Don't Make the Same Mistake Twice

I have heard a lot of people talk about "re-establishing" their credit after getting themselves into a mound of trouble through debt. I just read an article saying the best way to re-establish your credit after a bankruptcy is to get a low-limit credit card, make small purchases, then pay it off early each month.

I am sure it does help your FICO score, however, I have a problem with this advice for two reasons.

#1) Why should you care about increasing your FICO score anyway? All a FICO score is for is to allow you to borrow MORE money (even though that is the thing that got you in financial ruin in the first place.)

#2) This advice takes the "human" element out of the equation. If personal finance was 100% finance and 0% personal then my advice would be different, but it is inaccurate to say this.

When a person files for bankruptcy it is because they were so far in debt the could not get out of it. At this point isn't this something that that person should avoid rather than jump back into it?

I advise people to not be concerned with "re-establishing" their credit. There are steps that you can take that we talk about on this website that will enable you to eliminate debt completely from your life. The only thing that I consider "acceptable" debt is a home mortgage and getting a home mortgage is a different kind of beast when applying for it.

The lender is 100% concerned with probability of paying it back (not with FICO score). If they see your savings increase and you don't have any new entries on your credit report they will notice this (not just the FICO score). In fact, I don't know of any lenders out there who would even turn down somebody that drops a 20% down payment on their house.

Dave Ramsey says, "The definition of insanity is doing the same thing over and over and expecting different results." Getting back into what got you into a mess in the first place could be considered insane.

Cash Can Cause...

CONFLICT

I was in wal-mart the other day and saw a kid melt down because he wanted to get something but his mom would not let him. At first I thought how embarrassing that looks and then how thankful I was that I never did that as a kid (...right).

I realized that this was a conflict that was caused by money. It causes conflicts across the board: teenagers and parents, married couples, little kids in toy stores...it is messing stuff up all over the place.

CONFUSION

Money also causes confusion. I think that 2 groups that have a major role in people's confusion is the local church and the educational system.

It is strange that a senior can graduate from high school and can dissect a frog, knows the Pythagorean theorem, and can tell you the symbol for Sodium but cannot balance a checkbook or recognize a good interest rate.

It is so funny that major outlets of teaching will ignore the most practical thing people need to know. And when I mean ignore it, I mean never bring it up period. Then when someone is faced with financial decisions they are hit flat in the face without any experience. Maybe that is the reason why more people will declare bankruptcy than graduate from college this year. It is because we’re confused.

Money is dangerous stuff, you better know how to handle it. Jesus talks a lot about money, but most of the time he is warning us from it. Put yourself in a position to win with money. It really does matter. Are you controlling your money or is your money controlling you?

Giving God Control Part 3

This is my last post on Giving God Control by following what He says through scripture. There are so many other verses we can talk about but I have narrowed down a few as they are fresh bread to me

Matthew 10:16 "I am sending you out like sheep among wolves. Therefore be as shrewd as snakes and as innocent as doves."

This sounds very un-Jesus like, but we can take it very practically and I believe it to be wisdom that we can take in our daily lives. The context of this passage is Jesus sending His disciples out to preach the Gospel. His advice was not to go where the wind takes you and THEN you will be provided for; he's saying "I have already provided with you what you need, don't get ripped of."

Practically speaking this means that we are called to read the fine print. It is wisdom to not put yourself in a position that you will be taken advantage of. I'm laughing right now because recently I did this and it was so obvious that it was my fault because I put myself in a position to be taken advantage of. Another practical example is debt: HAVE YOU READ THOSE CREDIT CARD CONTRACTS!! If you did you would see things like "We reserve the right to change the account terms for any reason" In other words, "Dear Customer - You have NO rights!"

Bottom line, Jesus says make every effort to not be taken advantage of, be shrewd as snakes. However, the verse also says be "innocent as doves." I was about to leave that last part out but I do not want anyone to misunderstand this passage of scripture. While we are making sure we are not taken advantage of, we are also called to NOT TAKE ADVANTAGE OF OTHERS. I know this is a no-brainer but it needs to be said because I know first hand of people who got the first part of that passage down but trample over people in the meantime.

