In my last post, 4 Steps for Money Management For Young Christians, I discussed the basics of money management, leaving out one very key topic: avoiding the prison of debt. That’s because debt is so serious a topic—especially for college students—it deserves its own attention.
So in this post, I will cover the fith principle for sound Christian money management, which is, of course, eschewing debt.
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In This Article
Look at Debt With Both Eyes Open
Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless.
Ecclesiastes 5:10
You can have both God and money, but you cannot serve both. Yet in our modern culture, taking out a loan or racking up credit card debt is as accepted as owning a smartphone and drinking coffee.
I want to challenge that viewpoint right now. Let’s look at debt for what it really is: Debt means we think we need more than God has given us. Sale rack jeans aren’t good enough, I need $69 Levi’s 711 Skinny Fit jeans!
Debt means we think we need more than God has given us.
But debt of any kind is a harsh master, so harsh that in Biblical times, someone could actually be sold into slavery over it. Today isn’t much different, but instead of being sent to debtor’s prison, those who have heavy debt must slave away at work to conquer it, and some never do. Avoiding debt altogether is the only way to do it.
Avoiding the Prison of Debt Means Not Falling for the Lure
I can’t say this enough: If you are young and new to the world of money and spending, don’t fall into debt!
Save your pennies, catch a ride with friends. Use public transportation and save up to buy your first car with cash. (It probably won’t be the sexiest model but it will get the job done. My first vehicle was a Buick Skylark with a crackly radio and questionable brakes. When I totaled it in a rollover, I walked away—yes, walked—without the debt of a dead car hanging over my head.)
The same is true of college. You will be told over and over that you need a student loan to go to college. But student loans have sunk an ungodly number of young people right out of the gates of college.
For an in-depth look at avoiding debt in college, check out Dave Ramsey’s collection of articles, especially How to Pay For College Without Student Loans.
Credit Cards: Pretty Plastic or Vicious Monster?
TEENAGER BEWARE: You are the #1 target of credit card companies.
Why? Because statistics show that if you have a pretty piece of plastic in your wallet or purse, you will make the credit card companies lots of money—in the form of high interest charged on unpaid balances. Credit cards have become almost required in today’s electronic shopping environment. But that doesn’t mean you have to become a money-maker for a company that does not have your best interests in mind.
In his book, Managing God’s Money, Randy Alcorn lays out a few rules for using credit cards:
- Never use your credit cards for anything except budgeted purchases.
- Pay your balance in full every month.
- The first month you have a credit card bill that you cannot pay in full, cut the card in half and don’t get another one.
Some people cannot resist the temptation that credit cards present. If you are one of those people, you should not own a credit card. Don’t give the monster a chance to rule over you.
Is debt Ever Okay?
One exception to the no-debt rule is the purchase of a house—when you reach that point in your life. Look at it as rent you’ll get back someday. When you rent an apartment, you’re handing over money you’ll never see again (unless by chance you inherit your landlord’s estate. Not likely). When you take out a mortgage to buy a home, however, you have to potential to regain what you’ve paid when you sell.
But, having purchased my first home before I even graduated from college, I will warn you that homeownership comes with great responsibility. A few pointers:
- Don’t take out a mortgage bigger than you would be able to pay for rent. It kills me every time I see a bank okay a loan much bigger than my budget would allow. If you operate on a budget (which you should if you’re even considering this), go by your budget, not the bank’s suggestion.
- Houses have extra expenditures that rentals do not. Figure in property taxes, utilities and maintenance when you figure how much you can spend each month.
- Start small. Your first home doesn’t need to be a 2,500-square-foot behemoth with a Mt. McKinley-sized mortgage. In fact, a smaller home is actually more enjoyable. You clean less, you don’t pay as much for maintenance and utilities and you don’t have to work as hard to pay the mortgage. Scale up to a bigger home only if you need to. A growing family is a good reason to have a few extra rooms, but a growing income is not.
Always remember, God is big enough to provide for you. Avoiding the prison of debt is possible when you look to him for everything!