Credit debt is a long-standing problem in the United States. Since the 1960s, when credit card use became common among consumers, our rate of credit debt has been steadily increasing.
It is easy to think of having credit debt as something that is normal, perhaps even to be expected, but having credit debt and being in bondage to that debt through worry and stress should not be common for a Christian.
Although we are taught we should not covet what our neighbors have, it is hard for many people to overlook what someone else has and not want the same for ourselves. The bulk of Americans use credit to purchase those special items. They finance cars, boats, motorcycles and other recreational toys. They purchase clothes, shoes and sometimes even groceries on credit. Credit debt has become not only dangerous, but quite common.
Avoiding credit debt is not difficult. It is really about staying true to your ideals, being honest with yourself and standing firm when pressures for impulse buying arise.
Avoiding Credit Debt
Experts say that the best method for avoiding credit debt is to avoid using credit altogether. Although this might be difficult when making those large purchases, like a car, it is entirely possible in daily life to pay for everything with cash.
One of the best methods for avoiding credit debt is to have a budget. Keeping a budget requires people to think about purchases, understand where those purchases fit into the big picture and then, if necessary, reverse course and choose not to make a purchase or make a less expensive purchase. Rather than being limiting, a budget is really a roadmap to a solid financial future and tends to make buying decisions simpler rather than more difficult.
The lure of credit cards and credit debt is all around us. A recent study showed that college students graduate with an average of $9,000 in credit debt. This is staggering when you consider that most debt is acquired in early adulthood, after college. No matter our level of education or knowledge, everyone is tempted by credit.
It is hard to avoid having a credit card altogether (as booking travel, or renting a car is nearly impossible without a credit card), but staying out of debt does not have to be hard. If the cards are used only for booking travel (but not paying for travel), there will be no trouble with debt.
Tips for Staying Out of Credit Debt:
- First, if you must use credit, carry only one card with you. Do not pick and choose cards with each purchase, which adds to your debt and makes it harder for you to keep an eye on the debt you are incurring.
- Because many credit cards offer unique reward opportunities, credit card holders might want to use credit cards for regular purchases, like gas, groceries and household items. If you do this, keep a running total of how much you have charged to your card each month and be prepared to pay that amount in full when the bill arrives.
- Finally, if you find you are tempted to use credit when cash is not available, do not carry a credit card with you. Keep them at home. Put the credit cards in a cup of water or ziploc bag and freeze them. This makes you think long and hard before thawing them out, and using them for something unnecessary.
Tips for Managing Existing Credit Debt:
- Credit debt should be carefully managed. That is, it should be written down, completely accounted for and watched. Any extra fees should be curtailed (never sign up for a credit card that charges an annual fee, and never pay the bill late).
- Remember that one of the great benefits of credit cards is their ability to help us establish an excellent credit rating. If we are careful in using them and careful about paying the bills, we will be rewarded with a good credit rating. Always pay the bill on time, even if you are worried about having too much debt. On-time payments will be worth much more in the grand scheme of establishing and maintaining a good credit record.
- Find a method for paying back the credit debt. The first step should be to not use credit cards anymore, but after that, find a method of payback that is going to work for you. You might use the debt snowball method, or you might work on the debt with the highest interest rate first. Whatever method you choose, be consistent in your strategy as you pay back the debt.
- Finally be sure to pray with your spouse about your financial situation and ask for God's blessing on your debt repayment plans.
Although credit debt can be overwhelming, it can be avoided, and it can be repaired. Find a repayment method that works for you and constantly remind yourself about the benefits and freedom that come with being free of credit debt. No matter your situation it can happen for you if you will strive to make your future financial decisions through prayer and wise stewardship.