Financial Freedom Series: Why Do We Rack Up Unnecessary Debt?
Welcome to part 7 of our Financial Freedom Series, where we’re looking into God’s Blueprint for Building Wealth and Managing Your Money Well!
We dive into biblical principles and cutting-edge money management wisdom to help you…
- Honor God with your money
- Build wealth
- Shrink your debt
- And build toward financial freedom
“The rich rules over the poor, and the borrower is the slave of the lender.” (Proverbs 22:7)
“But remember the Lord your God, for it is he who gives you the ability to produce wealth.” (Deuteronomy 8:18)
“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” (Proverbs 21:5)
“The wise man saves for the future, but the foolish man spends whatever he gets.” (Proverbs 21:20)
“I will guide you along the best pathway for your life. I will advise you and watch over you.” (Psalm 32:8)
So many people are…
- Battling to make ends meet,
- Living above their means,
- Cash-strapped,
- Debt-ridden,
- Just trying to survive,
- Going through the motions, and
- Disillusioned with life.
Over the last few weeks, we have looked at various aspects of DEBT.
So far, we have…
- Looked at the horrific statistics on debt,
- Encouraged you not to give up but to surrender your debt to God,
- Looked at the difference between good debt and bad debt,
- Encouraged you to face your debt and examine your current financial position,
- Motivated you to act and deal with your debt,
- Shared how you can avoid the debt trap,
- Looked at the consequences of being in debt.
Today, I want to look at 4 REASONS WHY SO MANY GET INTO DEBT.
In the next few weeks, we will share practical ways to help you SQUASH YOUR DEBT and follow this up by giving you a DEBT ATTACK STRATEGY that really works to help you get out of debt once and for all. Once we have dealt with debt, we will give you the tools to build financial freedom. I am confident that you can turn your financial affairs around.
Why do people rack up unnecessary debt?
It is easy to overspend and build up debt. I want to encourage you to avoid taking on more debt. Think twice before you spend!
I want to encourage you to avoid the debt trap.
4 Reasons Why So Many Create Unnecessary Debt
- Peer pressure.
Many are trying desperately to “keep up with the Joneses.” You may feel pressured to have what your friends have.
You may say,
“I have to have it too!”
“If I get that new (fill in the blanks), I will be happy.”
Please don’t fall for the lie!
The truth is that often when you buy that “latest gadget or fashion item,” it is outdated by the start of the next month anyway! Even that brand-new car does not feel that new by the time you need to make the first repayment!
“You must not covet your neighbor’s house.” (Exodus 20:17)
Do you realize how crazy it is to try and keep up with the Joneses?
“Often, we buy things we do not really need, with money we cannot afford to spend, to impress people they don’t even like!” – Dave Ramsey
Trying to keep up with the Joneses will leave you debt-ridden and empty.
Before you buy that item on your credit card, which creates debt, first ask yourself:
“Is it worth it?”
If you want or need that item, rather save up for it!
- Instant gratification.
You see that advert for that new awesome gadget. You cannot wait! So, you convince yourself that you HAVE TO HAVE IT NOW! Not next year, but NOW!
So, you buy that item on credit, and it looks good. It feels so good now! But a few days go by, and the newness wears off, and all you have is a nice debt and a monthly repayment schedule that messes up your finances.
Can I let you in on a little secret?
You are allowed to save up for things!
The advert on TV tells you that you can buy that car for a “special discounted” price and that you only need to make the first payment in 3 months. Many think they have the deal of the century, only to face the harsh reality of repaying the debt installment over the next 5 years! And then, after 5 years, you have another debt balloon payment! They call it a residual payment. WHAT A DEAL!
Many buy now and choose to pay it off later. This makes you feel good now, but not so good over the next year because the extra debt repayment stresses your cash flow.
A little short-term “feel-good” gain often leads to a lot of long-term pain!
Jesus said, “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?” (Luke 14:28-30)
Don’t just buy things on the spur of the moment.
