My first encounter with debt came when I was 15. It was fall and my siblings and I needed winter coats, boots and bigger clothes. Courtesy of Visa, my parents could conveniently get us these things before they had the money for them by charging them to their credit card. Like so many others, this is what they routinely did and it had always worked to pay it off the next month.
But the next month came and their income was less than half of what it normally was. The subsequent months were also low. For the first time they couldn’t pay it off. They were in debt and paying interest. My dad had panic attacks and anxiety for the next several months. It was very stressful. I didn’t understand how it all worked entirely, but even as a child I felt the guilt of wearing those clothes. I knew one thing: debt had horrible effects and I never, EVER wanted to be “in debt” to anyone!
In just the past year among my family and close friends my husband and I have seen the following examples played out in people’s lives. These are REAL people in REAL situations. Names have been changed to protect their privacy.
- Eighteen-year-old Curt borrowed money to buy a more expensive than he could afford, but hopefully “more reliable,” car so he could go to school. When a deer jumped out in front of him on a dark early morning commute, he had an almost-totaled car, no money and a huge debt he still owed to relatives. (As luck would have it, no full coverage insurance either.) He had to fix the car or buy a different one, and he had money for neither. The debt only went up, to the point he owed more than the car was worth. Then it would need other small repairs or new tires and that month’s payment that should have gone toward the debt would have to go to that instead.
- Rachel and her husband are working hard to pay down their student loans. They can live on his income alone, but hers is necessary to pay down the debt faster and be able to save. But… she’s expecting. The burden of these student loans are jeopardizing their dream of her being stay at home mom.
- John and SueAnn want to be in full-time ministry working at a church. Their exorbitant student loan debt – from a great, but very expensive, Christian college! – is causing stress in their relationship and restricting ministry. It is overwhelming and hard to see the light at the end of the tunnel when the debt is so big and a ministry-worker’s salary is so small.
- Josh took out a loan to buy a car, thinking that with his very stable job he would be able to pay it off within a year. Some very poor life choices cost him his job and now he cannot make those once so-sure payments.
- Ray co-signed with a partner on some business loans. The business venture ended up not working out and now he is stuck with a big amount of debt to pay down. This debt is hampering his dream of working with youth and extravagant giving.
- Dick and Cindy are a retired couple with an upside down rental on their hands. The monthly rent is barely enough to cover the payment, let alone repairs and other expenses. Unfortunately the apartment has too much owed on it yet that they would have a pile of debt either way and so they are slowly taking the hit month by month as it costs them to keep it.
If you think these are rare situations of bad luck, just think back in the last year or two for you and what unexpected expenses popped up (maybe some of those became debts). And look around at your friends and family – are any of them going through a rough time made worse by having debt? If some of your friends seem to have a great lifestyle supported by debt, wait 5 or 10 years and see how it’s working out for them then. (In very rare cases they may still seem to be doing fine… and it also may be that you are just seeing the shiny surface of a false identity – that they have lots of nice things and life is great, but if you knew the whole story you’d see there is a lien on their house, money fights instead of quality communication, lots of stress when the bills come, and their marriage is on the rocks.)
Making a commitment to not use debt is a safeguard from:
- Buying things you don’t have the money for
- Buying more car than you can afford
- The stress if there is a sudden change in income (job loss, injury, medical emergency) and you are unable to make payments
- Your life choices being restricted because of money owed
- Dragging a heavy debt load into your marriage
- God’s money being wasted by being paid in interest to banks
- Assuming you know how much money God will provide for you in the future (i.e. enough to cover the payments you are taking on)
When money is tight thrift store clothes, hand-me-downs, or even charity clothes may be humbling to wear, but it’s better than a new coat that the bank owns.
Deciding to live without debt is choosing to live within your means. That’s a smart way to live!
Note: This has been an entirely practical look at why not to go into debt. To know why Ben and I believe so strongly on the topic of debt, and are so passionate about encouraging people to be free from debt, read What Does Jesus Say about Debt?