Category Archives: mortgage

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.

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Go forth and…. multiply?

Starting a new family is tough these days – financially. When considering the purchase of a home, we should apply these criteria as for undertaking any debt loan. First of all, does it make economic sense to incur a home loan? To determine this, there   are two rules to follow:

Women's Buying Power

The cost to borrow (after-tax interest) must be less than the economic benefit received (interest, yield, and/or growth in value). Rule two: there should be a guaranteed way of repayment.

Secondly, if you’re married, are both spouses free from any anxiety regarding this home loan? The principle indicates that there must be unity between the spouses. Can the home loan be undertaken with peace of mind? If you experience a lack of peace when you picture yourself taking on this home loan, do not enter into the debt.

Thirdly, ask yourself, what personal goals and values am I meeting with this home loan that can be met in no other way?

These criteria are practical, pragmatic, and biblical and should be applied unemotionally to every debt loan opportunity. The counsel to young couples who   are considering the purchase of a home or those intending to purchase a new home, is never to become so attached to the home   that they could not give it up if the debt could not be paid. Jobs are not nearly   as secure today as they were in the past. Inflation will certainly go up,   and fixed low interest rates may very well be a thing of the past.

The psychological burden of home mortgage debt is more severe than most people think,   especially if a woman whose centre of influence and security is in her home is involved. Studies have shown that having mortgage debt is a stressful factor and   that degree of stress relates to the amount of the mortgage.

The question of whether or not to pay off the mortgage, if that is an option, is really an economic, psychological decision. Economically, it may not make sense to pay off a low interest rate mortgage, even if one has the funds to do so. However,   psychologically, it may be, by far, the best course. Again, I would remind you   that finances are nothing more than a resource to accomplish other goals and objectives – they are never an end in themselves. Therefore, even if it does not make economic sense to pay off a mortgage, there may be higher priority goals and objectives that need to be met. Money then becomes merely the resource to meet those goals. The decision does not have to be always an economic one. That counsel is, of course, good for all decisions.

But we’re not just talking about having children, raising kids. How about multiplying your finances? There is an interesting phenomenon in money management that makes it seem as though money is growing on trees. It’s called  interest compounding.

Compounding is when interest is added to the principal, so that from that moment on, the interest that has been added also itself earns interest. This addition of interest to the   principal is called compounding (i.e. the interest is compounded). The principal amount, for example, may have its interest compounded every month: in this case, $100 initial principal and 1% interest per month would have a balance   of $101 at the end of the first month, $102.01 at the end of the second month, and so on.

It’s interesting to realize that this principle has its source found in His Word. Dishonest money dwindles away, but he who gathers money little by little makes it grow. Did   you catch the basic concept there? Gather money little by little, and thereby make it grow. By the way, did you know that if you invest any amount into a deposit at 6% interest, your principal amount will double in 12 years? In other words, your $20,000 will double to $40,000 in 12 years. Your $100,000 will double to $200,00 in 12 years.

That’s   precisely what compounding does. Whether you start with $100 or $1000 or $10,000 or more, the results over time invested at a reasonable rate can be phenomenal. The factors in compounding are time, amount and interest rate. But the most important key to compounding is being debt free. That’s because compounding will work against you the moment you take a loan.

As managers, we’re charged to manage His resources as efficiently and effectively as possible. The story of the talents which we read earlier, indicates that investing money wisely – and reaping the benefits financially – is a practice He encourages.

And that makes the magic of compounding a concept that’s crucial for us to understand… put to work, and it can help produce a positive cash flow.

A positive cash flow margin is also absolutely essential if you are to accomplish either long-term or short-term financial goals. Without a cash flow margin, you cannot accumulate in order to meet long-term goals. In addition, each of the four other short-term goals – tax reduction, increased giving, debt reduction, and increased living expense – can only be met by having a positive cash flow.

In order to reduce taxes, either additional expenditures must be made for such things   as increased giving, IRA’s, tax sheltered investments, and the like, or income must be reduced. Either increased deductible expenses or reduced income will result in tax reduction. However, both require that there be a positive cash flow to begin the process.