Matthew 25:14-30 Parable of the Talents

Man I am not saying it is wrong to try to make money. In fact I say the opposite. What I really harp on is what you do with that money once you get it. Like my example yesterday, when you get stuff be missional with it. Our lives are 100% Jesus, not 98% Jesus and 2% HDTV.

I am an advocate of investments and in Matthew 25 the Parable of the Talents shows that Jesus is too. A talent in this example I believe is a days wages, maybe more. God gave us "talents," it is wisdom to turn them into more talents. It is simple. Do not bury them, this is what is known as hoarding. Live with an open hand. Yes it allows money to go out of your hands, but with an open hand it is also easier for money to go into your hands. When you are tight fisted neither is possible.

Along with that parable, the guy who sits on what God gave him is punished, the guy who multiplied his talents(money) is told he did good. And I honestly believe this is not supposed to be because we can have more "stuff" because after all you cannot take a u-haul with your hearse. But I believe that it WILL advance the Kingdom by doing so. Its as simple as living on mission in every area of your life and that includes your money.

Giving God Control Part 2

To compliment us talking about the heart yesterday, I wanted to point out a few things that scripture speaks on that is on the practical side.

Proverbs 21:20 "In the house of the wise there are stores of choice food and oil, but a foolish man devours all he has."

Scripture actually says saving for a rainy day is cool; and rainy days are coming. Let me also clarify; most of us are suffering from a disease in which we need more and more stuff for ourselves. That is not what scripture is saying is okay, in fact let me just clear it up, that is wrong. An example of this is when Joe gets a big screen tv. The issue isn't that he spent money on the big screen tv, the issue is why did he get the big screen tv.

Let me use a friend of mine as an example...they bought a big ole 55 inch HD TV. The reason why he got that is so that he would have a reason to invite people (ie co-workers, college students, and everyone else) to come over and watch a big football game or basketball game and use it as a ministry tool. God has been glorified through his TV and that is cool.

Another friend of mine has a sweet boat; the reason why he has that boat is for ministry. It is the heart behind this stuff that matters, it is not just an excuse to get more stuff. That is the difference. It is not a numbers issue, it is most definitely a heart issue.

More coming tomorrow on giving God control by practical application of Scripture.

Giving God Control

Giving God control of your money doesn't necessarily mean to give away all your money. It is very clear through scripture that the way we handle our money is an indicator of our hearts flat out.

If we are not giving to the poor but giving to Clemson football, we can fight it all we want but it is an indicator that you care more about Clemson football than you do homeless people. It's not me saying it so please do not be mad at me, but money is just an indicator.

Jesus wasn't lying when he said in Matthew 6, where your treasure there your heart is. Our hearts are connected to our money. When you invest in a stock and you see those 3 little ticker symbols go across the screen your heart jumps up and down with them. With giving your finances to God we are biblically mandated to give some away (in old testament after the harvests and tithing it comes to about 27.33%). But, usually a tithe in scripture is referred to as a minimum 10% of all your increase.

We are also biblically mandated to provide for your family (we won't really argue against that, it is what most people use to argue hoarding). But scripture doesn't stop there, it says lots of practical things about how we handle our money.

Tomorrow we will talk about basic practical steps that scripture teaches us about money. But I wanted to talk first about how our heart is connected to our money. And if we have an attitude of "I will do what I want cause its mine" this is the same rebellious heart that spawns other sin issues.

Learn the Magical Word

The great word that we as Americans need to tell ourselves is "NO!"

It may sound simple but it is so NECESSARY. It doesn't matter how much money you make you still need to tell yourself "NO." For whatever reason the trend is to always spend a little bit more than what your income is; it could be a $30,000 income, $300,000 income, or $3,000,000 income you still end up living paycheck to paycheck.

I was reading an article in ESPN the magazine I think like a year ago. And it had an article on John Daly and how he was in debt $4,000,000. He turned to casinos to try to keep his head above water and was running himself into the ground by trying to make it to so many appearances.

