You need to learn how to handle your personal finances, how to get out of debt, and how to stay out of debt!
THE CHANCES are you, right now, are in debt! If you are an "average" citizen in Canada or the U.S., for example, you have obligated nearly 25 percent of your take-home pay to short-term credit purchases. And you are going to pay for them with monthly installments and add-on interest charges for two or three or even five more years. But as you pay off on one account, you will have charged on another. Some of you may not foresee a time you will ever get out of debt. And in addition you are probably making long-term monthly payments on your home, your furniture or your automobile. The world of CREDIT BUYING has made it all possible.
Time to Pay the Piper
At the same time millions of families accrue debts by credit buying, scores of thousands among them are filing for bankruptcy. How did these scores of thousands reach the point of economic collapse? Surprisingly, most of these families were average. They were not multimillionaires who went broke over bad investments. They were the average neighbors down the street in suburbia who hold regular jobs and have regular debts. Here is a profile. The typical bankrupt family in Canada or the U.S. earns between $15,000 and $25,000 annually. The head of the household will be in his middle 30s. The family will have a 30-year mortgage on a middle-class home in the suburb of a major American city. They will have accumulated credit debts in addition to the home mortgage of a little more than $8,000. And they can't make the payments! That's what you might call "head over heels in debt."
How It Got That Way
Let's analyze this "average" family for a moment. You might fit the mold yourself. You certainly want to avoid the pitfalls so many have fallen into. During the past quarter century credit buying has become a way of life. If you do not have a wallet full of plastic cards, you are indeed handling your finances different from the average person. You may have even felt compelled to obtain a credit card since many stores today will not even take a check in payment unless accompanied by your driver's license and not only one, but TWO major credit cards. Obtaining these credit cards has heretofore been fairly simple. Just fill out an application where you bank and one comes in the mail. Lured by high-power ads on television and in magazines we have found it convenient to charge gasoline, clothing, department store purchases — almost everything we needed or thought we needed. Young couples could furnish their apartments or homes within a few weeks of marriage. Their parents probably started with a hand-me-down bed and a used dining set and then accumulated furniture over 10 or more years. No need to wait today. Buy it on credit. Pay for it over three or four years. Enjoy a new couch, an entire bedroom suite and, of course, the ever-present brand new television and stereo. Each item seems so affordable — the furniture, the car, new clothes. The first thing you know, the used car dealer sends for the car to be repossessed. A credit collection agency sends snide and threatening letters. Panic. Bankruptcy. It happened to more than 1,300 American families every single day last year.
Credit Buying is Nothing New
It might surprise you to know it's an old American custom to buy on credit. It goes back to the very foundation of the country. In his book, Buy Now, and Pay Later, Hillel Black shows just how much of a problem this debt menace has been, historically, as well as in the 1980s. On page 6 of this most-revealing book, Mr. Black states: "Being in debt is not new. The Babylonians, the Celts and other civilizations extended credit. Even the pilgrims on the Mayflower booked passage on the installment plan." Most Americans probably are not aware that the founding fathers started the New World on money borrowed to be paid back later. But, an alarming new trend was noted in the middle part of the 20th century. As a result of a consumer credit explosion, not only in the United States but in the whole industrial world, the total private debt proved greater than the combined private debt of mankind throughout history. Never have so many owed so much. Never has so much profit been made out of the debt itself. Here we are, living in a world of spectacular push-button luxury — and much of it STILL BEING PAID FOR month by month, check by check, patiently hoping that all this glittering world we live in will someday be our very own. At the present rate, it probably never will be! The average family will continue to go deeper and deeper in debt in the years just ahead.
What About You?
The chances are you are an average American, or Australian, Briton, Canadian or South African. And the chances are to one extent or another you have been caught in the swirling vortex of credit buying! But where has it brought you? The same average family probably lives in fear of their financial world closing in someday. After months of paying for the car, the television or the stereo, the desire to purchase more soon overwhelms the responsibility to pay off old debts first. You are going to have to see where it is heading and learn it has to end somewhere. And you will have to discipline yourself to make yourself do what is best.
