By Sandy Weyeneth
Navigator Staff – College Communications

Steve Soliz got his first credit card as a freshman in college, just outside the campus bookstore. At first he used his card for necessities like gas. Gradually though, he started using the plastic for stuff he didn’t need. Wanting to keep up with his buddies in college, he charged clothes and electronics. After Steve graduated, his habit of relying on credit rather than cash continued.

A September 2008 Forbes.com article, “Choking on Credit Card Debt,” tells how after college, Steve got married and had three children. He was making $44,000 a year and began using the credit card to pay for groceries and even day care for the kids. He thought he could stay one step ahead of the game by signing up for more credit cards, trying to use one to pay for another. All too soon, he had eleven cards and a walloping $40,000 in credit card debt!

Debt is so ingrained in our culture that many of us, like Steve, are used to it or cannot imagine living without it. Our culture repeatedly communicates that debt is normal and good. It has even gotten to the point that an absurd phenomenon has developed. Some people who decide to stop overspending and start getting out of debt are ridiculed by friends and family who believe that debt is good! However, whether we are pressured into debt, or don’t realize how our debt is piling up, or we erroneously feel entitled to get whatever we want and pay for it later-we finally wake up to find a huge pile of debt with our name on it.

What can we do about this? How is our debt-ridden culture trying to influence our thinking? What does God say about debt? What is an effective plan to get out of debt?

America’s Debt Culture

Consider that:

• According to CardTrack, the average American household with at least one major credit card owes $9,659.
• The average college debt for recent graduates is more than $20,000 and rising.
• In 2007, Americans owed $850 billion in credit card debt, which was four times more than the level in 1990. This year, the total has increased to $969 billion!

VISA, Mastercard, and other credit card companies offer airline miles and all sorts of things to get us to sign up for our own credit card. The reason? If you do not pay off your total credit card balance each month, they win, you lose. VISA and these companies bank on you choosing to pay only the minimum payment because they make millions from the daily, high interest added to the total balance you owe.

School loans are similar. If you only pay the minimum payment, they win, you lose. According to a 2007 study by Nellie Mae, a subsidiary of Sallie Mae, one of the nation’s leading student loan companies, the average amount of money a graduate student puts on a credit card for direct education costs was $2,820. Let’s assume a 15 percent interest rate, which is typical for student credit cards. Let’s also assume the student pays the minimum payment, which is one percent of the balance in this case, plus interest and fees. At that rate, it would take 21 years to pay off this debt, and you would fork over $7,100!

It is amazing that Sears now makes more money from their Sears credit card than on the sales revenue from the products they sell! That reveals why Sears and other stores routinely try to get us to sign up for their store card. In addition, lenders are teaching children earlier and earlier their message of reliance on plastic. Mattel, the billion dollar company who makes the ever popular Barbie dolls, now produces a “Fashion Fever Shopping Barbie,” complete with a credit card swiping machine! In its shameless commercial advertisement, the Chorus repeats: “Buy everything you want at the Barbie Boutique!” and later the girl says, “I love shopping. You never run out of money.” How outrageous!

That is just one example of “kid-branding”—a marketing ploy where lenders get manufacturers like Mattel to influence the way children think. When Mattel agrees to make a Barbie with her own credit card, this influences children who play with the doll to not only develop a consumption mentality, but when they grow older, to believe and accept that charging things on credit is cool and normal. That is disgraceful.

God’s View of Debt

The Bible has much to say about money and debt. Proverbs 22:7 says, “…the borrower is servant to the lender.” The Hebrew words for borrowing mean “to entangle,” and “to twine, to take an obligation to, to unite with.” Using a credit card is a form of borrowing, which is another reason why it is a trap if you cannot pay your total amount due every month.

Borrowing is based on the assumption that future conditions will allow us to repay the debt. However, God warns against that presumption. James 4:13,14 says, “Now listen, you who say, ‘Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.’ Why, you do not even know what will happen tomorrow.” Proverbs 27:1 instructs, “Do not boast about tomorrow, for you do not know what a day may bring forth.” Unfortunately Rachel got caught in some expensive presumption.

Rachel says, “I thought I was a model card holder. I had small balances on multiple cards and always paid my minimum payments. Then expenses from another move and a costly round of unexpected repairs added to the balances I was already carrying. When my credit card debt doubled to more than $9,000 on five cards, I realized I had taken a serious turn in the wrong direction.”

Instead of costly presumption, God has better ways for us. He wants to help you and me take turns in the right direction. Romans 13:8 says, “Let no debt remain outstanding…” Strong’s Exhaustive Concordance amplifies the message, “Owe to no one, no not anything, nothing at all.”

God calls us to joyfully live within our means and trust Him to supply our needs, which He willingly does. Matthew 6:33-34 teaches, “But seek first his kingdom and his righteousness, and all these things (food, clothing) will be given to you as well.” And I Timothy 6:3-10 corrects those who, eager for money, viewed godliness as a means to financial gain. Instead, God calls them to be content with basic food and clothing.

Not having a credit card for several years, I lived within the boundaries of my income and learned to not buy things if I did not have the cash in hand. My experience with debt came through two school loans, and I only made the minimum payments. However, those loans became like the unwelcome relative who comes to stay for a “few days” and is still in the guest room ten years later. Feeling imprisoned by them, I decided it was time to get out of debt.

