5 Mistakes That Lead to Debt

Know what’s impressive? Those rare individuals who’ve learned to control their lifestyles and use their financial abundance to help others and spread the good news.

Know why more people aren’t living that way? Failure to plan!

The number one expense that leads to unmanageable debt is the purchase of too much house. The monthly payment alone should be no more than 25% of net spendable income which is what’s left after tithes and taxes. Adding the mortgage payment to the cost of property taxes, insurance, utilities, maintenance, repairs and the percentage climbs to around 38%. More than that and you’re asking for trouble.

The second trap is buying a new car. People assume they can make the monthly payments but fail to budget maintenance and repairs, insurance and parking. Most people owe more on a car that’s a year old than its actual value.

Another problem is failing to plan for disasters – those nasty expenses that arise when we least expect them…things like car repairs, water heaters or health issues. With no margin, people use a credit card – and then can’t pay it off when it’s due. Reducing spending in other areas is too painful, so they don’t budget for emergencies and ignore their probability.

Believers are vulnerable to trust others, but it’s extremely dangerous to use borrowed money for investments and speculate on the future. It’s presumptuous, for no one can rightly predict what will happen in the financial markets today or tomorrow! Avoid a get-rich-quick mentality.

If you’re married, listen to your spouse before making ANY decisions that affect your family’s financial condition. Seek the counsel of your parents or other trusted people. Solomon said, “Without counsel plans fail, but with many advisers they succeed.”

I appeal to you friends, make 2018 your year to plan wisely, so you can live abundantly!

If you need to start your New Year with a plan to pay off credit card debt, I want you to get in touch with Christian Credit Counselors. They’ve been our trusted partners for years, because they can help you make a plan and they’ll negotiate with your creditors on your behalf. Start with a free debt analysis at crown.org/ccc.