Saturday, December 31, 2005

Compound Interest and Christian Debt

I have made probably one of the biggest mistakes of my life. Considering some of the whoppers I've made in the past, to think that I could actually top any one of those would boggle the mind. The worst of it is that this mistake was actually made with an eye on my once-hoped-for ordination in the United Methodist Church.

A small, private university in Arkansas offers what is known as the Advance Program. It is designed for working adults with a minimum sixty hours of accumulated college credit. In less than two years, one can finish undergrad work and come out with a BS in Organizational Management, a toned-down business degree. The school is fully accredited, and the course work is very real and demanding. There is nothing "pretend" about it.

The problem is that I do not have a business mind. There are some elements of business that I enjoy such as Human Resources management and labor law. Math in any form, however, has always been my weakness even though, oddly, geometry was something I had no problem with. How's that for logic?

Why did I choose this route instead of liberal arts at a public, and less expensive, state university? In the beginning, it was the most expeditious way to finish my undergrad work so that I could move on to seminary sooner. I was becoming impatient with the time my ministerial candidacy was taking, and I wanted to move it along.

This path, as much as I seem to regret it now, has shown me something that I had long suspected but had never given much thought to. My last class was "Financial Math" which involved figuring debts and interest, both simple and compound. While I love the teacher, the class came with no text book to help explain the why's and what's of compound interest. So what did I do? I purchased "Everyday Math for Dummies" that contained a section on figuring compound interest.

I cannot say that this section helped me as much as I had hoped, but the author did devote a section on "legal loan sharking" known as revolving credit. Of course as I was feeling pretty low for being forced to purchase a book designed for the "intellectually challenged", I read this section and felt just a tad lower. Why? Because I have revolving credit accounts. However, these accounts will soon be history.

This nation and some states once had usury laws which put a cap on the amount of interest a lender could charge. Over time, these laws were done away with in favor of market rates. What this means is that those who are challenged or desperate or "dumb" have been led to believe that they can afford almost anything when the truth is, at the end of the month they are in worse shape than before.

Congress put the clamp on bankruptcy criteria and after the first of the year, these dastardly minimum payments will go much higher in an effort to force Americans to pay these debts off sooner and save themselves some very expensive interest payments. However, it must be considered exactly how those who were struggling to make the relatively low minimum payments will somehow be able to make an even higher payment?

Of course there is no denying that we credit users have no one to blame but ourselves. We bought into the absolute nonsense that convinced us to "play now, pay later". We fell for it. We "dummies" have been playing and playing, and now it is time to pay the piper.

Christians face a tougher problem. How can we say we are serving the Lord when our monthly statements clearly reveal that we dutifully serve Chase and CitiBank and Sallie Mae and ... and ... ?

I think I know what has happened to so many. We have become a people with an entitlement mentality. Regardless of our level of income, we have become convinced that we are entitled to so much more. We have allowed ourselves to be convinced that even if we cannot afford it now, things will surely change in our favor once the bills come in. We have become a nation of gamblers.

And the truth be told, someone besides the Lord owns us lock, stock, and barrel when we allow ourselves to be drawn in by the riches and rewards that this world claims to offer. In the end, however, these rewards are only an illusion and the riches are not real. And we sold our souls for a new stereo that we could not afford in the first place.

If any young people who are just starting out happen to read this, I hope you make it this far to see this: If your finances are such that you cannot afford to put back a little in savings every single week or every single month without fail, you cannot afford payments on a revolving credit account. On your own income, if you cannot afford your supposed standard of living, you are living someone else's standard and not your own. And the very real hole you are about to fall into is very deep indeed.

No comments: