The rich rules over the poor, And the borrower is servant to the lender.
Are you still in control of your finances? If not, who is?
I'm grateful that we do not owe money. We don't have to pay off credit cards or loans each month. We are not in debt. That hasn't always been the case, though. By God's grace, we managed to get out of debt and so can you. In my post Debt I have mentioned that I will share more on how to tackle debt.
Meanwhile, I'm taking a course on Home Economics which includes a workbook called The ABCs of Money Management. One of the books recommended for reading is called Kingdom-Focused Finances for the Family. It reveals truths about the way we are using money that I have never thought of before. In chapter 6, What Is a Financial Statement, Gary Miller explains using a financial statement. In it he is giving an example of buying a sofa and then updating his statement. This has been a real eye-opener for me. He deducts the amount he has paid for his new sofa from his checking account. Then he gets into the value of the piece of furniture after he has taken it home. He points out that buying this sofa just dropped his net worth a couple of hundred dollars.
Another thing that I keep bumping into during this study is debt. We need to stay in control of our finances even when we are borrowing money. There are times when we will have to get into debt, e.g. by getting a loan, but we will have to carefully discern our motive behind it. Do we need a new car or would a used one do as well? Did we borrow because we need a mortgage to buy a home? Or, are we in debt because we have made a couple of unwise decisions? Perhaps we kept spending money, charging our credit card/s again and again, on things we couldn't afford to pay cash for? Have we ignored that fact and bought them no matter what the consequences?
So, how do we tackle debt?
Be in control of your finances. Don't waste money. Don't spend it on paying high interest rates and making payments over a long period of time. Be content. Don't give in to every wish you might have, especially whenever that wish will cost a large sum of money. Instead, plan ahead: Set aside money each month, saving up for the day of purchase.
My post Finances - Introduction is a short overview what it means to live according to our available finances. Today I want to talk a little about debt in general.
Honestly? We have never experienced a great debt, beside the mortgage for our apartment. Yes, we did buy a few things on credit, mainly tempted by the 0% interest deals back then. We also had a credit card which we had used in some cases of emergency and to pay what we had ordered from stores outside of Europe. True, debt has not given us sleepless nights all too often. On the other side, we did have quite a few days in our lives when money was short and we were struggling to pay off what we have owed.
Of course, it's always best to avoid the burden of more or less big loans altogether. But how? We will need to learn to be content with less and/or what we have. How much house (clothing, food, etc.) do we really need? Before buying, and especially before applying for a credit, we should always ask ourselves if it is luxury we are craving for, and, how much of our freedom we are willing to give up for it.
God's Word says: The rich rules over the poor, And the borrower is servant to the lender. (Proverb 22:7)
There is something about living debt-free, when we are no longer slaves to our creditors. No matter how small or large the amount of debt is, it's important to tackle it, to break free from it. Regardless of the reasons for our debts, we should give our best to get rid of them as quickly as possible, even after getting ourselves into debt due to unfortunate circumstances. There is something special about having more than enough so we can share and help the ones who are in need (Eph. 4:28).
How do we tackle debt? Stay tuned, I will write more on that in a future post.
Prepare your outside work, Make it fit for yourself in the field; And afterward build your house. (Proverbs 24:27 NKJV)
The Reformation Heritage Study Bible comments on this verse that we will need to focus on supporting our lives before seeking comforts and pleasures. Meaning, we shouldn't be spending more than what we can afford to live on. We need to secure that money is coming in, before we consider building and/or buying a home. One step at a time: prepare and plan ahead (make it fit for yourself), then build your house.
Think of it, if you are having guests over for dinner, you would not just jump into cooking it 30 minutes before they arrive, would you? Instead, you would be planning and preparing ahead of time. You would plan the meal, think of what you will need, make a shopping list of the ingredients, and go to the store to buy them. Then, back home, you would prepare and cook the food. All of this ideally happens in good timing so that when the guests arrive everything is well taken care of. But not only that, you would also consider if you have enough money to buy the ingredients to cook this meal. Could you afford it?
No different, if you were to plan and prepare your home for your future family. You wouldn't go out to buy things for the baby 30 minutes before giving birth to your child, would you? Instead, you would plan and prepare the home - including the child's room before taking the newborn home from the hospital. But not only that, if you didn't want to go into debt, you would consider beforehand what pieces of furniture and layette you could afford to buy.
The way we differentiate between our wants and our needs will affect the way we are using our finances. It's a shame that in today's world most of the financial advice focuses on how to "pay off debt" instead of how to "stay out of debt." The main focus of advertisements is never on the essentials. They are out for the money. So they will give their best shot to ignite a craving in you for more things - even if you couldn't afford to buy them. You want more? They'll offer you to "buy" things on credit. And, if you are already deep in debt, they'll fool you into taking a credit to "pay off" your debt. What they will not tell you is that you will make your self more and more dependent on creditors.
Live Within Your Means
One of the most important things to learn when handling finances is: spend less money than what comes in each month. Easier said than done? Not really. It just takes a good dose of self-control and persistence. Start by keeping a family account book.
Having said all this, it is important for us to remember that:
Unless the LORD builds the house, They labor in vain who build it; Unless the LORD guards the city, The watchman stays awake in vain. (Psalm 127:1 NKJV)
We can plan and prepare all we want to, if the LORD is not the foundation we build upon. we will eventually labor in vain. Sooner or later our family home will begin to crumble - because we've built it on sand.
Link/Tip: I have come across Larry Burkett's books a long time ago. Even though I slightly disagree with a few things he has taught, I have found his books to be the best on this topic so far. Crown Ministries was founded by Larry Burkett. Check out their website. They have many free downloadable resources and also offer a few courses there.