What Is the Role of Credit and Loans in Successful Financial Planning?

            Families, communities, and nations are stronger when credit and loans are used wisely. Credit should be used sparingly and for purposes that cannot be purchased in any other way – such things as “education, a modest home, or a basic automobile” (Robert D. Hales). 

            E. Jeffrey Hill and Bryan L. Sudweeks wrote a textbook titled Fundamentals of Family Finance – Living Joyfully within your Means, and much of the material in this post come from their chapter on credit and loans.

Unwise debt leads to financial downfall. J. Reuben Clark, Jr. gave the following warning: “Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it … and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.” 

            Debt can destroy marriages and crush families if it leads to marital conflict. Financial difficulties can lead to excessive debts and marital stress. Marvin J. Ashton quoted a study by the American Bar Association that indicated that “89 percent of all divorces can be traced to quarrels and accusations over money.” 

            Financial problems often come because we do not have enough self-control to wait until we have the money to purchase what we want. Thomas S. Monson taught how debt can have negative impacts on family relationships: “Feelings become strained, quarrels more frequent and nerves frayed when excess debt knocks on the door. Resources channeled to make payment on debts do not put one crumb on the table, provide one degree of warmth in the house, or bring one thread into a garment.” 

            Too many or too big of loans can bring havoc into a marriage, but credit cards are particularly destructive. Credit cards are tools to use for our benefit. My husband and I have used credit cards for many years without getting into financial difficulty with them. Our secret is that we pay the entire balance every month. We recognize that the money comes out of our pocket whether we use cash or credit card.

            Wise marriage partners will be wise in their use of credit and loans. They will “avoid debt as [they] would avoid a plague” (Ezra Taft Benson). When they have children, they will share their knowledge and experience with money management with their children, and thus they will strengthen their family, community, and nation.