Common Errors That Lead to Debt

By Harvey Nowland

Debt isn’t the same as credit. If you have credit, it means that a mutual trust relationship exists between a lender and you, the borrower. The Bible doesn’t say that we cannot borrow, but God does warn against the undisciplined use of credit relationships, because they can quickly lead to uncontrolled debt.

It seems amazing — considering all of the financial related commercials bombarding us — that most people aren’t trained to handle money. A common attitude is: If I want it, I’ll get it, because I deserve it. And, if I don’t have the money, I’ll charge it. It’s the attitude that says we should “get what we want, when we want it.” The concept of saving to buy something seems alien.

There may be an endless list of errors that lead to debt, but two always seem to bob to the top.

Buying too much house – Everyone enjoys a nice house, and a common practice is to buy based on how much monthly payment you can afford. However, a better test would be to determine just what you need, and not simply what you want, because things such as job loss and health issues can quickly impact that affordable monthly payment.

Buying too much auto – Larry Burkett used to say, “The best car to drive is probably the one you’re driving now.” And unless it happens to be a gas-guzzling SUV — with today’s prices for a gallon of gas averaging $2.10 (as of March 2005*) and rising — you should probably plan to keep on driving it. If you must buy, a good quality used car from a trusted source will save you the thousands of dollars that you would lose when driving a new car off the lot.

Here are some other common errors:

Vacation – Everyone needs rest and recreation. The big vacation error is paying for your playing with plastic. The key is to have an affordable vacation budget. Then, plan a getaway that fits your budget and not one that is based on what your credit cards will allow.

Compare transportation and lodging prices on the Web. Even with today’s gas prices, consider driving. Pack sandwiches, fruit, beverages and snacks, instead of eating in restaurants. Choose lodging with free breakfasts and swimming pools. Restaurants charge less for lunch than dinner, so treat yourself to good eating at noon.

Poor planning – A budget is a written plan for managing your money, and without such a plan — unless you’re one of the fortunate few with an endless supply of money — you could be setting yourself up for unnecessary debt.

Don’t borrow – Borrowing doesn’t relieve debt. Home equity loans and transferring credit card balances to lower rate cards generally won’t solve your debt or overspending problem. You must treat the debt problem with disciplined spending habits, take on no new debt and pay off your existing debt.

It doesn’t take much to get into debt, but the process of untangling yourself from debt’s bondage can be daunting. When indebtedness shackles you to your creditors, you are not free to serve God fully.

Decide to get out of debt now — and stay out. With God’s help, partnered with your discipline, you can. “A sensible person sees danger and takes cover, but the inexperienced keep going and are punished.” (Proverbs 22:3 HCSB)

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