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Bible Finance
1. GOD’S PEOPLE, MANAGING GOD’S MONEY, GOD’S WAY Applying Bible principles to your finances.
2. Legal Disclaimer The material in this presentation does not constitute legal advice and you should not rely solely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from taking) any action. Twin Pines Baptist Church does not hold itself out as providing any legal, financial, or tax advice. Some or all of the material discussed in this presentation may not be applicable or suitable for you. The material in this presentation reflects Twin Pines Baptist Church’s opinions on financial management according to principles laid forth in the Authorized King James Version of the Bible. If you have specific questions related to your personal situation, you should contact an independent financial advisor and/or legal counsel.
Legal Disclaimer The material in this presentation does not constitute legal advice and you should not rely solely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from taking) any action. Twin Pines Baptist Church does not hold itself out as providing any legal, financial, or tax advice. Some or all of the material discussed in this presentation may not be applicable or suitable for you. The material in this presentation reflects Twin Pines Baptist Church’s opinions on financial management according to principles laid forth the Authorized King James Version of the Bible. If you have specific questions related to your personal situation, you should contact an independent financial advisor and/or legal counsel.
Why Did Christ Teach on Finances? It surprises many Christians to learn that approximately two-thirds of the parables that Christ used in teaching deal specifically with finances or material possessions. The reason for this is very simple: He chose a topic with which everyone could identify to use as an example, as well as using a topic that tends to be one of the biggest snares to Christians. Christ never said money or materials things were problems. He said that they were symptoms of the real problems. He constantly warned us to guard our hearts against greed, covetousness and pride, because these are the tools that Satan uses to control and manipulate this world. Christ warned us a great deal more about materialism than He did about any other sin (see Luke 12:15). In fact, in the parable about salvation in Matthew 13:18-23, “the deceitfulness of wealth” is given as a cause for unfruitfulness. Satan has taken the very riches provided by God to enhance our lives and bring others to salvation and has diverted them for his use.
We are going to look at two principles that are cornerstones for Biblical financial management. Giving and Stewardship
Although not always the most popular topic, tithing is the first and most basic concept that must be understood. While most of you already know what tithing is, we are still going to cover it with the understanding that all of the other financial concepts will be based on this foundation.
How Much Do You Give? Part of being a good manager, or steward, is giving back to God a portion of what He’s entrusted to us. It’s not that God “needs” our money. Rather, giving serves as an external, material testimony that God owns both the material and spiritual things of our lives. It also supports the greatest, most enduring work ever conducted in this world: the Lord’s work through the local church. One of the first standards of giving found in the Bible is the tithe, a word which means “tenth.” Abraham tithed in Genesis 14 after returning from the daring rescue of his nephew Lot from four enemy kings. He encountered the priest Melchizedek and voluntarily surrendered to him one-tenth of all the spoils he had taken from his enemies. We see Jacob also vowing to give a Tenth of all that the Lord blessed him with back to God.
The Storehouse 10 Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the LORD of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it . {pour…: Heb. empty out} (Malachi 3:10). In order to bring our tithes into the storehouse, it is necessary to determine exactly what the storehouse is. In biblical time it was a physical place where the Jews would deliver their offerings of grain or animals. A storehouse had specific functions according to God’s Word. F To feed the tribe of Levi (Numbers 18:24-29). The tribe of Levi and the priests would be equivalent to pastors and other church staff, missionaries, and evangelists. F To feed the Hebrew widows and orphans living within the Hebrew city (Deuteronomy 14:28-29). They would be equivalent to the widows and orphans served in a local church. F To feed the Gentile poor living in the Hebrew city (Deuteronomy 14:28-29). Today’s equivalent would be the unsaved people in the community surrounding a local church. Some modern theologians will claim that it is difficult to affirm that the Old Testament law of tithes is binding on the New Testament Christian Church. The word tithe only appears in one context of the New Testament. Jesus rebuked the Pharisees for tithing of certain precious minerals but ignoring the “weightier matters of the law “ such as judgment, mercy, faith and the love of God. He says these things ought ye to have done, and not left the other undone. So from Jesus’ own mouth, he said that they ought not leave the tithe undone, but that the tithe is not what proves the love of God. Beyond this, there is no mention of the tithe other than references to the Old Testament. Nevertheless the principle of this law remains, and is incorporated in Paul’s letter to the Corinthian church. #1Co 9:13,14 1Co 9:13 Do ye not know that they which minister about holy things live of the things of the temple? and they which wait at the altar are partakers with the altar? 1Co 9:14 Even so hath the Lord ordained that they which preach the gospel should live of the gospel. What Paul is saying is that those who minister and preach the gospel, who wait at the altar (the church) should make a living from doing so. In other words, they should be compensated for their duties just as the Levites were supported by the tithe in the Old Testament. First and foremost this starts with the pastor or bishop and then would possibly fall down to others serving in an official capacity for the church such as assistant pastors, deacons, administrators, educators and so on.
Establish the Tithe Every Christian should establish the tithe as the minimum testimony to God’s ownership. It is through sharing that we bring His power in finances into focus. In every case, God wants us to give the first part to Him. You cannot sacrifice God’s part—that is not your prerogative as a Christian. So what is the key? If a sacrifice is necessary, and it almost always is, do not sacrifice God’s or your creditor’s share. Choose a portion of your own expenditures to sacrifice. Ideally, the local church could serve as the storehouse in God’s economy today. Then people’s tithes would simply be given to the church. After all, God has designed the church to carry out vital social functions among Christians and non-Christians. These functions include ministering to the sick, teaching families to care for themselves, and taking the Gospel to the lost at home and abroad. 2 Cor. 9:7 – “Every man according as he purposeth in his heart, so let him give; not grudgingly, or of necessity: for God loveth a cheerful giver” Tithing requires discipline. It requires faith and commitment. If you are not tithing Biblically right now, you may be saying to yourself, “I just can’t afford to do it or I won’t be able to pay my bills”. We will get into that aspect more when we discuss budgeting and planning in Session 2 But remember that you can’t sit under the teaching of a local church and not support it Financially and expect to be blessed.
