An Rx for escaping from debt

by Tony Thomas

Benjamin Franklin signed the Declaration of Independence, helped to frame the Constitution and discovered electricity. He is also known for his homespun wisdom.

For example, it was Franklin who wrote, “Guests are like fish; after three days they smell.” Think back to your Christmas guests and you'll get his drift, pun intended.  

Here's another one I like: “Better to go to bed supperless, than wake up in debt.”

According to USA Today, the average credit card debt per U.S. household in 1990 was $2,966. That figure now stands at $9,312 and if you make the minimum monthly payment, at 18 percent interest, it will take you 25 years to pay off that debt. What’s more, you will have paid out more than $27,000 in interest.

The Christian Stewardship Association in Milwaukee, Wisconsin recently surveyed 1,000 Americans. A whopping 91 percent of us revealed that we make more money than ever before, but 68 percent admitted to feeling more anxious because of debt.

Have you heard about dumb debt? In California, you can buy a home and make payments only on the interest. In other words, your monthly payment never touches the principal debt. As Forest Gump said, “Stupid is as stupid does.”

Before you take that spring break vacation, consider avoiding the debt trap.

Here are three prescriptions for financial health:

• First, spend less than you make by following the 10-10-80 plan. Give the first 10 percent to your church, save 10 percent (pay yourself) and live on the rest (80 percent).  

• Second, build an emergency fund. Larry Burkett says that every family ought to have $1,000 set aside for emergencies. When our eldest grandson turned one, his vocabulary included the word, “Uh-oh.” Every time he tripped or spit up, he instinctively said, “Uh-oh.”

What’s funny with a child, however, is a disaster for an adult.  

Solomon taught that, “He who gathers little by little makes it grow” (Proverbs 13:11). If you will skip a bag of chips at lunch every day during your work week, you will save $177 annually. If you invest that savings for 20 years, it will grow to $10,484 (you will also eliminate 10,000 calories each year).

• Third, establish a spending plan. In the old days this was referred to as a budget. Although this is an exercise in semantics, the prescription is still valid.

Everybody needs a plan because those who fail to plan are, in actuality, planning to fail. A spending plan helps you discipline not only your spending, but your savings, too.

Solomon warned Israel not to “be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you” (Proverbs 22:26-27, NIV). A modern day proverb warns: “If your outgo exceeds your income, your upkeep will be your downfall.”  

Benjamin Franklin was a member of the first Continental Congress, and today’s Congress could learn a thing or two from Mr. Franklin. Why? Because he's still right: a supperless sleep is better than a full belly on credit.

• Tony Thomas is a church pastor, a high school basketball coach and author of “A Smidgeon of Religion.” He can be reached through the newspaper at ptnews@pharostribune.com.

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