To an average teenager, the possibility of debt can seem far away. While news headlines cite the “credit crunch,” the “housing crisis,” or even the “global financial downturn,” the most debt a typical teenager thinks of is when he owes a friend “10 bucks.”

Yet this is the reality: the average college undergraduate carries more than $3,100 in credit card debt. Coupled with student loans obtained to attend college, this number approaches $30,000!

Consider the story of a college student named Samantha. Offers declaring, “Establish Credit Now”—“Build Your Credit Early”—“Start Building Credit with No Interest Student Card” almost immediately began filling her family’s mailbox when Samantha turned 18. She felt pressure to “establish credit” and build a good track record of borrowing and repaying money. She knew a credit card would also be a convenient way to acquire fast money—and an easier way to make purchases. The bill would come later, and there would be time to earn cash to pay the company back. To her, this seemed a real “win-win” situation.

When the card arrived, she was determined to be careful. The next day, Samantha and her friend Kylie went to lunch. She paid with the card—easy. The meal cost the same as it always did, but the purchase did not feel the same. No cash left her pocketbook. She did not feel the loss, and it was convenient and easy.

A month passed and the bill arrived. “Wow. I don’t remember spending that much,” Samantha thought. Still, the amount was not a lot more than she would normally have spent, nor was it enough to cause her to worry.

 

Source: Canstockphoto.com

Month after month, the same scenario played out. The amount she owed slowly increased. Stressed and worried, she was finally forced to admit, “I’m in debt.”

Samantha became one of the average undergraduate students carrying a credit card debt of more than $3,100. And it was easy to do—just the swipe of a card.

What Samantha did not know was that these companies specifically target young people. Their goal is to put teenagers in debt, and make them pay maximum interest (a percentage of a card’s purchases charged to a cardholder that is payment for allowing him to borrow money), so a company can make maximum profit. This is easier to do with those new to the “credit game.”

With this scenario in mind, you need to come to understand the danger of debt, and how to avoid it!

Over-extension

The meaning of debt is simple—something owed for something borrowed or performed. Take out a loan from the bank and you must repay the sum of the loan according to the terms of the agreement, with interest. The same is true of credit cards. The lender (the credit card company) loans you an agreed upon amount. Until you repay the sum (generally with interest), you are in debt!

The danger of debt comes when money is unnecessarily borrowed, or when it is borrowed without the means to pay it back.

Even nations are not immune to debt. The United States national debt recently passed the $14 trillion mark—a number so large it is difficult to comprehend. Think of it this way: $14 trillion or $14,000,000,000—14 with nine zeros. A stack of 14 trillion $1 bills would be high enough to reach the moon four times! The same amount could create more than 3.4 million stacks the height of the Empire State Building in New York City. Imagine owing that much money!

How did America get itself into this situation? Simply put, overspending. For years, the government has run over budget, borrowing money it did not have. Soon, the debt took on a life of its own.

America’s debt proves that business leaders, corporations and even entire governments can completely overlook the dangers of poor money management. The same is true for individuals, many of whom have the attitude of, “I want what I want, when I want it, and I do not care what it takes to get it!”

More often than not, credit card abuse and poor management of finances trap teens and young adults in the debt cycle. Most are not as careful as Samantha, who still fell into debt.

Malls are filled with people buying name-brand jeans, designer shirts, the latest high-tech toys, or whatever else is a must-have item. This is usually with money they do not have.

Whether burning through their paychecks purchasing unneeded items or swiping plastic cards without giving any thought to the coming bill, money is spent with a focus on wants and not needs.

How widespread is the use of cards? As of late 2010 there were 269 million Visa credit cards in circulation, 171 million MasterCards, and 49 million American Express cards, among others. As of early 2010, creditcards.com reported that Americans held more than 600 million cards! That is an average of over 2.5 credit cards for every person over the age of 18.

Household credit card debt estimates hover around the $10,000 mark—some higher, some lower. CNN Money reported, “The average American household with at least one credit card has nearly $10,700 in credit-card debt…and the average interest rate runs in the mid- to high teens at any given time.”

That is more than a whole year’s rent or mortgage payments for many families!

Credit card debt also affects young adults. A 2008 report found that the average age among those under 35 who began using credit cards was between 20 and 21 years old.

