When making purchases, understand the difference between what you desire and what you need. It’s extremely foolish to go into debt, or as I like to call it, slavery, for something that you don’t need. For example, you need transportation. You desire a brand new BMW. You need shelter, you do not need a 2500 square foot house, unless you’re the Duggars. You need to eat. You desire filet migon. You need clothing. You desire Ralph Lauren. You need to communicate. You desire an iphone. Get the picture?
The Apostle Paul told Timothy, to be content with food and clothing (1 Timothy 6:6-10). I’m not saying it’s wrong to have nice things, but there’s no way I’m trading liberty for luxury. Over and over I tell you, the rich rule over the poor and the borrower is slave to the lender (Proverbs 22:6). The principle remains the same for both small and large purchases. Know that God will supply all your needs according to His riches in glory in Christ Jesus and He will give you the desire of your heart, if you delight yourself in Him (Philippians 4:19, Psalm 37:4). The Master of the universe does not need a bank to provide for His children. God owns the world and everything in it (Psalm 24:1, 50:12). Don’t believe He needs financing to take care of you. He’s bigger than Bank of America, Citi, Chase, the Federal Reserve, and the entire global economy. When He had over 5 thousand to feed, He took a kid’s sack lunch and made it more than enough (Matthew 14:13-21, Mark 6:34-44, Luke 9:10-17, John 6:1-13). The provider He was then, He is now. He doesn’t change (Malachi 3:6).
Jamel Black
Personal Finance Coach
Foresight Christian Financial Coaching
Wisdom from the world, “If you’re a parent, all your debts — including mortgage payments, credit cards, car loans and education loans — shouldn’t eat up more than 35% of your gross pay.” – Liz Pulliam Weston (Click the link with caution, I just didn’t want you to think I made this stuff up.)
What!
Just imagine if you could invest 35% of your income instead of sending it to the bank. According to the U.S. Census, “Real median household income was $49,777 in 2009.” If your family could invest or save 35% or $17,421 per year, you’d be a millionaire in less than 20 years if you average 10% return on your investments.
My advise to teens, never borrow money. To 20 somethings, use your 20s to get out of debt, your 30s and 40s to invest and grow, and be a millionaire by 50…all while making the median household income. Warning, your broke friends and relatives will mock you and call you crazy. It’s okay, that’s a sign you’re doing it right.
Wisdom from God:
The rich rules over the poor, and the borrower is the slave of the lender. Proverbs 22:7 (KJV)
The LORD shall open unto thee his good treasure, the heaven to give the rain unto thy land in his season, and to bless all the work of thine hand: and thou shalt lend unto many nations, and thou shalt not borrow. Deuteronomy 28:12 (KJV)
There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up. Proverbs 21:20 (KJV)
“It’s stupid to guarantee someone else’s loan.” Proverbs 17:18, Contemporary English Version (CEV).
I’m not sure how accurate this translation of Scripture is, but it grabbed my attention the first time I heard it. For the more conservative Bible scholar, the KJV says, “A man void of understanding striketh hands, and becometh surety in the presence of his friend.” See, it just doesn’t “POP” the way the other one does.
Whatever translation you fancy, let’s unpack this thing and try to figure out why cosigning is such a terrible thing. For starters, when someone needs a cosigner, someone in the business of selling loans has already reviewed this persons credit history and come to the conclusion that your broke half cousin-in-law, I mean the person in desperate need of financial leverage, can’t be trusted on their own to pay the money back. So the lender needs someone who they can trust, someone with good credit, to agree to repay the loan in the event the original borrower does not.
For me, that would be enough, but I know you’re far more loving, merciful, and generous than am I, so I’ll continue. The same banks that send credit card offers to dogs, dead people, and 4-year-olds do not trust this person to make good on the debt. The same people who spend millions of dollars trying to get 18-year-olds living on student loans to borrow money, will not lend to this person. But you…your tender heart wants to believe, “He just needs a little help to get on his feet. He’s ready to turn his life around and start being responsible. Besides, he needs the car or he won’t be able to get to work.” RUBBISH! PURE RUBBISH!
Please don’t kid yourself. I know you love this person and it’s very hard to say, “No” to a loved one in need, but here are the facts. There is a very high probability that your beloved, with his great intentions, will stick you with the bill. That’s why he needs a cosigner in the first place; because professional lenders don’t believe he’ll pay up.