A quick example of giving God not only a portion of your material wealth, but of your time. This is not a concrete scenario, nor is it one that came specifically from the Bible. However, it shows you how the church provides opportunities for you to be faithful in giving your time to God. You could almost say that the tithing of your time is a precursor to establishing the monetary tithe. Because until you surrender your life to the Lord you will have a difficult time surrendering possessions. Either way, this affirms that the tithe is the cornerstone of this concept called stewardship.
Answers to Questions About Tithing F When I calculate my tithe, should it be on my net or my gross income? Proverbs 3:9-10 says that God has asked for our firstfruits, which is the first and best of all that we receive. That means we should tithe from our total income before taxes (gross). F Should I tithe if I am in debt? T he tithe helps us to fear and respect God, which is the beginning of wisdom. If there is anybody in the world who needs God’s wisdom in the area of finances, it is a person who is already in debt. F Is it okay to take my tithe money and put it toward Bible college tuition? Malachi 3 says we are actually stealing from God if we don’t pay an honest tithe, as well as give liberal offerings as we are blessed. As noble a thing as saving for a Christian education is, God cannot bless it if you have sacrificed the tithe in favor of it. F Could tithe money be used to support secular organizations? The tithe is given in God’s name and should be used specifically for His work. If you feel moved to give to a secular charity, that’s fine But not if it means sacrificing the tithe. F Should I tithe from the profits from the sale of my house? Any profit made from the sale of a house ought to be tithed on, because it is, in fact, part of your firstfruits. Even if the profits are to be reinvested in a new home, a tithe should be given first. F Should a person tithe on an inheritance? Because an inheritance is part of our “increase,” we should give a portion of it back to the Lord to honor Him. F What about insurance payments received after the death of a spouse—should a person tithe on the lump sum or just on the interest earnings? Again, look at the principle of tithing on our “increase.” If insurance proceeds are paid in a lump sum distribution, a tithe should first be paid on the entire amount. Afterward a tithe should be paid on any increase received (interest, dividends) from the investment of those funds. If the proceeds are held in trust and distributed periodically, then a tithe should be paid on each distribution. F Should I tithe on alimony or child support I receive? Alimony is part of your income from which a tithe should be given, but child support belongs to the children and isn’t part of your personal “increase.” It is meant to support the children. F What about business income? You could easily find people to debate every side of this issue. However, since there are several folks who have home businesses or are self-employed, let’s look at it for just a moment. Some will argue that you should tithe from your gross sales or revenues. Others say that is not reasonable because some businesses don’t even make a 10% profit, so you should tithe on your net income after all expenses. Like I said this could be argued all day long with legitimate points from both sides. What I want to focus on is the BASIC PRINCIPLE – which is that the tithe is based upon the firstfruits of your personal increase. Therefore, if you run a legitimate business, you will have revenues and costs of doing business. The revenues (or increase) belong to the business initially. The expenses (as long as they are legitimate business expenses) also belong to the business. The cash flow of the business does not become your personal gain until is used for a non-business purpose. There are so many different ways to organize a business that it can get tricky. However, here are some examples of personal gain from business or self-employed income: This list is not all-inclusive by any means Cash draws/payments received for personal services rendered on behalf of the company Regular salary/wage paid out that is considered your income for active participation Dividends paid out on the basis of your ownership stake in a corporation (passive income) If you pay a wage to your children to reduce tax liability on the business, then that becomes their personal gain and should be tithed on.
WHEN IN DOUBT, ALWAYS REMEMBER THE FUNDAMENTAL PRINCIPLE – THE TITHE IS THE FIRSTFRUITS OF ALL YOUR PERSONAL INCREASE
1 Timothy 6:17-18 Charge them that are rich in this world, that they be not highminded, nor trust in uncertain riches, but in the living God, who giveth us richly all things to enjoy; That they do good, that they be rich in good works, ready to distribute, willing to communicate; Along this line, Dr. Charles Ryrie made a powerful statement about love and money that lays bare the truth of our devotion. “ How we use our money demonstrates the reality of our love for God,” he said. “In some ways it proves our love more conclusively than depth of knowledge, length of prayers, or prominence of service. These things can be feigned, but the use of our possessions shows us up for what we actually are.”
No one who is financially bound can be spiritually free. 50% of marriages are ending in divorce. 37% of marital problems are money-related Where are mom and dad during the critical moments in their childrens’ lives? Especially when Mom is out working so that they can afford two new cars, a new house, cruise vacations. Meanwhile, the world and the public school system is teaching your children about evolution, homosexuality, humanism, sex education as young as 4 th grade. While Mom and Dad are out “making a living”, who is teaching and training the children to love, obey and fear God? Who is teaching them morals and Biblical living principals? When we are financially bound we are also spiritually bound. What is bound on Earth is bound in heaven. But when we are loosed from those bonds, it will be loosed in Heaven as well. In other words, we will be spiritually free.
Ecclesiastes 5:10 He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity Enough will never be enough. If you desire money for the wrong reasons, your appetite will never be satisfied. Think about the professional athletes making millions of dollars per year to play a game. And yet there are some who will sit out or refuse to sign a contract because they are not the highest paid player or because they want $15 million, not $14 million. ARE YOU SERIOUS? Matthew 6:21,24 For where your treasure is, there will your heart be also. No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon. Proverbs 23:4-5 Labour not to be rich: cease from thine own wisdom. Wilt thou set thine eyes upon that which is not? for riches certainly make themselves wings; they fly away as an eagle toward heaven. Luke 12:15 And he said unto them, Take heed, and beware of covetousness: for a man’s life consisteth not in the abundance of the things which he possesseth. Notice in 1 Timothy 6:10 the Bible does not say that money is evil. Money in and of itself is an inanimate object. It is neutral. However, the love of money, the desire for riches, the covetousness of worldly possessions, these things are EVIL.