It doesn't matter how much your income is, you need to learn to tell yourself no. That is the toughest thing for me. If I want something (or talk myself into "needing" something) I want it right then; it is the mentality we all have in America. I want it right now, my way or I am pissed.

When I make a plan I need to stick to it, the next month I can make a new plan; I can figure into the new plan the thing I want (and it might take multiple months saving for it!!!!). It is so worth it; to be financially free allows you to live life the way Christ designed it (not in bondage). There is so many warnings throughout scripture; they are not there for show, its truth.

Should I borrow from my parents?

I recently got an e-mail asking me if it was okay to accept a loan from this person's parents. This person believes it is okay and actually borrowed money on two occasions from family members and it worked out.

Check out my previous post to understand my point of view on borrowing money from family. Out of Bounds.

I thought he had a valid point that I wanted to address on the blog. I am glad that borrowing money from your family worked out. However, what I am still saying is truth and it's good advice. You can drive down the road 100 miles per hour and get where you are going in one peace; but that does not prove it was a good idea.

In most instances families can produce strain on those involved and usually will be followed by regret. The borrower is always slave to the lender (Proverbs 22:7) and Thanksgiving Dinner tastes different when you are eating with your master.

The Heart of Savings

What I am going to talk about is a tough issue to teach and explain. The reason why it is hard is because it is a balancing act.

Savings is important but not at the cost of replacing the hope we have in Christ with our "stuff."

Proverbs 21:20 "In the house of the wise are stores of choice food and oil, but a foolish man devours all he has."

This is saying save for a rainy day. This is where I got the concept of an Emergency Fund from.

However, there is a flipside to this that was brought up in my life group last Wednesday. When we put our hope in that to take care of us we now have a new issue to work on and some might even go as far to say they don't need God.

Matthew 6:19 "Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal."

I cannot stress this enough. You SHOULD do things like save money. Scripture is clear and calls that wisdom. But DO NOT put your trust and hope in that because our stuff on earth is so fragile. It can be given then taken away in a blink of an eye.

God loves his children and loves us enough to teach us what is best for us. Just like a father telling his daughter to not play on the roof. The daughter will say things like, "Why are you ruining my fun" or "You are so mean, why are you against me." Then the father will reply, "I know what is best for you even when you don't, I love you, and because of that you need to go sit in the corner."

It's discipline but it's love.

Proverbs 12:1 "Whoever loves discipline loves knowledge, but he who hates correction is stupid."

I want you to save money AND put your hope in Jesus and not on Earthly things. Look for discipline in this; our hearts will fight this and as a Christ Follower you should be constantly growing in this area.

Am I against all debt?

I get this question a lot, and in order to answer let me explain the kinds of debt that I am specifically referring to.

Types of Debt

Credit Card
Student Loan
Home Mortgage
Car Loan

The answer: Yes, I am against ALL debt. I want to make every effort to have (zero) debt in my life. That is the ultimate form of financial freedom when I don't have to make payments to ANYBODY. I do not want to ever be STUCK at a job because I need the security of being able to make payments. This is not freedom, it is what I call bondage. You are literally bound to doing something you may not want to do. So my plead is to make every effort to stay out of ANY kind of Debt.

With that being said, those 4 types of debt are not created equal.

My stance on debt is, it is only acceptable debt when you can sell it and be debt free immediately. It has to retain monetary value.

Therefore out of the 4 types of debt I listed, a Home Mortgage is the only form of debt I consider acceptable.

Home Mortgage
At any point when things change in your financial situation you can sell your house and be out of debt immediately. Now we all know it might take a few bumps (like it may take your house a few months to be sold). But that is why I recommend a fully funded emergency fund of 3-6 months expenses. It is smart to have it for this very reason.

Car Loans
Car Loans are NOT acceptable. Your car depreciates in value so fast and it breaks my heart when people get stuck financially and need to sell their car but they can only sell it for like $15,000 when their loan is still outstanding for $25,000. You still have to sell it because $10,000 of debt is still better than $25,000 but it is just a bad situation...stay away.

