The Biggest Wealth Killers

If you had to pick a single Bible verse to explain the financial condition of many American households today … it might be Proverbs 20:21: “Precious treasure and oil are in a wise man's dwelling, but a foolish man devours it.”

The Twittersphere was abuzz last month on just what might cause that to happen; specifically, what are the five biggest wealth killers today in America. Obviously, not all the tweeters agreed on which should be included, although there was some general consensus.

No surprise that credit card debt was on everyone’s list. According to Experian, the average balance for folks carrying one, is roughly 68-hundred dollars with an average interest rate of 16-percent. And looking at the nation as a whole … Americans have nearly 900-billion dollars in credit card debt.

If you’re carrying a credit card balance, it’s imperative that you get on a budget and make a plan to pay it off quickly. It’s no wonder financial advisors say that credit card debt is “hazardous to your wealth.”

Student loans also made most of the wealth killer lists, but at least one tweeter posted that there’s actually something worse than racking up a lot of college debt. It’s doing that but then not earning a degree. Borrowing for education can be an investment that in the best case scenario pays for itself with a higher future salary. That’s certainly not the case, however, if you don’t get a diploma. If you drop out of school, you’re still stuck with the debt and in a lower paying job.

The average debt for students who borrow is now almost 33-thousand dollars, but 40-percent of students who borrow fail to get their degree. If you’re considering college, make a commitment to graduate before borrowing a penny. Otherwise it’s money down the drain.

Next on the list of wealth killers was buying a home or car that’s more than you can afford. While a home may appreciate in value, that certainly can’t be said for buying a car. It’s estimated that a brand new vehicle depreciates up to 20-percent just by driving it off the dealer lot. Financial author and teacher Ron Blue calls this, “driving to the poorhouse.”

If you’re buying a house or car … don’t let your pride and ego enter into the decision-making process. Make sure the payments fit comfortably in your budget.

Ideally, you want to pay cash for a car purchase. When your current car is paid off, keep making the payments to yourself. Put them in your savings account, so you can make as big a downpayment as possible for your next car. Eventually, you won’t have to borrow at all. Next on the list of wealth killers is no doubt the most devastating, all things considered--divorce. God hates divorce. In Matthew 19:6, Jesus says spouses, “ … are no longer two but one flesh. What therefore God has joined together, let not man separate.” While divorce is spiritually and emotionally devastating, we can’t ignore the financial destruction it causes.

Divorce splits assets, increases expenses and reduces net income. The National Retirement Risk Index shows that most people would need a 30% increase in income to maintain the same lifestyle after divorce.

Of course, one of the biggest causes cited for divorce is couples arguing over money. It’s critical that spouses share the same financial goals. That makes saving and spending decisions much less stressful.

To set those shared goals, spouses often find it’s helpful to seek outside assistance from an advisor who shares their Christian values. They can find a Certified Kingdom Advisor® by going to FaithFi.com and clicki ng “Find a Professional.” The last big wealth killer is something called “personal lifestyle creep.” It’s a condition where spending increases right along with income, sometimes even faster. In his book, Master Your Money,” Ron Blue sums it up like this, “If you spend more than you make, you’ll go into debt and rob yourself of the ability to save for emergencies and invest for the future. This is just simple, inescapable math, yet so many people do it.” If you’re struggling with your finances, seek help from one a MoneyWise volunteer coach. Just go to FaithFi.com and click “Budgeting.”