What’s the Next Step? Examine your attitude towards money Commit to putting God first in all aspects of your Christian life, including personal finances. Establish the tithe A Christian should give their tithe because it is a command from God. If you are not tithing (that means 10% of your gross income), then you need to step out by faith. However, due to poor money management practices, many Christians are overburdened in their finances and underburdened in their faith towards God. My challenge for you today is to commit to putting God first in regards to your finances. Commit to establishing the tithe, not just for a couple of weeks or months, but commit to the underlying principle of tithing which is giving of the firstfruits of your increase. We will discuss in the next session how to make it happen, but the commitment to God has to come from you first. NEXT WEEK Now that we have discussed our attitude towards money and the cornerstone principals of giving and stewardship, we will get into more of the mechanical details of how to manage God’s resources, using the Bible of course as a reference tool and guide. We will learn the ABC’s of Godly money management, talk about budgets, learn the principles and blessings of Godly giving, and discuss the dangers of greed and prosperity theology.
During this series we are going to look at the past, present and future of our financial situation. There are things that have happened in the past that may have put you in financial burden. There are some things that need to be done right now in order to get things back on track. And there are things in the future that need to be planned for. In order to have a proper perspective on your finances, you need to have a plan that addresses all three of these areas, and does so within a Biblical context of obedience and principles.
Who’s in Charge? When we view ourselves as owners and not managers, we’ll look at every other aspect of our lives the same way. Each of us will see himself or herself as the person in charge, but that can change quickly in the face of circumstances beyond our control. Too often we find ourselves distracted by buildings, cars, investments, and retirement plans for 30 years in the future. The very second we cease to breathe, all those concerns are going to be irrelevant. The Bible story of Job is another reminder that no one has a permanent hold on anything in this world, no matter how powerful he or she is. Suddenly stripped of his many possessions, Job confirmed this fact, pointing to his own mortality as the undeniable evidence of God’s controlling ownership: “Naked came I from my mother’s womb, and naked I shall return thither. The Lord gave and the Lord hath taken away” (Job 1:21). Thus, money is not ours; it is God’s. We just hold it in trust. He allots different amounts to His children, based on His plan and purpose for their lives. And someday we’ll be held accountable for the way we managed our allotments.
70% of all consumers live paycheck to paycheck Luke 14:28 28 For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it ? Proverbs 27: 23 ¶ Be thou diligent to know the state of thy flocks, and look well to thy herds. {look…: Heb. set thy heart} Proverbs 21:5 The thoughts of the diligent tend only to plenteousness; but of every one that is hasty only to want.
1) “I don’t know where to start!” These are the folks who feel overwhelmed by life and the money pressures they are facing. They want less stress and confusion. From their perspective, doing a budget is just one more complication they don’t need! What these people fail to realize is that a budget is the first step towards relieving their pain. The good news is that a budget is simple and not very time consuming. A few minutes spent in the budgeting process just before the month begins can bring financial balance and tranquility for the month ahead. 2) “I don’t get math—money stuff confuses me!” This is like saying, “I’m not a chef—so I’m not going to eat food.” To properly handle your income doesn’t require any special classes or degrees. All it requires is a little basic knowledge of Bible principles and a willingness to change one’s behavior. And, remember, it’s not a question of whether or not your income is going to be spent. The only question is: Are you going to control the spending, or is the spending going to control you? 3) “Thinking about money is such a downer”. Remember, the source of stress in all of our lives comes from the feeling that we don’t have control over our environment. I mean think about it, when you feel in control of a situation are you ever stressed out? It’s the same with budgeting. When a person seizes control and begins taking charge of their money, something wonderful happens. There is a rightful sense of power and control—a sense that one has control of what happens in their life.
So many people just try to wing it. They don’t know what’s coming in or what’s going out. If the bank account is empty and they want to buy something they just charge it. If an unexpected expense or need comes up, they have no plan, so they charge it. There is too much month left at the end of their money so they just stop paying their bills. If you ran any organization, other than possibly the Federal government, you would go under. The business would go bankrupt, the church would close its doors, yet somehow we think that isn’t going to happen when we manage our household finances like that. There has to be a plan in place to manage the money.
Step 1—List Monthly Expenditures in the Home. a. Fixed Expenses Tithe Federal income taxes (if taxes are deducted, ignore this item) State income taxes (if taxes are deducted, ignore this item) Federal Social Security taxes (if taxes are deducted, ignore this item) Housing expenses (mortgage payment or rent) Residence taxes Residence insurance Other b. Variable Expenses Food Outstanding debts Utilities Insurance (life, health, auto) Entertainment, recreation Clothing allowance Medical/dental Savings Miscellaneous Each individual or family budget may vary slightly as to what is considered Fixed or Variable. However, all non-essential expenditures should be categorized as variable expenses.
Salary Interest Dividends Rents Notes Income tax refund Other NOTE: I would encourage couples to establish a budget based on the husband’s income only. I recommend the wife’s income be applied to one-time purchases only—vacations, furniture, cars—or to savings or debt reduction. Often times the wife’s income is interrupted by illness, pregnancy, childcare needs or a change in the husband’s employment location.
Step 3—Compare Income Versus Expenses. If total income exceeds total expenses, you only have to implement a method of budget control in your home. However, if expenses exceed income (or more stringent controls in spending are desired), additional steps are necessary. In that case, to reduce expenses, an analysis of each budget area is called for.
Here is a sample Income vs. Expense Worksheet. It is included in your participant handbook. When trying to balance a budget and see where you can cut back, a tool such as this can help. You can use it as a budget and to track your actual income and expenditures throughout the month. The type of categories you use and how detailed you want to be are really up to you.