Without a positive cash flow, increased giving is not an option. Once there is a positive   cash flow, however, and it is used to increase giving, that decision results in   decreased taxes because charitable contributions are deductible. There are many people who plan all of their tax reduction through giving. However, they had to have a cash flow margin to begin the process.

Obviously, if you want to reduce your debt principle payments, you must have the excess cash to do so. If you are “going in the hole” by overspending, then there is no way to get out of debt until you generate a positive cash flow. After debt retirement that extra amount can be used to reduce debt further, which in turn increases the cash flow.

The first key to riding any financial crisis is to be debt free. The only absolute way to become debt-free, in the first place, is to have a financial   plan prepared at the beginning of each year that does not allow for the use of debt, and that you will stick to through self-discipline.

The major problem most people face is how to get out of the debt that they are already   in. there are only two ways to get out of debt after making the decision to avoid the use of debt: Examine the assets you have to see which ones could be sold in order to reduce debt; and in the absence of assets to sell to eliminate debt, set up a repayment schedule and strictly adhere to it.

To learn more, you can  download the Financial Freedom Small Groups kit.

Is the future Economic prediction here and now?

David Wilkerson’s book reads like today’s headlines.  There is worldwide economic confusion just ahead. In my vision, this is the clearest thing I have seen. Many praying people now share this very same vision.

Not only is the American dollar headed for deep trouble, but so are all other world currencies. I see total economic confusion striking Europe first and then affecting Japan, the United States, Canada, and all other nations shortly thereafter.

It is not really a depression I see coming—but a recession of such magnitude that it will affect the lifestyle of nearly every wage earner in America and around the world. Countries that now control huge amounts of Western currency are going to be in very deep trouble also. Arab countries will especially be hurt.

Without a doubt, there are lean years ahead full of monetary confusion and despair. How soon is not clear, but it is not far away. The world’s greatest economists will be at a loss to explain the confusion, and an international crisis of fear will develop. A false economic boom will precede the recession—but it will be shortlived.

A Few Good Years to Prepare

In spite of all the danger signs around us of impending economic disaster, the next few years (from 1973) will be among the most prosperous in the history of mankind. They will be fat and flourishing years. In spite of tight money policies, people will continue to spend freely. Sales will continue to break records and people will spend more than ever in modern history. Credit debt will become nearly uncontrollable.

I see, very clearly, just a few years of tremendous affluence and continuing economic prosperity. Church budgets will increase, wages will increase—missionary giving will also increase.

Inflation, costs, and wages will spiral higher and higher. There will be a few minor adjustments in prices, but world economy will become white-hot.

When I received this vision in April of 1973, I also received clear instructions from the Holy Spirit to believe God for sufficient finances to clear all debts of our organization other than necessary mortgages. The message I received from God was very clear and to the point. It was simply this:

There is great economic confusion coming and lean years lay just ahead. There will be a few short, fat, and flourishing years to prepare for the lean years. Work and pray to clear off all debts and get ready for drastic cuts in budget. The money will not be flowing as it was in the past, and if you are free of debt, you’ll be able to maintain your programs even in the difficult years. Don’t panic—and don’t be afraid—just prepare for it and expect it!

Bankruptcies of Major corporations

I believe we are going to witness the bankruptcies of some of this nation’s major and most popular corporations. I see tremendous difficulty arising for credit corporations. There are going to be many people unable to pay off their heavy obligations to major credit card companies, causing near-chaos.

Thousands of small businesses will also be forced into bankruptcies. Three, and possibly four, of the major religious denominations will be forced to operate with a skeleton organization due to a lack of funds. More than a few churches are going to have to pull back. All but a few of the radio and television ministries will have to be abandoned.

Tight money will trigger a wave of uncertainty and fear. Those who have money will hold it in reserve.

The United States government is going to “overreact” to the confused economical developments.

I see a flurry of near-panic decision being made by various government agencies—but these hasty efforts to shore up the economy will backfire.

The President of the United States will make one, and possibly two, national radio and TV appearances to reassure the nation that all is well and that the best of economic times is just ahead. It will not work. People will distrust these statements, and their fears will lead to a revolution at the polls.

The auto industry is going to be hurt badly. Makers of recreational vehicles are going to get hit very hard. Appliance inventories will pile up, and sales will fall off drastically. Almost every economic indicator will be gloomy. It will be spotty at first—but will eventually affect nearly all industry.

