Is Debt Your Servant or Your Master?

            Families, communities, and nations are stronger if they have little to no debt. As we enter into the Christmas season, I thought that it might be good to discuss debt. Wise people understand that debt is a tool that can be a blessing if it is used correctly. However, debt can become strong chains if used incorrectly.

            At this moment, the debt owed by the United States government is $31,334,888,632,641. The national debt amounts to approximately $93,989 per citizen. “About 46 percent of Americans carry a balance on their credit cards from month to month, with an average balance of $6,093. 

            The first credit card issued was the Diners Club in 1950. Bank of America issued the first general-purpose credit card that offered a “revolving credit” feature.” The same year, American Express Company issued a travel and entertainment payment card. In 1969, a magnetic strip was adopted in the U.S. for all credit cards. In 1976, Bank of America created BankAmericard and joined with other banks to create Visa. Three years later in 1979, Mastercard was born. Discover Card was created in 1986, and in 2015 the EMV chips became standard to help protect buyers against fraudulent card transactions. 

            Jay Evensen’s article in Deseret News explained that grocery stores began accepting credit cards. Most of the women interviewed at that time did not think that credit cards would bring anything good. One woman said that paying on credit would be “like paying for a dead horse,” and another said that “credit cards would lead people to overspend.” A third suggested that credit would “end up as one of the biggest causes of voluntary bankruptcy.” A fourth woman looked into the future and proclaimed that there would come a “time when we won’t handle any of our money at all. Some big computer will run us and our money.” None of the women mentioned anything about hackers stealing our money, but they got lots of things correct. 

            Millions of Americans have been living on credit for numerous years, and many more are using credit cards now because inflation is eating so much of our money. Evensen referenced the following data recently released from the Federal Reserve Bank of New York.

[The data shows] that household debt in the United States rose faster in the third quarter of this year than at any time since 2008. We added $351 billion in overall debt, with higher-interest mortgages leading the way.

But the report said we also added the most credit card debt in 20 years, increasing our collective balances by 15% over this time in 2021. This, at a time when interest rates are topping 19% on those cards, and when you don’t have to Google too hard to find warnings of a possible looming recession.

            No one is suggesting that anyone stop using credit cards. Evensen and this post are pleas for Americans to be mindful of the amount of money being put on credit cards as well as wise plans to pay the bills. My family uses credit cards for our convenience in making purchases. However, we never put anything on the cards that we could not purchase with cash. The credit card bills are always paid completely at the end of each month. We learned this lesson from the examples of our parents, one set used credit wisely while the other set did not.

            J. Reuben Clark, Jr. made the following statement in 1938: “Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.” (See Conference Report, Apr. 1938, 103.)  

            Debt is a tool to use for our benefit. When we use it wisely, it is an obedient servant, However, it becomes our master if we use it unwisely. Wise parents will use credit wisely and teach their children to do the same. The wise use of debt can strengthen families, communities, and nations.