Hope for your financial life and beyond

3 Reasons Credit Cards Didn’t Work For Me

Credit Card TrapTo use credit cards or not? That is the question.

Like most of you, I have placed a good many credit cards in my wallet through the years. I believed what every American hears – that using credit is convenient, it’s safer than carrying cash or debit cards, and there is protection on large purchases. I also figured I needed one for emergencies, and of course to improve my credit score for those all-important car and home loans.

Good people come down on both sides of this question and the purpose of this writing is not to discuss the pros and cons of each position. Rather, I would like to share with you why, after years of using credit cards for EVERY purchase, I just finally decided it wasn’t for me. I just couldn’t get past these three issues in my life.

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Scary College Debt Statistics

In case you missed it, the cost of a college education is increasing dramatically. Public and private colleges alike are increasing tuition significantly, many because of state budget cuts. This has left many high school seniors in a bind. For years they have heard the media, their parents, their teachers and counselors say the best way to get a decent job with good pay is to earn a college degree. But now they wonder how they can afford it.

The Institute for College Access and Success’ Project on Student Debt conducted a recent survey that gives us insight into how students are paying for a college education. The results are astonishing and scary.

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Should I Borrow Money to Get What I Want?

borrow moneyWe live in a “Have It Now” culture that screams, “Borrow money now to get what you want!”

We want our fast food within 5 minutes or less in the drive-thru.  We want to make quick money for as little work as possible. We drive fast cars so we can get to our destination sooner. We are first in line for the newest technology gadget the day it is released. Can’t wait…gotta have it.

This “Have It Now” culture has also skewed our reasoning ability, in that it has masterfully helped us change our “wants” into “needs.”

We no longer want the new bass boat – it is a need.

We no longer want the week-long cruise to Bermuda – it is a need.

We no longer want the $5,000 Hall of Fame rookie card – it is a need.

We no longer want…(fill in yours here)…it is a need.

Borrow Money to Get What We Want

Think through all of your major purchases in the past year. How many of them would truly be classified as “needs?”

Put these two things together – getting what we want quickly and “wants vs. needs” – and a real problem begins to arise for most everyone in society. We don’t have the money to pay for these items!

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Surety: How to Get Out of a Cosigned Loan

The idea of becoming surety for a stranger, friend or family member has not been spoken highly of in the Bible. We have been warned about the potential dangers and risks involved in doing so. Despite these warnings, there will still be some people who think their situation is unique and choose to vouch for the debt obligation of someone else by cosigning for them. It is unfortunate that they would ignore this wisdom and put themselves at risk for financial and emotional harm.

So what do you do if you become surety for someone? Is there a way out if you regret your decision? Well again we turn to the wisest man who ever lived.

Deliver Yourself From a Cosigned Loan

In Proverbs 6:1-5, Solomon addresses this situation by saying,

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Surety: The Potential Costs of Cosigning a Loan

Any good professional financial planner would tell you their primary goal is to create financial security for their clients. They would organize your investments in such a way as to produce that desired outcome. They would also counsel you the best path to establishing financial security is to engage in wise personal behaviors. In other words, don’t do anything in the present to damage your financial picture and thus jeopardize a secure future.

The fact of the matter is, when you become surety (going into debt, cosigning) for another, it puts you at risk in the present. It is the risk you take that could have devastating affects on your long-term financial picture.

Words from Solomon on Surety

Solomon about surety often and he clearly did not think it a wise financial move.

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Surety: Do You Really Want to Cosign That Loan?

There is a curious money word in the Bible – found mostly in Proverbs – that needs some defining. It’s the word “surety.” Surety refers to the act (or promise) of a person to take on or assume the responsibility for the debt obligation of someone else if that person cannot repay their loan. In essence, you become the guarantor of the loan by being willing to provide this service.

This type of arrangement is most common when the lender of money has a question or some doubt the borrower may be able to repay the loan. So they will require a third party (you the guarantor) to step forward and legally enter into the borrowing contract. The lender does this to reduce their risk and, in some cases, this may actually lower the interest that is charged to the borrower.

An Example of Surety

So, for example, your son wants to buy a $8,000 car.

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Do You Want to be Debt Free?

Breaking the chains of debt is key to gaining financial freedom.

Where do you stand on the concept of debt?

It is huge issue in our culture today with proponents pushing both sides of the debate. And probably no Biblical issue about money has been more widely and passionately discussed than this one. We can all find justification for our particular position from the pages of the Bible or from just an everyday practical, money management standpoint.

So, the purpose of this post today is not to expound on and discuss the virtues or vices of debt. We will have plenty of time to do that at a later juncture. Rather it is to help us understand this one irrefutable core concept from Scripture…

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