Don’t get trapped in the guilt trip of not being there when they need you, either. If you truly love that person, find the nicest way possible to say, “No.” Please understand me, I’m not being mean, but I am trying to save your relationship. If you are absolutely sold on the idea that whatever this person needs is a necessity, just give them the money. If you don’t have it to give, you don’t have it to give.
When the original borrower doesn’t pay the bill, you’ll be stuck with the payments. Now picture Thanksgiving dinner. You’re sitting across the table from someone who owes you money. You look at their family dressed all nice in the new clothes they bought with the money they owe you. And they act like it’s all good. And you try to convince yourself, “It’s the principle, not the money.” But the principle is, “THAT GUY OWES ME MONEY!” So you don’t talk to each other for years, and you can cut the tension with a plastic knife whenever you two are in the same room. All of this because you chose to sign a note that you knew they could not pay.
People usually cosign for others out of a genuine desire to help, but more harm than help comes out of these deals far too often. The truth is this. A person usually needs a cosigner because they have a proven track record of misbehaving with money. When someone cosigns, they enable the person to continue in that misbehavior and they also set themselves up to be the a potential victim of the same. And if you don’t know, the closest people to the debtor are the farthest down on the payback list. They know how much you love them, what they owe you doesn’t show on a credit report, and they’re pretty sure you’re not going to sue. You’ll just stop talking, be upset, and hopefully get over it.
Again, I’m not sure about the CEV’s accuracy, but Proverbs 11:15 says, “It’s a dangerous thing to guarantee payment for someone’s debts. Don’t do it!”
But what if I’ve already cosigned for someone? If you’ve already cosigned for someone, take this advise from the CEV’s rendition of Proverbs 6, “My child, suppose you agree to pay the debt of someone, who cannot repay a loan. Then you are trapped by your own words, and you are now in the power of someone else. Here is what you should do: Go and beg for permission to call off the agreement. Do this before you fall asleep or even get sleepy. Save yourself, just as a deer or a bird tries to escape from a hunter.”
Life Without Loans! My loans, your loans, or anybody’s loans!
In the world of personal finance, there’s not much debate about whether someone should rent or borrow to buy a place to lay their head. Most financial gurus agree that it usually is best for people to buy a home if they can afford the monthly mortgage payment. Each financial know-it-all has a formula that they use to gauge whether or not someone can afford to take on a mortgage. One financial ministry says spend no more than 40% of your take-home pay on total housing costs, including your mortgage. A popular radio/television host and author advises his followers to take out a 15-year, fixed rate mortgage with a monthly payment that’s no more than 25% of your take home pay, even though he says he would save and pay cash.
Some of the reasons given to support the position that getting a mortgage is better than renting is that real estate traditionally has risen in value and renting is just throwing away money. I may not do extensive writing on this subject, but I will do a few interviews with people who have both rented and borrowed to buy and see how they feel about their decision in retrospect. Watch the videos. I believe they will be helpful to renters, owners, and those deciding if or not they want to leave the nest.
Peace & Thanks,
Jamel Black
Foresight Christian Financial Coaching
This is a very commonly asked question. One of the reasons this question even arises is because sometimes we like to operate on a different set of principles when it comes to our personal finances and our business finances. However, we should use the same good sense we use at home, at work as well. I’ll just touch on a few of the issues here, and you can watch me ramble on for a few minutes about it in the accompanying video.
1. The borrower is still slave to the lender in business, like he is in your personal life. (Prov. 22:7)
2. Slow down, don’t be in such a hurry to grow your business. Proverbs 21:5 says, “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” Take your time and do it the right way.
3. I know everyone is telling you that you NEED to borrow money to succeed in business, but remember that “No wisdom, no understanding, no counsel can avail against the Lord.” (Prov 21:30) And His wisdom, understanding, and counsel NEVER advised anyone to borrow to grow a business. (I already know those two arguments from Exodus and 2 Kings. Check the context of those stories and original languages before you make negative comments.)
3b. “…and my God shall supply all your need, according to His riches in glory in Christ Jesus.” (Philipians 4:19) If you really NEED additional capital, God will handle that as well. And some will say, “He’ll handle it through a loan.” I say rubbish. God owns everything, He doesn’t have to borrow to get His work done.
