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Living In Debt
Many people get into debt at one time or another, often through no fault of their own. Losing their job, university fees,
having a baby, sickness, bereavement, an increase in housing costs, divorce - all of these can make it difficult to
manage a household budget. Sometimes people may have several debts and it can be a constant struggle juggling payments
and making ends meet. Some people find themselves in debt because they are living far beyond their means – buying clothes
they don’t need, getting a new car to keep up with the Jones, or by shopping as a form of self comfort. However you got into
the red, you want a way out. So how can you get out of debt?
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Needs Versus Wants
Everyone needs to understand the difference between our needs and our wants. Out needs are our essentials: food, drink,
clothes, a place to live etc (Matthew 6:25-34 and Philippians 4:19). Our wants are clearly things we do not need: a new
faster car, a more compact DVD player, the latest holographic projection phone, more jewellery and expensive designer
clothes etc! See 1 John 2:15-17.
In a consumer driven society, TV adverts, magazine spreads and billboards are ‘pushed’ in our faces on a daily basis -
telling us to get the best, the latest, the most stylish etc – we need to discern what we really need and when we can
afford our wants! After a few months of owning the ‘new thing’, we often look back and think, “Why did I buy that?”
It is easy to purchase goods without really thinking about it. However, we do spend a lot of time thinking why we can’t
tithe! Your tithe is the financial seed for your future, if you don’t sow seed, can you expect a harvest? God asks us to
be responsible with what we have – not to live beyond our means, and to give our tithe to Him. Malachi 3:6-11.
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A Guide For Purchasing
To get out of debt, you may need to stop spending so much – so that you can pay off all your that you owe. That means
cutting back! Think about these simple rules for spending your money.
1. Ask yourself, ‘If I walked away from it now, will I still want it next week or next month? Is it an impulse or a fad,
am I being pressurised by a sales person or by advertisements?’
2. Do I need it, or do I want it? It’s very easy to justify large expenses, but also, it is very wrong to use a spiritual
excuse for a fleshly desire - I want the latest hi-fi so that I can play teaching tapes to minister to others! I must
have the latest games console, so that the youth can come round and play it!
3. Am I rushing into something because of a money saving offer? Money saving is actually money spending! Would you buy it
if the reduction was not so big? If there is something you did not intend to buy, but you purchased it because of the
reduction, you have in actual fact spent more money, not less!
4. If you had hard cash instead of a credit, store or debit card, would you still buy it? It is easier to hand the plastic
over than to count out the notes.
5. Can I afford it? Am I staying within the weekly/monthly budget?
6. Would I be willing to spend this amount on someone else? Is it greed and self indulgence?
7. Have I prayed about it? There is no need to pray for your daily needs, food etc but do you really need that expensive
item?
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A Lifestyle Of Debt
Many people today are using their credit cards not only to pay for big items, but for their weekly grocery bills: this has
been identified as a dangerous spiral into a lifestyle of debt. According to the Consumer Credit Counselling Service
(CCCS), a UK charity involved with giving advice to those in debt, a typical client of theirs in his or her mid thirties,
married with children has an average debt of £24,000 - and a £100,000 debt is not uncommon. But many people in
their twenties, who do not want to sacrifice by cutting back, find themselves in deep debt also.
We are warned in the Bible not to fall into a lifestyle of debt - as it can lead to poverty and bondage. ‘Owe no one
anything, except to love one another…’ Romans 13:8. Peter Walpot a 16th century Hutterite said ‘Whoever is bound by
covetousness and lust for wealth is fettered with a thousand chains about his neck…’
Many people get into debt at one time or another, often through no fault of their own. Sometimes people may have
several debts and it can be a constant struggle juggling payments and trying to handle the household budget. Debt
is living beyond your means; at times it is a sign of greed [unless you live below the poverty line and have an uphill
struggle whilst fighting overwhelming odds - see Nehemiah 5:4-6]. Greed is the opposite of giving. Debt is emptying your
future to fill up your present, whereas giving is empting your present to fill up your future. See Matthew 6:19-24 and
Luke 14:28-30.
