Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds, and to be generous and willing to share. (1 Tim. 6:17-18)

Tuesday, November 8, 2011

I Just Need A Little Debt To Get Me Through

Larry, I Need Your Advice

As the stewardship pastor at a large church, I often get people that call me, email me, or stop me in the hallway at church in order to solicit my advice. This week was a busy one for me in the advice department. I ended up talking to a business owner on the phone, and I also had some email correspondence with the wife/mom of a family of five. I believe as more people are feeling the pinch of a difficult economy, they are seeking out solid financial advice on how they should handle their specific situations.

In the first advice situation, I had a church member call me a couple of days ago asking for my opinion on using debt to carry his family's struggling business through a difficult time. They have cut their business operating budget down to the bare minimum. Now, this member is having a difficult time deciding on whether or not to go out of business or to get a line of credit in order to keep the business afloat for a period of time. If the business goes under, then he loses his job. Tough call!

In the second situation, a family of five in the church have been faithfully working through the Dave Rasmey FPU Baby Steps. Suddenly on Sunday, they discovered on the drive home from church that they are having transmission problems with their van. Now what do they do? Fix the transmission for $2,000+, or do they take out a small loan for $5,000 to find a reliable used vehicle and then pay off that small loan as quickly as possible? Again, another tough call. We all need reliable, safe transportation to get our families from Point A to Point B, not to mention to work each day.

Total Weirdness

Now, I'm a guy that has drank the debt-free kool-aid. Around 2005, I made that radical paradigm shift that debt was no longer an option for me. When you make this choice to live a debt-free lifestyle, that decision is going to get tested - water heaters go out, the roof needs to be repaired, or cars break down. You end up draining your emergency fund to fix these stupid problems and then have to start all over again. Sometimes it feels like a never-ending cycle of jumping back and forth between Baby Steps 1 and 2!

So, you may be asking, "Larry, what was your advice in these two situations?" Well, I am so glad you asked me that question! In the first one, the business debt question, I asked the church member if taking on this business line of credit was truly going to solve his business's problems or just delay the inevitable? Could he take a look at the general health of his industry and the economy and then truly say that his business would turn around and that the business would be okay? I told him that the reality is probably that our economic situation was probably going to remain pretty stagnant over the next couple of years, especially during the election cycle of 2012. Going into debt in order to keep his business afloat for a few months was probably not going to be the best choice. I closed out our phone call by encouraging him to check out the Entreleadership book by Dave Ramsey for business advice.

In the second situation, I encouraged this family of five via email to consider a different path than going into additional debt. First, I asked them to pray like crazy for God to provide for their need of a reliable vehicle in order to haul their family around - DEBT FREE! Second, I recommended that they connect with the small groups that they are associated with at church and make these small groups aware of their need. You never know, one of their connections at church may know of an inexpensive vehicle that will fill the need. Third, they need to see how much they can get for their messed up van. Fourth, they need to use their emergency fund to help them in their situation if necessary. That's what it's there for in the first place! Fifth and final piece of advice, if they get to the point where they just can't avoid going into some debt to get a reliable vehicle, then they need to try to get the smallest loan amount possible (such as $1,000-$2,000), combine that with their emergency fund as well as the proceeds from the busted van sale in order to buy their next vehicle. After that, they need to be committed to paying down their small loan as quickly as possible.

No Excuses, Just Results

We can all come up with an excuse to go back into debt or to take on additional debt. We can get weary of working our debt-free plan and throw in the towel when a little life stuff gets in our way. When you're trying to do the right things with your personal finances, it's never going to be easy. It's definitely going to be a lot of hard work.

You have to make a choice. You can no longer make excuses. You have to stick with your plan. Pray really hard as if everything depended on God. Let Him grow your faith during a time of financial diffficulty. But then do the hard work, expend the creative energy to work through your problem. I truly believe that God will honor both your faith and hard work in order to get through your financial challenges. He will provide a means of escape for you.

Don't make up additional excuses. Find better solutions that can lead to amazing results!

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