What I personally do, and what I recommend is to find a beater car (couple thousand bucks) that is in good mechanical shape (ugly physical shape) and drive that while making a car payment to yourself. Put aside $300-350 a month but put it in a money market to buy your next car, in cash. Keep making payments to yourself and at some point put it in a mutual fund. After years of making payments to yourself, there will be a break even point where due to compound interest you will never have to make a car payment again!

Credit Cards
These are NEVER acceptable. They do not even come close to the rule that I have of being able to sell it immediately and be out of debt. I do not feel that I need to go real in depth but Credit Card companies are making MAJOR money; it is or will be coming from you if you play around these things.

Student Loan
I know that I am going to get push back on this. The common response is, "Education is important. Some people can't afford college, so are you saying they should not go to school just because they can't afford it." My response to this is no AND yes. First of all, education is SO IMPORTANT. But it is not valuable because you need a diploma, you need to actually learn and apply it there. And I do think that an education is VERY important, but like I said before the only acceptable form of debt is when you can sell what you went into debt for and be out of debt immediately; it needs to retain a monetary value (not sentimental value, not emotional value, not enjoyment value). Student Loans do not fall into the category of being able to sell it and be out of debt.

But I DO want kids to go to school. If asked, my advice would be to work, work, work your tail off. Work for a couple years and save up every penny you can, go to a state school. You will most definitely not take school for granted at that point. My buddy, Casey, worked his way through school and graduated from Clemson University in Engineering. He did not incur a penny of debt and graduated with a degree. It is never okay to use money that you do not have. That seems very basic to me but something that we rationalize so well. By the way, you know what we do when we rationalize, we tell rational-lies.

Yes I know that student loans generally have lower interest rates and yes I know they have things like you don't have to pay until you graduate. But it is still the emotional response of being in bondage and I will choose freedom 100% of the time.

So when you tell me the perks of debt (like in Student Loans) what I essentially hear is, "Come be in slavery, we have all types of perks like water, food, sheets, good hours, a nice master and it is much better than the other type of slavery." I will never be willing choose or say it is okay to be in this. I cannot make people's decisions for them, but there are too many Americans that have the walls closing in because of their money and we have to open our eyes that we are allowing it to happen. It is so important because it affects everything else in their life, to the point that they may not be able to do what God wants them to do because they have put them into a place of bondage.

Too many people are stuck in a trap and doing a job they don't want to be doing. Instead of doing something that makes them come alive and what God designed them to do.

In John Eldredge's book, Wild at Heart, there is a quote that holds very true.

"Don't ask yourself what the world needs. Ask yourself what makes you come alive, and go do that, because what the world needs is people who have come alive."

Gut Check Time

Recently I have been thinking about my principles on personal finances because I am preparing to teach a two week Financial Class on October 21 and 28. (Click contact me if you want more information on this) These are 3 questions that I had to ask myself, that I encourage you to ask yourself to examine your financial health.

1.) Is there anything in my finances that if made public would discredit me?

If your financial records suddenly became public, is there anything you are doing that would make you embarrassed? You know what that is and chances are you need to cut it out of your life. This rings true especially if you are a Christ Follower. It may be your $400+ monthly eating out expense when you say you have a heart for the poor. Money is an indicator of our heart, the tough thing is that it is so easy to keep it private. I encourage you that if there is something in your financial life that if brought to light would be a negative representation of you, to cut it out.

However, this is just a symptom of a bigger issue. If you are not content in every situation in life you will always have these type issues being brought up. Cutting out something of your life is behavior modification and will probably be brought up again. Praying and working on being content because God has given you so much already is the solution. That is not an overnight thing, that takes perseverance and time.

2.) What am I doing right now that will make me be where I want to be financially a year from now?

I know a lot of us say, "we are going to save money when this changes" or perhaps we say, "once that thing goes away I will spend less." Whatever reason (cough, excuse) we might be telling ourselves, the better question is what am I actually doing? Am I making steps to be where I want to be?

One of my goals has always been making my money work for me so I wouldn't HAVE to (I would still WANT to because I love working at what I am passionate about; I would just do it for free now). I want my "alternative income stream" to be larger than my expenses. What I qualify as alternative income is anything that I don't go to a job for. This could be interest earned, dividends, rental income, or any type of income stream that doesn't require me to "go into work for." This is a lot longer than a goal than one that can be achieved a year from now. But I honestly have to ask myself, if this is a goal then what steps am I or have I taken towards it.

