You hear recovering addicts say it all the time — the first step to getting help is admitting that you have a problem. So it goes with debt.
That’s right, addiction isn’t just the realm of smokers, alcoholics, druggies and perverts. An addiction is anything in your life that you’ve become dependent upon — if you can’t separate yourself from something without great pain and turmoil, you’re probably addicted to it. And our world is addicted to debt.
Think about it: Do you depend on credit cards, loans and other credit instruments to get by from day to day, week to week, month to month? Would you be able to drive a car, buy food, or attend college without borrowing? For far too many people, the answer is no. Our society’s addiction to debt is widespread and well-documented. It is throwing our governments into turmoil, and has created a financial bondage around the necks of Christians that prevents us from doing God’s work with His money.
If we’ve been successful in convincing you that debt is not part of God’s plan for your financial life, then hopefully you’ve come to the place where you’re ready to get real about your debt. You’ve realized that borrowing decreases your buying power; that just because you can afford the payments doesn’t mean that you can afford the purchase; that it isn’t impossible to live without borrowing. You’re ready to begin doing something about your debt.
We’ve talked a lot about some of the theories around debt. Now let’s take a look at the practical side — where does most of our consumer debt come from? While everyone’s life story is different, these common denominators show up in many people’s debt landscapes:
- Credit Cards. The crack-cocaine of the middle class, credit cards are the most prolific creators of consumer debt in America. You may have signed up for your first credit card in college, either as an “emergency” backup plan or as an attempt to build a credit score. Because they were convenient, you began using them to pay for everyday expenses in restaurants, grocery stores and the mall. Because they had friendly payment terms, you gradually let a balance build up on the account until one day you realized that you had amassed several thousand dollars worth of debt.
- Car loans. For decades, people have taken up smoking because people looked cool doing it on TV, or because all of their friends were doing it… even though they knew it was dangerous. The same is true of auto loans: Though we all know that we could get from A to B in a hooptie ride, new cars make us feel much cooler. A car helps create the image that you want to send to the world. And since you didn’t have much cash to spare, you took out a big loan to buy that brand new car. It all seemed like a good plan… until you realized that you owned more on the car than it was worth.
- Student Loans. Just as our culture tells us that you can’t go to a party without drinking, it also tells us that you can’t go to college without borrowing money. The truth is, you can — but it’s not nearly as much fun. So instead of busting your hump by working your way through college and paying cash as you went, you took out student loans, which would allow you to live in a dorm, join a fraternity, and work part-time for beer-money. You figured that you would pay off those loans with the plum salary you would get just for earning a degree. Once you hit the real world, though, you began to realize that the five-digit Sallie Mae balance could be around for 20 years or more.
- Medical costs and home repair. Sometimes people become addicted to prescription medications that were once necessary to help keep them healthy. Some debt, like medical bills and home repair costs, come from similar circumstances. You needed to go to the hospital when you broke your arm, and you had to replace your furnace when it went out. But because you hadn’t saved up for emergencies, you had to set up a payment plan at the hospital, and take out a “convenient” same-as-cash loan from Home Depot. Now, those debts have gone nowhere, and the interest payments are starting to add up.
There are other ways to get in to debt, of course, but these four are the most usual suspects. We’ll deal with each of them separately in upcoming articles. For now, take some time to stare down your debt addictions in these areas.
After all, figuring out where you went wrong is the first step to making things right.Lead photo appears courtesy www.taxbrackets.org.