No doubt many of us have had to confront the reality of our debts and the subsequent pain required to pay them off. Surely the shake-down of credit and debt in the global economy has forced the average person to get their head out of the sand! My recent read through the book of James got me thinking about the efforts many North Americans have made to avoid “looking or feeling poor” and how those behaviours attached to credit are making us all suffer. It does elict grief: James writes, “Now listen you rich people, weep and wail because of the misery that is coming upon you. Your wealth has rotted, and moths have eaten your clothes. Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days” (James 5:1-3). Ouch! That’s hot! A survey of the world shows that we have lived like kings and queens in North America. We have hoarded, spent, and trivialized great blessings until now they are slipping away. What to do? Well one this is to change your view of debt. Below is a reprint of an article I wrote for one of my other blogs.
One of the issues on your way toward financial freedom is to settle how you view debt. You have to change your thinking. Most of us in North America it seems have accepted one or more of the numerous mantra’s about debt. One of the most laughable I heard from a member in our last provincial government was, “We are going spend ourselves out of debt.” Total confidence…sheer lunacy.
Many of us came to our views of debt honestly in the adventure of paying for school and trying to enjoy a level of life that was beyond our means. That first credit card application was a rush. We felt so responsible, so grown up, so trusted. The first credit card has become an unfortunate rite of passage. And then they increased our limit. Oh, we must be doing something right; see they want to trust us with more money. Some of us even looked for bragging rights by comparing the size of our credit limit. The shocker comes though with the first run of bills after graduation. Our first year salaries and our hoped for lifestyle are not congruent with the size of our debt.
And then the pattern of debt creation continues as we justify added credit cards and debt with the, “Oh, its just for emergencies.” We make promises, we do not make adjustments. We have regular emergencies like dates, groceries, birthdays, Christmas, cell phone bills. And then the extraordinary like broken cars.
If you are going to become a person of means with growing wealth you must become a person with the character required to steward wealth. More money is not necessarily the whole solution you need. Your character for managing wealth grows by dealing with the beliefs and emotions you have connected to debt. Here are four views on debt I believe you need to integrate into your worldview:
1. Debt makes me a slave to the lender. The Bible’s wisdom reminds us: “The rich rule over the poor, and the borrower is servant to the lender.” Proverbs 22:7 If you have debt you are a slave to your lenders. Debt / Credit is our new form of slavery. We are all singing new forms of the old song, “I owe my soul to the company store.”
2. Debt is a trap from which I must escape. Again the Bible’s wisdom reminds us: “If you have put up security for your neighbour, if you have struck hands in pledge for another, if you have become entrapped by what you have said…then do this my son to free yourself, allow no sleep to your eyes, no slumber to your eyelids. Free yourself, like a gazelle from the hand of the hunter, like a bird from from the snare of the fowler.” Proverbs 6:1-5 If you are indebted you are entrapped in something that seeks to suck your life away. Develop some urgency about escaping.
3. Debt / Credit is not my best plan for paying my monthly expenses; actually last month’s income is the best plan for paying for this month’s expenses. I have talked to many people who go through the month “collecting points” by using their credit card to pay their regular and irregular expenses throughout the month. It’s OK they reason, as long as I pay it off at the end of the month. The trouble is they are never working for themselves. They are always working to payoff their lender. As well they have no margin for the unplanned–what happens when they cannot work a month?
4. Debt / Credit is not my best plan for dealing with emergencies; actually cash is the best plan for dealing with emergencies. The truth is many of us in North America are just living month to month, week to week with out incomes. We are just two weeks from financial disaster. We have bought into the idea that our debt capacity–our credit cards and lines of credit–are acceptable social nets for emergencies. The worst time to use your credit card is when you need to. You need to get out of debt; you need an emergency fund that is constructed of dollars not debt.
Changing your mind is a first step for getting out of debt. I have so appreciated the work of Dave Ramsey on this matter. His presentations are definitely “in your face” as he attempts to change the minds of North Americans on debt. You can hear more by going to his .com website formed with his name www.daveramsey.com