GIVE CONTROL TO GAIN CONTROL 1. Transfer Ownership Christians must transfer ownership of every possession to God. This means money, time, family, material possessions, education, even earning potential for the future. This is essential to experience the Spirit-filled life in the area of finances (see Psalms 8:4-6). We must realize that there is absolutely no substitute for this step. If we believe that we are the owners of even a single possession, then the events affecting that possession are going to affect our attitudes. However, if we make a total transfer of everything to God, He will demonstrate His ability. It is important to understand and accept God’s conditions for His control (see Deuteronomy 5:32-33). God will keep His promise to provide every need we have through physical, material, and spiritual means, according to His perfect plan. It is simple to say that we will make a total transfer of everything to God, but it’s not so simple to do. At first, we will experience some difficulty in consistently seeking God’s will in the area of material things, because we are so accustomed to self-management and control. But financial freedom comes from knowing God is in control. 2 What a great relief it is to turn our burdens over to Him. Then, if something happens to the car, we can say, “Father, I gave this car to You; I’ve maintained it to the best of my ability, but I don’t own it. It belongs to You, so do with it whatever You would like.” Then look for the blessing God has in store as a result of this attitude. Psalms 24:1 declares, “The earth is the Lord’s, and the fulness thereof.” Deuteronomy 8:18 says it is God who gives us power to make wealth, not we ourselves. And in 1 Corinthians 4:7, Paul asks “What do you have that you did not receive?” When we recognize that God owns everything and all blessings come from Him (including our ability to work), our role as managers, or stewards, becomes evident. We also see the multitude of blessings we have to be thankful for. Now that we have Acknowledged whose money it is Created a plan for how it is going to be spent Accepted our role as managers of his possessions We can explore the principles of Godly giving and the blessings that come from Godly giving.
Reasons for Giving Like tithing, giving beyond the tithe should be an outward material expression of a deeper spiritual commitment and an indication of a willing and obedient heart. Just as the Macedonians did, we should give out of a grateful heart and with an attitude of joy. Second Corinthians 9:7 says, “Each man as he purposeth in his heart, so let him give; not grudgingly, nor out of necessity, for God loveth a cheerful giver.” This Scripture applies even more in this situation, since larger and larger amounts of money are being sacrificed. Another reason for giving beyond the tithe is conviction. Perhaps the Holy Spirit is prompting you to give to a special cause. How can you determine if such a desire to give is actually from God or just an emotional response? Read God’s Word and pray. If you are married, include your spouse in the decision to ensure balance in your giving. Finally, some may have the spiritual gift of giving described by the apostle Paul in Romans 12:8. These people live very disciplined lives, enabling them to give generously. They are especially sensitive to the needs of others and conscious of the need to check out every cause they give to. Generally, they are very prudent people. While anyone can give, some Have a special gift given them from the Holy Spirit. How to Give When giving beyond the tithe, give out of your abundance, according to the principle taught in 2 Corinthians 8:14. God doesn’t want us to give until we are made poor, unless it is to improve our lives spiritually. A balanced attitude toward material things can be found in Proverbs 30:8-9. God’s main concern for us is what’s in our hearts. Other guidelines for this type of giving include the following. F Donating something other than money —You may donate your time or services to an organization or give noncash gifts such as food, furniture, and clothing. Avoid giving useless or junk gifts. F Taking a balanced approach to sacrificial giving —Sacrificing to give is a way to honor God, but, once again, this should be the result of a heart attitude and not a desire to impress others.
Luke 6:38 Give, and it shall be given unto you; good measure, pressed down, and shaken together, and running over, shall men give into your bosom. For with the same measure that ye mete withal it shall be measured to you again. Malachi 3:10-12 Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the LORD of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it . 11 And I will rebuke the devourer for your sakes, and he shall not destroy the fruits of your ground; neither shall your vine cast her fruit before the time in the field, saith the LORD of hosts. 12 And all nations shall call you blessed: for ye shall be a delightsome land, saith the LORD of hosts. 2 Cor 9:12 For the administration of this service not only supplieth the want of the saints, but is abundant also by many thanksgivings unto God; Acts 20:35 I have shewed you all things, how that so labouring ye ought to support the weak, and to remember the words of the Lord Jesus, how he said, It is more blessed to give than to receive.
Two friends met in the street. One looked sad and almost on the verge of tears. The other man said, "Hey my friend, how come you look like the whole world has caved in?" The sad fellow said, "Let me tell you. Three weeks ago, an uncle died and left me 50-thousand dollars." "That's not bad at all...!" "Hold on, I'm just getting started. Two weeks ago, a cousin I never knew kicked-the-bucket and left me 95-thousand, tax-free to boot." "Well, that's great! I'd like that." "Last week, my grandfather passed away. I inherited almost a million." "So why are so glum?" "This week - nothing!“ Prosperity theology is the teaching that an authentic religious belief and behavior in a person will result in their material prosperity. That is, the doctrine holds that material prosperity, particularly financial prosperity and success in business and personal life, is to be expected as external evidence of God's favor. This has to be a flawed concept because if every Christian were wealthy, then it would be extremely difficult if not impossible for them to witness unto every class of individual. It assumes that God wants all Christians to be rich. Jesus said it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of heaven and yet God said that he is not willing that any should perish but that all should come to repentance. In the Bible when the people were giving their offerings he praised the poor widow woman who gave her last two mites. God says he will bless us according to his abundant riches in Christ Jesus, not money. God owes us nothing – “My grace is sufficient for thee” (2 Cor 12:9) God blesses obedience, not belief. There are examples everywhere in the Bible God is more interested in our perfection than our prosperity - Perfection: SANCTIFICATION SANCTIFICATION Involves more than a mere moral reformation of character. It is brought about by the power of the truth: It is the work of the Holy Spirit bringing the whole nature more and more under the influences of the new gracious principles implanted in the soul in regeneration. Beware especially of these televangelists who will try to convince you that if you will just sow a seed of $50 or $100 or $1,000 God will bless you. I don’t know how many times I will turn on the TV and 9 times out of 10 they are preaching on sowing a seed. You’ll reap what you sow. If you give me $1,000, God will multiply it 30,60 or 100 fold like it says in Matthew 13. Now don’t get me wrong. The Biblical principle of reaping and sowing is sound. However, in Matthew 13 the seed is not money, it is the Word of God which is to be sown into the heart of people through the hearing of the gospel. The reaping and bearing of fruit that is described has nothing to do with $1,000 turning into $100,000. It is talking about people getting saved and telling others about Jesus. The harvest that is multiplied are the saved souls that are won to Christ.
