I read an article on a popular news site the other day. The author of the article stated that even though consumer debt numbers are rising in America, debt default percentages are staying stable. Apparently the reason for the “stability” is the mostly stationary unemployment rate. The author said that the rise of Americans’ consumer debt is okay as long as people are making their payments, which they would likely continue to do provided unemployment stays at its same level.
This is the second such article I’ve read in the last two months where supposed financial experts are encouraging people to continue spending above their means. And my life experience tells me these people are way off base.
Our Experience with “It’ll Be Fine!”
I remember in the year 2000 when the Lord spoke to my heart and said, “Laurie, you guys need to pay off your debt now and work on building savings.”
I poo-poohed those words and responded, “It will be fine, Lord! I’ve got a great job, Rick’s got a great job – it’s all good!” Ten years later our descent into massive amounts of consumer debt began. I had been laid off in 2003 from a cushy job that allowed me to work part-time from home and make $50k a year. I was in the mortgage industry and things were hopping, but my worldwide employer must have sensed a bubble burst even though the rest of us didn’t have a clue because at the end of the year it laid off all sales assistants with the exception of a few who worked for super high-producing mortgage reps.
We struggled along financially but managed to keep our debt somewhat manageable until Rick got laid off in 2010. Even then, we still didn’t see the financial red flags. We decided that since everything had always managed to “work itself out”, that we would simply survive on credit cards until Rick got a job making what he made before the layoff.
Five years and tens of thousands of dollars in credit card debt later, Rick got enough raises to make the income that he was making pre-layoff, but the damage was already done.
Our mistake? Counting on the fact that the world had never let us down financially before, so the world certainly won’t start now.
The financial bust of the mid-2000’s absolutely compounded our financial problems, but the root of those problems began when Rick and I refused to take responsibility for our spending and savings habits, even after a clear warning from the Lord.
No Time for Regret
There’s not much room for regret at this point in our lives. We spent years beating ourselves up for being poor stewards of our money and it didn’t do us much good.
We have a saying in our family when someone apologizes. The saying is “Sorry means ‘I’ll change my behavior.'”
We finally learned after dealing with much regret and sorrow over our financial cluelessness to let go of regret and change our behavior. We learned (and are still learning – it’s important to never stop learning even when you think you know it all) how to become good stewards of our money. We are taking steps such as:
- Making a budget each month and spend-tracking
- Analyzing the value base of each purchase
- Making debt payoff a priority
- Saving money where and when we can
- Giving regularly
- Seeking God’s advice and listening to it 🙂
Make Your Own “Just Fine”
I get a gut-wrenching pain in my stomach when I read financial “experts” telling the world that 15k+ in consumer credit card debt, massive car loans and bloated mortgages are “just fine.”
That pain comes because we’ve experienced first hand the ramifications that occur when outside circumstances take your income away and you’re left with the bills and no way to pay them. It’s not fun to live this way, my dearest friends.
The thing is, you need to determine for yourself what “just fine” looks like from a financial standpoint, and it’s smart to do so considering worst case scenarios. Ask yourself questions such as:
What would happen to us financially if one/both of us lost our jobs or had a major expense?
How would we survive financially in the case of a long-term job loss?
How would our life change if we were completely debt free?
What amount of money would it take for us to be financially worry-free?
After asking yourself these questions, make a plan to get to that worry free place so that no outside factors can destroy you financially. Instead of coasting along paycheck-to-paycheck and then being miffed at the world when a job loss or major expense takes you down, work toward taking control of your money NOW so that those things CAN’T take you down financially. Gain the upper hand now, before trouble comes. I promise you’ll be glad you did. 🙂
Have you taken control of your financial situation yet? If so, how has it affected your life?