Let this be a wake up call.
The majority of you are taking on WAYYY too much debt. You’re so leveraged, it’s keeping you from doing so many things that could do good not only for yourself, but also the Kingdom.
This is a serious issue that I feel runs rampant among society and unfortunately, also the church.
Although this idea has been harped on by a few in the personal finance community, it has NOT been spoken on enough and that is evidenced by the ever-increasing statistics of people living in debt up to their eyeballs.
Today, I’m going to outline what excessive debt looks like, what the implications of it are, AND most importantly, what can be done to change it.
Let’s do it!
What counts as too much debt?
Often times when questions like this are asked, the answer that is wanted is a specific number. However, that is simply impossible due to the vast number of unique and individual scenarios.
It would be easy for both of us if I simply said, “If you have debt in excess of $100,000 you are using too much leverage.” But, as you can now see, for some it wouldn’t be enough, and for others it would be grossly too much.
By the way, the term leverage is simply one that paints debt in a better light.
It means to use borrowed capital for something such as an investment, expecting the profits made to be greater than the interest payable. I prefer to say leverage because I don’t think all debt is bad.
Let me say that again:
All Debt is NOT Bad
For many, the only way they would be able to go to college and earn an education is through the use of a loan.
This is a perfect example of where I would use the term leverage (at least for many college students.) You are leveraging the use of a loan, so that in the future you can have a job that will pay you more than the loan and the interest of the loan will cost you.
But, don’t get too far ahead of yourself. Although there are many college students that use leverage in the right way, there are some (if not the majority) that use it in the wrong way.
Rather than trying to get the most VALUE out of their college education. Many students simply choose the school with the best name (such as Harvard, Yale, etc.) and decide to go to a 4-year University immediately out of high school. This wouldn’t be a big deal if the student knew why they were going to school.
But, they don’t.
So, many college students end up taking on way too many loans to try and achieve something they don’t have any idea how they will use it.
This is an example of BAD DEBT.
Another example of too much debt is a rather simple one. You’re paying the minimums on your high interest rate credit card. This is a recipe for disaster and unfortunately happens all too often.
Here’s some signs that you’re taking on too much debt:
- You’re having trouble paying your ordinary expenses such as rent/mortgage, utilities, groceries, etc.
- You aren’t saving ANY money because it’s all being paid for ordinary expenses.
- All of your extra money goes towards paying down debt.
- You can only afford minimum payments
- You’re constantly stressed due to the creditors you owe.
If any of these signs resonate with you, you may be taking on too much debt.
What’s the problem with debt?
First off, I want to make it clear that NOWHERE in the Bible does it say it is wise to borrow money.
I could not find anywhere that borrowing equated to knowledge or wisdom. I don’t think this indicates that debt is necessarily a bad thing, but it may not be a good thing either.
Here’s my main issue with debt, written rather plainly in Proverbs:
The rich rules over the poor, and the borrower becomes the lender’s slave. – Proverbs 22:7
By choosing to borrow from a lender (for those unaware, when you take a loan you ARE borrowing, meaning you must make every effort to pay it back,) you are saying I am indebted unto you until I have paid back what I borrowed.
This has BIG implications that many do not think of when they become a slave to the lender.
Having debt that must be paid off can prevent you from doing all sorts of things, such as:
- going on mission trips
- purchasing things you want
- funding missions
- going on vacation
- giving above and beyond tithe
- taking time off to spend time helping others or spending time with your family
- ___________ (fill in the blank)
These events and things that you could be involved in are often times no longer available. The reason is because rather than being able to be fully devoted to Christ, you are having to split devotion to your lender.
It says so right here in Proverbs:
Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, “Go, and come again, tomorrow I will give it”—when you have it with you. – Proverbs 3:27-28
With this being said, let’s look at what can be done to change this course.
What can be done to reverse this problem?
First off, from a macro perspective, more education is needed.
Read, read, read. I have never seen someone go broke from purchasing books to improve their life. Never.
Schools aren’t doing enough to introduce the importance of understanding money, and being a good steward of the gifts God has given you (i.e. money) is elementary to being Christ-like.
From an individual perspective, here’s a list of both basic and advanced tips I give to those struggling with debt:
- Create an emergency fund. You never know when a rainy-day will come your way.
- Set a budget and stick to it.
- Avoid Buy Now, Pay Later schemes.
- Become comfortable with being uncomfortable (it gets easier.)
- Always pay off credit cards.
- Avoid the grocery store when hungry.
- Understand your buying habits and put up defenses to help.
- Invest for the future.
These are just a few of a LONGGGG list of tips on avoiding debt.
The biggest tip I can give you regarding debt and just about everything else in life is this:
Long term consistency always trumps short term intensity. – Bruce Lee
Yours in Ambition,