What’s the Next Step? Acknowledge whose money it is Transfer ownership Write a spending plan Be specific Start managing his money Establish controls - Remember following a budget or going from a credit based approach to a cash-based approach requires discipline. It won’t come easy at first. Put controls in place, a sort of check and balance system, to keep the family following the plan. Evaluate results monthly and adjust Make sure you are tracking the categories you set up in your spending plan Do a mid-month checkup on how you are doing and adjust before the month is over. Towards the end of the current month, start developing next month’s plan. Make necessary adjustments based on changing circumstances. Reallocate as needed if the family’s priorities have changed. NEXT WEEK We will look to the past and examine how those decisions have got us to where we are today, and how to undo some bad decisions that may have led to indebtedness and credit dependence. We will see what God’s outlook on debt is. We will look at proper ways to establish and handle credit. And I will also attempt to show you how to get out of debt for good in four years or less by applying simple rapid paydown principles to your existing debts.
The average family would have to use a credit card to pay a $1,500 unexpected expense
What the bible says about debt 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). Ecclesiastes 5:5 Better is it that thou shouldest not vow, than that thou shouldest vow and not pay. The principle of borrowing given in Scripture is that it is better not to assume surety on a loan. ¶ A man void of understanding striketh hands, and becometh surety in the presence of his friend “ (Proverbs 17:18). Again, surety means that you have taken on an obligation to pay without a specific way to pay it. The law of borrowing given in Scripture is that it is a sin to borrow and not repay. ¶ The wicked borroweth, and payeth not again: but the righteous sheweth mercy, and giveth.” (Psalm 37:21). Does this mean that if you cannot pay your debts you are a wicked and evil person? NO. The assumption in the verse is that the wicked person can repay but will not, as opposed to an individual who wants to repay but cannot. This second person is not evil, but they are enslaved.
Common Attitudes That Lead to Debt 1. Ignorance —Many of us simply never were trained, either formally or by example, to manage money. Our society is no help; its philosophy is spend, spend, spend. If you don’t have it, get it. If you can’t afford it, get it anyway; you deserve it. That type of attitude leads to . . . 2. Indulgence —We tend to think we need everything NOW. Somehow it has become our “right” to have at least two new cars, a nice home, exciting vacations. The whole concept of starting out small and patiently building our lifestyles one step at a time has certainly flown out the window. That is a symptom of . . . 3. Poor planning —No matter how noble our intentions may be, a person without a plan that gauges income versus expenditures is on the road to debt and financial troubles.
Proverbs 22:3 says, A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished. Credit and credit cards are not the problem; it is the misuse of or ignorance towards credit that creates the problems. There are some simple rules for using credit cards. 1. Never use your credit cards for anything except budgeted purchases. 2. Pay your credit cards off every month. 3. The very first month you have a credit card bill that you cannot pay, destroy that credit card and never use it again. 4. Finally, keep in mind that just because you can afford something, you don’t necessarily need to buy it. If you did not budget for that purchase then don’t buy it. If you feel you need or want it, plan it into your budget the following month. This also gives you time to reflect on how much you really need that thing. Every retailer’s goal is to get you to spend impulsively. In fact, most retailers have an entire department or category of items that are labeled “impulse items”. These are the candy bars, bubble gum, breath mints and other small items that are placed near the checkout areas. 5. Keep credit lines small to eliminate the temptation to spend outside your means. This way if you do lose discipline, it will not ruin you. Many of these get rich quick schemes that are out there teach you how to build up a massive amount of available credit because they know that is the only way you will be able to continue to shovel money you don’t have into their pockets.
Many young people get into trouble with credit because they are desperate to establish credit and because it is easy for them to qualify for more credit than they can manage. The very best way to establish credit initially is to borrow against an acceptable asset. For example, if you have saved $1,000 and want to borrow the same amount, almost any bank will lend you $1,000 using the savings as collateral. Usually the lender will charge from 1 to 2 percent more for the loan than the prevailing savings rate. So, in essence, it costs about 2 percent interest to establish a good credit history. For a one-year loan of $1,000, the net cost would be approximately $20. (sometimes called a passbook savings loan) Then, by using the bank as a credit reference, almost anyone can qualify for a major credit card, although the credit limit normally would be the minimum amount. Of course I am not advocating that everyone should rush out and apply for a credit card or that everyone is able to manage a credit card properly. The point is that credit is relatively simple to establish, if you have already acquired the discipline of saving. 3 Having someone (a relative or friend) cosign for a loan is a common way to establish credit, but it is also a major form of surety and, as such, should be avoided. Parents, this means that co-signing for your children’s debt is not something you should be doing. Firstly, it directly contradicts Bible doctrine on surety which says that you should not become a guarantor for someone else’s debt. The Bible says, “why should you take the fall for someone else’s failure to manage their money?” Proverbs 22:26,27 6 ¶ Be not thou one of them that strike hands, or of them that are sureties for debts. If thou hast nothing to pay, why should he take away thy bed from under thee? But it’s for my child you say. Better off to refuse your child something they can live without and cannot afford, and teach them what the Bible says about debt and borrowing, than to see them fall into the same trap many of us have fallen into. Well what about paying for college tuition? How are they supposed to do that on their own? If you spend the time now teaching them Biblical financial principles, they will be able to either secure their own financial aid, save money, or work through college to pay the bills as they come due. By allowing them to pay their own way you are setting them up for success once they graduate and have to manage a household of their own. If you’ve already planned ahead and saved up money to pay for their college, make sure you still implement a system that incorporates some accountability into it. For example, have them take the money they earn while in college and start setting up financial plans of their own such as emergency funds, savings for a car or home, retirement accounts, etc. Whatever you do, don’t let them cruise through college on your dime, frittering away all of their excess income. If you do, then don’t be surprised when as an adult they can’t manage their money and come to you to bail them out, because that is what they learned from you. THE IMPORTANCE OF TRAINING OUR YOUTH Statistics show that 85 percent of people who accept Jesus as Saviour do so before the age of 18. And it is estimated that over 50 percent of the world’s population is now under the age of 18. We need to work with our children and prepare them as leaders for the next generation. If their lives are grounded in biblical truths, they won’t be carried away like their peers. We need to form them into a group that can reach out and offer hope to a generation without hope. They will be able to do this because their lives will be founded in and on the eternal principles of God, rather than on the passing fancies of progressive secular humanism.
