High schoolers should all be given a class on money management and the credit system. It would be too bad for them to learn the hard way, with thousands of dollars of credit card debt, in addition to school loans when they are out of college. Which is how I learned.
I was never taught much about money management. All I learned was from my parents’ example, which was to buy what you want when you wanted, screw waiting, and put in on your credit card. It was a whole mystical system to me. Free money?? Pay it later??? So I developed the same pattern when I was old enough to get a credit card.
I remember when I got my first credit card pre-approval. I thought to myself, “Wow, I’m pre-approved?? They must think I’m trustworthy!!” More like, they must know I am a noob when it came to the system. So I kept getting card pre-approvals in the mail, and I kept opening up new credit card accounts, using them for purchases, and paying only the minimum payment.
At my worst, I had 10 credit accounts open. You can imagine the panic when all were pretty close to maxed out, some even over the limit, and I started being unable to make my minimum payments. Interest rates soared, and soon, the money I was putting towards payments just went to interest, barely touching my principal balance. When I graduated from college, I had about $14,000 in credit card debt alone.
That’s when I realized that “The Man” got me. And that’s when I decided to wage war back on “The Man.” I began to look into Christian debt management programs. I found an excellent one, www.40debts.org. They negotiate with credit card companies to lower the interest rate to next to nothing, and offer credit counseling and education for those who are clueless about the credit system. Also, part of the stipulation of being in the program is having NO credit cards. I’ve learned to live off my debit card these past four years, which has been surprisingly freeing knowing there’s no debt looming over my shoulders. Through it all, I remember thinking, MAN, I wish someone had taught me all this!
I pay 40debts a monthly lump sum, and they disburse it to all my creditors. I currently have only four more cards to pay off and less than a year left in my program, praise the Lord! I am just so thankful that God taught me this lesson in coveting and greed and money management relatively early in my lifetime, and that He has freed me. I would hate to be in my 50’s or 60’s with tens of thousands of dollars of debt enslaving me and burdening me, keeping me anxious all the time. It really is slavery.
I have taken it personally upon myself to educate others on money management. My advice for beating “The Man”:
1. I love Quicken. It’s a money management program that tracks where you spend all your money (dining out, groceries, rent, utilities, play money, etc). They have a pie chart for all your spending, so you can see where it all goes and what percentage goes to what. It is a discipline to maintain, but in discipline is where I have found financial freedom. Quicken also allows you to…
2. Make a budget. Take your monthly income, allot money from your monthly income to each of the spending areas in your life. Oh yeah, and STAY WITHIN YOUR BUDGET. You may need to tweak it the first few months. RJ and I have found that financial freedom comes from knowing what we can or can’t spend. For example, I want a new shirt. Do I have money in the clothing fund? Yes?? Then booyah! No? Then wait till next month. Live within your means!
3. Keep spending just to your debit card or with cash. That way you don’t rack up debt that you can’t pay off immediately.
4. Keep credit cards to a minimum. I don’t see why you need more than one for emergencies.
5. Pay off your balance completely on your credit cards!
6. If you do get a credit card, make sure it’s one with a low APR, and even make money off the system! A lot of cards offer cash back or gift rewards. RJ recently got a new cash back rewards credit card. We had prayed about it, and figured, we were going to spend money on gas and groceries regardless, why not make some money while doing so? Every time we use the credit card, I track it in the Quicken register so I know how much money we have free after we pay off the card at the end of the month.
7. Be generous! We have found that the more we give to others, the less the system and world has a foothold on our lives.
8. Remember the words of Paul in 1 Timothy 6:10: “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.”
Learn from my mistakes. Let’s take down “The Man!”