Two
men were bemoaning their financial situation. Said one: “Every time I catch up
to the Jones’ they refinance.” “I don’t care about the Jones,” said the other, “I
just wish we could afford to live the way we are living now!”
Somehow, we
are caught in a belief that we can juggle our way out of debt. On a credit card
bill for $182.90 I received this week, a cryptic note in red told me that
making a minimum payment of $7.00 each month, at 20% annually, would take four
years and four months to pay off the debt.
The danger
of revolving credit on plastic is that debt increases silently until only the
minimum can be paid each month. Eventually even the interest itself is more
than we can afford, so the debt continues to increase, even without more
spending.
This is
crippling not only large numbers of people, but also an increasing number of
countries particularly in Europe. Greece is beyond the ability to ever pay its
debts. Spain and Ireland are not far behind, and riots at austerity measures
make any recovery more distant and unlikely.
But even
worse, the refusal to take whatever measures are necessary to pay the debts,
displays an entitlement mentality that cannot comprehend prosperity is earned,
not a reward for living. Those who have grown up in prosperous times come to assume
it is their right to enjoy it.
In the
middle of the last century, as the world rebuilt and restructured following two
world wars, western prosperity was built on human hard work to recover from devastation
and the accompanying poverty. That in turn provided easier and better living conditions.
Today’s prosperity
is built, not on human industry, but on borrowing from the future—have now, pay
later. Now is the later when payment must be made; increasingly by individuals,
but also by nations. Any failure of the world monetary system will likely be a
gradual spreading collapse, not a sudden catastrophe like the Great Depression.
The Bible
enjoins us to be debt free, the borrower is always obligated to the lender. Those
who are debt free are better able to withstand financial insecurity around them.
We never finally paid our mortgage debt until our late sixties. It should have
been a primary financial aim in life.