A quick warning about the advertised FREE credit report websites and companies. They are for the most part legitimate, but to obtain the FREE credit reports you have to sign up for credit monitoring services. These are typically free for 30 days and then they start charging anywhere from $12/month & up ADVICE Either just pay a small one-time fee of less than $50 to obtain your credit reports from sources such as MYFICO.COM OR order your free three bureau credit report directly from one of the 3 main credit reporting agencies and EITHER Pay the monthly credit monitoring fee OR cancel within the trial offer period which differs for each company but is typically around 30 days. Also, if you have recently been denied a loan, credit card, mortgage or job due to poor credit, you have the right to receive a free copy of your credit report. Simply call the bureaus and request it stating that you have recently been denied due to information contained in your personal credit report.
How to Get Out of Debt Everyone can become debt free and stay that way, if they have the desire, discipline, and time. Here are some important steps to take to get out of debt and stay out. 1. Stop any form of borrowing, including credit cards, no matter what. Consumer credit is the most common source of indebtedness for Americans, and the sooner you stop borrowing the sooner you will get out of debt. In order to get out of debt, we cannot simply treat the symptoms, but we have to fix the underlying cause of the problem which is our attitude towards credit. 2. Develop a budget. A budget is a written plan for managing money in your home. If you are in debt, it will need to be a fairly restrictive budget for at least a year, maybe more. 3. Work out a payback plan with your creditors. Most creditors are more than willing to work with people who honestly want to repay them. 4. Learn to trust God for the things you truly need but can’t afford. It may well be that God does not want you to have an item that you thought was a need but really could do without. 5. Exercise self-discipline as a lifestyle. Curb your impulses to buy. If you haven’t budgeted for it, don’t buy it. 6. Seek counsel. Many of us need assistance with establishing and maintaining a budget and working with creditors. (Proverbs 15:22) Proverbs 15:22 ¶ Without counsel purposes are disappointed: but in the multitude of counselors they are established. NOTE: Beware of Consumer Credit Counseling providers (CCC’s) that offer to consolidate debt, negotiate reduced payoffs or reduced interest rates. First, all of these things you are able to do for yourself. Secondly, most of these programs appear negatively on your consumer credit report; worse even than declaring bankruptcy. In summary, when considering the whole subject of debt and credit, Christians should base their decisions on the principles of God’s Word—not the world’s conventional “wisdom.” God wants us to live debt free in order to serve Him to our utmost. If you are in debt, determine now to get out and stay out. With the Lord’s help you can do it!
This list of debts is one resource that can help you to eliminate your debt quicker. First list all current debtors, the amounts owed, the monthly payment, and the interest rates. Use your most current statements or call the creditor to get this information. The most logical way to pay these off, is from the highest interest rate to the lowest. The higher the interest rate, the more this money is costing you.
Consider this example: You have a $5,000 car loan with an interest rate of 12% and a monthly payment of $133. At this rate it will take you 4 years to pay off this debt. By paying an extra $34 per month, you will pay this loan off in 3 years and save $330.52 in interest. $34/month = $7.85/wk or about one value meal at a fast food restaurant The interest savings of $330.52 over 36 months equals $9.18 per month, which means the total cost to you is $25 per month to pay that loan off one year sooner. Now consider a situation in which you have multiple debts. You just gave up a value meal a week to pay off this loan a year sooner. At the end of 3 years you now have an extra $167 each month to apply towards the debt with the next highest interest rate.
Now consider a situation in which you have multiple debts. You just gave up a value meal a week to pay off this loan a year sooner. At the end of 3 years you now have an extra $167 each month to apply towards the debt with the next highest interest rate. You just paid of your $5,000 car loan after 3 years You now have $167/mo that you were spending on a car payment to apply towards eliminating other debt You have a credit card that still has a $2,500 balance with a monthly payment of $52 at 9% interest With those terms you will pay off your credit card in 60 pmts (5 years). By adding the $167/mo that you were paying towards the car loan to your credit card payment you will Pay off credit card in 12 months (1 yr vs 5yrs) Save $488.79 in interest charges By using this method, in this example, you will have paid off $7,500 in debt in 4 years instead of 8 years (half the time), saving over $200 a year in interest, and you now have an extra $219/month to either pay off your next highest interest rate debt, OR to start putting towards savings/retirement. Let’s say you retired all your debt and invested the $219/month and earned a conservative 4% return (equivalent to a 3-5yr CD) for the 4 years that you no longer have debt payments for. After the same 8 years, instead of having just now paid off your debts, you will have increased your wealth by over $11,000. Wait a minute. Didn’t we start this example 8 years ago by giving up one value meal a week for a cost of $34/month. And as a result of that, and by not incurring any more debt, and applying these accelerated paydown principles, we ended up making $114/month? Are you starting to see why God doesn’t want us getting into debt? And are you beginning to understand the payoff of getting rid of any debt that you do have?
What’s the Next Step? Commit to no more debt Obtain a current credit report if you haven’t done so in the past year Complete the Debt List Worksheet Start applying extra or unexpected funds to the Debt List in order from highest interest rate to lowest
After years of scrimping and saving, a husband told his wife the good news: "Honey, we've finally got enough money to buy what we started saving for in 1979." "You mean a brand-new Cadillac?" she asked eagerly. "No," said the husband, "a 1979 Cadillac."
Proverbs 13:22 22 ¶ A good man leaveth an inheritance to his children’s children: and the wealth of the sinner is laid up for the just. We know from this verse that we are to build an inheritance for future generations Proverbs 21:20 There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up. God calls a man foolish who spends up all his money and does not save and invest for future needs. Matthew 25:27, 27 Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury. We know from scripture such as the parable of the talents, that God approves of and actually expects us to plan for the future and to gain a return on our money. One clarification. This saving and investing is to be done with our excess funds. This all revolves around having a solid spending plan like we discussed earlier, that properly allocates a portion of your budget to savings. Talk to your elder children about your financial plans. Start training them now how to be faithful stewards. Emphasize the importance of staying out of financial bondage. Involve the whole family in the finance process utilizing tools such as chores, allowances and simple budgets (10/45/45 rule). Show them that God comes first in every aspect of your life, and they do it also.