How to Begin to Solve Money Problems
While this flurry of consumer credit buying is going on, let's stop to ask a moment — where has God been all this time? Are there any laws and principles from the Bible telling us how to handle our money? Undoubtedly, the average man does not know. Most people wouldn't know where to turn in the Bible to find out if all this credit buying is good or not! Many would laugh if anyone even suggested searching the Scriptures to find how to run a family budget and handle money matters. There is not one single facet of life the Bible does not touch upon and, in principle, tell you what to do. Your personal finances are included — there is a great deal in the Bible about money matters. So, the place to start straightening out your financial problems is the Word of God. Go to the source. The apostle John was inspired to write in III John 2, "Beloved, I wish above all things that thou mayest prosper and be in health, even as thy soul prospereth." It is God's desire we have brimful, jam-packed lives — lives abounding with good health and the prosperity to enjoy that health. Christ said one of the reasons he came was "that they might have life, and that they might have it more abundantly" (John 10:10). You certainly cannot have a happy, abundant and prosperous life if you are up to your ears in debt. You need to find the way to prosperity and abundant living.
Put God First
The first law of financial happiness and PROSPERITY IS to put God first. Don't turn to him in a last minute, last ditch, effort of desperation to save yourself from disaster. Find out now what you should do! Of course, if you are already halfway down the road to financial collapse and ruin, the only thing you have left to do is try it God's way. If you are a newly married couple — or if your debts have not piled up beyond reason — you need to learn what to do to avert a future disaster in your financial life. Whether you are now under deep financial obligations or have already undergone bankruptcy, or if you are just getting started on a life of earning money and providing for a family, you need to put God's way first and foremost in your planning. Most people never stop to think the very soil they till, the factory where they work, the home where they live, in reality all belong to God! It never enters the mind of the common man on the street that the paycheck he receives initially belongs totally to God. God gives us the land, the water and natural resources that make our jobs possible. He gives us food to eat, air to breathe and water to drink so we can work at our jobs. The universe, the earth and all its natural resources, yes, even the very buildings we build, BELONG TO THE ALMIGHTY CREATOR OF HEAVEN AND EARTH. In that sense of the word, nothing we do or have really belongs to us. It all belongs to God. But God is a generous God. He has not demanded we give it all to him. He has given it all to man to use. Man can work the land, till the soil, use the earth in any way he chooses or sees fit. God has given laws whereby man should do all of this, but he has not forced human beings to do it the right way. He has left that up to us for a period of 6,000 years. In Deuteronomy 30:19, God gives us a choice, "I call heaven and earth to record this day against you, that I have set before you life and death, blessing and cursing: therefore choose life that both thou and thy seed may live." There are two ways to go. One leads to curses, sickness and financial disaster. The other choice is do it God's way. That way will result in life as life is intended to be lived. And it includes monetary blessings. The question remains — do you want to do it God's way? Obviously, if someone is going broke and standing on the brink of collapse, he is spending more money than he has coming in. A $200-a-week American factory worker cannot live in the same fashion as a $1,000-a-week executive. He would go broke the first month he tried to live that way. And the $1,000-a-week executive cannot spend money on the same scale the highly paid $1 million-a-year professional athlete does. No matter what salary you make you have to control how you spend what you have.
God's 10 Percent
Most people in today's society receive a wage or salary as income for labor. Whether a laborer, clerk, blue-collar or white-collar worker, businessman or banker, we receive money for our efforts. The reason so many are failing is that they never have been taught the right way. Here's what people haven't learned from Malachi 3:8-9, "Will a man rob God? Yet ye have robbed me. But ye say, wherein have we robbed thee? In tithes and offerings. Ye are cursed with a curse: for ye have robbed me, even this whole nation." Remember, God owns the land — it's all his! Yet God tells you and me we can have 90 percent of all the increase we can make from the land or in our jobs. Think of it — a God so generous he gives us 90 percent of all the earth will produce. But he is careful to point out that the 10 percent (that is what the word tithe means) that belongs to him must faithfully be paid to him for his use — it cannot be used for our own spending. Because people have not known that — they have been robbing God and face the potential for financial disaster. Just look around you to see whether or not that scripture is literally being fulfilled today. Malachi gives sound and stable financial counseling. His writings have been preserved for us and are not out-of-date but up to the minute. If you are willing to follow this counsel there will be abundance and prosperity. Notice the next verse — verse 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." That's God's promise to you! And he challenges you to prove it. Thousands upon thousands of people are finding out that God's way of tithing and being generous with offerings does work. God will do for you what he promises.
Tithing Teaches Budgeting
There is more to family financing than sitting down and watching God cause paper money to grow on trees in your backyard or garden. I have not yet heard God has done that — and I'm sure he won't. But he will bless you — if you will diligently apply his way. God said, "The laborer is worthy of his hire." He did not say the man who sits around will get rich. When you begin to pay God his tithes, God will begin to add to you as he sees fit. But you must learn to control your income. The chances are God will not give you a salary increase double your present amount the very first month you begin to pay tithe. First, you must learn to handle your present salary. Budgeting principles can be learned from the tithing principle — this teaches dividing your income and expenditures up by percentages. The first thing you should do when you receive your pay is give God the 10 percent that is his in the first place. (In most nations, the government will already have taken its tax revenues out before you even see your check) Remember, though, God's tithes come out of the total increase or adjusted gross income, not on the after-taxes amount. God has given you control over 90 percent of the remaining income. (The government, of course, has taken whatever it has decreed is its fair share) The remainder becomes your responsibility to handle. It may not make sense to you now — and you probably will not be able to put it down on paper — but when you begin to properly tithe, God will see to it that your 90 percent will go further than the entire 100 percent used to — one reason being you begin to make wiser decisions.
Follow These Basic Rules
Once you have decided you will handle your finances God's way, you have a place to start. How you control your after-tithe-and-offering and after-tax income now becomes a matter of budgetary discipline and wisdom. There are rules you must follow if you want to be financially successful. Since living conditions are so different from one part of the country to the next — and different in one nation from what they might be in another nation — it is difficult to properly advise exactly what each of you should do. But there are basic rules which apply to all people everywhere. The first financial need most families face is that of housing. You will either rent or buy a home. There will be furniture for the home. Once settled in a residence, you must provide food and clothing for your family. After those things, there will be smaller day-to-day necessities and you might have room for a few luxury items that must be placed last on your list. The first and foremost rule of family financial planning is never obligate yourself to more than you can afford to pay back.
Principal Budget Areas
Follow that basic rule of thumb and you will never be in debt above what you can afford to pay. There are many books available on the subject of family money management and budgeting. Most family financial planners will advise that an average family in Canada or the U.S. must plan to spend about 25 percent of income for home mortgage or monthly rent payments. Because of the spiraling cost of mortgage rates and housing costs, this percentage might have to be increased to 30 percent. Any family that spends more than 25 percent of income for the monthly house payment needs to realize there will be sacrifices in other areas. This housing payment should generally include the cost of utilities and furnishings where possible. After housing costs, you will have to consider food and items purchased at the grocery store. This will generally average about 20 percent of the monthly income in developed countries. Of course, married couples without children can spend less than larger families. Food is cheaper in some areas of a country than others. Many more families are turning to backyard gardens and forming neighborhood co-ops in order to save money in food purchases. You can adapt a particular percentage to your own local condition — know how much groceries cost and how to properly spend your money for food. This responsibility is often delegated to the wife in the family. A wise and cautious shopper who buys the best quality foods at the best possible prices can be a real asset to family budgeting. Some families can get by on clothing expenditures of approximately 5 percent to 10 percent of their annual income. Other families where certain type clothing might be required for business might have to spend more. This is another area where self-control becomes important. Changing fashions and intensive advertising campaigns draw our attention to clothing items, and we become easy targets for over extension of our budget in this area. This is a good time to once again encourage you to exercise caution in using credit card purchases. It is not at all unusual to purchase clothing items on credit plans and have the item of clothing worn out, or in the case of children, outgrown, by the time it is paid for. After these three basic necessities — food, shelter, clothing — you will probably have to take care of your transportation needs. For most, that will be in the form of a car payment and operational costs for your automobile or for public transportation. Don't forget to budget car repairs. If you live in an area where public transportation is available you may use public transportation more frequently and not buy as late a model car as you might if you simply have to have a car for daily transportation needs. If you must purchase an automobile, purchase one you can afford — it may have to be an older model than you would like and don't forget to calculate the cost of operation. If you've been keeping track of the percentages, you soon will realize that the basic necessities of life often consume the lion's share of your salary. After God's 10 percent plus offerings, the government takes perhaps 20 percent, and 25 percent goes to housing, 20 percent to food and 5 percent for clothing. All of a sudden, 85 percent or more has been consumed and you have not been able to buy insurance, get the dry cleaning done, go to the dentist, and you haven't had any