In Phase I: The Foundation Phase, Step 4, Pay Off All Consumer Debt, we explore the various ways to pay off debt and just as important, why you need to. One of the most compelling reasons to get out of debt is simply that debt is not your friend.
That may sound like a vague generality, or even a point that’s beyond obvious. But given the fact that it has become a cultural norm in America to walk peacefully with debt, this is a topic that deserves far more consideration than it normally gets.
If you can fully embrace the reasons why debt is so toxic, you might be able to accelerate your efforts to pay it off . . . .
1. Debt makes you beholden to others.
The concept of “low monthly payments” has become a certified sales pitch – used to sell various products and services – by making the entire concept of debt more tolerable. But debt is never benign, in fact the Bible describes it as a form of bondage:
The rich rule over the poor, and the borrower is slave to the lender. – Proverbs 22:7 NIV
Do you think that “slave” is too strong a word in connection with debt? Try not making the payment on your house or car and see what happens! No, you won’t go to prison for not paying your debts, but creditors can make your life incredibly uncomfortable. In extreme cases, they can even garnish your wages, seize your financial assets, or even take your home.
And even if slavery is too strong, there is no question that debt obligates you to the lender. As we move through life, it should be an objective to have as few obligations and encumbrances as possible. It frees us up for whatever else it is we would like to do in our lives.
2. Debt interferes with your faith walk.
In the Sermon on the Mount, Jesus warns us that an attachment to money can actually separate us from God:
No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money. – Matthew 6:24 NIV
Is unfortunate that many people interpret this teaching specifically to the pursuit of money. But Jesus didn’t specify which aspects of money this referred to. It is my belief that he kept the teaching intentionally generic. That means it can extend to cover virtually all things related to money.
That can include an excessive desire for material goods, for a certain lifestyle, and a willingness to go into debt in order to pay for that lifestyle.
In today’s world, debt is actually a form of money – it is commonly used to pay for all kinds of purchases in one form or another. It is possible then to also become obsessive over debt. You can do this when you pursue it in order to buy what you cannot afford, or when you fret and struggle over how to pay it off.
No matter how it plays out, debt – like all money matters – has enormous potential to separate us from God. We are on dangerous ground when that happens, even if it feels like we are merely “struggling” with difficult circumstances that result from debt.
3. Debt represents a cloud on your future.
Whatever future plans you have, debt represents a cloud on the future. Debt is, after all, a claim on your future financial resources. That is to say that any income you earn – or assets you acquire – in the future will be subject to reduction or complete liquidation in order to satisfy debt obligations.
4. Debt results in less options during a crisis.
This is one of the very worst aspects of debt. Even if you’re facing a crisis – and a very serious one at that – you will still need to make your monthly debt payments. Personal crisis will not exempt you from the requirement to do so.
If you are dealing with a job loss, a major health issue, or a family crisis, the existence of debt will limit your options to deal if the problem. For example, let’s say that you lose your job, and the only way to replace it will be to move to a city a thousand miles away. You’d like to take the job and get on with your life, but you can’t because you have two large monthly car payments, $35,000 in credit card debt, and face the distinct possibility of having to write a check at the closing table in order to pay off your mortgage if you sell your home.
Each of those debt obligations will have the effect of reducing your mobility in taking the new job. They’re all kinds of situations where debt can compromise your efforts to deal with a crisis. The sooner you can get out of debt, the more flexibility you will have in facing whatever life throws at you.
5. Debt results in less cash flow for savings.
It is a sad commentary that in the United States – the richest nation on earth – the vast majority of households are unable to save any significant amount of money at all. But this should come as no surprise, given that so many people are so deep in debt.
Each of us earns only a certain amount of money. Whatever it is that we earn must be allocated to paying off basic living expenses, any extras that we need, as well as cover savings contributions and debt payments. The higher your debt payments are, the less money you will have available for savings and investing!
Considering all that debt does to compromise your life, never allow yourself to accept the popular – if unspoken – cultural fallacy that debt is in any way your friend. Where finances are concerned, it might be better to say it’s your worst enemy. Approach it that way, and your chances of dealing with it successfully will be much greater.
Have you struggled with debt thinking it was your friend? Leave a comment and tell us your story!