FINANCES: Debit/ Credit Cards

The rich rules over the poor,

And the borrower becomes the lender’s slave.

Proverbs 22:7

This topic will be revisited many times on this blog but today just a few thoughts on it today. We found ourselves in mega debt a few years after our first child was born. I had not been working for 2-3 years and our income level had been more than cut in half. We ended up cashing out my 401K but needed to make some drastic changes. After much prayer and counsel from our church elders Bob's job situation changed miraculously and he is still with the same company today. That was 12+ years ago.

We are completely out of debt except for our home which thankfully has kept most of its value in today's market and only use our credit card like a debit card. We both carry the same card and I subtract the amount charged from our checkbook as I use it so there are no huge surprises at the end of the month. He uses the card for gas and some miscellaneous expenses. Anything over $50 or so, we discuss before purchasing. We pay the balance in full each and every month. Interest charges are absolutely outrageous these days.

Looking back, if we had been disciplined enough we should have determined to live on one income when we both worked and saved most of the 2nd income which is what we are able to do today. I only work part-time with two home businesses but we use that money primarily for family fun, Christmas (and other) gifts and enjoy the tax write-offs of having business at home.

If you find yourself in debt, follow these two guidelines from Crown Ministries.

• Maintain $1,000 in a savings account for emergencies (begin saving for this today). Put any extra from the week into an account so you are prepared for unexpected emergencies--car repair, maintenance, etc. Twenty dollars ($20) a week will get you here in one year.

• Begin paying off the smallest balance credit card in excess of the minimum payment each month until it is paid off. Once that is paid off, then use the total amount you were paying on the next card and so on until they are all paid off. It may take some time but every little bit you can reduce the principal will help you so much in the long run. The miracle of compound interest works both ways--for your good if you reduce the principal; for the lender's good if you do not.