Dealing with Debt - 4 (See Reasons people get into debt).

In my last article on this series, I showed how natural occurrences drag people into debt sometimes, I also proved that not all debts come as a result of the mismanagement of our financial resources. In this article, we will be looking at another category of reasons why people get into debt, I call them…

FINANCIAL REASONS:
They deal with our relationship as individuals with money, they include some financially harmful habits that are guaranteed to bring those practicing them to points of debt no matter how much they wish to avoid it. They include;

1.) Ignorance of the Laws of Money: I have come to understand that just like in other areas of life, money has laws that you must follow to guarantee its maximization. Just as you can't eat food through your ears, or walk with your head (these things appear to be basic and common to all, but it’s all because we have generally accepted them and therefore can’t act otherwise), likewise you can't just treat money anyway you like and expect to have it always with you. These laws cuts across all tribes and races, they are universal and if you must have enough money always to keep you out of debt, you must understand the basic laws of money, some of which includes,

-Living within a budget to avoid over and unnecessary spending,

-Saving a portion of your income,

- Multiplying the money that you saved through investments.

-Becoming a giver.

Failure to adopt and walk in the above listed laws guarantees a debt ridden life, you can’t pray it away, God himself set them and has given us enough information and wisdom to walk in. No matter how much you pray and fast in this case, once you ignore these laws, you will always be in debt.

2.) Standing as a financial guarantor for ‘Strangers’: Whoever puts up security for a stranger will surely suffer, but whoever refuses to shake hands in pledge is safe. Proverbs 11:15 (NIV).

The word "stranger" in this context refers to another person whose (financial) condition you do not thoroughly understand. If a person counts you worthy of standing as a financial guarantor for him/her, then he/she should also be willing to disclose unreservedly his/her financial history and current activities which includes cash-flow. Banks do not make this mistake, you must present your financial statement as one of the basic documents required to access a loan. If banks with large sums of money relatively at their disposal do not break this basic principle, why then do individuals without much money break it? Little wonder you are now in a needless debt. The stranger you stood for as a guarantor has defaulted and you are now being held liable for money that you never used.

3.) Buying things on Credit: This is the easiest way to buy non essentials. That you can have it does not mean that you should. When you depend on credit to maintain your lifestyle, you are already spending too much and it shows lack of contentment which means that you are placing presumption on the future you don't know how it will turn out. Unless you break this habit and learn to buy things with cash, you will never be free from debt.

4.) Missing Payment schedules or making late payments: This gives a serious dent to your integrity and trust worthiness. It also creates interests for defaulting on agreed dates for payments. If it becomes a habit, you will discover that you will find it hard to get help from those around you and this can give a big blow to your financial life. No one will be willing to give their money to people who have a track record of defaulting on loans and agreements. And the last time I checked, everyone still need others to succeed.

5.) Using your reserves to settle current debts: This is a bit connected to number 3, always go for the things that you can purchase using cash, digging into your reserves to settle current debts because of the lack of self control for having things is like walking on top of broken bottles on your bare feet, it exposes you and leaves you defenseless in case of eventualities. Before you use your reserves to settle current debts, ask yourself these questions;

-Do I have sufficient reserves?

-Where will I get the money back from?

-Am I expecting any extra money in the near future?

-Is it in line with my financial goals?

-What will be the consequence(s) or opportunity cost of not taking this action?

These questions will help you to make an informed financial decision before you dig into your reserves. Be sincere with yourself, once you know that it is not worth it, then, do not go ahead, if not, you will be walking majestically into an avoidable debt trap.

6.) Borrowing to play bets and "invest" in get rich quick schemes: One of my colleagues got roped in this at the heat of the MMM drama in Nigeria in 2016. I saw him endure all sorts of abuses and insults before he finally paid back the money he borrowed to put into the ponzi scheme and couldn't get out the money before the scheme crashed. He paid the debt back from his salary of course, but what if he didn't have any salary to pay back from? You may not be as lucky as he was. Never do that, it is not right. That debt was totally needless and avoidable.

7.) Defaulting on taxes: We can never build prosperous societies if we don't pay our taxes. If you have any desire in you for your country to prosper, you must diligently pay your tax and for all it’s worth, you must pay the right amount. Get professional help if you don't know how to do the calculation, your friend who studied accounting or is knowledgeable in that area can help you out if your business is not financially buoyant enough to engage the services of a professional. You don't want to be caught by the government as tax defaulter, it has never been a funny experience and will never be. As a Christian, you will be showing Christ in a bad light by doing so. Permit me to add this, if you intend to get into certain positions of authority in the future, most especially the political field, set your tax records straight starting from today. If you still do not get how this concerns debt, let me help you out, a tax defaulter is owing the government, one day, they will come for their money with you, and if you do not have it with you, including the penalties that you will pay for defaulting on your taxes?...

It has never been God’s will for his children to be tied down in unnecessary debts, and that is why he is sending this information to you again today, heed instructions and be wise, never get into debt that you could have avoided from the onset.

Are you in debt currently and do not know how to come out of it? You can be free, it is possible, and we are offering free counseling on becoming totally free from debt. Drop your questions in the comment box and we will help you through the process.

Stay blessed.

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