Well, if true this does sounds like a lot of pain. But Jabez, Christians can turn their attention to God and cry out against the backdrop of pain. To learn more, we recommend you download the Jabez Personal Study Kit.

Are we living in the last days… of the dollar?

In 1971, President Richard Nixon made financial history by removing the U.S. dollar from the gold standard. Although the US dollar was still the world’s currency, but it was a road to financial ruin. The United States was free to print as much money as it wanted, and like blind leading the blind, the world went along with it.

Roll of Cash

Because of this historical change, foreign exchange became more complex. Today, to understand the world of currency, you need to think a little… differently — essentially because they don’t really don’t make a lot of sense. For example, today, the United States is “perceived” to be the richest country in the world. But like Hollywood, perception is usually wrong. In reality, though, America is now the biggest debtor nation in the world. And who is America indebted to? What many consider to be a Third World country: The People’s Republic of China.  The irony is that many Americans think we’re rich and China is poor. The joke’s on us because exactly the opposite is true. This is because the removal of gold’s backing from paper money has created a virtual explosion in credit and liquidity and a vacuum in accountability. The sheer amount of liquidity around the globe is like the sands of the seashore.

This excess money is constantly creating inflation and causes people to feel rich and almost everything to be more expensive. Today, stocks, real estate, automobiles, and gasoline become more expensive as the dollar depreciates. While some people do become richer in this system, this financial system actually punishes working people who save money. It devalues the value of your work and your savings, even though you may feel wealthier.

In overly simplistic terms, China, Japan and many countries in the world today lend the US trillions of dollars to spend. They send us products like mobile phones, electronics, LCD televisions, cars, clothing, almost every product in your home. Since they can’t spend those dollars at home, they simply lend them back to us so we’ll buy more of their products. That would be like me going to my local grocery store and asking them for a loan so I could buy their potatoes. A logical person would say, “That makes no sense.” Yet it’s exactly what happened after 1971, and to many highly educated people — bankers and politicians, especially — it somehow does make a lot of sense (or cents).

You can find current smaller examples of such financial insanity. For example, many people refinance their homes to pay off their credit cards. This makes no sense; obviously someday that debt will have to be paid.  Yet getting deeper into debt does make sense as long as you can repay your lender with cheaper dollars, and as long as your lender is willing to take those cheaper, less-valuable dollars. As long as the grocer is happy with this arrangement, things are fine.

Over the years, other currencies got stronger and the US dollar got weaker simply because America printed more and more money, all the while consuming more and producing less. Japan would lend America money and we would buy their products. Japan’s economy boomed, and so did America.  The problem today is that China isn’t willing to play the game the way the Japanese did. If America drops the purchasing power of the dollar, China, by pegging their currency to the dollar, also drop the value of their currency. The United States then pays back its debt with a cheaper dollar.

The irony is that America accuse China of playing games with their money. It’s more honest to say that China just isn’t willing to play the game America want to play.  But an even bigger problem is looming: It seems like the rest of the world is less willing to play that money game too. That’s why the European Union introduced the Euro.  If the oil-producing nations stop accepting the dollar and switch to gold or the Euro, things will definitely go “pop”. The world might be tipped into a global recession and possibly even a depression (which is actually a prolonged recession).

For now, though, this money game continues. When will it pop? Nobody really knows, but throughout history all paper money has eventually come back to its true value – zero. That’s when the game truly ends, and a whole new cycle of pass the buck begins. We’re living in the dollar’s last days.

Whatever debt you have, its time to start taking action. Many of you are perhaps deeply in debt and have no assets at all. In fact, statistically, 80% of Americans owe more than what they own. You must decide, first of all, not to take on any more debt, and second, to set up a schedule of debt repayment.  To learn more, you can  download the Financial Freedom Small Groups kit from our Store.

Long term investment: Gold vs. property

Appearing on CNBC, former Congressman Ron Paul warned that if the US continues on its current course, the dollar will collapse, and gold will literally be priceless.

“Eventually, if we’re not careful, it will go to infinity, because the dollar will collapse totally,” Paul said on CNBC.com’s Futures Now.

