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Friday, June 19, 2015

How do you feel about debt?

How do you feel about debt?
All of us have heard many times over and over again, debt is bad! Even the bible talks about debt, “Proverbs 22:7 The rich rules over the poor, and the borrower is a servant to the lender.” The one misconception that many Christians talk about is, going into debt is a sin. Nowhere in the bible does it say that debt is a sin or that you have broken one of God's commandments if you find yourself in debt. The bible does talk about being in debt is dangerous and the bible also talks about not repaying your debt “Psalm 37:21 The wicked borrow and do not repay”.
One of the issues we see today that our own leaders in government is borrowing money like mad and going deeper and deeper into debt, which is teaching us to do the same. Our own government is setting a bad example for us to follow. Back in 2008 the government was saying that the people of the nation are not
borrowing enough money to purchase items and the Federal Reserve had to step in to help bail out companies that were hurting because we were not buying things to help companies pay their debt. The government has been in debt since the last great depression, but over the past several years the debt that the government owes has skyrocketed out of the roof. Most of the country’s debt is either mortgage debt or student loan debt. We have seen both of these categories explode over the years. Back just a few years ago when the housing market balloon busted we saw many homeowners leave their homes and dumped this debt back onto the government through bankruptcies. The government was handing out money to homeowners like handing out candy to children. I was working at the time doing loan closings for individuals and people were taking out two and three loans against their home equity just to purchase toys and etc. I knew something bad was going to happen, there was just too much money being handed out all around the country and I was correct. Banks and financial institutions began to fold and the market value on homeowners homes began to drop like a rock. Soon homes that had two and three mortgages on them were upside down, that is when you owe more on the home than what it is worth. When people realized this they just packed up their personal belongings and left their home and gave it back to the lenders (the government in most cases).
Let’s look at some reasons people go into debt or have to go into debt.
Income has been cut. For many, their income has taken a hit or they had to change jobs and their monthly income is less now. Many people fall into this category and they have not tried to cut their expenses. They want to continue to live like they were before their income was cut so they take out loans or charge credit cards to fill in the gap between their income and their expenses.
No savings. It is too easy to spend money that you have left over at the end of the week or month. A person or family should take any left over money and stick it away for a rainy day. Many families have no money or savings set aside for unexpected bills or job layoff or illness. A family should try and set aside three to six months of salary just for times like this, if they don’t they have to use credit cards and other types of loans to make ends meet.
Spending money before you get it. You are banking on a big bonus, or inheritance and it does not come in, but you have already spent this money and now you cannot payoff that credit card bill. I have learnt this one the hard way myself. I was informed of a big bonus and went out and bought some new fishing gear and then the company told me that they made a mistake in calculating my bonus and it was more than half less than it was supposed to be. The moral to this example is, never spend the money until the check clears the bank.
Lack of communication in the family. I find that a lot of family’s have terrible communication skills when it comes to talking about finances. When it comes to money people are afraid to talk to their significant other about buying habits, or the bank statement, or savings and etc. I know families where the husband runs the finances and the wife has no clue what is in the bank and she is afraid to ask anything to her husband about the bank account. I know other families where each spouse has their own bank accounts and they have no clue what the other does with his or her money. Each person has his and hers charge cards and there is no communication between the two of how far in debt they are. This is a terrible way to live as a union. This tells me that there is no trust in the household.
Medical Bills. Medical bills are just getting out of hand. Even with medical insurance you still have large deductibles, copay's, and the insurance is denying many types of surgeries that a person may need to have done. My nephew for an example has hepatitis C from a blood transfusion from when he was a child and he has to take a medication that cost a thousand dollars a day. His insurance will only pay for fifty percent of the cost, there is no generic medication and if he does not take the medication it will kill him. Unfortunately he cannot pay for the medication without going into debt. Another example is my wife, she had to have major surgery, the hospital required a twenty thousand dollar copay, and she has great medical coverage. The hospital required for her to take out a credit card with them in order for her to have the surgery. The hospital is not in the credit card business, they have a third party company that issues the credit, but the hospital has seen too many times when they have not gotten paid after the surgery, and the hospital is just trying to protect themselves from financial failure.
Divorce. Most of us have been through a divorce once or twice in your life. I can count on one hand the number of friends that have not gone through a divorce. As most of us know, a divorce is extremely expensive, even a simple divorce will cost about $3,000.00, then if you have children and assets it will drive the cost of the divorce through the roof. I have one family member that has to fly from Florida to Alaska every time his wife takes him back to court for one thing or another, can you imagine what his divorce is costing him. I know two others that have been separated for over three years and still legally married because they cannot afford to go through the divorce. Many people opt to go into deeper debt just to get the divorce over with.

These here are just a few reasons why people fall into debt. We would love to hear from you some other reasons why maybe you have gone into this dark deep hole called debt.

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