Waking up this morning, I heard the news of recent 50,000+ layoffs announced by a a few major companies (Caterpillar, Home Depot’s Expo, etc.). They reported that the current unemployment rate is at 7% and they expect it to be over 10% by the end of 2009.
It doesn’t require a PHD economist to know that when fewer people have jobs people spend less, causing businesses to make less and in turn cut jobs. The cycle then repeats itself.
Paying down debts helps us weather the storm
I have been seeing a lot of major companies going out of business lately and it concerns me. I don’t enjoy seeing businesses fail and especially when you think about all the families who are greatly impacted by it.
I don’t have a solution to solving the economy’s problems, but I will say that one of the best things we can do to be better positioned to weather the storm is to minimize our debts.
Even if you have no desire to get out of debt for the freedom that comes with it, cutting back on your debts will cause you to be in a stronger position to handle the inevitable challenges in our economy right now.
It’s simple math
Basically our personal finances consist of money coming in and money going out. Most of the US spends all their energy trying to increase the inflow to get it to match their outflow. As the recession/depression deepens we will see more people who suddenly lose large portions of their income and will be forced to start working on minimizing their expenses.
Joseph prepared for the recession in his day
Just like Joseph saved up 7 years for the famine that was coming (Genesis 41:17-24) we would be wise to prepare. Each credit card, car payment, or other debt we pay off minimizes our monthly outflow. I don’t know about you, but I am trying to get my monthly expenses to the lowest point possible before my income takes a hit. If my income never suffers, then I will just be in that much stronger of a position financially.
Trusting God and preparation go hand in hand
I get concerned when some Christians claim to be trusting God and use that as an excuse for not preparing for the future. Yes God is our source and provider, but we have a part to play and if we don’t do our part, we may be learning some difficult and painful lessons in the coming years.
{ 5 comments… read them below or add one }
We were thinking about painting and buying new furniture for our house with our tax refund, but I think we’d be better off using that money to pay on our debts now.
I hate the current state of the economy. Its like you can’t do anything without being afraid of what the future may hold. There’s so much uncertainty that you can’t plan for anything. Forget about the vacations, the big purchases, having a baby, etc. Its like the economy has stolen our joy.
I don’t mean to go off on a tangent like that, but our current state is above frustrating and my wife and I still have our jobs. I can’t imagine what the people who’ve lost their jobs are going through.
Amen to this Bob! My wife and I have just been thinking about all this and want to focus on getting rid of any debt and saving as much as we can. Thanks for the post!
Love this post. I am so in a dilemma with a chance to buy my dream condo at a phenomenal price, but i still have some debt. what to do, what to do?
Thanks,
Bobbi,
I know what you mean – we are looking at some opportunities and trying to balance the risk/reward of them as well!
I wish the Federal Government thought like this. They only have, what, $10 trillion to pay down? That’s about $35k per US citizen.
{ 1 trackback }