Monthly Archives: April 2014

5 keys to financial success

5 keys to financial success

One of the many risks of charging to credit cards is that if most people  aren’t attentive to their spending, often you can run up more debt than you can pay for. Recently there has been a lot of talk in the news  about a proposed amendment to the financial reform bill before Congress that would   have imposed states’ usury limits on national banks that issue credit cards, but no matter what the laws are,  if you are one of those with high debt, you may need help dealing with your payments before it leads a unmanageable debt sentence.

Throughout the recession, some consumers have had difficulty paying off their credit card debt. That trend continued through April, according to a recent   report. In another report, credit card defaults were the most common for all age groups. Young married couples   in the same segment had even higher rates of defaults on debts than single   counterparts.

Many people do not realize that money borrowed today has to be repaid tomorrow – with interest, of course. With debt,   you will have reduced freedom in the future. Opportunities may knock, but you   won’t have the freedom to take advantage.

The credit card market is full of card tricks and you need to play your cards right in order not to get trumped. Here   are five basic keys to financial success:

1.   Understand the scriptural principles. Your involvement in this series show you’ve   made a commitment to know His will for your financial life.

2.   Adopt a non-consumptive lifestyle. Live simply, frugally. Make saving a priority   to enable you to reach the financial goals He sets before you.

3.   Avoid the use of debt. As we’ve seen, nothing is more destructive to your   financial health than debt.

4.   Keep your liquidity high. A wise investor follows a step-by-step strategy. The first steps involve making   sure you have adequate emergency funds (liquid assets) you can use quickly.

5.   Set long-term goals. In our next session we’ll learn how to set goals that   are achievable. Because if you aim at nothing, you’ll hit it every time.

Action   Item:

Look again at those five keys listed above. Put a checkmark beside the ones you feel you are currently following. Are you satisfied with the number of checkmarks?

The Bible does show many ways to overcome any financial crisis. Many of these principles are laid out in our successful course, the Scriptural Financial Freedom series. To learn more, you can  download the Small Groups kit from our the Business by the Book Store.

The valley of the shadow of debt

The causes of bankruptcy tell a deep dark tale. Every year, government agencies which administers bankruptcies publish a list of the top reasons people give for going bust.  It usually universal throughout the world.

Here are the usual suspects, but the number one reason given by bankrupts was unemployment or loss of income. Then there are adverse legal action as a result of having guaranteed a debt, relationship breakdown, excessive use of credit facilities and ill health plus a lack of medical insurance.

If there is one attitude that should be changed, it’s this: never underestimate the power of debt. It’s a slippery slope that’s hard to climb. Some even call it a curse. People fail under it, so make sure you know what you’re up against.

Secondly, bad things happen to indebted people. There seems to be an attraction (or opening) for more bad stuff.  Some say it’s a law of attraction. Maybe that’s why it’s called a curse. But if you borrow money you owe it to yourself to ensure you can pay it whatever happens.  This means factoring in the cost of taking out credit insurance into your borrowing. (sound ironic). But be aware it can prove expensive.  This is possibly the most profitable form of insurance ever invented.

It is especially important to take debt seriously if you have kids, although loading up with debt for luxuries can have a big impact on your ability to own a roof that’s over your kids’ head.

Thirdly, don’t be fooled into the blurred lines of good debt versus bad debt. The case for good debt would be appreciating assets like houses and student loans, bad debt would be for cars, boat and LCD TV screens. No doubt there is some true in the case for good debt, but it is a pretty fuzzy line to cross. House prices can fall, student loans can be a self-justified reason to get a car. Ultimately, can you control the debt, or will debt eventually control you. But without doubt, debt is such a serious burden it should not be taken on “miscellaneous” expenses like mag wheels, cosmetic surgery or fashionable clothes.

What is often overlooked is the interest incurred especially when you purchase an item by instalments. Debt is what you use today to buy what you can’t afford tomorrow while you’re still paying for yesterday. Eventually, you’ll get so tied up paying, it will result in an uncontrollable spin downwards.

And the sad truth is that there are two groups of debtors – those who get indebted by choice and those who do so as a result of a family crisis but because they are on low incomes and have no savings it is impossible to cope without borrowing. It’s tough to plan for the future when you are too busy fixing the things you did yesterday.

Money borrowed today must be repaid tomorrow. Borrowing money has its price – and it is a cost far greater than you realise. Anytime you use credit to borrow money, you pre-commit your future income. The effects of such a decision can range from simple inconvenience to financial disaster. Indebtedness is not something that seems to really bother Americans – until a financial crisis strikes.

If the financial situation is dire, and the financial forecast calls for difficult times ahead, you should work to get rid of all your debt. To do otherwise is to presume upon the future. If you want to ride out your own financial crisis and prepare for the next economic crisis, it stands to reason that we will want to operate from a position of financial freedom.

Getting out of debt may be hard, but it is not impossible. And it has a high price to pay. The best way to get out of debt is to cut spending. Cancel that magazine subscription, or high speed broadband access, or cable television service, forego restaurants and movies. Frugality will eventually pay off. In uncertain times, gone are the days where you “shop till you drop”, but instead, be frugal till you pay off your debts.

Establish a realistic repayment plan and discipline yourself to follow it. Establishing and following this plan is critical to the success of your debt-retirement strategy. There is no quick or painless way to get rid of debt. Once your plan is in place, you will need to take the long walk of self-discipline to make it work.

Never use your credit cards to pay for debt. The debt amount will just keep mounting. Many people justify indebtedness with the thought that they are making an investment when they purchase items. That’s an unwise assumption. And don’t apply for new credit cards you don’t need.

Many of these principles are laid out in our successful course, the Scriptural Financial Freedom series. To learn more, you can download the Small Groups kit from our Store.

Today’s Bottom Line

It pays to be debt free and financially free. Be a debtor to no man.