The Social Cost of Debt

According to C. Michael Johnson of Mindstorm IdeaLetter, the next few years will see a huge increase in social and societal problems as a result of the current mortgage crisis. A large part is the limit of personal savings and the increasing consumer culture. House prices nationally have doubled in the past decade, and more in some areas. Teaser-rate mortgages have encouraged people to get into increasingly larger houses they can barely afford.

Johnson reports that more than a quarter of low-income households now spend forty percent or more of their earnings repaying debt up 191 percent. That means if they got into the housing market on an adjustable mortage, and that mortgage rate goes up, they can end up spending the majority of their income just for housing. And in my area, housing prices have started dropping, so many people that bought in the past couple of years now owe more than the house is worth, so they're at risk of having to pay more than they can afford for a house they can't sell.

The report also notes that “a family with two earners today actually has less discretionary income, after fixed costs like medical insurance and mortgage payments are accounted for, than did a family with one breadwinner in the 1970s.”

What's that mean for your church? Since 95% of married couples fight about finances, and this gives ammunition, more marriages will be in trouble. In fact, #1 cause of divorce in America is finances. It might mean that your occasional givers will stop giving. It may mean an increase in benevolence needs. It may mean some volunteers will have to stop coming to work a second (or third) job.

So what can the church do? First, learn the extent of the problem. Start with Mr Johnson's blog on the issue.

Then act. Host money management courses. Bring in community service counselors.

And pray.