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False Sense Of Wealth
A former work colleague and friend told me how easy it was to spend with a credit card; he said that the purchase
appeared cheaper than if he had the actual cash in his hands. The reality is that if you had the cash in your hand,
you would think twice before you spent it.
Credit cards and overdrafts give that false sense of wealth, many people, like my friend, say that purchases appear
cheaper, but it will come back to haunt you! Proverbs 22:7 ‘The rich rule over the poor and the borrower is servant
to the lender.’ Galatians 6:7 ‘…for whatever a man sows, that he will also reap.’ The slogan buy now pay later is
very true - you really will pay for it later and the debt can haunt you for a long time or even cripple you for
decades! James 2:6 ‘…do not the rich oppress you and drag you into the courts?’
In March 2004, the Bank of England figures showed that borrowing on credit cards, overdrafts and loans reached a record
£18 billion in the previous month. In June 2004, an English newspaper's front page said the UK consumer had ‘£1 trillion
in debt.’ That’s a big debt of £1,000 billion! It equals a thousand, thousand million which looks like
this - £1,000,000,000,000. The debt includes mortgages, loans, credit cards, store cards and overdrafts.
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Hard Cash Only
One in four homeless people in South Korea have credit cards, according to a report from 2003! The study comes amid
concern over the number of people in the country running up bad credit card debts.
If you cannot control your spending and continually overspend on your credit card, then maybe you need to move back to
purchasing with cash only. Instead of using a credit card, get a debit card, which cannot exceed your bank limit, or
use cash only. When you purchase products with cash – the reality of the cost comes home, but credit cards often seem
like the money is not real.
‘Jesus said “If anyone desires to come after Me, let him deny himself, and take up his cross daily and
follow Me” Luke 9:23.
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The Right Time To Borrow!
There are some occasions when believers may need to borrow money, e.g. university fees, hospital bills, a mortgage. We are
not under bondage in impossible situations and often, sadly many people need to borrow in order to live, just like in
Nehemiah’s day, Nehemiah 5:2-5. You may be able to negotiate a low interest or interest-free loan from your employer
and if you observe certain rules, you may not have to pay tax on this perk.
Most people wanting to buy a home in Britain will need to get a mortgage. That is an acceptable debt. But should we be
getting into debt to buy clothes, or cars that we don’t really need? It is relatively easy to dig a deep financial hole,
but when you’re at the bottom it can be very difficult to get back out. Sadly some people have become ill and even
committed suicide over the stress, anxiety and worry of their debts.
The problem with being in debt is that it acts like a chain around your leg - it hinders you from what you want to do
and you are under obligation to another. Proverbs 22:7 ‘The rich rule over the poor and the borrower is servant to the
lender.’ You should never under any circumstances go to a ‘loan shark’, an unofficial money-lender who has ultra high
interest repayments and very unorthodox and illegal methods of repayment. James 2:6 ‘…do not the rich oppress you and
drag you into the courts?’
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The Devil’s Tithe
The worst form of credit is that which has a high annualised percentage rate (APR) of interest; the higher the APR, the
more you will be paying back in interest. We call it the devil’s tithe - which can very easily spiral into huge
insurmountable debts. The highest form of APR is generally found in store cards, which can be as high as 33%! It is
usually followed by credit cards or hire purchase and then a bank loan or unauthorised over-draft. But different
companies do charge very differing rates on different amounts borrowed - over various repayment periods. If you
default in any of these monthly repayments you will incur an extra charge, which makes the product or the loan become
even more expensive.
God’s tithe is around 10% of one's income, and the Bible shows that when we sow our financial seed, we shall also reap. But
the Devil’s tithe usually costs more than what God asks of us, and there will be no harvest from this tithe. Many say
they cannot afford to give God His tithe, but in the long term, end up paying the Devil’s tithe!
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Buy Now - Pay Later
Many catalogues offer a buy now, pay later on purchases: are they a good idea?
1) Many times the products are more expensive than in the shops.
2) The interest rate, included in the monthly instalments is usually high.
