Have you ever thought about what causes debt?

Most people who have accumulated debt didn’t do so on purpose. It’s usually because of a series of small mistakes, one huge accident, or an assumption that “this is just the way it’s done”.

But underneath all those causes are deeper, hidden problems. Paying off debt or getting on a budget are good things that should be part of every Christian’s financial plan. But changing behavior will only get you so far. Changing your beliefs is what will bring you true financial freedom.

These 5 things are the most common underlying causes of debt.

Get-Rich-Quick Mentality

This mentality is usually most evident in investment schemes. Christians find themselves trapped in these schemes before they even realize what’s happening.

Often what makes matters worse is that these scams allow you to invest borrowed money. If we could only invest cash, maybe we would be more careful! This is when the debt accumulates quickly.

The Bible warns against surety, which is what happens when someone invests borrowed money – they have no way to cover it in the event of a loss and are speculating on the future outcomes. No one can accurately predict what the country’s financial markets will look like in the next hour, let alone the next year.

Investing is a biblical principle, but borrowing money to do so, or because of a motivation to get rich fast, is not.

Ignoring Your Advisor

For those of you who are married, you have a God-given financial advisor in your spouse. Even if your spouse doesn’t have a background in finance, or is the “spender” of the relationship, they’re still you’re most trusted financial advisor.

Husbands are to listen to their wives and wives are to submit to their husbands. But there must be clear and respectful communication between the two. Debt can be accumulated and get out of control when the communication is broken.

Secret loans, hidden spending habits, private bank accounts, or just a lack of communication can all divide a couple’s hearts and finances. Listen to your spouse. Be open, honest, and vulnerable with your spouse. And go to the Lord in prayer together.

Buying a Home you Can’t Afford

Nearly every family in America dreams of owning their own home. However, many times they try to buy a home too soon after getting married and end up paying too much for their first home, which leads to financial stress and ongoing debt.

Being “house poor”, or owning a more expensive house than you can truly afford is becoming a more common source of financial stress. When you’re buying a house, remember that your mortgage payment, taxes, insurance, utilities, maintenance, and repairs combined should total about 38% of your income. Following that general guideline will help you live below your means and avoid more debt.

Buying a Car You Can’t Afford

What happens most often is that people look at the monthly payments for a car instead of the overall price. A price tag of $300/month seems much more feasible than a lump sum of $48,000. The problem with this, as with most debt, of course, is interest. Making monthly payments on your car means that you will end up paying significantly more than the original price, and spend years burdened by the debt.

Unlike a house, a car depreciates in value the second you drive it off the lot. So don’t finance something that you’re ultimately losing money on. Be patient and disciplined to save, and buy a reliable, used car for an affordable price.

Failing to Schedule Disasters

We’ve all had those inconvenient, surprise expenses come up out of nowhere. The way you respond to such a surprise expense all depends on whether or not you are prepared. Those who aren’t prepared have to rely on credit cards to pay for the repairs or expenses. Those who have planned ahead and saved, however, just access their emergency savings account to cover the expenses.

Decide today to plan for the unexpected and start saving for whatever comes up. If you can save $10, you can save $100, and you can save $1,000. But if you’re struggling with credit card debt, get in touch with Christian Credit Counselors to get on a debt management plan. They’ve been our trusted partners for years and can help you get out of debt the right way.