Nine Keys to Investing Even though every family’s needs in the area of investing are different, there are some common principles, or “keys,” that can provide a solid foundation for anybody. If you’ll apply these keys to your own financial plans, your investment decisions will be clearer. Key 1: Formulate Clear-Cut Investment Goals No one should invest without having an ultimate purpose for the money. You may be laying money aside for education or retirement, but you should have an ultimate, clear-cut financial goal. Retirement Goal The amount of debt you’re still carrying at retirement will play a key role in what you can or cannot do. Becoming debt-free, including your home mortgage, should be your first investment goal in preparing for retirement. Once your home is paid off, you can start preparing for retirement and/or your children’s college education with the money you were paying each month on your mortgage. It takes discipline to invest this money, but it makes sense. You can’t depend on Social Security to be your sole retirement plan. Social Security is intended to be nothing more than a supplement to your retirement income. Preservation Goal Education Goal Growth Goal As we’ve just noted, some people need a little more growth potential in their investments. But there are others who seek a lot of growth potential because they’re hoping to get rich quick. These people are willing to take big risks in an effort to become rich overnight. But Proverbs 28:22 says, “A man with an evil eye hastens after wealth and does not know that want will come upon him.” Tax Shelter Goal This particular goal is very complex. Depreciation and investment tax credits can be legitimate tax shelters. But an important principle to remember is that when you “defer” income tax through depreciation you eventually must recapture it. Most tax shelters don’t really eliminate income tax; they only defer it to a later time. This is especially important to small business owners. For instance, if you put money into a retirement plan, such as an IRA, it is an excellent tax shelter. But you’ll have to pay income taxes on withdrawals from that IRA when you retire. One final note about tax shelters. You should never get into an investment solely for the tax benefits involved. Any good investment is eventually supposed to make money for you. Key 2: Avoid Personal Liability Most get-rich-quick schemes, as well as most tax shelters, are available only if you accept personal liability for a large debt. God’s Word says to avoid “surety,” which means making yourself personally liable for indebtedness without a certain way to repay. For example, let’s say that you were going to buy a $10,000 piece of property but had only $2,000 as a down payment. So you put your $2,000 down on the property and then sign a note for $8,000 that says, “If ever I can’t pay the note, the lender has the right to recover the property and sue me for any deficiency.” That is surety. On the other hand, let’s assume that you’re buying the same $10,000 piece of property, you put down $2,000, and you sign a note for $8,000. But the condition of the note reads, “ If ever I can’t pay, the lender has the right to recover the property and keep what I’ve already paid, but I owe nothing additional.” In other words, there is no personal liability for any deficiency. In legal terms, that’s exculpatory, meaning you have limited your liability to the collateral at risk. Thus, you have avoided surety because you always have a definite way to pay: surrender the property. That is the only biblically sound way to borrow. Avoid personal liability at all costs. Then, if you buy equipment, property, or investments, the most you can lose is the money you have “at risk,” not future earnings. Failure to do this can result in the total loss of all your family’s assets. Many times when an investment goes bad, it does so during the worst times in the economy. That’s usually the time when you are least capable of carrying the loss. Key 3: Evaluate Risk and Return An important factor in investing is called the “risk versus return” ratio. The higher the rate of return, the higher the degree of risk. You can lower the risk by education and careful analysis, but you cannot eliminate it. The reason an investment pays a higher rate of return is because it must do so to attract the needed capital. Before investing in anything riskier than an insured savings account, you need to ask yourself this fundamental question: “ Can I really afford to take this risk?” The answer to that question normally depends on two factors: age and purpose. The older you are, the less risk you can afford to take, because it’s more difficult to replace the money. If the purpose of the money is for retirement or education and both are still years away, you can probably afford to take a higher risk. However, if you need the investment funds to live on right now, then you need the lower risk, regardless of age. If you find an investment that promises a high rate of return with a low degree of risk, watch out; there’s no free lunch. As Proverbs 14:18 says, The simple inherit folly: but the prudent are crowned with knowledge. Key 4: Keep Some Assets Debt Free For most average Christians the largest assets involved will be a house or personal vehicle. There are some more complicated principles regarding leverage (borrowing at a lower rate, and re-investing in an asset with a higher expected return). However, for the average Joe, the best practice is to own your major assets free and clear as soon as possible. Key 5: Be Patient It’s important to get your money to work for you, but patience will help avoid a great many errors. You must know what your goals and objectives are and only select the investments that help you meet them. Remember that greed and speed often work together, so a key to avoiding greed is patience. Most get-rich-quick schemes rely on greed and quick decisions. In fact, there are three basic elements associated with any get-rich-quick scheme. They do the following. Attract people who don’t know what they’re doing. 2. Encourage people to risk money they cannot afford to lose. 3. Attract people who will make investment decisions on the spot. Many get-rich-quick plans rely on group meetings and a lot of emotional hype. But if you hear of a deal that sounds so good that you don’t want to wait and pray about it, pass it up. Good investments are rare and seldom flashy. Get-rich-quick schemes always look the best initially. If they didn’t, nobody would buy them. So be cautious and, above all, be patient. “Rest in the Lord and wait patiently for Him” (Psalm 37:7). Before you do anything, talk about it, pray about it, and give God time to give you an answer. Key 6: Diversify “ Don’t put all your eggs in one basket.” That certainly applies to your investment strategy. It’s important to remember that the principle of diversification is not a one-time decision. In other words, you don’t diversify and then forget it. You have to continue managing your money. We are required to be stewards: managers of God’s property. If you don’t have the knowledge, you need to gain it. Spend an hour a day for six months studying any area of investing, and you’ll know more than most people who sell it. How diversified should you be? There is no clear cut answer to that question. Consider the eggs in a basket. Let’s say you have a dozen eggs. If you have all your eggs in one basket and that basket falls, you could lose all the eggs. However, if you have each egg in its own basket, how are you going to be able to carry all those baskets and keep an eye on where you are going? Here’s the principle – and you will have to determine the best strategy for you. One basket is easy to manage and keep track of, but also increases your risk Multiple baskets decreases your risk of losing everything