Acquiring things using debt is very normal in our society today. It is almost cheered upon to have the ability to buy things on debt. Why not use someone else’s money to buy what you want today, rather than waiting until you save the money to buy in the future?
Debt? No Problem
In the book “Money, Possessions and Eternity,” Randy Alcorn, gives a great example of how we can be disillusioned by the impact of debt.
A man jumped off a 20-story building. Onlookers were terrified, but the man seemed perfectly calm. As he plummeted by the window of a fifth-story apartment, he looked at the wide-eyed occupant and said, “Everything’s all right so far.”
This apocryphal story reminds me of the attitude many people take toward debt in its early stages: “Everything’s all right so far.” But what happens to most debtors later is equivalent to what happened to that man when he finally reached the ground.
Americans live in a consumer-driven, debt-burdened world. Everything is going just fine because the payments can be made. There may even be some leftovers at the end of each month.
It all seems fine, until it’s not. When unexpected expenses hit or income is reduced, catastrophe begins. There is often no margin of safety in our budget. The bumps in the road get bigger until they can’t be managed.
We can’t afford to bank on the future by using debt. It must be paid back at some point. We are stealing from our future. In the meantime, we do not understand our risk exposure.
We continue by spending on credit cards, buying cars when the payment seems doable and buying more house than we can really afford. We have a job that allows us to afford those things now and make payments in the future.
The Present Will Become the Past
We believe that things will always be the same. But it will not. Things happen. Things change.
What if our job is lost? You may think, “No, they need me. I’m valuable to the company. Even if I lose my job at this company, I’m very employable, maybe even considered in high-demand.” However, I know people with careers in medical, financial, manufacturing and other fields that had an incident or situation that reduced their employability. It kept them from being able to get a job in their field. For some, it was completely out of their control.
Think of people that you may know or those who are in the public spotlight. They excel in their field until someone makes false accusations against them. Their reputation is permanently harmed. Their earning potential has now been reduced.
Stock markets have downturns. Housing prices do fall. Death and disability happen. These are just a few of the many things that would tremendously expose our level of risk and financial vulnerability when we have a lot of debt.
We say to ourselves, “This will never happen to me.” Even if we acknowledge that these things could happen, we don’t take is seriously.
Out of Nowhere
Boom! Out of nowhere it hits. The Coronavirus! The average person, including myself, had never even heard of a Coronavirus before this. It is rocking the world as we know it. Our lives will forever be changed.
Many people are being furloughed or laid-off, or their businesses are sinking. During this time, debt is having a tremendous impact on our financial lives. The Coronavirus is not your fault. However, those who have little or no debt are in much better shape. The health aspect of the virus creates enough anxiety. We don’t need to be overloaded with financial stress.
Challenge to You
I rely on God’s word as a guide on dealing with all financial matters. There is no point in scriptures where it is stated that debt is wrong. However, there are strong warnings of its dangers. And we should protect against those dangers. It keeps us in bondage.
Take your experience and seeing the impact of the Coronavirus on others as an opportunity to learn – and maybe even as a wakeup call. Get out from under that bondage and put yourself and your family in a better financial position to weather the storms of life.
Let’s come out of this in the months ahead with a new respect on the importance of being financially sound rather than living a consumer-driven, debt-burdened life.
If you are ready to put together a comprehensive financial plan, contact the fee-only fiduciary financial advisors at Global View. We’re here to help.