Dealing With Debt
Giannis: * “My business collapsed during the Greek financial crisis, so we could no longer keep up with our mortgage and credit-card payments. I couldn’t sleep because of the stress.”
Katerina: “We had built our home with love, and I couldn’t bear the thought of losing it. Giannis and I fought many times about how we would deal with our debt.”
DEBT can strain or even destroy a family. For
example, researcher Jeffrey Dew found that couples in debt spend less
time together, have more fights, and are less happy. Compared with other
topics, arguments about debt and finances last longer, generate more
yelling and hitting, and are more likely to carry over into other
issues. It is no surprise, then, that the leading cause of divorce in
the United States is disagreements about money.
Excessive debt also brings health risks, such as
insomnia, headaches, stomachaches, heart attacks, and depression. A wife
named Marta relates: “My husband, Luís, was so depressed about our debt
that he slept most of the day. The man I had always relied on had
become helpless.” For some, the stress becomes unbearable. For example,
BBC News reported that a wife in southeastern India committed suicide
after falling behind on payments for loans totaling the equivalent of
$840 (U.S.). She had borrowed the money to pay for her children’s
medical treatment.
What if your family is under stress because of debt? Let us consider some common challenges that couples face in dealing with debt and look at Bible principles that can help you to meet them.
CHALLENGE 1: We blame each other.
“I accused my wife of wasteful spending,” admits
Lukasz, “while she complained that we would have enough money if I had a
job that provided year-round work.” How can a couple keep debts from
driving them apart?
A key to success: Work together against debt.
It will not help matters if you vent anger on your mate
Fight the debt, not each other. A husband named
Stephanos describes how he and his wife worked together: “We viewed our
debt as a mutual enemy.” Such cooperation is in harmony with Proverbs 13:10,
which says: “By presumptuousness one only causes a struggle, but with
those consulting together there is wisdom.” Rather than presumptuously
trying to solve things on your own, talk candidly about financial
problems and then act unitedly.
Your children can join in the effort. A father
named Edgardo, in Argentina, describes his family’s experience: “My
young son wanted a new bicycle, but we explained to him why we couldn’t
afford it. Instead, we gave him a bike that had belonged to his
grandfather, and he enjoyed riding it very much. I learned the value of
working together as a family.”
TRY THIS: Arrange a time to
talk openly and calmly about your debt. Acknowledge any mistakes you may
have made. Rather than dwelling on the past, though, try to agree on
principles that will guide your future financial decisions.
CHALLENGE 2: Getting out of debt seems impossible.
“I had run up a large debt in my business, which
was made even worse by the financial crisis in Argentina,” recalls
Enrique. “Then my wife needed surgery. I felt that I could never get out
of debt, as though I were trapped in a spiderweb.” A man named Roberto,
in Brazil, lost all his savings in a business venture and was in debt
to 12 banks. He says: “I was almost too embarrassed to face my friends. I
felt like a loser.”
What can you do if you feel overwhelmed by discouragement, guilt, or shame about your debt?
A key to success: Take control of your finances. *
1. Determine your current budget. Keep a record of all money moving in or out of your household for two weeks
2. Increase your income. You could take
on extra shifts at your current job, perform seasonal work, tutor a
student, recycle, or make your hobby into a home business. Caution: Take care not to allow work to encroach on activities that are more important, such as your spiritual routine.
3. Reduce your expenses. Buy an item only if you need it, not just because it is on sale. (Proverbs 21:5)
“Waiting to buy is good,” says Enrique, quoted above, “since it helps
you to decide if you really need the item or just want it.” Here are
some additional tips.
- Housing: If possible, move into a residence with a smaller monthly payment. Reduce your utility costs by conserving electricity, water, and heat.
- Food: Pack a lunch or snack instead of eating out regularly. Use grocery coupons and other special offers. “I save on fruits and vegetables if I shop at street markets just before they close,” says Joelma, in Brazil.
- Transportation: Sell nonessential vehicles, and maintain what you have instead of quickly trading in for newer models. Use public transportation, or walk whenever you can.
After you reduce your expenses, you are ready to make the best use of your remaining money.
4. Analyze your debt and act. First,
determine for each debt the interest rate, the fees, the impact of a
late or missed payment, and the possibility that a payment is already
overdue. Examine the wording of the loan or bill carefully, since
creditors may be deceptive. For example, one short-term loan service in
the United States stated that its interest rate was 24 percent, when, in
fact, it was over 400 percent.
Next, determine the order in which you will
tackle your debts. One approach is to pay toward debt with the highest
interest rate first. Another option is to pay off smaller balances
first, since receiving fewer bills each month will likely boost your
morale. If you have loans with a high interest rate, you might benefit
by getting a new loan at a lower rate to pay off the existing ones.
Finally, if you cannot meet your obligations,
try to negotiate new payment plans with your creditors. You could ask
for an extension or a lower interest rate. Some creditors may even be
willing to reduce what you owe if you can pay the lower amount in full
right now. Be honest and courteous in explaining your financial
situation. (Colossians 4:6; Hebrews 13:18)
Put any agreements in writing. Even if your first request is not
successful, be willing to persist in asking for an adjustment if
necessary.
Of course, you will need to be realistic as you
manage your finances. Even the best plan can fail as a result of factors
beyond your control, since money often “makes wings for itself like
those of an eagle and flies away toward the heavens.”
TRY THIS: Once you have
prepared an initial budget, discuss how everyone can reduce expenses or
increase the family’s income. Seeing one another’s sacrifices can help
to pull you together in the fight against debt.
CHALLENGE 3: Debt consumes our thinking.
The struggle to deal with debt can crowd out
more important aspects of life. As a man named Georgios put it, “the
biggest problem was that our whole life revolved around our debts.
Matters that should have had priority got pushed into the background.”
A key to success: Keep money in its proper place.
In spite of your best efforts, you may be
paying your creditors for many years. In the meantime, you can choose
how you will view your circumstances. Rather than being obsessed with
money or the lack of it, we are wise to heed the Bible’s advice: “Having
sustenance and covering, we shall be content with these things.”
Being content with your financial situation allows you to “make sure of the more important things.” (Philippians 1:10)
These “more important things” include your friendship with God and with
your family. Georgios, quoted above, says: “Even though we have not
completely paid back our debts, they are no longer the focal point of
our life. Our marriage is happier now that we spend more time with our
children, with each other, and in spiritual activities together.”
TRY THIS: List things that are
truly valuable to you and that money cannot buy. Next, determine how to
increase the time and energy you devote to each item on your list.
Debt problems create stress, and dealing with
them calls for sacrifices; yet the results are worth the effort. A
husband named Andrzej, in Poland, admits: “When I learned that my wife
had guaranteed a large loan for a workmate who then vanished without
repaying, our home atmosphere was tense, to say the least.” Looking back
on how he and his wife responded, though, he says: “We actually became
more united
ASK YOURSELF . . .
- How can I help my family to get out of debt?
- How can we keep our debt from dominating or even destroying our relationship?
No comments:
Post a Comment