If you’ve ever tried to make a glass of fresh juice from a bunch of raw fruit, you know how much pressure it takes to squeeze the juice out of an orange, lemon, lime or grapefruit. And if you’ve ever tried to go back and eat a piece of fruit that has already had the juice extracted from it, you know that a spent wedge of citrus isn’t nearly as satisfying as a plump, juicy one.
Making juice by hand is a tedious and tiring process. People that make fresh juice commercially, like in restaurants, use large, automated juicing to get the very most juice possible out of each piece of fruit.
Those big restaurant juicers, with all of their mechanics and impressive squeezing power, are a lot like our modern debt industry. If you get caught up in it, debt can squeeze the very best out of your life and resources, leaving you feeling limp and dried up in the process.
We’re no fans of debt here at God, Money & Me. The Bible tells us that debt is a form of financial slavery, and we believe that borrowing money holds us back from doing the many important things that we should be accomplishing with our money. We also believe that the way to have the best experience with personal finance in life is to stay away from the big squeeze that debt puts on your money.
Mounting Monthly Payments
Debt never seems dangerous when you first take it on. There’s something that you want to buy now (ranging from a new TV to a car to a college education), but you don’t have the money for it. So you borrow the money, with the understanding that you will pay it back — plus interest — over the next several years.
The monthly payments for the loans that we take out rarely seem like they’re going to break us. It’s $150 here, $250 there, and we tell ourselves that we can afford them. After all, if you have a good income, a few hundred dollars a month shouldn’t be a big deal. And if you have two incomes in your house, it’s even safer, right?
Not as safe as you may think. When you sign on the dotted line to borrow money, you’ve walked right in to the juicer, and the debt you’ve just agreed to is going to start squeezing your financial life until the best of you is extracted.
Once you borrow money, you’re obligated to make the monthly payments on your debt. The bigger the balance you’ve borrowed, the higher the monthly payments will be. Those payments have to be made every month (missing them can land you in really big trouble), which means that every dollar that you spend in loan payments is a dollar that you can’t spend anywhere else.
If you take out a few loans, you’ll begin to notice that debt payment represents a significant chunk of your monthly budget. If you have student loans, a car payment and some credit card balances, those payments can easily amount to several hundred dollars a month, or even $1,000 or more.
The more loans you take out, and the more debt you rack up, the more your monthly payments mount up. Slowly, these payments begin putting pressure on your monthly budget. It can be difficult to do some of the things that you need to do — like saving for emergencies of putting aside money for college — because your debt obligations eat up so much of your money each month.
This situation amounts to the “big squeeze.” Your debt has put so much pressure on you that it squeezes the first, best money that you have every month, leaving you with only drippings and pulp to use in taking care of your family’s needs.
This is how people get into trouble with debt: They live under such pressure from the big squeeze that one little mishap or emergency will break them. There’s little room for flexibility in your budget if you’re paying a ton of money to banks each month. If the water heater goes out, the roof needs repair or one of your kids makes an unexpected trip to the emergency room, you may be left with a bill that you can’t pay.
From Pressure to Freedom
People who live without debt have remarkable flexibility in life. They can adjust their spending and saving every month to line up with the situations that they’re facing or their evolving life priorities. They’re not squeezed by outside debt.
If you feel like you have no wiggle room in your financial life — like there’s hardly any money left to work with once you pay your bills every month — there’s a good chance that debt is squeezing you like an orange.
The answer, of course, is to escape the machine: Get out of debt, and change your lifestyle so that you don’t have to depend on borrowed money to live every month.
It won’t be an easy process. But in the end, it will free you up to enjoy the best of your life’s fruit, instead of being squeezed by the debt machine.
Photo by LizMarie_AK. Used under Creative Commons License.