Larry Burkett - The Worlds Easiest Guide to Finances

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Unless otherwise indicated, all Scripture quotations from the HOLY BIBLE, NEW INTERNATIONAL VERSION 1973, 1978, 1984 International Bible Society. Used by permission of Zondervan Publishing Company.

Other Scripture quotations are from the (updated) New American Standard Bible 1960, 1962, 1963, 1968, 1971, 1972, 1973, 1975, 1977, 1995 by the Lockman Foundation. Used by permission.

Randy Southern is a freelance writer with more than 50 books to his credit. A former product developer for David C. Cook, he lives with his wife and two children in Mount Prospect, Illinois.

James S. Bell Jr. is Executive Editor for Moody Press. He has compiled and abridged numerous classics. He is also the general editor of The Worlds Easiest Guide series as well as co-author of The Complete Idiots Guide to the Bible and The Complete Idiots Guide to Prayer.

T he knot in Eds stomach tightened as he looked at the pile of papers on the table. This cant be right, he thought. Maybe the mailman delivered our neighbors bills by mistake. Theres no way we owe this much.

But the bills and statements in front of him, the ones that were all addressed to Edward Pfaff, told a different story:

$1,275 to Community Hospital for Beckys C-section and Michaels neonatal care

$6,510 to VISA (payment past due)

$3,280 to Discover Card

$7,512 to Ford Credit ($419 monthly payment past due)

$840 to Workout World ($40 monthly payment past due)

And that doesnt even include the mortgage and what weowe Beckys dad, Ed reminded himself.

He glanced down at his paycheck stub and then at the figure on his calculator. We cant even make minimum payments this month, he realized. And we just paid for new brakes on the Honda, so that means next month is going to be even worse!

Ed shook his head and sighed. Becky, he called out, we need to talk. I think we may be in trouble.

Do you have a bill or a loan payment thats past due?

Do you carry a balance on your credit card?

Do you ever get nervous about your financial situation and wonder how youll ever be able to pay what you owe?

Do you ever try to disguise your voice when you answer the phone, just in case its a collection agent calling?

Have your ever considered panhandling as a second career?

Do you have a bumper sticker on your car that reads, I owe, I owe, so off to work I go"?

If you answered yes to any of these questions, chances are youre struggling with debt.

In ancient times, that might have meant a stretch in prison for youor at least a future as a servant to your creditor. In those days, people didnt fool around when it came to money. One way or another, debtors paid what they owed.

Creditors today prefer a different method of imprisonment. What theyll do is offer you credit opportunity after credit opportunity until theyve got your financial future locked up tight. Its not quite as dramatic as life behind bars, but its just as effective. Anyone whos ever fallen into the easy credit trap can tell you that being surrounded by walls of debt does feel like a prison.

The good news is that theres a way out of your financial Alcatraz. The bad news is that getting out wont be easy. There are a few truths you need to accept right from the start.

1. Youre not going to win the lottery.

2. A computer virus is not going to permanently wipe out all records of your debt.

3. Your creditors arent going to let you off the hook because they think youve suffered enough.

4. Ignoring the problem will not make it go away.

If youre counting on a near miracle to rescue you from debt, were going to ask you to hop on the first bus out of the Land of Make Believe and join us here in the real worldwhere it really is possible to escape debt, but only with a lot of hard work, tough choices, and personal sacrifice.

Most debt is caused by three common financial mistakes, any of which can put you between a rock and a hard place faster than you can say, What do you mean Ive exceeded my credit limit! Lets look at these three blunders to see why theyre so dangerousand so easy to make.

No, Im not talking about marrying someone with expensive tastes (though that certainly could be a financial drain). Im talking about buying big-ticket items that most people consider necessities, things like houses and cars. The long-term commitment to these purchases is in the payments. Today its not unusual for car loans to be stretched out over seven years or more. And, believe it or not, its now possible to get a 70-year mortgage.

Seventy yearsrun that figure through your brain a couple of times. Lets say you bought your dream house when you were in your early 30s. With a 70-year mortgage, your kids, your grandkids, your great-grandkids, and your great-great-grandkids could all watch you write out your monthly payment. When you retired at age 65, you would still owe more on the house than youd paid. You could even live to see Willard Scott IV wish you a happy 100th birthday on the Today show and still be survived by your payment book!

Fortunately, a 70-year mortgage is still the rare exception and not the rule. Even if you choose not to finance a house for seven decades, though, youll find that most lenders will be happy to give you more than enough financial rope to hang yourself, if youre not careful.