In many ways, credit card debt in your financial life can be compared to cancer in your physical life -- if caught early enough both can be cured! During the last several years, I have had friends who died due to cancer and I have had friends whose lives were saved because the cancer was detected early enough.
I am sure you have heard the early warning signs of cancer . . . but have you ever been informed about the early warning signs of excessive credit card debt? These early warning signs just might be the key to literally saving your financial life in the months or years to come.
The key is early recognition and taking action to do something about it! Check below and see if you have any of the early warning signs:
Sign #1: You receive a credit card bill in the mail and cannot pay it in full.
This is definitely the best early warning signal you will ever receive! Whenever this happens, you have to stop and ask the question, "Why can’t I pay the bill in full?" The obvious answer, "I have lived beyond my God-given means."
The first month you receive a credit card bill in the mail and cannot pay it in full, red flags should be waving and alarms sounding.
Now hear me loud and clear. I did not say you are a bad person, nor did I say you are in a financial crisis! What I am simply saying is that if you do not deal with this problem, immediately, it can lead to a financial crisis in the months to come.
It is easier to solve the problem of one month of overspending than solving the problem compounded by 5 years of overspending. If everyone would understand this early warning signal and immediately stop spending and begin to pay the cards off, credit card problems could be avoided. The key is to deal with the problem immediately -- without delay! Many people tend to avoid the problem, hoping it will go away on its own -- but it never will -- unless you take action.
Do you have credit card bills you cannot pay in full each month?
Sign #2: You are using your credit cards out of necessity, rather than convenience.
Only you know when you have crossed the line between convenience and necessity. Credit cards used as a convenience can be paid in full each month. You can have 25 credit cards as long as you pay them in full every month. If you cannot pay all the credit card bills in full each month (only if you have one), you probably have crossed the line.
Here is a quick way to determine if you are using credit cards out of convenience or necessity.
The way you answer the following question will give you a pretty good sign: Do you ever use credit cards because you don’t have the money in your checking account?
Sign #3: You see an upward trend in your credit card debt.
The total credit card debt you owe can be compared to a thermometer. The higher it registers, the more danger you are in. The higher the credit card debt, the more wide spread the financial cancer. Increasing credit card debt leads to a sick financial life. Analysis: make a chart showing the total amount of outstanding credit card debt for the last 12 months. What is the trend? Up or Down?
Sign #4: You are paying the minimum payment each month.
This is a sure sign of financial problems. You have fallen victim to the credit card company’s trap. This is exactly what the credit card companies want you to do! Don’t fall prey to their high interest rates.
Why do you think they offer a minimum payment so low? So you will take the easy option and pay the low amount due. If you have a balance of $1,600 and always pay the minimum payment, it will take you over 15 years to pay off the $1,600 in credit card debt! That’s over 180 months of credit card payments. Don’t let the credit card companies siphon off your hard earned money in interest payments each month. Do you believe this is a good use of God’s money?
Are you paying the minimum payment each month?
Sign #5: You are thinking about financial problems every day.
What used to be a monthly nag of paying the bills, has become a chronic crisis. Even going to the grocery store produces stress. The worries and concerns that used to enter your life once each month when the bill arrived, now consume your thoughts every day. Your credit cards have become a daily drain on your life. In some ways you are becoming financially paralyzed by them.
Do you have a high level of stress due to credit card debt?
Sign #6: You are transferring balances from one credit card company to another.
There is nothing wrong with taking advantage of a lower interest rate, but this should not be your lifestyle. You need to be more concerned with finding ways to pay them off than with spending time trying to find another card with a lower interest rate.
During the last six months, have you transferred a balance from one credit card company to another?
Sign #7: You are hoping for another credit card application to arrive in your mailbox.
You know it is serious when you are seriously looking for new cards to apply for that will only allow you to run your balance even higher.
How many of the seven warning signs do you have? _____
Now, if you have diagnosed that you have credit card cancer, here is your prescription for recovery from "Dr. Pope":
Rx for Credit Card Cancer: "Seven Solutions"
This problem is more of a spiritual battle than most people would be willing to acknowledge. The world is encouraging you to buy things you cannot afford and spend money you do not have. Pray and ask God to help you overcome those desires and give you peace and contentment. (Philippians 4:6-7 and 4:11-13)
I have not met one person who likes surgery, but in many cases it is surgery that can save your life. In this case, we are not talking about physical surgery, but financial surgery -- and you can perform the procedure right in your home or office. Here is what you need to do. Lay out all your credit cards on a clean desk. Locate a large pair of scissors and proceed to cut your credit cards in 20 or more pieces. Next properly dispose of the waste and begin learning how to live without them.
Learn to operate your finances on a budget - plan ahead of time how the money is going to be spent, before you even receive it. There are a lot of great budgeting systems on the market. Let me recommend you consider using my MAP: Money Allocation Plan. It is a simple plan that operates on one piece of paper every month. Check out our resources/order form for more information.
4. Cut your expenses
In order to pay off your credit card bills, it will require some lifestyle changes. Consider, dropping cable TV, cook all your meals at home, stop all long distance calls, use coupons at grocery store, become a one car family, stop all purchases for "wants", consider selling your house and buying a less expensive one, or moving to a less expensive apartment if necessary.
5. Chart your success
Keep track of your progress. Seeing the balance drop will be motivational.
You must find someone to be accountable to during the recovery process. You have been sick -- financially -- and you need someone to help you recover. This could be a friend, a church staff member, a financial counselor, or financial professional. Their job is to encourage you, check on your budget, check on your income and expenses, and pray for you!
7. Read and meditate on the Word of God
Meditate on God's Word daily, read God's Word daily, study God's Word daily -- and you will find peace, contentment, and comfort during this time in your life! To start with, let me recommend you study and memorize Psalm 1.
God desires for you to be a good steward over the resources He has entrusted to you. Living beyond your means and paying high interest on your credit cards is not good stewardship (Luke 16:10-13). To be honest, it is foolish (Matthew 7:24-28). Pray (Psalm 37:1-7) and ask God to help you overcome your weakness and give you discipline (Galatians 5:22-23) to be a godly money manager.
© copyright - 2000, Ethan Pope