CCS Newsletter: Spring 2006

Spring is a great time to do Clean up!

If you are like me, you look forward to the time when the sun is out, the weather warm and you are able to be outside! One of the activities that occupies much of our time in the spring is clean up. It's amazing how much clutter and garbage accumulates over the winter! Clean up often suggest that a new beginning is about to occur. Sometimes it's the gardens or our garage, but regardless, it looks so much better when it's complete!

Spring is a good time to clean up our debt. For many of us, the winter, with Christmas and other events, sees us slipping further into debt. I am thankful that the Bible has so much to say about our financial lives in a practical way! Debt generally is considered to be “when the liability is greater than the value of the asset”. So for the sake of this example, we would preclude a mortgage, from other forms of debt.

In Romans 13:8, Paul encourages us to “owe no man anything”. Even though Paul had a spiritual application fundamentally, I believe that God's desire is to owe no man anything. Debt by its definition suggests that we are counting on paying back what we owe in the future and we are encouraged not to presume on the future (James 4:13 -14). Unfortunately many individuals learn too late of the bondage that debt creates with the lender (Prov. 22:7). Many of us learn that it is easy to get into debt because there is always something else we want (Ecc. 5:10 ).

It's interesting to see how God views debt. In the book of Deuteronomy, God goes to great lengths to tell His people that if they will obey His commandments He will bless them. He also was clear that if they disobeyed Him, there would be consequences and one of those consequences was debt (Deut 28:15,44). Sometimes we need to be reminded of what God thinks!

So if we are going to clean up the debt, how do we start? First, list out all the debts you have including the amount and the interest rate. Next, list them with the highest interest rate at the top. Then, break the highest rate item one down so you can pay it off over a short period of time. Let's say for example you had a credit card at 24% as the highest rate and you owed $1,000.00. If you broke it down into 20 bi-weekly payments that would amount to just over $50.00 with interest, you would have it paid off in less that 6 months. Then take the next highest and do the same. Before you know it you will have “cleaned them up”. This works much better, we believe, than a consolidation loan where the overall interest rate will likely, in fact, be higher than the average interest on the debt.

All of this only works if you stop spending more than you can pay. An easy rule is simply to put the cards away if you can't pay it off completely, until it is fully paid off. That way, you won't be tempted to overspend and get into the debt trap!

Use spring as a good time to clean and home and your finances!

(Follow up to Fall 2005)

A corporate attorney sent the following out to the employees in his company:

• Place the contents of your wallet on a photocopy machine. Do both sides of each license, credit card, etc. You will know what you had in a your wallet and all of the account numbers and phone numbers to call and cancel. Keep a copy in a safe place. Carry a photocopy of your passport when you travel either here or abroad. We've all heard horror stories about fraud that's committed on us in stealing a name, address, SIN, credit cards, etc.
  
• We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card numbers handy so you know whom to call. Keep those where you can find them.