For example, one pair of trainers costs £7 per month, for a twelve-month period. The total price would be £84. But if you
saved up the money yourself, and bought the same pair in a shop, it would cost around £60-£70.
As a teenager, my friend showed me a catalogue in which I saw the latest brand named trainers costing £60 - which I just
had to have - to be fashionable. I asked my parents if I could buy them through the catalogue and they told me no, but
said that if I really wanted them, then it was best to save up for them. Over many months I saved my money from my
paper-round and eventually had £60 in my hands. But having worked so hard for so many months, the trainers were not
worth all the hard labour that I had endured and the trainers were now out of fashion!
Magazines often advertise rings and watches etc at greatly reduced manufactured recommended retail price, believing that
you will pick up a great saving on the purchase. The picture of the ring that I am looking at now, from a free
supermarket magazine retails at only £175 repayable in five interest-free instalments. The blown up picture, which is as
big as my wrist, shows the ring to be nearly ten times its actual size, with sparkling diamonds at approximately 10mm
long. In actual fact the ring is small, with the diamonds actual size being around a mere 1mm! Appearances are not what
they seem and if you were to see the ring in a jeweller’s window you may not give it a second glance. Advertising can
lead to impulse buying or retail therapy, which in the long run is not good. It is always best to have cash in your
pocket and to see and handle the product in the flesh before you purchase.
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Support Your Bank, or Support God’s Work!
Instead of supporting your local bank, why not support a missionary? Instead of paying massive APR back to your bank, why
not think carefully before you spend your money and consider supporting mission work! Look at the price for loans below
and see what you could be doing for the Kingdom of God. Have you ever looked at non-essential loans in this light
before?
The interest on one UK bank loan (February 2004) of £1000 at 17.8% APR repayable over 60 months is £475 or $808, this
is four times the average annual wage of a Vietnamese person. It could fully employ an indigenous missionary/evangelist
in India for 1½ years! Or you could purchase 475 pocket sized New Testaments in English, or you could purchase 15,800
quality coloured tracts from the Open-Air Mission, UK!
The interest on a loan from the same bank (February 2004) of £5000 at 13.9% APR repayable over 60 months is £1839 or $3126.
This could fully employ two indigenous missionaries/evangelists in India for three years. Or it could pay for a team of
four travelling from the UK to North Africa to do missionary work for two weeks and still have money left over to buy
souvenirs! Or you could send eight people on a short mission to Rome, Italy for a week flying from the UK, on a budget
airline, sleeping in a youth hostel and still purchase 1,200 Italian tracts from the UK for evangelism.
The interest on a loan from the same bank (February 2004) of £15, 000 at 8.9% APR repayable over 60 months is £3489 or
$5931. This could support two people on a three-month mission across Asia, (India to Vietnam) flying from the UK. Or
it could enable 2,636 Chinese Bibles to be placed into believers' hands via asiaharvest.org. Or it could fully employ
four indigenous missionaries/evangelists in India for 35 months. As you can see it is more profitable to invest into
God’s Kingdom than to throw your money away! From interest in 2003 one major UK bank made £8 billion in profit, and
in 2004 they made over £9 billion!
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Repaying Your Debt
If you are in debt then your first priority is to pay it off. Jesus said “Render therefore to Caesar the things that are
Caesar's, and to God the things that are God’s”, Matthew 22:19-22. This means that you should pay whatever you owe to
whomever it is due.
Pay off your loan with the highest APR first; this will reduce the amount of interest you will have to pay. Usually bank
loans cannot be repaid early, but discuss your options with the bank manager and look out for penalty clauses for an
early settlement in any of your contracts.
With credit cards, do not just pay off the minimum amount every month as this will incur excessive accumulative
interest, but pay off as much as you can, even if you have to sacrifice a few luxuries for a time and if possible work
extra hours to help pay off the debt. If you are not able to trust yourself with a credit card, then the best things to
do is to destroy it, cut it in half, that way you will be unable to use it again and get yourself into any more trouble.