This is not to say credit cards are of themselves bad, but rather the mismanagement of the very real money connected to them.

Manage Your Money

In the booklet Taking Charge of Your Finances, Mr. Pack explains how to approach financial management. “Proper money management, especially in today’s fiscally driven world, is a key to success—even survival. Most are obsessed with material possessions and wealth. However, if money is not properly managed—is squandered and wasted—life will not be productive and enjoyable, and basic family needs will be unattainable.”

He continues, “But this need not include you.

“There are crucial principles that guarantee financial success—and many are biblically based.”

Concrete steps can be taken to ensure you avoid the debt trap:

Budget: Creating a budget, a plan for managing your money, is key. How much money do you earn on a regular basis (income)? What needs do you have (expenses)? How much money will you have left over after you subtract your tithes and expenses from the money you receive? (If you are not earning money now, you can always apply these principles later.)

Write out your budget—do not leave it to guesswork! Ask your father or mother for help or do your own research at the library or online.

Some are unnecessarily intimidated at the thought of this kind of financial planning. Your budget does not have to be overly complex. Simply make a logical plan and stick to it!

Be disciplined: God knows we have needs (Matt. 6:32), and He promises to provide those needs if we trust and obey Him: “But seek you first the kingdom of God, and His righteousness; and all these things shall be added unto you” (vs. 33). The “things” are physical needs listed earlier in chapter 6—such as food and clothing.

Part of God’s character is self-control. You must also learn to be disciplined. Do not focus on wants (though wants are not always wrong), but instead on needs. Stick to your budget!

Learn to do the following explained in Taking Charge of Your Finances: “Before making a purchase, you must ask: (1) Is this something that I want? (2) Is this something that I need? (3) Can I do without it? (4) Does the budget allow for this purchase?”

“This enables you to examine whether your spending is the product of impulsive desires, or whether the purchase is justifiable—essential. American scholar and former Secretary of State, Henry Kissinger once said, ‘Many people have had to learn in their private lives, and nations have had to learn in their historical experience, that perhaps the worst form of tragedy is wanting something badly, getting it, and finding it empty.’”

Spend your money responsibly and avoid the pain that comes with wasting money—and going into debt.

Overlooked key: While you know of God’s tithing law, most do not. This is privileged knowledge—absolutely vital to staying out of debt.

King David recorded, “The earth is the Lord’ s, and the fullness thereof” (Psa. 24:1). Stop and think about this: “the fullness thereof”—everything—belongs to God. We on Earth are using what He has given us. It is not our own.

Yet the only payment God requires in return is a tithe (10 percent) of what we earn, plus offerings.

If we tithe, God promises to bless us. In Malachi, He says, “Bring you all the tithes into the storehouse, that there may be meat in My house, and prove Me now herewith, says the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it” (Mal. 3:10).

God tells the skeptic to “prove” Him—to see if He will uphold His end of the deal and bless the tithepayer with abundance so great “that there shall not be room enough to receive it”!

Many people claim they cannot afford to tithe, but the reality is this: they cannot afford not to tithe. Will you go without the blessing God promises for the tithepayer?

In the same chapter of Malachi, God plainly states what happens if someone refuses to tithe. A person who will not tithe has “robbed”—stolen from—God! This is serious.

The penalty? “You are cursed with a curse: for you have robbed Me…” (Mal. 3:9). This curse often comes in the form of debt.

You Can Be Different

You do not have to be among those cursed with debt. You have been given the opportunity to live God’s Way. You can learn to not succumb to impulse buying. You do not have to regret buying things you do not need—or find you did not even want them in the first place. Instead of falling into the debt trap and being controlled by financial situations, you can control your money.

You know God’s tithing law—reap the blessings God promises for obeying this command. By keeping this law, it will “keep” you. If you break it, you will likely wind up “broke”!

By applying the principles outlined in Mr. Pack’s booklet Taking Charge of Your Finances, you can control your finances now. This will help you avoid the debt trap that has left many stressed, worried and unhappy about their financial situations.

Budget your money. Focus more on your needs and less on your wants. Exercise self-control. Apply these principles and you will successfully avoid the dangers of debt!