“As long as we have excessive spending, and excessive computerized money, we are going to see gold go up,” Paul urged, noting that as the value of the dollar is destroyed, everything measured against dollars will increase in value.

Paul added that recent drops in gold prices do not factor into the long term outlook. Apparently, he is not alone. Peter Schiff is the icon of a gold bug.

Schiff, 50, isn’t fazed that gold is heading for its first annual price drop in 13 years, or that Goldman Sachs Group Inc. has called it a “slam-dunk sell.” He predicts bullion will reverse its 21 percent year-to-date decline and probably surge 52 percent to reach a record $2,000 an ounce within a year.

That’s just the beginning: Before President Barack Obama leaves office in 2017 the U.S. will default, the dollar will collapse, hyperinflation will strike and gold will skyrocket, he says.

“I’m waiting for the dollar crash, I’m waiting for the real crisis to hit that I know will benefit gold,” Schiff said Oct. 18 over lunch of spinach-and-beet salad and stewed rabbit in the sun room after the radio show. “The longer it takes, the longer I have to wait for that payday. But the longer it takes, the bigger that payday is going to be.”

To hold interest rates low, the Fed will have to keep buying bonds, which means printing more dollars, Schiff said. Foreign countries use them to buy U.S. bonds — in effect lending the U.S. more money to pay back what’s already owed. Governments such as China eventually will balk, Schiff said.

“The minute China tells America, ‘I want my money back, I don’t want to loan it you again, just give me the money,’ then we default,” Schiff said on the radio. “The sooner the Chinese do this the sooner we can start fixing our economy, because the longer they wait, the bigger our problems get.”

Renowned gold expert Jim Sinclair says financial calamity is just around the corner for America.  Sinclair contends, “We are facing the annihilation of currency.  We are facing the shift of America as the leading and most influential nation of the world to some form of banana republic. . . . If it wasn’t for food stamps, we would be facing long lines of people waiting for free food.”  For gold, everything hinges on the U.S. dollar, and Sinclair says, “I think the dollar gets hammered.  I believe we are headed for hyperinflation.”  One of the many black swans, according to Sinclair, is the possible abandonment of the U.S. dollar by Saudi Arabia.  If Saudi Arabia stopped selling oil only in U.S. dollars, what would that do to the buying power of the buck?  Sinclair says gasoline would be “$10 a gallon very soon, without a doubt.”

Sinclair predicts retirement funds and bank deposits are going to be taken by the government.  How much of your money could you lose?  Sinclair says, “In Cyprus, it was a total of 83%. . . . Cypress is the blueprint, and it’s what we are going to experience here in the United States.”  Jim Sinclair, who has just accepted the position as Chairman of the Advisory Board for the establishment of the Singapore Gold Exchange, says, “The exchange will trade physical gold only and not future gold. . . . You have to make delivery.”  Meaning, there will be no naked short selling or manipulation of this new market.  Sinclair says, “This will emancipate gold from the paper price.”  How high will gold go?  Sinclair predicts, by 2016, “Gold will be $3,200 to $3,500 an ounce.”  By 2020, Sinclair predicts, “Emancipated gold will be $50,000 per ounce.” 

Are these people right? Are they giving good advice? Maybe, but there’s just one problem. You can’t eat gold. In fact, gold is only used to hold the value that will be lost by the dollar.

What about property? Well, what about it? Perhaps, owning rural or agricultural producing property may be one of the best ways to survive and prosper during this period. Don’t forget, a total collapse will not just bring misery, it will bring anarchy, riots, and looting.

While such an event is bound to wreak havoc throughout the world and cause an economic depression that will be written about in future history books, there are a few things that people will still need to survive at the most basic level: water, energy and food.

In that sense, agriculture is depression proof… even for the type of super-depression the world is expecting.

To add to the bullish case for agriculture is pure demographics. The world population has gone up nearly 700% in the last century.  That is a lot of new mouths to feed, literally. That is really the only chart you need to see to make the case for rural or agriculture as a solid investment.

Farmland the world over is outpacing other real estate properties. For instance, in the United Kingdom, farmland is outpacing the price of prime central London property for the first time in 16 years.  Predictions submit that the average price of an acre could soon hit a new record soon there. And that is in the decaying United Kingdom.