Ask yourself:
“Do I really need it?
“Can it wait? ”
“Can I afford it?”
“How long will it take me to save up for this?”
I promise you that you will appreciate that item more and won’t face unnecessary debt stress if you carefully consider spending first and make wise decisions instead of the spur-of-the-moment decisions that can leave you bankrupt. You don’t have to live in debt.
Like the old Queen song, “I WANT IT ALL, I WANT IT ALL, I WANT IT ALL, AND I WANT IT NOW! I want to warn you: Don’t fall for the “feel good now” lie.
In the old days, people used a “lay-buy” system. You saved up first. Why not try this approach? It will save you a lot of heartache.
When you continue to buy things on a regular basis on credit, it eventually will catch up with you. The vicious buying-on-credit cycle leads to more debt. This debt can easily spiral out of control and really mess up your cash flow while causing mounting stress and heartache.
Think twice before you buy it!
If you really want or need it, set up a plan and save up for it!
- Retail therapy.
You have a bad day so, to feel better, you decide to treat yourself on the spur of the moment without having the cash to do so!
You may choose to take a holiday when you feel stressed and book it on your credit card— “Just charge it!” Or you might just go out to spoil yourself. You may end up buying new shoes even though you don’t need them. (Often, you use something once, and it gets left in the cupboard to gather dust.) Many call this “retail therapy!”
“The wise are cautious and avoid danger; fools plunge ahead with reckless confidence.” (Proverbs 14:16)
“Retail therapy” may give you some instant and temporary relief and make you feel better now, but a mountain of debt tomorrow will not do much for your future stress levels.
Rather, build room in your monthly budget to fund your entertainment and other needs. You can also save some of your hard-earned money to fund your dreams.
Related: Your Budget – How to set an effective budget God’s way
- Addicted to spending.
Just like a person can be addicted to drugs, some people get addicted to the emotional high of spending. The old saying “money burns a hole in his pocket” seems true in people addicted to spending.
If your spending is out of control, you need to get help.
Overspending leads to large amounts of debt, and debt = stress!
“The wise man saves for the future, but the foolish man spends whatever he gets.” (Proverbs 21:10)
So, eliminate the bad habits and start forming some good ones. Why not start investing some of your hard-earned money instead of foolishly spending your money on junk?
You Can Manage Your Money Better
A little discipline with your spending can prevent your debt from spiraling out of control. By managing your money better, you can eliminate a lot of stress and can build toward a fruitful financial future.
Budget?
Why don’t you consider setting up a budget?
You can even start tracking your spending.
“A budget is telling your money where to go instead of wondering where it went.”
“You must gain control over your money, or the lack of it will forever control you.” – Dave Ramsey
Having a budget will help you know what you can afford and, more importantly, what you can’t. Set up a strategy to manage your money well.
“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” (Proverbs 21:5)
By budgeting effectively, you can create a balanced approach to money management.
Why not set some money aside for entertainment and fun?
But make sure that you also live within your means and make sure include saving and investing in your budget so that you can build towards financial freedom.
It is vital that you spend less than you earn. Only spend money you can afford to spend. You can greatly reduce your “stress levels” and increase your “joy levels” by forming good money habits.
Before you spend money, ask yourself…
“Is it worth it?”
“Do I really need it?”
“Can it wait?”
“Can I afford it?”
Count the cost!
Get determined to say NO to debt. Ask God for HELP. He wants you to bother him with your problems. He is interested in you. Set up a PLAN. Dare to DREAM. Get DETERMINED to squash your debts. DECLARE WAR on your debt. You can turn your FINANCIAL AFFAIRS around. You can get out of debt and BUILD TOWARD FINANCIAL FREEDOM.
Next week, we will continue our discussion of Financial Freedom and look at a few practical ways to help break the debt cycle. We will also give you a working Debt Attack Strategy to help you squash your debts and turn your financial affairs around. You can set yourself up for a brighter tomorrow. You can build towards financial freedom.