entertainment built into your budget or set aside savings. Recently, I was covering some of these principles in my college class and we all jokingly concluded at the end of the lecture that with all of these costs and percentages, we could not afford to be alive. Of course, that's not true, but it does illustrate the point. No matter how much money we earn in salary, it seems we'll always be able to spend it. Only a few wealthy individuals make more money than they can spend. Since we are in the same boat trying to keep up with spiraling inflation and enjoy the conveniences of modern life, we all face the same problems of budget and control. If you want to control your money and stay out of debt, you will have to know where you're spending it. The most helpful hint I can give you here is to keep records. One of the best things a family can do is sit down together and plan a realistic budget and help each other stick to it. Perhaps it means moving into less expensive housing quarters, or stepping down in the style of transportation. It often means delaying purchases for items you would like to have but really can't afford at this time. Then, make an accurate listing of all expenses for a period of about three months. This will help you analyze your outgo. Whether you keep your records in a notebook or shoe box, keep them where you can have them available. Set up some kind of system so you can write down your needs and payments every single paycheck. And most important, before you buy any major new item, or before you take that trip — sit down and talk it over as a family! Impulse buying is one of the great culprits in creating consumer debts. The salesman knows how to tempt you and lead you into the purchase. Many salesmen are trained experts. They subscribe to a study that generally states most purchases will be made on the first visit. Have you ever wondered why that used car salesman puts so much pressure on you when you're wandering through the lot merely looking out of curiosity or because you had a little extra time? If he can get you interested, see the glint in your eye over a particular car or in the case of housing, if you express an interest in that time-sharing plan, he will put the pressure on. And thousands of people fall for it every day. Make it a personal rule in your family that you will make no purchases, make no financial decisions, until you have gone home and talked it over. Sit on it for a day, or a week — even a month. In most cases, it will still be there when you go back. The salesman would like you to believe it's a once-in-a-lifetime opportunity — pass this deal up today and it will forever be gone. If that's the case, let it be gone. At least you won't go bankrupt. As you budget, base your budgeting expenses on what you need — not what you want. Set up a system of budgeting that best adapts to your own needs — and be sure you stick to it!
What about Credit Cards?
Early in the article, we talked about credit cards and installment buying, which have a great deal to do with our present day financial situation. If it were not for mortgages, most of you probably would not have the home you now live in. You probably could not be driving your car, using your furniture or even wearing the clothes you have on. It is not wrong to have a credit card — or to take out a 30-year mortgage on your home. That is, it is not wrong if you can adequately make the payments. But many over-extend themselves. For these, it is not all right. Perhaps some should not be sitting on a particular item of furniture or they should not have that extra coat they bought at the department store on credit. That put an extra strain on the budget that was already near the breaking point. A wallet full of credit cards for half of the stores in town can become a curse. If you can't control installment buying, don't have credit cards — and don't open charge accounts. If you have been able to control credit buying, be careful it doesn't sneak up on you — thousands get in trouble thinking they have enough money to go ahead and say, "Charge it." A word about installment buying. While hire-purchase or time-payment buying can at times be helpful, it must be used with great care and caution. The cost of credit is out of sight — and most people do not stop to think of what they're doing when they buy on time. In the last few years, credit buying plans have become increasingly more expensive. Interest rates are soaring beyond 24 percent per annum and credit cards can now cost upwards of $50 a year. That's expensive credit! Truth in lending laws in the U.S. have helped consumers understand exactly how much it's going to cost to take out a loan or to make a credit purchase. Be sure you fully understand the terms of the loan or the credit arrangements. You'll have to determine if the item you wish to purchase is worth the interest charges — or whether it would be better to save and buy it for Cash later.
Start Now!
It is never too late to start straightening out your family financial problems. The longer you delay, the deeper in debt you are going to be. The 1980s well could be a time of economic concern greater than any since the Depression of the 1930s. Gold and silver prices have fluctuated wildly up and down in the last few years. Interest rates have soared and fallen. World economy rides the roller coaster ups and downs with balance of trade deficits and costs of importing oil from the Organization of Petroleum Exporting Countries (OPEC). Double-digit inflation has us still rocking and reeling. The financial future is at best uncertain. You want to be on sound footing. You want your finances under control and blessed by God. The laws of financial success start with God and end with your wise money management. Break any aspect of those laws and you will suffer economic crisis. Keep them and you will weather the storms. Try them and see if they won't work for you. Read our free booklets Ending Your Financial Worries and Managing Your Personal Finances. They will go into even greater depth of the whys and hows of getting out of debt.
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