But, all over the world, there is not much arable land on the market. People simply aren’t selling.  Owners hold onto arable land as a long-term investment, like precious metals.

After all, God did not promise Abraham gold. But He promised him land. For him and his descendants. The gold simply followed.

Wealthiest by Definition, Poorest by Default

How did the United States, the world’s richest and wealthiest nation, closed down its government and come to the brink of a catastrophic default on its debt that could send shockwaves through the fragile world economy? Relax. The worst is yet to come.

US DEBT shot up to reach more than 100 per cent of gross domestic, Treasury figures showed. The new borrowing took total public debt to US$17 trillion, and putting it in a league with highly indebted countries like Greece and Spain.

Public debt subject to the official debt limit – a slightly tighter definition – was US$17 trillion, rising from the previous official cap of US$14.29 trillion a year earlier. Treasury had used extraordinary measures to hold under the cap, while politicians battled over it and over   addressing the country’s bloating deficit. The official limit was hiked US$400 billion and will be increased in stages over the next 18 months.

Looking at these statistics, it is not hard to see why debt generates so much news and discussions. The average American family devotes at least 25 percent, some as much as 50 percent, of its spendable income to paying outstanding debts. And that’s during sound economic growth. In financially difficult times, indebtedness can imperil our survival. Unfortunately, indebtedness has become a pillar of America’s financial framework. Both nationally and domestically. Greed will bring about global financial disaster – on a Biblical scale.

Dire economic downturns — including the worst since the Great Depression of   the 1930s — giant tax cuts, costly wars in Iraq and Afghanistan, and a pricey new health program all helped sour Washington’s fiscal picture. Or, as President Barack Obama put it literally in a speech  “For the last decade, we’ve spent more money than we took in.” Nervous Americans are bombarding their financial advisers with questions about what to   do if the U.S. government defaults on its debt. Although we do not expect the stalemate to result in a temporary default, we now see a more than 50% chance that US sovereign debt will be downgraded by the rating agencies in the coming months. How will America pay its debt? Eventually, the US government will shut down. It’s a matter of when, not if.

When this happens, it will send shock waves across the U.S. economy and the world that will hit consumers and businesses, both struggling through a weak global economic recovery. The debt ceiling debate already is weighing on the economy. The bankers says credit is an important part of your financial identity. the more credit you have, the better your lifestyle can be. “Anything is within your grasp if you can simply get the payments low enough.” Nothing can be further than the truth.

The Bible discourages debt, individually and nationally, because debt presumes upon the future – and on God. If you are concerned about economic uncertainty, the last thing you want to do is to take anything about the future for granted. In fact, debt is a curse. If you go into debt, you are obligated to repay – yet you take on that obligation without knowing for certain whether you will be able to repay or not. Second, debt may deny Him an opportunity to work.

If the financial forecast calls for difficult times ahead, you should work to get rid of all debt. To do otherwise is to presume on the future.

Can USA continue to meet its financial obligations. No way. Ratings agencies have warned the country to reduce its debt-to-GDP ratio quickly   or facing losing its coveted AAA debt rating. That is just the tip of the iceberg. The runaway debt is beyond hope. The entire nation will eventually go over the fiscal cliff. What matters now is: Can  you continue to meet your financial obligations – car payments, credit card bills, housing instalment loans, and the like – if you lost your job? If there is hyperinflation? If the dollar collapses? We now have to view debt through the window of possibly one of the greatest financial crisis since the Great Depression. We have to find answers that will enable you to approach debt with a proper perspective.

Debt is not something that seems to really bother buyers in good times. Yet borrowing money has its price – and it is a cost far greater than you realize. Anytime you use credit to borrow money, you pre-commit your future income. The effects of such obligations can range from simple inconvenience to financial devastation. Many are now paying that price today.

There are two simple principles to keep in mind if you want to work to strengthen your financial position. First, you must increase your financial flexibility, and second, you must reduce your financial constraints. If borrowing money limits financial flexibility, the absence of debt makes for a lifestyle of financial freedom and opportunity. With no, or even low, financial pre-commitments, you will be at liberty to pursue your goals and desires.

The freedom from the financial obligations of debt can spell all the difference in how effectively personal resources can be used by God. Getting rid of any debt, whether it is large home mortgage or a relatively small credit card balance, is a guaranteed profitable investment.

