Breaking the Chains of Debt

Farmers and their customers may not realize it, but debt is the most aggressively marketed product on the planet. Debt isn't just sold by banks and credit card companies. My reading has shown that many national retail chains make more money on the sale of credit than they do on the merchanise they sell.

If you spread a cultural perspective often enough, loud enough and long enough, the myth becomes accepted as normal. Debt has been marketed to the American cultural so pervasively since the 1970's that to envision living a debt free life requires a complete change in our perspective.

Proverbs 22:7 says, “...the borrower is slave to the lender.”

In Financial Peace Univerity (FPU) we look at some myths that our culture has embraced and the fact. Here are just a few we cover.:

Myth: I pay my credit card off every month with no annual fee. I get brownie points, air miles and a free T-shirt.

Fact: More than 100 million Americans do not pay off the balance every month. They intended to but the credit card becomes their emergency fund. Even if you pay everything each month, when you use plastic you buy 18% more because you don't “feel” the use of plastic like you do cash.

Myth: I'll get my teenager a credit card to make sure he/she builds credit and learns to be responsible with money.

Fact: Teens are a target of credit card companies 8% of students drop out of college due to credit card debt. A better approach is to get your student a checking account when they are 14 and teach them to balance their checkbook and do a budget. If we are going to follow the scriptural model and not borrow, we are going to need to know how to manage cash!

Myth: You need to borrow money with a credit card or car loan to “build up your credit score” and win with money.

Fact: The FICO score is an “I love debt” score and is not a measure of winning finanically. It is estimated that a person with a 800 FICO score would have had $100,000 in debt transactions. If I was really winning with money and improved my net worth by $1,000,000, it wouldn't change my FICO score at all. When surveyed, the Forbes 400 were asked, “What is the most important key to building wealth.” 75% replyed that becoming and staying debt free was the number one key to building wealth.

Many farmers are addicted to debt in their operations and this is a very precarious position to be in. One bad weather year can bring a debt "house of cards" down.

See the next post on steps for getting out of debt.

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Brian and Lisa Petersen, lead the Financial Peace University course at Autumn Ridge Church. Concepts like the one discussed in this article are taught in FPU. Brian and Lisa welcome your questions on “Breaking the Chains of Debt”. They can be reached at brian@vegetablefreak.com.