Co-signing almost always guarantees financial pain for you.
This program will help you undo financial bondage.
When you’re approached by family and friends about co-signing, tell them “NO” and continue to pray for strength to be wise according to God’s Word and that they will see and act upon God’s money management principles in the future so they can receive the great benefits produced by following them.
If you’ve already cosigned on a loan for someone by using your credit card or by signing a note that says you’ll pay the loan amount if he or she is unable to, then you need to run to the lending institution and work on a way to get out of that arrangement as quickly as possible. If you can’t get off the loan, pray real hard that the person makes all the required payments on time and pays the debt off early. If he doesn’t, you’re on the hook! So, realize that you will have to take over the monthly loan payments the moment he or she stops paying them.
If you don’t currently have enough savings stashed away to cover the loan amount, revise your budget to eliminate unnecessary spending so you can save as much as possible in case this unfortunate but highly likely scenario occurs. In the future, refuse to co-sign for anyone. Learn to say “no” to such requests and really mean it! If there is a legitimate need that cannot be fulfilled in some other way, then give the family member or friend what you have in available cash (savings) that is not targeted at meeting an obligation that you have to meet and that you willingly want to give.
Many times people that ask you to co-sign could take initiative to resolve their situation without asking you to take on their debt. However, they don’t see the picture clearly or they simply want to use a way that appears easier for them. For example, the person could get up earlier to catch the bus to work instead of asking you to co-sign for a car note. Or, the person could purchase a less expensive engagement ring for their fiancé instead of asking you to co-sign for a more expensive ring. Or, the person could rent, pay off debts, and begin to save for a 20% down payment on a home instead of asking you to co-sign on a home loan.
This lesson is not to discourage from giving to meet true needs. Christians should be givers and lend themselves to abundantly funding gospel ministry and helping the poor. Pursuant to biblical instruction, I am instructing you to stay away from promising to cover debts taken by other people when you don’t currently have far more than enough money to cover the entire debt because the history shows that most of them, at some point not too long after you cosign, will ultimately refuse or be unable to complete their promise and commitment to paying the debt. Co-signing will set you up for a financial fall that you could have and should have avoided.
Stop cosigning for family and friends to get things they can’t afford to pay cash for. The best way to help most people and ensure your long-term financial health is to give them available cash when a true and verified need arises in their lives. Then encourage them to use biblical principles to manage their money and desires, so their needs can be met.
Please pray for this ministry and email any questions. May God bless you richly as you follow His plan!!!
Proverbs 11:15, 17:18, 20:16, Romans 13:8, Ephesians 5:15-17
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You can find books authored by Randy and Karen Parlor at www.Amazon.com.
Published in: Personal Finance