How to avoid a financial crisis

Dear Chuck,

I’ve ignored our financial problems for months. I don’t think things are hopeless, but I need to act so we can avoid a crisis. Do you have a crisis plan?

Hoping to Avoid a Crisis

Dear Hoping to Avoid a Crisis,

It is never too late to turn things around. Let’s go through some foundational principles and steps to get you on the right path.

Pain can be a motivator

Pain has a purpose. When we touch a hot stove, pain tells us something is wrong. When our bodies are sick, pain alerts us to seek treatment. Financial pain works the same way. It warns us that something needs attention.

The problem is that many people respond by looking away. They avoid opening credit card statements. They postpone checking their bank balance. They ignore investment accounts, delay making a budget, or refuse to total their debt because they fear what they’ll discover.

Psychologists call this avoidance behavior or intentional blindness. We temporarily reduce our anxiety by avoiding reality. Unfortunately, what we avoid rarely improves. More often, it grows worse. Interest continues to accumulate. Late fees increase. Spending habits remain unchanged. Months become years. Years become decades. The very pain we try to escape becomes even greater when we delay dealing with it.

It’s similar to ignoring a cavity. Avoiding the dentist may spare you discomfort today, but it almost guarantees greater pain and expense.

Embrace God’s plan for stewards

Financial stewardship requires the opposite response. Instead of avoiding discomfort, wise stewards embrace pain early in order to experience freedom later.

Proverbs 27:23 (NIV) says, “Be sure you know the condition of your flocks, give careful attention to your herds.” In today’s world, that could mean knowing your bank balance, understanding your spending, reviewing your investments, and honestly facing your debt. You cannot steward what you are unwilling to examine.

Jesus also said in John 8:32 (NIV), “You will know the truth, and the truth will set you free.”

Notice the order: First truth, then freedom.

Many people want financial freedom without confronting the truth. Lasting financial freedom requires complete honesty.

• It may mean admitting you’ve overspent.
• It may mean that debt has become unmanageable.
• It may mean recognizing your lifestyle has outgrown your income.
• It may mean accepting that retirement savings are behind schedule.
• It may mean confessing things you have kept hidden. 

Facing the truth can be painful, but it is necessary, because once a problem is identified, it can be addressed. And that’s where hope begins.

Ironically, the pain we fear is usually less than the pain created by years of avoidance. Can I challenge you to choose courage over comfort? The pain is temporary but often the price of long-term peace. You cannot create a budget until you face reality. You cannot implement a debt payoff strategy until you total what is owed. Every successful financial turnaround starts by choosing to stop looking away.

Step by step to avoid a crisis

• Open the statements.
• Create or adjust your budget.
• Develop a spending plan.
• Add up the debt, and decide on a payoff plan.
• Enroll in a training course, and/or work with a trained budget coach.
• Ask God to strengthen you for the journey.
• Pray with your spouse, and work on the problems together.

Though these first steps may be uncomfortable, they are a requirement to finding freedom. Faithful stewardship is not the absence of financial problems. It is the willingness to face them with honesty, wisdom, and confidence that God will guide your obedience.

Review your bank accounts, savings, investments, monthly expenses, and every debt you owe. Do not estimate. Know and record the true numbers. Set and post specific goals and timelines, then take time each week to check your progress. 

It is important to compare your spending with your values. Does your budget reflect your priorities? Where are you living beyond your means? Where can you make cuts? Are you giving, saving, and planning for the future?

Resist the temptation to feel discouraged and give up. Your current financial status is not your identity. It is simply the starting point of choosing to wisely manage what God provides. Despite any challenges you may face, God can guide you forward. Consistent steps in the right direction will lead to lasting transformation.

If credit card debt is adding to your financial worries, Christian Credit Counselors can help. As a trusted Crown partner, they provide personalized debt management plans designed to reduce debt, lower financial stress, and help you regain control of your finances.