Hopefully, this will motive people to break the habit of carrying a balance on their credit cards once and for all.  If you need some help, here are links to a five-part series of articles I wrote detailing a Bible-based, practical approach to getting and staying out of debt (Part One, Part Two, Part Three, Part Four, and Part Five).

Key steps for ditching your debt include: stop going any further into debt (if you have credit card debt, stop using your cards); “fix” your payments (note your minimum required payment this month and, at very least, keep paying that amount every month even though your credit card company will likely ask you for a little less each month); and ideally, pay more than the fixed minimum.  You can use this calculator to determine when you’ll be out of debt under various repayment scenarios.

One relatively simple and free way to monitor your own credit for signs of ID theft is to pull one of your free credit reports via Annualcreditreport.com every four months.  For example, pull your free report from Equifax in January, TransUnion in May, and Experian in September.  Then scan the reports for open credit accounts you don’t recognize.

While bankruptcy’s stigma has weakened in recent years, it is still an especially troubling topic for many Christians. What about the biblical admonition that “The wicked borrow and do not repay, but the righteous give generously” (Psalm 37:21)? Does that make a person who has filed for bankruptcy, or who is considering filing, a “wicked” person? No. While bankruptcy should be viewed as an absolute last resort, it is a viable option—even for a follower of Christ.

Three Important Questions

Consider the following questions to help determine whether bankruptcy may be appropriate for you.

Is there no other choice? The Bible teaches that we have a responsibility to provide for our families: “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever” (1 Timothy 5:8). This includes cases where family is just you. If you have prayed for God’s help with your finances, pared your budget down to the absolute essentials, sought help from family and friends, and negotiated with your creditors in good faith, only to have them play hardball by garnishing your wages or by suing you, making it impossible for you to take care of your family’s needs, bankruptcy may be necessary.

Have you taken responsibility for your debts? You may have gone through some difficult circumstances that led to your debts—a divorce, the death of a spouse, medical problems, an extended time of unemployment. Still, chances are you can identify something you could have done to avoid the problems you now face, or at least to make them less severe. This isn’t about adding insult to injury. It’s about owning up to your part in the problem. What could you have done differently? 

Have you taken steps to avoid debt problems in the future? If you weren’t using a budget to manage your spending prior to getting into debt, you absolutely need to be using one now. If any of your debts are credit card debts, you need to commit to not using your cards, at least for the foreseeable future. You also need an accountability partner that you meet with on a monthly basis to review your finances.  I would never counsel someone to file for bankruptcy without these steps in place.

Bankruptcy Alone Won’t Solve Your Problems

If you haven’t made any significant changes in how you manage money, filing for bankruptcy may turn out to be nothing more than a short-term solution.  All too often, that’s exactly what happens.  According to the Consumer Bankruptcy Project, a Harvard University-based research group that has studied bankruptcy for twenty years, only half of all bankruptcy filers said their financial situation had improved a year after filing. As described in a Smart Money article, for 35 percent, their financial situation remained the same, and 15 percent said their situation had actually gotten worse.

Don’t Ruin a Relationship

There is one type of creditor whom you should make every effort to repay: friends or family members who have loaned you money. By law, you are required to list all of your liabilities when you file for bankruptcy, so individual creditors may receive at least partial repayment through the formal bankruptcy process. However, it’s unlikely that they would end up receiving the full amount that you owe, so you should repay whatever portion of the loan they do not recover, even if that means paying a small amount each month over a long period of time. Otherwise, your relationship with the person is likely to suffer.

Accepting God’s Forgiveness

Even if you realize that bankruptcy is your only option, you may still feel hesitant. Perhaps you feel embarrassed or guilty. If so, may I remind you that Scripture contains numerous examples where God forgave people of far worse behavior than taking on more debt than they could handle. For instance, Jesus forgave prostitutes (Luke 7:36-50), extortionists (Matthew 9:9-13), thieves (Luke 23:26-43), adulterers (John 8:1-11), and murderers (Acts 9).

Many biblical money management teachers say that Christians who file for bankruptcy should still pay back what is owed, even if it takes the rest of their lives. For a long time, that’s what I believed.  However, during the process of writing Money Strategies for Tough Times, that teaching just didn’t sit right with me.  As I thought about it and sought God’s guidance, what kept coming to mind was the fact that Jesus didn’t say to those he forgave, “Go now, leave your life of sin, and show up every Saturday to sweep the temple for the next twenty years.” He gave them a fresh start. Likewise bankruptcy offers a fresh start for those who need one most, have owned up to their role in their financial problems, and have taken steps to avoid trouble in the future.

While developing a set of detailed recommended spending plans for various size households at various incomes, it became clear to me that in order to live in financial freedom it’s essential to avoid financing vehicles.

MSN recently pointed out that most of today’s vehicles should be able to make it to 250,000 miles if you simply keep up with their manufacturer’s recommended maintenance schedules. CNN.com profiled 10 high-mileage vehicles that are still going strong, including one with over 1 million miles.

It isn’t even the mileage that’s so important; it’s how long you keep your vehicle.  For someone who doesn’t drive very much, keeping their vehicles for 10 years should be easy; keeping them for 15 or even 20 years should be well within reason.  And the longer you keep your vehicles, the less you will pay for vehicles over your lifetime.

If you currently have a vehicle loan, in order to break the financing cycle commit today to keeping that car or truck at least 10 years.  Once it’s paid off, keep making the payments.  Just send them to a savings account instead of your finance company.  Five years after paying off your current vehicle, you should have plenty of money to buy your next vehicle with cash.

When you’re ready to buy, check Consumer Reports for its recommendations on the most reliable vehicles (you can get their picks for best used cars under $20,000 without subscribing).  Also use the True Cost to Own tool at Edmunds.com to compare some of the vehicles you’re considering based on their insurance, fuel, maintenance, and other costs.

As much as I’ve tried, I have never owned a car that made it to 200,000 miles, but I have kept the last two vehicles for over 10 years.  A Honda Accord I once owned made it to 190,000 miles, but then developed too many cost-prohibitive repair problems.  The Toyota Camry my wife brought into our marriage made it to 165,000 miles, at which point a front spring broke, which caused too much other damage to make it worth repairing.

It’s worth noting that a mechanic told me if I had been on the highway when the Camry’s spring broke, instead of a parking lot where it actually happened, I would have lost control of the car.  So, everyone with a high mileage car should be especially vigilant about asking their mechanic to check for safety issues.

By the way, the recommended spending plans I developed for one-, two-, three-, and four-person households with incomes ranging from  $30,000 to $150,000 are in the appendix of the “Money, Purpose, Joy Personal Workbook,” which Amazon is currently offering at a great price.

If you have a high mileage car or truck, what is it and what have you done to keep it running so long?