By Steven Clark Goad
“The rich rule over the poor, and the borrower is slave to the lender” (Proverbs 22:7).
Something that has been marketed in the last 50 years more than houses and cars and boats and trinkets is credit. We want what we want and we want it right now. But this plastic money has us by our throats. Households are choking on indebtedness that has taken years to establish. It’s a dilemma that can’t be cured overnight apart from a rich uncle or winning the lottery.
We have ridden the cash cow for so long that we have accepted charging what we buy as a way of life. I know a man who has a revolving account on a charge card. He is paying the minimum each month at 19 percent interest on a balance now over $10,000. Yet he uses his card for buying lunches. He is oblivious to the fact that he will end up paying $200 for his $10 lunch.
The Debt Dilemma
I was thrilled when I paid my last car payment. A fellow driver told me proudly, “Oh, I’ll always have a car payment.” Not a very wise philosophy in retrospect. “The plans of the diligent lead to profit, as surely as haste leads to poverty” (Proverbs 21:5).
Mike Todd said, “I’ve never been poor, only broke. Being poor is a frame of mind. Being broke is only a temporary position.” If only that were true. Many families live from paycheck to paycheck. They are always one step from insolvency.
USA Today informed us that 63 percent of bankruptcy filers blame credit card bills. Credit card debt per household in the U.S. averaged over $7,000 last year. Ram Research Corporation stated there are over 50 million Discover cards, 49 million Citibank Visas, and 48 million American Express cards in use. The Wall Street Journal reported over 63 million Sears cards were active with 700,000 applications per month. Is it any wonder that two of the major credit card companies spend $60 to $70 million each quarter just marketing their cards?
It seems most households don’t have a fixed budget. Without a planned budget, wage earners can never know exactly where all the money goes. If a set amount for groceries is not made, a family could end up spending far more than it realizes on food. The same rule applies to entertainment. If there is not an amount that can be worked into the income, spenders using credit cards end up with a growing amount on their accounts at high interest rates.
Planning a budget is not that difficult. One must sit down and figure out what the necessary monthly expenses are. Utilities, house payment, car payment, medical bills, food, and other expenses must be established. Only after the necessities are met can frivolous spending be done. And even then it must be budgeted. One might earmark $100 for eating out per month. Or $50 for movies. And within every budget there must be room for savings. Spending on ourselves is the easy part. Saving for the future and sharing with those in need is more difficult.
Quit Making Excuses
If a history of out-of-control spending has been established, it is futile to make excuses or to pretend to start managing the money “some day.” I’ve checked a lot of calendars and “some day” isn’t on any of them. If we are serious about getting out of debt so we can finally enjoy financial freedom, a change in attitude and behavior is vital. We must immediately begin a program to get out of debt.
There are some tremendous financial advisors available today who share their fiscal expertise to wide audiences. Dave Ramsey is a man I admire greatly, and his Financial Peace University is a godsend to many Christian families. He uses biblical principles to walk people out of debt and into an ongoing debt-free lifestyle. Since taking his course and reading his books, my wife and I have become debt free for over five years. To be out from under revolving accounts is liberating. “Remember the Lord your God, for it is he who gives you the ability to produce wealth” (Deuteronomy 8:18).
Money has to be managed on purpose. It must be deliberate. It must be consistent. It isn’t rocket science. If I can do it, anybody can. “The wise store up choice food and olive oil, but fools gulp theirs down” (Proverbs 21:20).
Managing our incomes is not unlike managing other areas of our lives. We groom ourselves and feed ourselves often without giving much thought to these activities. But they are managed whether we think of it or not. Toothpaste. Razors. Soap. Shampoo. All of these and more must be allocated to keep ourselves looking somewhat presentable. Meals must be planned. Food must be prepared.
Getting a handle on income and living within one’s means is vital to a debt-free life. The joy of financial freedom cannot be experienced without a hands-on approach. Many financial advisors, including counsel recorded in the Bible, warn not to cosign for others. In doing so you are taking on their debt if they default. That is unwise, even within families. Sloppy handling of income is like stealing from ourselves. “Anyone who has been stealing must steal no longer” (Ephesians 4:28).
Here are some practical guidelines that will help us get out of debt and stay that way:
• Learn to live within your income. If you only make $300 a week, then work out how to make that cover expenses. Don’t spend more than you make—period. Just because our politicians do that doesn’t mean we need to follow suit.
• Always give to the Lord up front. It is far easier to live on the 90 percent that remains than to withhold the tithe that is the Lord’s due.
• Save at least a tenth of your income in some investment fund or interest bearing account.
• Pay as you go. One way to do this is to tear up all credit cards and use only a debit card. It forces you to immediately pay for what you purchase.
• Learn to pay yourself first. In other words, set aside a designated amount from every paycheck to go into a savings account. This is a way of saving for a rainy day.
• Never buy anything on impulse. Sleep on it.
• As a general rule, purchase only necessities on a regular basis.
• Plan far ahead for luxury spending.
• Buy on sale. Everything will eventually have its price reduced.
• Forget buying to impress or keep up with you-know-who. (The moment you catch up with the Joneses, they’ll refinance.)
Putting these principles into practice will bring you peace in your heart and in your bank account. “The plans of the diligent lead to profit as surely as haste leads to poverty” (Proverbs 21:5).
Steven Clark Goad is a minister and freelance writer in Blythe, California.
Financial guru Dave Ramsey provides a variety of practical, empowering, step-by-step resources to get out of debt—or avoid it altogether.
• Read some success stories