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Zero Interest And Consolidation
Many companies have introductory offers where you can transfer your existing credit card debt onto their credit card,
often for zero interest or a low amount for the first six months - this is worth looking into, but as with all things,
always read the small print and ask for the relevant information to be put in writing: never sign anything unless you
are absolutely sure you know the pros and cons. It pays to shop around; from the near worst card we checked, to near
best, the savings available on a £3,000 ($5,100) balance carried for one year, amount to £464, ($790) equivalent
to 15% of the outstanding debt! By choosing carefully you can save hundreds of pounds!
You may wish to consider consolidating your debts by taking out a loan to cover them all, this way you may be able
to pay off your debt over a more manageable period of time, but if the loan is secured against your house this could
be very dangerous for you and perhaps it is not the best option.
Never do what a work colleague did, when he got a loan of £11,000 to pay off a debt of £10,000 leaving him with £1000
to treat himself! The bottom line is making sure that you are paying the lowest possible interest on any debt. Always
check your bank, credit card statements as errors can be made; often not in your favour! See if you have any bank
standing orders, which you should not be paying anymore and get them cancelled.
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Excessive Debts
If your debts are excessive and you can’t see any light at the end of the tunnel you need to seek professional advice
immediately. Don’t be tempted to pay a debt-advice company to put a plan together, as a charity will do the job for
no fee.
As a last result and only to be taken upon professional advice, preferably someone who is godly and handles his/her
finances well, (‘Blessed is the man who walks not in the counsel of the ungodly…’ Psalm 1:1) you can file for
bankruptcy, but this is a drastic step that will affect a person for years and all other options should be
considered first. Your home, property and goods can be sold to pay off your debts; this is not an option that
homeowners should really consider. Proverbs 11:14 ‘Where there is no counsel, the people fall; but in the
multitude of counsellors there is safety.’ Proverbs 20:18 ‘Every purpose is established by counsel…’
The Debt advice charity Consumer Credit Counselling Service (CCCS) (UK) says it deals regularly with people
who have debts of more than £100, 000, not including their mortgage! A representative said that “About one in
every 100 people we deal with owes £100,000 or more,” and they suggest that borrowing money to get out of debt
is rarely a good option.
For free debt advice in the UK contact: National Debt line,
Payplan 0800 389 3431, Consumer Credit Counselling Service (CCCS),
Money Advice Scotland,
and for Citizens Advice check your local phone directory or see their website.
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Face The Debt
Try not to worry about your debts, but never ignore the problem hoping that it will go away! You have to do something
about it. Seek free help from a professional money advisor, who can look at your debt situation and advise you on how
to deal with them.
If you contact an advisor he/she will need to know how much income you have coming in every month (your wage, benefits
etc) and how much you need to spend every month on essential items such as, rent, mortgage, bills and food. An advisor
will use this information to work out how much you can afford to repay towards your debts. It will also help them if
you have all your bills and any letters from people you owe money to with you before you speak to them. If you do not
have these to hand you should contact a money advisor anyway.
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Plan And Act To Get Out Of Debt
Your debts may have taken years to accumulate, so don’t expect to get free in five minutes! You may want a deliverance
from God, but if He did pay off your debts, would you get back into debt again? Others have.
To learn to value money, you will need to work your debt off. It means sacrificing your wants now, to pay off your debts,
so that you can be free in the future. It will be hard. But today you must plan, and then act to get out of debt. Take
some practical steps.
1) How can I stop spending so much money? What am I buying that I don’t need?
2) What purchases am I planning that I don’t need?
3) What is my monthly income, how much of it is spent on essential needs?
4) How much of my income can I put towards paying off my debts.
Cut back on your spending by avoiding non-essential items. Do you need to eat out so often? Can you walk more, instead of
taking the car? Can you get your weekly shopping cheaper elsewhere? Do you really need all those monthly magazines? Can
you make do with your current shoes?
Look carefully at your spending, and make a clear plan concerning how much you are going to extend your payments to get
free of all your debt!
Commit all of your finances to God. Ask Him for help. Get some good reading material about how to look after your money
more carefully, and plan to get out of debt!
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