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How Great a Debtor

Pop Quiz

It's January, a new semester, a new year. Here's a little quiz. You are returning to school with:

1. some longed-for clothes or technological gizmos, which Santa brought
2. renewed energy for your studies
3. eagerness to hang out with your college friends
4. credit card debt

For many of us, the answer is "all of the above."

Credit Card Debt: An American Habit

Credit card debt can creep up on us — and that's just the way the credit card companies like it. Most American households have an average of eight cards, and about $8,000 of debt. But it's not just middle-aged homeowners who carry these balances. An increasing number of college students do, too.

In 2001, Nellie Mae, the nation's leading provider of loans to college students, found that 83 percent of undergrads carry a credit card balance of about $2,327. Companies make it oh-so-easy for you to get a small, seductive piece of plastic, flooding your mailbox with as many as ten offers a week. That your college has allowed banks to hawk their wares at tables in the center of campus or outside sports stadiums doesn't help. Banks really like to hook college students, because studies have shown that students tend to be loyal to the first credit card they use; if you're using an MBNA Mastercard right now, odds are you'll be using an MBNA Mastercard in a decade.¹

You might know someone who got into credit card debt simply because she didn't really understand how credit cards work. Companies love to advertise, for example, that they charge "0 percent interest," a statement that seems to imply that you can wrack up debt and never have to pay interest on the money you've borrowed. But, as your mama no doubt taught you, there's no such thing as a free lunch.

Most of the time, when a company says they have "0 percent interest," they mean for the first month you have a credit card — after that, your friendly lender will happily charge you heaps of interest, sometimes as much as 20 percent.

Another hidden expense is the annual fee that some companies charge simply for the privilege of using their credit card. Before you sign up for a new account, be sure to ask about these sneaky annual fees.

But most of us land in credit card debt, not because we misunderstand the mechanics of charging, but simply because we charge things we can't pay for — and find that we owe not just the money we charged, but hideously high interest. Just how long it will take you to pay off your debt depends on how much interest your bank charges. But if you make a minimum payment of $20 a month on a $1,000 debt while also paying 12 percent interest — your loan won't be paid off for six years. My friend Ginny found herself in an even worse situation: She dutifully paid her minimum balance each month, and after three years, she owed more money than when she began!

Interest, of course, makes everything we purchase more expensive. So pull out those credit card statements (the ones you were too embarrassed to open and read, painfully and carefully, the lists of purchases. Do a little math while you read — the sweater you purchased last fall because it was such a great deal at 20 percent off? It's not such a great deal when you realize you're paying MasterCard 12 percent interest.

Carrying credit card debt can even make it hard to get a job after college. Potential employers, after all, can and often do ask prospective employees for their credit reports — and would you want to hire someone who's $10,000 in the hole? Peter, another friend of mine, got offered the job he wanted — working with urban poor in New York — but he had to turn it down, because he knew that a non-profit salary would never allow him to pay back the $17,734 he owed AmEx.

Serving Two Masters

The problems with credit card debt are not just practical; they're also spiritual. When we spend more than we can afford, we are acting out a wrongly ordered relationship to creation. We are trying to consume, own, and control everything. Genesis tells us that we are meant to be stewards of creation — stewardship is not the same thing as ownership. When we spend more than we can afford, we are acting out a false story that tells us we deserve to own whatever we want. We fail to recognize that what we already have is such a remarkable gift — health, home, faith, and life itself are all gifts from God. Yet rather than be thankful for the enormous gifts God has given us, we focus on feelings of dissatisfaction, of want, and we try to satisfy those wants through our credit cards.

When we charge things we can't pay for, we are cheating ourselves out of an opportunity to develop restraint. When we were first dating, my now-husband — who shares my basic fear of credit card debt — told me that he actually enjoyed going shopping on a very limited budget. "When I'm governed by a budget," he said, "shopping trips give me the chance to discipline my desires, and help me learn that I cannot have everything I want."

The Bible has an awful lot to say about money. Ecclesiastes 5:10 (NIV) tells us that "Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income." Jesus insists that the rich young ruler must give everything away.

One of the richest biblical texts about money is the book of Proverbs. Sometimes it's easy to skip over or dismiss Proverbs, which, if you just skim through them, might appear to be sweet little aphorisms, a la Benjamin Franklin. But, in fact, the book of Proverbs is a wise and, at times, prophetic collection of sayings that describe the good, God-fearing life.

C O F F E E  S H O P

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Do you believe that excessive debt may be a spiritual problem?

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When it comes to money, Proverbs is clear: Greed for money and things leads us away from God. People who lust after money bring ruin to their families (Proverbs 15:27). Money, and the things money buys, are ephemeral; "riches do not endure forever" (Proverbs 27:24), but a relationship with God is eternal. Only "righteousness delivers from death" — money may be able to buy you a sweater or a night on the town, but it will never buy you God's favor (Proverbs 11:4).

All of this seems to foreshadow Jesus' clear message: We can't serve both God and money (Matthew 6:24).

Help!

You went a little overboard last semester, and spent more money than you had. Between the pedicures, the pizzas, the trips with friends to the mall, and all the stuff you really thought you needed to outfit your dorm room — well, now you're several hundred, or several thousand dollars in debt to a credit card company. When you think about it, you know you need to erase this debt as soon as possible. But it seems so overwhelming. How do you start? Simply check out part two of this article.