4. “But I have to feed my family.” Get a job. You may have to stay at your 9 to 5 a little longer while you raise the funds, or you might need to deliver some pizzas at night to make the difference. Keep your overhead and expenses low at the beginning, and do the extra dirty work. It will pay off in the long run. By the way, “The Lord does not let the righteous go hungry…” (Proverbs 10:3)
5. If you borrow now, you will grow faster. That’s almost guaranteed. However, there’s this little regarded factor called RISK. 100% of the companies who ever went into bankruptcy, signed for loans. That will NEVER happen to me. Bankruptcy-Proof-Living…Gotta Love That.
“One who is faithful in a very little is also faithful in much, and one who is dishonest in a very little is also dishonest in much. If then you have not been faithful in the unrighteous wealth, who will entrust to you the true riches? And if you have not been faithful in that which is another’s, who will give you that which is your own? No servant can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.” (Luke 16:10-13 ESV)
Many people have the idea that they would be better managers of what God has given them if He would just give them a little more. This passage shows us that the people who handle money improperly with little, would do the same if they were given much.
Don’t throw away 100 pennies in search for a dollar. Maximize what you have, and make every cent count. If you learn to apply God’s wise principles in your lack, the disciplines learned will be invaluable in the event you amass great wealth.
This in itself would be enough to convince a wise man to change his ways, but Jesus took it a step further when He said, “If then you have not been faithful in the unrighteous wealth, who will entrust to you the true riches?” I believe the “true riches” spoken of to be spiritual riches, things pertaining to the very Kingdom of God itself. Many people like to separate their “spiritual lives” from their “natural lives,” but when God renews your spiritual life on the inside, it shows up in tangible differences on the outside. Therefore, if you have been “born again,” your bank account should reflect that redemption. And I’m not talking about paying 10 percent to your church, but honoring the Lord with your substance (Pr 3:9), with 100 percent of what He allows to come through your hands.
Glory to God in the highest, and on earth peace, good will toward men. (Luke 2:14) Have a very blessed day, celebrating the wonderful coming of our Great Lord and King, Jesus the Christ.
When you’re debt free, you can give like you’ve never imagined. This is me in October 2010, visiting some orphans in Ethiopia. We spent over 60 hours just traveling, but the reward is eternal.
Jesus said, 31 ?“When the Son of Man comes in his glory, and all the angels with him, ?then he will sit on his glorious throne. 32 Before him ?will be gathered ?all the nations, and ?he will separate people one from another as a shepherd separates ?the sheep from the goats. 33 And he will place the sheep on his right, but the goats on the left. 34 Then ?the King will say to ?those on his right, ‘Come, you ?who are blessed by my Father, ?inherit ?the kingdom ?prepared for you ?from the foundation of the world. 35 For ?I was hungry and you gave me food, I was thirsty and you ?gave me drink, ?I was a stranger and you welcomed me, 36 ?I was naked and you clothed me, ?I was sick and you ?visited me, ?I was in prison and you came to me.’ 37 Then the righteous will answer him, saying, ‘Lord, when did we see you hungry and feed you, or thirsty and give you drink? 38 And when did we see you a stranger and welcome you, or naked and clothe you? 39 And when did we see you sick or in prison and visit you?’ 40 And ?the King will answer them, ?‘Truly, I say to you, as you did it to one of the least of these ?my brothers, you did it to me.’ 41 “Then he will say to those on his left, ?‘Depart from me, you ?cursed, into ?the eternal fire prepared for ?the devil and his angels. 42 For ?I was hungry and you gave me no food, I was thirsty and you gave me no drink, 43 I was a stranger and you did not welcome me, naked and you did not clothe me, sick and in prison and you did not visit me.’ 44 Then they also will answer, saying, ‘Lord, when did we see you hungry or thirsty or a stranger or naked or sick or in prison, and did not minister to you?’ 45 Then he will answer them, saying, ‘Truly, I say to you, as you did not do it to one of the least of these, ?you did not do it to me.’ 46 And these will go away ?into eternal punishment, but the righteous ?into ?eternal life.” The Holy Bible : English Standard Version. Mt 25:31-46.
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