While the dictionary describes debt as “something owed, as in money, goods, or services,” it also can be described as imprisonment! Debt often dictates what a person can or cannot do. For example, if you have so much debt that little money is left after paying the bills, you are not free to meet the needs of others. You limit your opportunity to save and invest for your future. Debt actually binds your hands, so that you cannot do what you would like to do.
Every spending decision is really a spiritual decision. Do you believe that? Most people don’t. Imagine you’ve committed yourself to making 60 car payments at $350/month, 24 furniture payments at $200/month, and credit card payments of $200/month. These amounts are less than what the average American commits to pay, but let’s use them for purposes of our discussion. None of these appears to be a spiritual decision. Yet later, when a family member or fellow Christian has a genuine need (your spiritual and moral obligation), you won’t be able to help. Earlier spending decisions resulted in a financial situation that allows you little freedom or flexibility. Debt imprisons people. The new car or the furniture that seem so wonderful when you buy them quickly become burdens rather than blessings. Years of payments consume a huge amount of interest, with nothing to show for it. Wise is the person whodeliberately spends less than he/she earns each month. Over time, the monthly surplus created by spending less will enable you to make cash purchases without incurring debt.
Debt divert dollars that could be growing to provide your family’s future needs—college expenses, a daughter’s wedding, and of course, retirement. For the believer, it is dangerous to think that debt is a normal and natural part of life. The truth is, we should think the opposite. Debt should be regarded as rare, undesirable, and unusual.
Many people never receive counsel about how their annual income should be allocated. What percentage should be spent for housing, for food, for clothing, for insurance, and for health care? Contact the Board of Retirement for a helpful chart that shows these percentages based on your income and the number of people in the family. This chart will help you prioritize your spending and get you on the road to a debt-free life!
Developing a lifestyle that does not include debt is one of the first and most productive steps toward retirement. Ideally, you will have no debt at all when you reach retirement. The next best thing to being debt-free is to enter retirement with only a modest mortgage balance—an amount less than 25% of your anticipated retirement income.
People who retire with considerable debt often find they need to continue working. In reality, finding meaningful work that produces good income is very difficult. Many retirees work jobs that pay much less than they made during their careers; many of them work for minimum wage. The low pay means the retiree must work many hours, leaving little time or energy to pursue hobbies and other personal goals that make retirement rich and rewarding. Create a plan that does not require working in retirement, but allows you to work if you want to (if your health allows).
Start planning today for debt-free retirement and take the steps necessary to help you achieve your goal! Create a plan that will provide the framework necessary to make wise decisions today. Every step you take, no matter how small, will contribute toward your eventual retirement.
Former magazine editor Norma Goldman enjoys a free-lance career in her retirement. She and her husband live in Nashville, TN.
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