Coping strategies for couples with overwhelming debt

Struggling with debt is a common challenge for many families. Applying biblical principles can provide valuable guidance for effectively managing personal finances and overcoming financial hardships.

It's no secret that many households today face the challenge of managing their debt. Recent research has highlighted just how widespread this issue is. According to an article by Jane Fillion, which cites a survey conducted by Penny Hoarder, many parents have found themselves struggling with debt due to rising childcare costs. Unfortunately, four out of ten parents have been affected, with over a quarter having to move to more affordable housing and nearly 38% having to take on additional employment or side jobs to cover childcare expenses. This issue is also highlighted by Debt.org, which reports that American consumers with children carry between 14% to 51% more debt than the national average, affecting their credit scores. The combination of debt vulnerability and easy access to credit means that family financial stability is becoming more challenging.

It is essential to recognize that debt is a significant problem for many Americans, and it is vital to address the root causes of this issue. While practical necessities like childcare and education play a role in this problem, the underlying causes often stem from a fundamental mindset regarding consumption. Many tend to live beyond their means, driven to acquire the latest goods and flaunt their material prosperity to others. This materialistic mindset makes individuals prioritize ostentatious displays of affluence over financial prudence, often associating their identity with material possessions. This can result in spending habits that could be more sustainable, leading to long-term debt and financial instability. Therefore, addressing this mindset and encouraging individuals to adopt a more prudent approach to spending and financial management is crucial.

It is indisputable that accumulating debt can have detrimental effects on one's health, regardless of the reasons behind it. A study conducted by Randy Hodgson, Rachel Dwyer, and Lisa Nielsen titled "Credit Card Blues: The Middle Class and the Hidden Cost of Easy Credit" sheds light on the fact that middle-income borrowers are the most affected by debt, compared to their low- and high-income counterparts. While low- and high-income earners may only experience overwhelming debt-related issues during economic downturns, they remain pervasive. The researchers also discovered that relying on credit to solve financial problems often leads to long-term problems, especially for low-income Americans. Implementing institutional changes that can bring about long-lasting solutions to combat this issue is imperative.

No matter your family's challenges, there are avenues to surmount them. Though it may seem like an unending cycle, hope exists. There is a solution. Here are three actionable coping strategies to empower families navigating similar financial struggles:

Strategy #1 Prayer

During moments of anxiety or stress (especially financial ones), it can be difficult to remember the true nature of God and the comfort that His presence and guidance can provide. However, it is important to continue to seek a relationship with Him and strive towards a deeper understanding of His character. One way to do this is through prayer, which allows us to communicate directly with our Heavenly Father and share our thoughts, concerns, and hopes. Through consistent prayer, we can develop a stronger connection with God and gain a greater sense of peace and clarity in our lives.

Isaiah 35: 3-4 Strengthen the weak hands, and make firm the feeble knees. Say to those who have an anxious heart, “Be strong; fear not! Behold, your God will come with vengeance, with the recompense of God. He will come and save you

Proverbs 29:25 The fear of man lays a snare, but whoever trusts in the Lord is safe.

Phillipians 4: 6 do not be anxious about anything, but in everything by prayer and supplication with thanksgiving let your requests be made known to God

Strategy #2 identify your left and right limits by Defining these terms: Needs, wants, wishes, emergencies

Needs: Refer to the essential expenses that are necessary for an individual or a household to maintain a basic standard of living. These expenses are typically associated with the "4 walls", including shelter, utilities, food, and healthcare. As these are the fundamental requirements for survival, they must be prioritized and taken care of before any discretionary spending or non-essential purchases.

Wants: Are expenses that are not essential but can be enjoyable or fulfilling. These can take various forms, such as exploring a new hobby, treating yourself to a movie theater experience, or embarking on a vacation to unwind and relax. While wants may not be necessary for survival, they can enhance the quality of life and provide valuable experiences and memories.Wants are nice to have expenses. These can look like picking up a new hobby, watching a movie in theatre, or vacations.

Wishes: Can be seen as financial expenses that one would be willing to incur if they had the means to do so. The concept of wishes can be viewed as desires or aspirations. If given the opportunity to have unlimited wealth, one might choose to invest in fulfilling their wishes, whether it be purchasing a luxurious item, traveling to a dream destination, or fulfilling a lifelong ambition.

Emergencies: Unexpected expenses can be a major obstacle that can severely disrupt an individual's ability to maintain their basic necessities, also known as their '4 walls'. These expenses can range from medical emergencies to car repairs and can have a significant impact on a person's financial stability.

Sinking Fund: Is a reserve account set up by individuals or organizations to have enough funds when expensive items need to be replaced. For instance, if you are a homeowner, you may set up a sinking fund to replace your roof, water heater, or HVAC system when they reach the end of their useful life. Similarly, if you own a car, you may set up a sinking fund to replace your tires, battery, or brakes when they wear out. The purpose of a sinking fund is to ensure that you have enough money to pay for these expensive items when they need to be replaced, rather than having to rely on credit or other sources of financing.

Strategy #3 Establish an emergency fund

An emergency fund is crucial for financial planning, providing a safety net for unforeseen circumstances. It shields individuals from the repercussions of unexpected emergencies, ensuring they can navigate challenges without compromising their overall financial stability. Couples with dual incomes should have an emergency fund equivalent to three months' living expenses, while those relying on a single income stream should have a more robust fund equivalent to six months' expenses.

Debt management can be a daunting task for many households, but it is crucial to address the root causes of this issue. While practical necessities like childcare and education play a role in this problem, the underlying causes often stem from a materialistic mindset regarding consumption. The desire to flaunt material prosperity to others can lead to spending habits that prioritize ostentatious displays of affluence over financial prudence, resulting in long-term debt and financial instability. It is time to shift this mindset and encourage individuals to adopt a more prudent approach to spending and financial management, prioritizing financial stability over material possessions. Through consistent prayer, identifying your left and right limits, and seeking professional financial advice, families can navigate financial struggles and emerge stronger and more resilient. Remember, there is always hope, and with determination and perseverance, it is possible to overcome any financial challenge and achieve long-lasting financial freedom.