The Debt Ripple Effect

The headline jumped out at me: “Fed official says tax code provides incentives to carry debt.”

For the past several years, the topic of debt has become increasingly important, for individuals, organizations, even nations. That headline got me thinking… regardless of the incentives, how should Catholics regard debt? It also hit me – we need to think about the “ripple effect” and how debt affects other aspects of our lives. As it happens, I have experienced these effects personally.

Within a few years of my wife Kathi and I being married, we had three young children and lived in a small, two-bedroom apartment. Unfortunately, there were older kids in the unit directly above us who were not well supervised, and had the unfortunate habit of jumping around a lot. Late at night. For hours.

As rational means for rectifying the situation were gradually exhausted, we grew proportionately in our desire for a house.

It took time, but with some help from our family, we managed to scrape together a down payment and buy a small house. We also needed a minivan, having outgrown Kathi’s small car. So we leased one. Then we needed some stuff for the house… like a refrigerator. Then our clothes dryer broke. One thing followed another. Pretty soon, beyond the mortgage, we had accumulated several thousand dollars in debt.

Kathi and I recognized the need for financial stewardship. We had a budget, we tried to follow it, but things happened that we didn’t anticipate. Each purchase we made was rationalized as we approached each decision independently, rather than in the context of the overall picture. It was easy to talk ourselves into buying things that would make life easier. Heck, we were so stressed out with the kids, work, finances, you name it, we made more than one emotional decision.

It took years to recognize the fundamental error in our behavior. Purchasing things by borrowing, even good things that made life easier, had become an emotional “relief valve.” Over the course of time, we recognized that this pattern locked us into pursuing an ever-higher income, further perpetuating our stress level. With increased borrowing came decreased financial freedom.

Then there was the ripple effect. In our case, as sole provider for our family, I had to work countless extra hours, taking me away from Kathi and our children. Family relationships were strained as a result, financial stress increased, and we felt like we lived on a treadmill, having to run faster and faster.

There were other ripples that became evident over time. We saw financial needs in our parish, our family, or our world – and were powerless to help. Our money was already spoken for. We even began attaching undue value to things we couldn’t have. Because we couldn’t have them.

None of this is meant to suggest that I regret purchasing a refrigerator. There were certain expenditures that were beyond our control, such as when our seventh child had major medical problems at birth.

However, it became clear – and it’s amazing that it took so long – that we needed to detach from things, and do a better job at living within our means. It didn’t matter how much money I made, there were always ways to spend more. It was a way of thinking for our generation, raised with credit cards. Why wait? Indulge yourself!

As Catholics, we know that marketing techniques often play to our emotions, rather than our sense of virtue. Waiting for things builds the habit of patience, and enhances our gratitude for what we already have. Indulgence over and over leads to softness and selfishness, instead we’re called to a spirit of self-denial.

Kathi and I realized that as the ripples spread further, our spending habits impacted our spiritual well-being. A seemingly isolated decision to buy furniture could be transmogrified into a disordered attachment to things and vulnerability to further temptation.

Happily, our prayers on the matter led to a practical solution with positive spiritual ripples. We took a financial course at our parish that got Kathi and I on the same page in terms of priorities. From that point forward, we came up with a different approach, and resolved to make financial decisions together, prayerfully, in the context of an overall financial plan.

The key to the plan is putting our faith first, not the tax code or societal norms – and recognizing the long-term impact of our decisions. For example, as Catholics, we’re called to support the Church regardless of whether or not we receive a tax deduction. The benefit down the road is embracing a spirit of obedience, patience, and detachment.

Here are a couple things to consider as we strive to integrate our faith and finances:

  • Take a course, with your spouse if you’re married. Establishing shared priorities is critical. For a Catholic approach, I like Phil Lenahan’s 7 Steps to Being Financially Free.
  • To avoid debt, use a “want list.” Put desired purchases on a list, and only purchase it if it stays at the top of the list for 30 days and fits your budget.
  • When you see something you like, be careful – and recognize the Holy Spirit is generally not the motivator for impulse purchases. When Kathi sees a nice house (or I see a fast car) she says “debt!” Repeatedly, if necessary. It’s a reminder that if we can’t afford it, we don’t need it.
  • Recognize the wisdom of scripture and pray about your finances – Proverbs 22:7 teaches us that debt makes us “slaves to the lender.” If we’re slaves, we can’t be free to follow the Lord wherever he leads.

It’s good that economists are discussing the impact of debt on our economy. There are parallels to many of the situations we face as individuals on a macro level.

Yet as Catholics, we’re called to financial faithfulness regardless of the tax code. By putting our faith first, we can make decisions that cause positive ripple effects. After all, our ultimate “incentive” has nothing to do with taxes – it’s an eternity of joy with God. What could possibly be worth more than that?


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About the Author

Kevin M. Lowry is an enthusiastic convert to the Catholic faith, and the son of a former Presbyterian minister who also became Catholic. A graduate of Franciscan University of Steubenville and Franklin University, Kevin spent over twenty years in secular financial and executive management roles. Kevin serves as Chief Operating Officer for The Coming Home Network International, a Catholic apostolate that assists non-Catholic clergy and laity on the journey to the Catholic Church and beyond. Kevin is a member of the Board of Directors of Our Sunday Visitor and is President of the Columbus (Ohio) chapter of Legatus. Kevin’s first book, entitled “Faith at Work: Finding Purpose Beyond the Paycheck” has just been released! The book encourages readers to integrate their faith and work in order to draw closer to Christ. The story of his conversion to Catholicism appears in Patrick Madrid’s popular book, “Surprised by Truth 2.” His web site and blog can be found at http://gratefulconvert.com. Kevin and his wife Kathi live in Columbus Ohio and have eight children.

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1 Comment

  1. Kevin,

    Thank you for this excellent article. With the focus on our government struggles to tackle our national debt we often forget that the challenges of debt can be just as painful for all Americans. I appreciate the transparency and openness of your article and your helpful tips. Indeed, as you stated, our ultimate incentive is an eternity with God.

    Thank you and God bless!

    Randy

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