How to get out of debt? Whether your  debt is due to unwise overspending or an unexpected calamity, one thing is certain: Getting out of debt is always harder than getting in. The most effective way to get out of debt is to cut your spending. Establish a realistic repayment plan and discipline yourself to follow it. Beware of over-ambition. Once your strategy is in place, all you need is the  self-discipline to make it work.

Ultimately, it all boils down to 3 simple rules in financial planning: First, spend less than you earn. Second, avoid the use of debt. And lastly, save up for financial uncertainties.

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 Store.

Are you ready for the Big One? Get out of debt now

There is increasing talk among traders and financial analysts that the latest slump in   global share markets, the euro zone crisis, the US debt crisis and credit rating downgrade and the  weakening dollar reflects a second instalment of the   financial crisis drama. Morgan Stanley’s global developed markets strategist and renowned forecaster   of the last global crash, Gerard Minack, said what started as a market correction may be   morphing into something more severe.

“I think it’s starting to change. I think we’re starting to see broader growth concerns, we’re starting to see some leading indicators   of growth wobble a little bit and, as a result, we’re now seeing the more severe   losses spread to other markets, so I do think this is starting to change from a Europe problem to a global problem.”

In the previous crash, stock markets  crashed around the globe, large financial giants  collapsed. The lucky few have been nationalised. Even some economies hang on the brink of collapse. Now we’re facing a possible second global financial crisis in less than 5 years. How does a global financial meltdown affect us? Are things going to get worst? Or are they going to get better? Some have even asked: “Is this the end?”

Well, not exactly. To understand what’s happening around the world, we need to grasp the concept of birth pangs. The financial crisis may ease, growth will take place once again, but the following financial crisis will be longer, more intense, more painful – just like birth pangs. About ten years ago in 1997, there was the Asian Financial Crisis. In the 1980s, there was double digit inflation. In fact, you can trace the ups and downs of the global economy throughout the ages. The collapse of the German Deutsche Mark. The Black Monday. The Great Depression.

In any case, financial planning must take place under God’s sovereignty. The Bible teaches us to plan for any economic situation. The Scriptural principles that are found in Scriptural Financial Freedom are financially and Biblically sound, no matter what takes place in the economy. God has called every Christian to a unique role in our uncertain economy – to be financially free. For that, we must apply those Biblical principles.

The first key to riding any financial crisis is to be debt free. The   only absolute way to become debt-free, in the first place, is to have a financial   plan prepared at the beginning of each year that does not allow for the use of   debt, and that you will stick to through self-discipline.

The   major problem most people face is how to get out of the debt that they are already   in. there are only two ways to get out of debt after making the decision to avoid   the use of debt: Examine the assets you have to see which ones could be sold in   order to reduce debt; and in the absence of assets to sell to eliminate debt,   set up a repayment schedule and strictly adhere to it.

Action   Item:

Whatever debt you have, its time to start taking action. Of course, Not everyone has the luxury, however, of selling assets to repay debt. Many of   you are perhaps deeply in debt and have no assets at all. In fact, statistically,   80% of Americans owe more than what they own; therefore, selling assets is not   an option. The only option, then – other than receiving an inheritance or striking   oil – is the slow, painful, and difficult process of making monthly payments.   You must decide, first of all, not to take on any more debt, and second, to set   up a schedule of debt repayment.

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 Financial Freedom Small Groups kit from our Store.

Debt for breakfast

Yet another close call. Nervous Americans are bombarding their financial advisers with questions about what to do if the U.S. government eventually defaults on its debt some time in the future. The US has already lost its prestigious triple A credit rating for the first time in its history, a situation that could trigger chaos in the global markets and have a catastrophic impact on global economic growth in the working. The threat of another downgrade looms. Will it eventually default one day?

When this happens, it will send shock waves across the U.S. economy that will hit consumers and businesses, both struggling through a weak global economic recovery. The debt ceiling issue already is weighing on the economy, and will continue to have an impact for future financial decisions. Businesses around the globe will fold as the number one consumer in the world no longer has buying power.

The world says credit is an important part of your financial identity the more credit cards you have, the better your lifestyle can be. Anything is within your grasp if you can simply get the payments low enough.

