Your Money and Your Generosity 2

This is a continued post based on my thoughts regarding finances.  Please note: I am NOT an financial advisor.  I will speak with authority on certain subjects.  The only thing that gives me any authority to speak on the area of finances is the simple fact that my wife and I have a handle on our finances, are debt free, and faithfully tithe to our local church.  Feel free to read and comment.

So yesterday I wrote about setting and sticking with a budget.  Today I want to clarify the issue of living within your means.  We all live on some percentage of our income.  Some may live on 80% of their income, others may live off 30%.  The trouble is when we choose to live beyond our means.  When we live off 120% of our income.  Many people are living over-extended in the area of their personal finances.  I hear far too many stories of people applying for a new credit card only to transfer the balance of one to the other at a lower rate in order to receive a cash advance so that they may pay off the balance of another.  I know, it sounds so twisted – but it happens too often not to talk about.

I remember my Freshman year in college and the barrage of applications that I received in my mailbox everyday.  At first I felt special (after all, it was the only mail I was receiving!) but I soon began to realize that the credit card companies were targeting me as a young adult with no money who was irresponsible and would help them accumulate more wealth through growing interest payments on a balance there was no way I was able to pay off.  It became a trap that I feel into headfirst.  The summer after my first year in college I can remember returning home and being scolded by my father who then had to advise me on how I would spend my summer.  The joy of having money at my fingertips with the credit card was soon gone as I spent my entire summer paying back the debt that I had caused.  Every cent that I earned went to a creditor.  I was an indentured servant for those three months.  Proverbs 22:7 says it with all the reality that was meant by the writer:

The rich rule over the poor, and the borrower is slave of the lender

I proved this all too true as I gave all of my money to my creditor.  The joke around campus my Freshman year was that when you receive a Discover Card you enjoy the ability to buy whatever you desire only to “discover” that you will never be able to pay down the balance.  Credit cards when used with little care or concern for the consequences that they carry can be dangerous when in the hands of one who does not understand the power of debt.  I was one such fool…

That was then, this is now.  I now refuse to use a personal credit card.  I make every effort to purchase items with cash.  If I don’t have the available cash I don’t make a purchase.  There is freedom in deferring a desire.  Most times if I can not afford an item and I delay the purchase until I have the necessary funds I end up realizing that I don’t even need the item.  By limiting my spending to “cash-only” purchases I end up reducing the impulse purchases that so many retailers thrive on.  It also teaches me discipline in spending and makes me truly count the cost of purchasing an item that I think I need.

Some reading this post may feel like there is no hope.  That is a lie.  Don’t believe it.  You can find your way out from under what seems to be an overwhelming debt load.  Pay beyond the interest payment.  Never make a minimum payment.  Always pay above the required payment amount and specify that you want the extra amount being paid to go directly to the principle.  By paying even twenty dollars over the minimum payment you can quickly reduce the principle and begin to make headway in reducing your overall debt.  As you begin to see the total debt load become less and less each month keep pressing on.  Don’t get cocky!  Continue paying down the principle and don’t give in to the idea that “just once won’t hurt” by splurging on a want.  That HD flat screen monitor with surround sound will always be available later and the prices are dropping.  Keep waiting on that purchase and you will pay less overall and get a product the is of even greater quality.

More tomorrow…

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