If You Lack the Means to Pay

I didn’t get to expand nearly as much as I wanted in my post, Paying Off Debt. In my effort to share some solid financial insight from Phylicia, absent was my own feelings about money, and how it fits in my life. Money has been a bit of a struggle for me much of my life. When I was growing up, money was scarce. Money and material things eluded us and I don’t remember thinking much about money, the absence of it, or the absence of anything. There was no confusion about it, because it didn’t exist. There were no extravagances about which I had to reconcile. If there were Christmas gifts, they were donated to us, but I don’t know from where. We never belonged to a church, even though my mother was very religious. One year I received a Barbie doll wrapped in newspaper. That wouldn’t have been the end of the world, but I recall the instant I realized that the Barbie doll was used. Her hair wasn’t golden and didn’t fall straight down her back. Instead, it was sparse and wild. And, she didn’t come with any clothes. I don’t remember feeling another gift as distinctly as I remember that one.

As I got older, and I was in a foster home, things seemed much brighter, and more confusing. Christmas in my foster home was a big big deal, and a real thrill. With no less than eight kids in the home at a time, and every child designated at least five gifts, the tree overflowed with colored packages that glistened and summoned my name. But none of the packages bore anyone’s name. They were color coded, and because we weren’t allowed to rummage around under the tree, it was easy to pretend the whole inventory under that tree was for me. We all undressed those gifts with our eyes. I recall willing a pair of culottes, or a David Cassidy album to be my gifts.  I’d gone from not anticipating anything to having high hopes for specific gifts.

As a young adult I got myself into deep trouble with a couple of credit cards. And, as an older adult, I got myself out of deep trouble from those credit cards. I recall vowing to pay off the credit card that had maxed out at $10,000. When that happened, I planned to reward myself with a dinner at what was then called Atwaters, atop the 30th floor of the U.S. Bank tower in Portland. I imagined sitting at a window table, overlooking the city, enjoying a medium rare Rib Eye steak, proud of my accomplishment.   But when I made that final payment to the credit card company, a $50 meal had no appeal.  I probably treated myself to homemade fried chicken, mashed potatoes, peas, and gravy, enjoying an episode of 60 Minutes. That was an ideal Sunday night in those days.

The problem wasn’t so much that I couldn’t justify spending $50 on a nice meal. The problem was that I knew my income didn’t support such an expense, and I was living a lie if I pretended it did. That issue is really at the crux of my decision making. It’s not so much about the money that is spent on something, but it’s the amount of money I’m spending, in proportion to my income, and my giving. When banks consider lending money to a borrower, they call it Debt to Income Ratio. What is my debt compared to my income, and does it make sense for me to increase my debt, based on my fixed expenses, like my home, a car, insurance, healthcare, my kids, etc.?  I can ask the same question of myself that the bank asks if they are considering loaning money to me.  Unfortunately, banks didn’t do a very good job of this formula several years back, and a lot of people received loans that shouldn’t have.  Within my marriage I experienced that era, too.

When we encourage our kids to purchase expensive items that are outside of their income, it’s creating a habit that could be very hard to break, not to mention confusing.  They don’t have the financial demands they will have as an adult. It’s easy to spend their babysitting money or our money on anything they want, when they don’t have the obligations of bills. But if we can teach them now how to live within their means, we’re helping them avoid the prison so many people face (as I did, when I had a $10,000 balance) of being held hostage to debtors.

Not only do people become hostage to debtors, but bad credit closes doors, and good credit opens doors.  Six years after my divorce, I was able to eek out a good enough credit score for a lender to take a risk on me so I could buy a home. I pay a premium for that risk, by paying a higher interest rate than my neighbor who has a more impressive credit score.  With every mortgage payment I make, my credit it improving.  The bad credit score I inherited from my divorce stifled my ability to buy a house in the conventional sense the previous six years.  Finally after six years and now a few months of paying a mortgage, things are improving.  A good credit score is a valuable piece of a person’s purchasing power.  A bad credit score leaves one feeling powerless in their ability to move forward regarding the big decisions, like a car, a home, and insurance.

I do believe it’s a confusing time in American culture. People often refer to the simple life of people in third world countries, and the happiness that people experience, without the material things and conveniences we take for granted. I believe that’s true. But I don’t think third world country people face the decisions that we do every day, to have or not have, to buy or not buy. They simply live the life they’ve been handed, while we’re trying to live a life with values of a third world country, within a first world country economy, complete with award winning marketing strategies. It’s a lot to ask of ourselves, and of our kids, when we’re faced with golden opportunities of richness everywhere we turn.

It’s not to say that beautiful things and conveniences are bad. I include conveniences in this, because convenience costs money. These things by themselves don’t define us as Godless. But debt isn’t of God, and when we live outside of our means, we aren’t living within God’s will for our lives. Proverbs 22:7 says “The rich rule over the poor, and the borrower becomes the lender’s slave.” Proverbs 22:26-27 says, “Do not be one who shakes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.”  God’s point is, buy it if you can pay for it. That translates differently for everyone, because everyone’s financial situation is different. Sometimes I will shop at Goodwill. Sometimes I will shop at the Loft or Nordstrom. I will shop for what I can pay for, and I won’t go into debt for anything (oops, I owe on my house).

I could pay $9.99 for these. They were the perfect compliment to a blue and burgundy striped top I wore with some black slacks.

I could pay $9.99 for these at Goodwill. They were the perfect compliment to a blue and burgundy striped top I wore with some black slacks.

I like nice things as much (and sometimes more) as the next person. I am seduced by the clothes at Nordstrom like everyone else. But I don’t like the clothes at Nordstrom more than I like my home, or my car, or falling to sleep at night when I hit my pillow.

Bradley gave me a compliment last summer that surprised me. I wrote about it in another forum and I’m going to simply write what I wrote at the time:  “Mom, it makes me feel good that you are careful with our money.  It makes me feel safe, like we’re not going to run out or anything. You could pretend that everything is the same and act like we can do whatever we want to, but you don’t do that.”  The reason I was shocked was because Bobby has often criticized me for being cautious and using coupons, or insisting on getting deals on something before I make a purchase.  When he’s been critical of that, I’ve been defensive and frustrated that he doesn’t understand that it’s not being cheap, but rather prudent.

Bradley had been watching me. So much, that at times, it caused arguments and frustration.  We weathered the arguments, though and another message emerged.

I don’t want my kids to think I’m cheap. I want them to get a thrill out of a new piece of clothing or event. But I mostly want them to understand that we spend, we save, and we give, what we have. We don’t spend, give, or save what we don’t have, and it’s not because we’re cheap. It’s because no matter how cool those new shoes look or that purse feels, we’re living within our means, with the hope that we can enjoy things as much later, as we do now. And we might even surprise ourselves, and find that later, things are even better.

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