The Debt Monster

The Debt Monster



Debt is a common problem in our country and it often causes people to become desperate after a while. If you have ever lived in the clutches of debt you will understand this analogy.

Debt comes to you with a friendly, albeit sharp-toothed grin and extends a friendly but clawed hand to shake yours. You have had the desire for a new plasma TV for some time, but find you cannot quite scrape up the amount to buy it. You take up the offer to buy the TV and pay it back in equal low monthly payments at 22% interest. “Hey, I can always pay it off sooner.” You reason within yourself. While you are at it, you decide to buy a nice stereo system and an entertainment center to house it all.
Quick as a flash you start receiving credit card offers in the mail. You bite. You buy a bedroom furniture set, funky couch, new clothes and a diamond necklace for your sweetheart. You feel exhilarated as you buy these items. Sure you deserve all these nice things, right? One day you turn around and find yourself in a large cage with thin iron bars. Debt is smiling at you with a forked tongue and says “Don’t worry; you can always pay everything off with your bonuses at work. You sit back in relief and pay the convenient low monthly payments.
The next month your bonus comes, but is smaller than you thought it would be. Your kids need to go to the dentist, the dog gets sick and has to go to the vet, and you get into an accident and have to shell out the $500 deductible, which you have to pay for with that new credit card that came in the mail. Your bonus is now spent and the debts still sit on the desk. You feel somewhat depressed, so you take the wife out to dinner and treat yourself with a beautiful new watch, all courtesy of the debt monster. You turn around after a few months of “one thing right after another” and find the cage is smaller, bars a bit thicker. The debt monster says “Don’t worry, you can pay it all off with your income tax return” and hisses slightly.
But somehow you never have enough money from month to month to keep up with your needs. That vacation to Maui sure added up and filling up at the gas pump every week, plus you had to buy school clothes. There is a nagging thought in the back of your mind that you just can’t shake. You get laid off from your job and have to use your tax return to buy groceries, make the house payment and pay the minimum payments on the existing credit cards. You are late paying one of your cards and this is the time you find that there is no grace period for late payments. You are also one month late on the store credit card. So your APR on the Visa goes up from 9.9% to 17.9%. The Visa company found out you were late, so they decided you are a higher risk. When you complain, the lady tells you “Well, you can always pay the balance in full to avoid the higher interest rate.” You turn around and the debt monster is leering at you and the bars have become much thicker, the cage much smaller.
Three years have passed since that big screen purchase. You are still paying the minimum and have barely paid toward the original purchase price of the TV. You get another credit card offer in the mail that says “Transfer higher interest balances to our 3.9% APR card.” You are excited and transfer the balance of the TV. Of course it helps, but you take the difference in payments between the two cards and it gets spent somewhere else. You are not sure exactly where. You find out your wife is having a baby and you splurge on new baby things. You are so excited that you don’t notice that the small cash advances you made last month had an APR of 274% plus minimum service fees of $3.00. You buy a new computer. You turn around and Debt suddenly looks very monstrous indeed, quite unlike the friendly beast you met a few years ago. Your cage is starting to look like a prison and you realize you don’t have the key.
One day six months later your wife says “Have you noticed that the minimum payments we make on the computer are less than the monthly interest rate?” You don’t believe her and look in astonishment at you bill. Yes, the minimum payment is $21, and the monthly interest is $24. Your bill is actually going up every month! Your hours get cut at work, and suddenly things look very bleak indeed. Debts are piling up and you have maxed out all your credit cards. You pay an over limit fee. You pay late charges. You get phone calls every day from collection agencies. You stop answering the phone. You turn around and see the Debt Monster for what it is: a dragon. It laughs at your misfortune and you cannot see the light between the bars anymore.
Does this sound somewhat like you? This family fell into four traps. The lure to buy what you want, the cage of not paying off the debt when you thought you would, the bait and switch of getting into debt and the interest rates go up, and the prison of not being able to get out.

