Is It OK To Use Credit Cards Sometimes?
We received this question in response to an article that we included in the newsletter called "God Provides".
First let me say I love your newsletter. Very good information. I struggled with what you said about trusting in God and that it shows a lack of faith if you charge something.
I guess it struck a very personal chord with me – because my mother passed away last July and there was no money for the funeral, casket, headstone, etc. I can pay it off over about 17 months and am doing so – but had to put it on a charge card to do that. (Relatives did pitch in but covered only 1/5th of the expense.)
I guess I look at it like God is providing in that I have a job where I can make the payment for this. As I sat in that funeral home and the funeral director showed me the bill and asked how I would be paying for this… the charge card was all I had. I don’t think it was a lack of faith – it was a lack of funds. I am open to your thoughts and opinions on this. Just doin’ the best I can. Thanks – thanks for your newsletter and all the work you do on this. I do really enjoy it.
That’s a good question, Ginger. Not everything I say here will be for you personally. I’m answering more broadly for the benefit of all of our readers.
What I was saying in that newsletter is that many of us don’t give God the time or the opportunity to work in our lives. We don’t have the faith to wait and see if God provides us the money for something or to find out if what we want is really what He thinks is best for us. Even though I really try to teach people to get out of debt, period, I do realize life happens and sometimes debt can’t be helped.
If we need something like a new coat, another car or a bigger house, many of us often become impatient or just don’t want to be inconvenienced and immediately charge these things instead of waiting and having the faith God will provide. This is bad debt.
Debt may be unavoidable in emergency situations. Sometimes we might have to charge things and your situation is the perfect example of one of those times. Not only was it an unexpected expense that had to be taken care of immediately but you also made sure it was a debt you could control by being able to pay it.
I don’t want to sound like I am contradicting myself but there are times when to be a wise steward of our money we may have to wisely use debt. I don’t recommend doing this often but it does sometimes happen.
Here is another example of where wisely using debt might be a good plan: I have my house paid for now and I decide to move. I find a house that is appraised at $250,000 and I can get it for $70,000. It is in a perfect location and in perfect condition. If I buy it I would have to take out a $10,000 loan. I have no debt, can easily afford to pay the payment and can even pay it off early. I would probably go into the $10,000 debt to get that home. It is a wise investment for me.
On the other hand, if I took out a $50,000 loan out for a new car, it would be a bad debt. A car depreciates quickly and I would immediately start losing money. If I really need a new car, it would not be difficult to find a much less expensive "basic" car. Taking out a loan for a 52 inch TV for a Christmas gift is a bad debt. Going into debt for Christmas gifts period is bad debt.
Going into debt temporarily to pay for unforeseen medical expenses for your child is another situation where debt may be necessary but it is bad debt if you charge a face lift or you are charging having your hair and nails done each month.
The main point I was trying to make was that we often lose out on the joy and excitement that comes when we see God come through for us and provide something we couldn’t do ourselves. We are like the woman who always complains to her friends that her husband is never there for her, especially in little things like helping her on with her coat or opening the car door for her.
What she fails to tell them (and probably doesn’t even see) is that her husband would love to help her and do those things for her but because she is always in such a hurry and so independent she doesn’t give him a chance to do them. She says, "Let’s go to the store," and before he is out of his chair she is at the door with her coat on. While he is locking the door of the house, she runs to the car and jumps in.
She is losing out of the joy of knowing someone cares for her and cherishes her, even in the little things, and her husband is losing out of the joy you feel when you help someone you love. Both of them lose out on the closeness that comes with the pat or squeeze as he puts her coat on or the hand on her elbow as he helps her into the car.
We lose out on the same feelings with God when we always stay one step ahead of Him and don’t give Him time to gently and lovingly help us. That was the main point I was trying to make in the "God Provides" newsletter– not, "Shame on you if you don’t wait on God because that shows you have no faith!" I was trying to remind people not to just immediately charge something when an obstacle comes, but to exercise your faith "muscles" in God more often.
The day may come when you have no credit cards or money to bail you out. Will you have exercised your muscles enough and will they be strong enough to carry you through? I don’t know. That is between you and God alone and is not for me or any one else to judge. It’s just something for you to think about.
A Few Notes From Tawra:
We recommend setting aside an emergency savings fund so that you have the money when an unexpected expense comes along. Life is full of unexpected expenses, so it is good to "expect" them. ;-) By cutting back on optional expenses like eating out, you can save the extra money so that when an emergency comes, you have the money to cover it. It may take a while to get a good emergency savings, but if you keep the optional expenses low and put as much in it as you can, you will be able to do it.
We found that once we set aside a reasonable savings to cover unexpected expenses like car repairs and unusually high medical bills, we used our credit cards a lot less. Then, when we had an unexpected expense, we paid it out of that savings and then replenished the savings. And when you pay back your savings, you’re not making interest payments.
Some people suggest keeping a lot of money in savings. We think that’s great, but keep in mind that you’re not saving anything if you are paying high interest on debt while you keep a large savings. Keep a reasonable emergency savings fund and then pay off the debt to eliminate the interest expense!
Photo By: Fosforix