

5 Find some money to obtain an independent legal diagnosis. You can

also take advantage of many free financial advice services. Why do this?

Because banks and debt collection companies are not always completely

open and honest with you. It is important to get an objective, unbiased

diagnosis of your real financial position.

6 Find some time during the day to work quietly and systematically on a

solution to the problem. Maybe you'll have to get up half an hour earlier, or

give up watching TV or surfing the Internet for a while. Perhaps you can also

try to work more effectively, if you carve out some time from your daily

schedule to hone and perfect a strategy to pay off your debt.

7 Pay off as much as you can, even if it is only a small amount. If you

cannot afford to pay the full installment, rather pay what little you can, than

pay nothing at all. If you explain your situation to your creditors, it will make a

much greater difference to them (and you!) than if you just avoided the issue,

and paid and said nothing at all.

8 Make an inventory of what you have. Sell off everything you don't need

(need, not want!), to pay off or cut down the debt. Can you sell your car, or

swap it for a smaller one? You might even need to move to a smaller

apartment, cancel your television subscription, or gym contract.

Difficult decisions call for rational, careful consideration. You may feel so

attached to your comfortable lifestyle that the very thought of lowering its

standard in any way seems unrealistic. Well, in that case you'll have to do


some work on your priorities. Take action calmly, but act as soon as possible,

to avoid your emotions leading you, and leading you astray. If you think

beyond the moment, you will realize that it is better to apply rational,

reasonable thinking skills - and your creative imagination - which will allow you

to appreciate the longer-term effects of the decisions you make now.

If you have a problem with the idea of selling something to reduce or get rid

of your debts, imagine that a company, your employer or a friend owed you

money. How would you then feel if you visited your debtor in his or her elegant

house, with an expensive car in the driveway, to be told, sorry, there is no

money to pay back the debt, and that you will just have to wait? Or if you

heard that your employer, who has apparently not been able to pay you a

salary for the third month in a row, has gone on holiday to an exotic island,

leaving instructions for you to exercise patience and forbearance? Try to put

yourself in the shoes of your creditors. Money and assets are usually

recoverable later. If you lose your good name as well, you can get into much

worse trouble than debts alone cause.

9 Work out a fair, sensible response to any phone calls from banks or debt

collection companies, who may start to phone several times a day with the

same question: "When can we expect to see the money?" For reasons best

known to themselves - at least if my experience at the lowest ebb of my life is

anything to go by - debt collection agencies tend automatically to presume

that any debtor is a crook and/or good-for-nothing (a "loser"). If you find the

same experiences happening to you:

a Think how much you can gain from employing the skills of tough talking.

b Whatever you do or say, don't lose your head during such

conversations. They tend to be full of the various "tricks of the trade" (the trade

in this case being debt collection). If you have a repayment plan in place,

are working towards the speediest practicable repayment of your debts, and

you have already communicated with the creditors and are working with

them towards a fair and equitable settlement, and yet the phones still


continue to ring, consider such talks as a free course in 'Polemics 101'. Do not

let anyone ridicule or threaten you, or force you to take repeated phone calls

a day regarding the same case.

Do not hesitate to take the appropriate legal steps against harassment and

intimidation.

c Beware what you might say under pressure, particularly under duress,

and make no declarations - least of all in writing - in any situation where you

are not convinced of the argument, because you have not had enough time

to consider the full implications or make a properly informed decision. Some

people dread phone-based debt collection, or a threat of being visited by so-

called “field debt collectors" to such an extent that they are ready to do

almost anything to have (however temporary) peace of mind restored.

However, we cannot stress this point too strongly: there is no advantage to be

gained in signing a promise of payment that you have no way of honoring.

This is likely simply to land you in even deeper trouble.