The Bible discourages debt because it presumes upon the future – and on God. If you are concerned about economic uncertainty, the last thing you want to do is to take anything about the future for granted.

Debt has two primary dangers.

First, debt always presumes upon the future. If you go into debt, you are obligated to repay – yet you take on that obligation without knowing for certain whether you will be able to repay or not.

Second, debt may deny Him an opportunity to work. For instance, if Ron Blue had funded the start-up of his financial planning practice the “normal” way through a line of credit, he’s convinced he would have prevented Him from providing the necessary funds – as He miraculously did!

If the financial forecast calls for difficult times ahead, you should work to get rid of all debt. To do otherwise is to presume on the future.

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 Store.

Consumers consumed by debt

The average consumer may feel far removed from the heated debates concerning the $17 trillion debt ceiling. But the truth is, American households are dealing with plenty of their own problems, and the debt issues weighing down the nation are similar to those facing consumers.

According to US Debt Clock, total household debt in the nation at the moment amounted to about $16 trillion, which means consumers owe almost as much as the federal government. Mortgage debt stands at almost $13 trillion. The conclusion to be drawn is the U.S. population (as well as the government), is addicted to debt. Total debt per family is a staggering $752,000!

Moreover, rising healthcare costs and inadequate retirement savings will likely create challenges for consumers and the retailers that depend on discretionary spending, according to a report from Standard & Poor’s. Most consumer sectors have gained momentum and ratings stability this year, despite softness in the economy and the slow pace of employment growth. S&P expects that trend to continue through 2014, as long as fiscal negotiations in Washington don’t undermine consumer spending.

But by 2015, consumer-related industries may run out of luck. Healthcare costs for individuals, as well as Americans’ need to increase savings for retirement, are projected to create headwinds for the sector.

S&P said sectors related to housing and autos will see the strongest short-term revenue growth compared to other consumer industries. Homebuilders, home-improvement retailers and automakers are projected to enjoy continued momentum through 2014.

Electronics and department stores, restaurants and discount stores were identified as more susceptible to anaemic growth trends after next year.

One of the biggest culprit identified: credit cards. Unlike the US Government, credit card companies and other lenders are not inclined to solve consumer overspending by raising the credit limit. While some card issuers may raise limits in some cases for their best customers, most will simply cancel the card or close the account and demand full payment.

According to the consumer website Creditcards.com, average credit card debt per household with credit card debt in the United States is $14,687. The Federal Reserve earlier this year conducted a survey of U.S. households that showed the median net worth of households fell from $125,000 in 2007 to $96,000 in 2009.

Credit card debt is responsible for causing economic uncertainty in America. Many families owe $50,000 or more on credit cards.   They are constantly haunted by calls from credit card companies. Many families struggling to pay their mortgages or put kids through college   say their real problem started with credit cards. The temptation to borrow a few thousand got them rolling into a debt avalanche.

According to one report, almost half of all bankruptcy cases  stemmed from credit card debts. About 80 per cent of them were males. Slightly more than 70 per cent of   bankrupts who cited excessive credit card debts were between 31 and 50 years old. America is a nation drowning in debt.

The common mistakes in financial planning are all, in one way or another, related to debt. Debt and lifestyle go hand in hand in American society. When you use   debt to fund a consumptive lifestyle, not only do you have the consumptive lifestyle   working against you financially, but you also have the additional burden of debt working against you financially. Both should be avoided like the plague!

Avoiding the use of debt is incredibly difficult because the promotion of credit card use has made credit so easy to obtain and the temptation to use credit or debt so overwhelmingly difficult to resist. Credit card companies are spending hundreds of billions of dollars to entice each of us to spend and to use credit with cards that make spending “easier”, and those amounts are a pittance when compared to additional advertising dollars of retailers.

Lending institutions do not want people to pay their credit card debts each month because of the 18% to 24% interest that is earned on that credit card debt.

Today’s Bottom Line

Get out of debt. According to a banker in the banking industry, a person who uses his or her credit card for convenience sake and pays the debt off each month is known as a “deadbeat”.

If you like to know more and would like to learn and share Biblical perspectives on money, we have the perfect tool. 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.