but becomes increasingly more difficult to manage. Key 7: Consider Long-Range Trends Your investment program should take into account long-range economic trends, especially inflation. So many times we get trapped into following short-range trends. When the economy is doing well and inflation and interest rates are down, everything seems to be going great. People want to jump into the market and “make a lot of money.” Some people who get in will make money, but the vast majority are going to panic during a short-term downturn and lose most or all of the money they made. This is where we are at right now. People who speculate may wind up losing more than they made, especially if they borrow to invest. When the market drops, they can’t afford to ride it out, so they sell in a down market. So, when you’re evaluating where to put your money, it’s always important to take the long-term approach. Remember that with long-term trends, whatever is going on right now will eventually reverse historically. Many seem to have forgotten that the stock market was just at it’s all-time high on October 9, 2007. Key 8: Focus on What You Own Assets don’t mean anything. What counts is the liability-free amount you own. Owning a $500,000 home means nothing if you have a $400,000 mortgage and a $50,000 Home Equity Line of Credit attached. Once you try to sell the house you will have to payoff the mortgage, the line of credit, about 7% to a real estate broker and another 3% in closing costs, netting you nothing. You should make it your goal to have at least half of your assets totally debt free. If you can’t do that right now, make it your number one long-range goal. How can you do it? By saying, “The next time I sell an investment, I’ll use that to pay off another investment.” Key 9: Train Family Members Every family member should be trained in the principles of sound investing. This is critical for children because they’ll eventually move away and be responsible for managing their own family’s finances. It’s critical for wives because 85 percent of them will outlive their husbands. That’s an important statistic to remember when developing an investment portfolio. Thus, a wife needs to be trained in good money management and investment strategy. She needs to know how to buy and sell and where to go for the help she needs. It’s poor stewardship for a wife not to understand her family’s investment portfolio, or the families finances in general. Also, since it is not uncommon for a husband and wife to die together in an accident, the older children should be brought into decisions involving investments. At a minimum, you need to leave instructions so they’ll be able to manage your portfolio without having to dispose of it just to pay estate taxes after your death.
This chart shows the history of the DOW Jones Industrial Avg, the major stock index that investors look at. You will notice that over the past 10 years (1999-2008), five have ended up and five have ended down. That is the nature of the market. The numbers aren’t that important, but when you examine the long-term trend you will find that over the long haul the stock market has provided about a 10-12% return. The Bible concept to consider here is that we should not make hasty or emotional decisions with our money. We should consider our long-term plans and needs and evaluate if the average performance of your portfolio will meet those long-range goals.
Important Goals for Investors Establish a “Safety Net” of Cash and Insurance One of the most important goals to consider when you invest money is the creation of a “ safety net” to provide for your family in the event of a catastrophe. This includes a cash reserve large enough to cover two to six months of living expenses. Of course, this reserve should be in a highly liquid account. In other words, you should be able to withdraw this money easily when you need it. Another part of your safety net should be life insurance, which will provide for your family in the event of your death. Again, there’s nothing wrong with providing for our families. God expects us to do that. “ But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel. {house: or, kindred} ” (1 Timothy 5:8). Being sure your family would be provided for if you died is like storing food for the winter, which might be likened to hard times. “ ¶ Go to the ant, thou sluggard; consider her ways, and be wise: 7 Which having no guide, overseer, or ruler, 8 Provideth her meat in the summer, and gathereth her food in the harvest” (Proverbs 6:6-8). Having insurance and a cash reserve reduces the likelihood that you’ll be forced to sell a long-term investment prematurely or at an inopportune time. Get Started Early When you start investing early in life, you spread the task of accumulating funds over a longer period of time. For example, suppose you want to accumulate $300,000 by age 65. Assuming a 10 percent compounded rate of return, you’ll need to put away $47 per month if you begin investing at age 25. If you begin at 35, you’ll need to put away $133 per month. At age 45, the monthly amount is $395. And at 55, it jumps to $1,464. Give Your Money the Freedom to Grow The more constraints you place on your investment program, the more likely it is that your investment results will fail to meet your expectations. Earning too little on your investments is one of the greatest obstacles to investment success, along with starting too late. It is important that you keep pace with inflation. It’s not enough just to preserve what you have now. You need to make your money grow, just to stay even with the rising cost of living. Consider the parable of the talents, where the master praised those servants who put the money to the exchangers and gained interest.
What’s the Next Step? Set specific savings/investment goals Establish your time frame Evaluate your assets Risk vs. Return Diversification
CONCLUSION While I can’t give you a one size fits all money management strategy, I can tell you for certain that God wants us to have a plan for managing his resources in the present and in the future. Most importantly, he wants us to have a plan for storing up our treasures for eternity. The Bible says that our works will be tried by fire. Money is made of either paper or metal, both of which will be destroyed by a fire. The currency will burn up into ashes and the coin will melt into a pool of liquid metal. The only things that will remain will be the things we accomplished for Christ by being good stewards of his material possessions. God had a spending plan. He spent countless years and resources in taking care of his children. He provided them food, clothing and shelter. Yet, they became the servants of sin, taking on a debt they could not afford. The payment for that debt was death and Hell (Romans 6:23), not just for 5 or 10 or 30 years, but for eternity. Consider the investment strategy God used in giving everything he had for us. He didn’t use a diversification strategy. He gave us one way. He chose the highest risk, highest return strategy there was in coming to Earth in the form of a man. He took his most prized asset, his only Son Jesus Christ, and leveraged him to pay our debt. He gave sacrificially, because of his immense love for us (John 3:16). If you take nothing else away from this lesson series, understand this. No matter what sort of money problems you have, what sort of personal problems you have, what sort of family problems you have, what sort of work problems you have; You have a God that loves you. He has already paid the debt for your sin. He has a plan for your life on this Earth. He has already made an investment in you. He has prepared for you an eternal inheritance. Won’t you please trust him today. Trust him to provide for your needs; trust him to help you with your problems; trust him to save your soul.