10 Investigate if you can restructure the debt. Often it turns out that instead

of taking out a further loan, which usually just exacerbates your problems, you

can turn rapidly-increasing, runaway debt (e.g. outstanding credit card or

consumer loan repayments) into one protected by a mortgage. If this is a

carefully thought-out and well calibrated decision, then you will probably

gain in several respects:

a interest on the debt may decrease by up to 10%,

b the size of the monthly charges - monthly installment, plus outstanding

payments and interest - may decrease by as much as a few hundred dollars.

Best of all, you will restore a measure of peace to your life - and also free up

time for further research into more effective ways of reducing and eliminating

your debt.

11 Use the “statute of limitations” - but in accordance with the moral

compass of your conscience, which is always the best judge. The law


determines precisely the various periods of limitation of debts, according to

their types. However, if you deliberately avoid paying off debts simply to take

advantage of this legal mechanism, you are committing a huge mistake.

What mistake? First of all, you're breaking the law, with the obvious risks that

implies. And if you continue to behave in this way, you will never achieve

anything in your life. If you don't know why, refer back to the series "Models of

a Well-Planned Financial Life" in this course – you will find the answer there.

Use the "statute of limitations" in a situation where you are sure that someone is trying

to make money off you unfairly. For example, a number of years ago you came to

an agreement with a bank to pay off the balance of a debt. The bank reduced the

interest you had to pay, in return for your immediate payment of the remaining

amount. Suddenly, many years later, you get a call from the same bank demanding

payment, according to a document signed by a different employee. The payment

due has also increased by a thousand dollars owning to a combination of added

interest, fees and costs. You don't know where this figure came from, because you

do not have an account with the bank any more, and the relevant data was

removed from their records after 6 years. But they refer to this signed document.

What's more, the bank may obtain a judicial order for payment if you do not

successfully bar the plea on grounds “statute of limitation”. What should you do in

this situation? You have to know. Such cases do occur.

So let us here recap our advice from Session 8 regarding debt: read any agreement

before you sign it. Read it very carefully. If it raises your concerns, seek legal advice.

We can now add a further, extremely important piece of advice: whatever you

determine or negotiate with the financial institution, immediately confirm your

decision or agreement with them in written form.


This session was entitled the "Debt – Curse or Blessing of Our Times?" Can you see

how debt may be a curse, but also a blessing in disguise?

● A curse, because it makes de facto slaves of us. The necessity of paying

off loans restricts many areas of our personal, emotional, social, family and

business freedom.

● A blessing, because debt is often an engine for radical changes in life. It

forces us to greater activity, adopt creativity, discipline and courage.

Financial trouble encourages us to seek more rapid financial education. And

paradoxical as it may seem, it may be a driver to achieve financial freedom.

This ability to rise from debt or bankruptcy is the lever that often turns the skill

of recovering from debt into an art of multiplying money. This is exactly how, in

the course of human history, many great fortunes have taken off.

If, on the other hand, you do not suffer debt problems, then don't feel left out. You

can rest easy too: because in the next session, we'll introduce another way of

achieving financial freedom, which results directly from the nature of modern

finance.

Finally, please complete the most profitable task of this session:

Focus on OVERCOMING DEBT, on ENDURANCE, PATIENCE and FORGIVENESS, as you

read through the following quotes and meditate on the timeless wisdom of the

Bible:

James 1:12

Blessed is the man who remains steadfast under trial, for when he has stood the test

he will receive the crown of life, which God has promised to those who love him.


Romans 12:19

Beloved, never avenge yourselves, but leave it to the wrath of God, for it is written,

“Vengeance is mine, I will repay, says the Lord.”

This is a part of the Internet-based Personal Financial Planning Course - “How to Get

Rid of Debts and Achieve Financial Freedom”.

Andrzej Manka

www.andrzejmanka.com

Original edition copyright © 2013 Andrzej Mańka

All rights reserved.

All rights reserved. No part of this e-book may be reproduced or transmitted in

any form or by any means, electronic or mechanical, including photocopying,

recording or by any information storage retrieval system, without permission from

the Publisher.

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