3.) Am I increasing in generosity?

It doesn't matter if you follow Christ or not, you have to be increasingly generous. I believe that it is truth that the love of money is a slippery slope that can ruin a persons life. In fact, it is cool that I am writing about this today because I just read 1 Timothy 6 this morning. (Fresh Bread)

1 Timothy 6:9 "People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction."

I believe that God created our hearts and through his divine word he is warning us about money. It is a blessing to have money and in that same chapter (1 Tim 6:17) scripture says that God richly provides us with everything for our enjoyment. Now, right before that is says do not put your hope in wealth but hope in God and they go together. What I am saying is, it is okay to enjoy blessings from God (after tithing, basic needs, and generosity of course) as long as you put your hope in God and not in wealth. I am not using that scripture as justification for being greedy so please don't hear me wrong.

But to get back on track, generosity is key to keeping our hearts in check so that we won't fall into ruin and destruction like 1 Timothy 6:9 talks about.

Those are 3 questions that you can ask yourself that will help examine if you are on track to being financially healthy.

Your Money and Heart are CONNECTED

Most of us have heard:

Matthew 6:21 "Where your treasure is, there your heart will be also."

For a while a just brushed that off and agreed with it but was never convinced that this was so. I can prove this and then I will talk about how that changes the way we should look at things.

Wherever our money goes a piece of our heart goes too. I just bought Clemson Football Season tickets for the first time in my life. I have gone to every home game since I was in 7th grade but never paid for them. I love going to games and anticipated each trip to Death Valley, but the anticipation has never been like this. I am emotionally connected to the Tigers now that I have dropped my $600 to support the team. I am invested in what happens. I am "bought in."

Or a better example might be if you have invested in stocks before. When you put money behind a stock and you see that 3 digit ticker symbol run across the bottom of the screen on CNBC your heart jumps with it. Your heart goes up and down with the stock. It is connected. The same thing happens when gambling. You are now invested into the game and connected to the team that you are cheering for. It could be two teams that you care nothing about, but suddenly you are rooting a team as if you grew up watching them throughout childhood.

Anyway, my point is Jesus was not lying when he said that our heart and money are connected. Well, how does that affect the way I live life or plan my money? Most people just want to have enough money so that THEY can be "happy." The realization to that is happiness is never brought on by more money, all that comes with that is being discontent because you want even more money. You are chasing a rabbit that can't be caught. Think about it, if more money is what brings happiness then celebrities would be the happiest people imaginable, but after seeing them self destruct over and over again you realize that the money that they have does not bring their happiness...or as Michael Scott would say, "mo money mo problems"

I honestly think the key is contentment in what we DO have. Most of you have just turned me off and stopped listening because of how cliche this sounds, but it is TRUE and I think this is one of the things that ring true with the statement of money and heart being connected.

There is something spiritual and free that happens when you give. Especially when you give to someone who is in NEED. Even people who to not have a Christ Follower background agree with this.

Whats going on when you do not give is you are thinking about yourself. This enhances greed which causes you to WANT more money to be happy and never get there. The shift that I think happens when you give is you stop thinking about yourself and therefore since your money and heart are connected your greediness begins to diminish. By you giving your money, your heart is affected greatly and this will allow you to be content with what you have.

I'm basically saying, "you should give, its good for you." I recommend giving at least 10% of your income away. If you are a Christ Follower, by Biblical standards you should be giving this minimum amount to the local church that you call family.

If you are reading this blog chances are you are in the top percentile of the world in riches. We have a lot to be thankful for, you should be very content with what you have been blessed with. I know that money problems affect everything in life so I cannot urge this message to you enough. If you think, "I'm going to be happy when I have more money", when you get more money you are still going to feel that.

I challenge anyone reading this to really evaluate if you keep telling yourself this and if that is true to take steps in order to shift your paradigm of thinking. A good way to start is to GIVE.