IT IS NOT BIBLICAL TO BE IN DEBT

Now I know many people will say “Well, it is ok to have secured debt such as a house or business.” But I even disagree with that. The reason is because you never know when your business will flop or you lose your job and can’t pay the mortgage. Unfortunately, debt is very common in our nation.
“A false balance is abomination to the Lord: but a just weight is his delight.” Proverbs 11:1Would you do business with someone who cheats you every month? Well that is precisely what credit card and lending companies do. They can raise you credit limits and interest charges at a whim. If you complain, they can say “you can always pay off the balance in full within 30 days and you won’t have to pay the higher interest rates.” So they have dishonored the original contract you made with them and get away with it legally!
They can also remove the grace period so if you are even 1 day late, you are charged a $29 late fee. Know this: Credit card companies do not have your best interest in mind. Credit card companies will lend to a person even if they have no means to pay the bill.
Modern day loan sharks will loan out money in the form of a pay day loan or a title loan. But know this, if you cannot pay back the $500 title loan against your car, you will lose your $3000 car! One title loan place I called said they charge 25% interest. So if you borrow $500 against your car, you pay $125 interest per month, and your minimum payment is $172.46 per month for 6 months. In six months you have paid $1034.76 if you pay the minimum payments. A pay day loan place I called charges $15% interest, but you have to pay it back in two weeks.
Don’t take advantage of the ‘no money down, same as cash for 90 days.’ Translation: You can have the new couch for no money, no payments but after 90 days, you will be stuck in a revolving payment at $36 a month. Sounds suspiciously like a credit card to me!

So how do we get out of debt?
I’m sure you have heard these before, but I will remind you. There is no quick way out of debt. The average time is six years.
1. Deal with the root issue. Why did you get out of debt? Was it poor planning, foolish spending? Greed or covetousness? Ask the Lord to reveal it to you. (James 4:1-10)
2. Go through a debt reduction program. They can work with all your creditors to lower interest rates, eliminate further late or over limit fees. Some creditors will eliminate interest rates altogether, some will agree to stop raising interest rates. I know of one company that raised the interest three times from 13.9 to 17.9% in the course of a year until they were locked in the Debt reduction plan. One catch: You have to promise not to acquire any new revolving debt and can no longer use existing creditors.
3. Plan a budget and do your best to stick with it.
4. Put some money in savings to cover emergencies. Most people say 1-3 months of living expenses. If that is not possible, I suggest you start with a fixed amount and put in more as your debt goes down. For many people, even $200 is more than they ever had in their savings accounts at one time! From personal experience, monthly unexpected expenses don’t go away just because you are trying to get out of debt.
5. Eliminate extra expenses. Sell stuff you don’t need or use. Sell that extra car, stop eating out so often, get rid of that extra phone, find a cheaper internet server, buy clothes at discount stores, and spend less on entertainment. Get creative!
6. Give some to God. If you can’t give 10%, give a set amount and do it consistently.
7. There are different theories on paying off debt. Some say pay off the lowest balance first. Some say pay off highest interest rate balances first. Whichever you choose, take one debt and pay as much extra as you can. When that is paid off, take whatever amount you were paying on that debt and put it on the next debt.
8. Take a break every so often. In other words, take some cash and go to a movie or out to dinner.
9. Take advantage of layaways. No interest, small or no fees. Only put into layaway what you really need and only put in what you can pay off within two months. Don’t take the payments from you debt reduction schedule!

Why is it so important to get out of debt?
Mark 8:36-37 says “For what does it profit to gain a man to gain the whole world, and forfeit his soul? For what shall a man give in exchange for his soul?”
Debt binds you spiritually. If debt becomes your master, you become discouraged because it drives your work day; your mind focuses on paying bills and causes disagreements between husband and wife. It quenches the Holy Spirit. It sucks away your peace and binds your dreams. Say you want to move to another city, or take a cut in pay to follow your dreams or go back to school. If you are in debt, those dreams could become nothing but fantasies.
This world is increasingly evil. Some day we will be under a one-world government. We don’t know exactly how that will affect our daily lives. Getting out of debt is just one less way the world and government will not be able to control us. I believe the Lord has a message to everyone to “Get out of debt.” And do it soon. Jesus tells us we cannot serve two masters because we will love one and hate the other. We cannot serve both God and money. Allow yourself to take the keys to the debt prison and be free of the debt monster!
A final word on bankruptcy. I see only two valid reasons for bankruptcy. A catastrophic event that makes it impossible to pay the debt such as death or a permanent disability, or if you are defrauded by someone.
If you find yourself facing bankruptcy, pray to Jesus for help and provision.

P.S. Never trust a smiling dragon.


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