I began to limit some spending and make double loan payments. I clipped coupons. As my balance owed decrease, I grew more excited. Eventually the end of my loan was in sight, and I made triple payments on it. After paying that last payment, I felt free!

Getting Out of Debt

You can get out of debt and be free too! It took time to get into debt, so it will take time to get out. Some information and the steps in this article are taken from the The Total Money Makeover by Dave Ramsey.

To begin your path of becoming debt free, I highly encourage you to buy The Total Money Makeover and read it. It is hard hitting, do-able, and effective. Dave tells encouraging stories, answers common questions, debunks familiar myths, and provides easy-to-use worksheets and steps to help you press ahead with a proven plan for financial fitness. Dave calls it The Debt Snowball. Think of it like a debt reduction snowball.

Dave is negative on credit cards precisely because too many people overspend, and debt slowly chokes them. As you commit to this process, it is also time for a plastectomy—Dave’s term for cutting up all of your credit cards, at least during this season of becoming debt free. (He recommends using a debit card instead.) It is the only way to stop accumulating credit card debt for awhile and start winning and changing things.

Here is an overview of The Debt Snowball process. It’s radical, and entirely worth it.

Step One: Set up a Monthly Budget

In order to get out of debt, you must first get a handle on how you are spending your income. A budget—also known as a cash flow plan—does just that. Virtually no one climbs out of debt without a budget to start the process. Knowledge empowers, and when you understand how and exactly where you are spending your money, that equips you to curb any over-spending, and it allows you to determine what changes you can make in order to accomplish what you need or want to do—like get out of debt.

A MSN Money article, “Why Generation Y is broke,” tells about Sophia, a 28-year old New York resident with a master’s degree from a prestigious university and a successful career in photography with a good salary. She became overwhelmed, to the point of financial paralysis, by her $60,000 student loan debt and other bills stacking up. An accountant finally told her, “You have to get your life together!” Sophia admits, “No one had ever taught me to make a budget or balance a checkbook.” A budget is a must. A budget is your friend. Here are two you can choose from: Quickie Budget or Basic Budget (Cash Flow Plan).

Step Two: Save $1,000 Cash as a Starter Emergency Fund

An emergency fund is money set aside for a “rainy day.” It gives you peace of mind to help cover emergencies—a major negative event like an unexpected car repair or a physical injury.

Get intense about this and come up with this money within 90 days. Work an extra job like delivering pizzas if needed. Pull out money from your savings if you have it. Sell something like a piece of furniture you don’t need for some cash. Do whatever you need to do to get this money fast.

Step Three: Start the Debt Snowball

This is not complicated, but it is difficult. In one word, you attack your debt. List all of your debts, except for your home, in order with the smallest payoff or balance first. Pattern it off of the example below. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.

After listing the debts smallest to largest, pay the minimum payment to stay current on all the debts except the smallest. Every dollar you can find from anywhere in your budget goes toward the smallest debt until it is paid. In other words, look at your budget. What areas can you temporarily decrease and apply towards your debt? Once the smallest debt is paid, the payment from that debt, plus any extra “found” money, is added to the next smallest debt. This process is repeated, with all the money used in paying off the first and second debt, now being applied to the third debt. Then all the first, second, and third payment amounts are applied to the fourth debt, and so on.

As you pay off each smallest debt in order, the momentum builds like a rolling snowball leading to financial freedom! Redo this sheet each time you pay off a debt. This helps you see how close you are getting to freedom. Also, consider working an extra job and funnel that additional money toward your payments. “Find” some extra money like others have: Bring your lunch to work, skip those Diet Cokes at the office, move somewhere cheaper to live, or get a roommate to reduce your rent payment. When you go out with friends, have an iced tea instead of dinner, skip the Starbucks, spend less on buying gifts, rent a movie free from the library, or simply stay home a little more instead of going out so much.

A “money makeover” like this is about behavioral change at the heart of it, and behavioral change is enhanced by these quick, small wins. It may take nine months overall, or a year or two or three, but you can get there with some radical focus, prayer, and action! Imagine your life with no more debt payments! Or imagine being able to follow one of your dreams, like Katie is. She has a plan to pay off her school loan in one and a half years so she can follow what God has put on her heart – being a missionary in Japan.

Step Four: Finish the Emergency Fund

Once you have eradicated your debt, congratulations! That is an awesome accomplishment. The next step is to increase your emergency fund to cover three to six months of expenses. Apply all of the money you have been paying towards debt to now increase your emergency fund. At that rate, it will not take long!

Celebrate in some small way after you make it through this step. You will be a changed person! Once you have finished your emergency fund, Dave Ramsey outlines a few more steps in his book to help you be financially healthy for life. These steps will put you on a healthy and good path as you continue to love and follow the Lord Jesus with all of your heart, and honor Him with all that He entrusts to you.

You can be debt free! Living by the truth of Scripture frees us to live for God’s glory and His purposes on this earth. Start your debt reduction snowball. You can also check it out at www.DaveRamsey.com, and click on “The 7 Baby Steps,” which covers the whole process in a nutshell. Don’t give up. Pray like crazy. Work like crazy. You can get free of debt and then live debt free to the glory and praise of our Lord Jesus Christ.