Tag Archives: credit

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.

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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.

It pays to be debt-free

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.

If borrowed money limits financial flexibility, the absence of debt makes for a lifestyle of freedom and opportunity. With no, or even low, financial pre-commitments, you will be at liberty to pursue your goals. For Christians, the freedom from financial obligation of debt can spell all the difference in how effectively personal resources can be used for His kingdom. How many times have we heard of individuals who pass up going to the mission field because of debt? Getting rid of debt – whether it is a large home mortgage or a credit card balance – is a priceless investment.

Unfortunately, indebtedness has become so common that we have convinced ourselves that borrowing is both necessary and right. But whether your debt is due to unwise overspending or wise decision, one thing is certain: getting out of debt is always harder than getting in. It is much easier to borrow money than to repay it.

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.

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.

It pays to keep your credit (cards) clean

A good credit score is your passport to a home, automobile, insurance and yes, a credit card. However, with a devastating sub-prime mortgage crisis and a credit crunch getting tighter by the month followed by a debt crisis and a credit rating downgrade, and now a likely Global Financial Crisis part II, one thing financial institutions are looking out for – your credit card debts.

Banks have been forced to write off record levels of credit card debt, so things are going to get rougher. So make sure you pay your credit card bills in full every month and on time. Late payments will lower your credit score and may even trigger an automated increase in rates. Moreover, it could result in a vicious cycle of credit-card debts.

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.

Positive Cash Flow in a negative economy

First there was a subprime crisis, then a credit crunch, followed by a debt crisis and a credit rating downgrade, and now an ever growing debt ceiling that threatens a future Government shutdown with the possibility to sending the world into a global depression. To overcome more than one kind of depression, a positive cash flow is increasingly getting more important by the day.

It’s common these days to seek the trappings of success – a high-priced watch, a snazzy sports car, an elegant home – without being able to afford it. Our society has bankrupted itself by recklessly pursuing wealth on the dangerous road of credit. We buy certain material possessions to make a statement – which, unfortunately, is usually a lie. A lie that hinders 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 repayment, 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.

You can reduce your lifestyle expenses. For instance, make sure you’ve establish a realistic budget, then follow it. Finally, make yourself accountable to someone spiritually mature to avoid impulse purchases. None of these steps is easy, but you’ll discover how beneficial they are for yourself. As soon as you begin to follow them.

Conclusion

Lastly, if a couple or individual has as a short-term goal to increase the level   of their lifestyle through a new home purchase, a new car purchase, vacations, additional gifting at Christmas, or eating out more often, they must have a positive cash flow to have the additional funds.

The Bible does show many ways to overcome any financial crisis and reach financial freedom. 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

Living expenses and debt go hand in hand. Typically, debt is used to fund living expenses and, conversely, without the ability to borrow, the ability to increase the lifestyle is not there. So be positive about your cash flow.

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.

Credit rating: For mature audience only

A US credit-rating cut would  raise the nation’s borrowing costs by  increasing Treasury yields by 60 to 70 basis points over the “medium term. The average American may not care. 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.

An individual’s credit score, along with his credit report, affects his or her ability to borrow money through financial institutions such   as banks. The factors that may influence a person’s credit score are:

  • ability to pay a loan
  • interest
  • amount of credit used
  • spending patterns
  • debt

Your credit score serves as a key determinant of the costs of some of the most   important and substantial purchases you’ll make–like buying a home or car–as   well as the interest rates that accompany your credit cards. Damaged credit can   affect how much you pay for services such as insurance, and some employers even   look to credit histories before extending job offers.

The best way to improve your credit score is to pay down your revolving (or   credit card) debt, because having a high balance/credit limit ratio doesn’t bode   well for your credit score. If you have a card that is close to being maxed out,   consider transferring part of the balance to other cards. That’s because it’s   generally better to have smaller balances on a few cards than a big balance just   on one. Also keep your charges to 30% or less of a card’s limit; 10% is ideal.   If you’re having trouble sticking to the limits, set up e-mail or text alerts   with credit card companies to let you know when you’re approaching a limit   you’ve set.

Banks have been forced to write off record levels of credit card debt, so things are going to get rougher. So make sure you pay your credit card bills in full every month and on time. Late payments will lower your credit score and may even trigger an automated increase in rates. Moreover, it could result in a vicious cycle of credit-card debts.

Most people tend to look for credit cards that give you tempting rewards like travel incentives, or discounts at expensive restaurants. But most of these perks are not your regular bills and payments. Unless you fly often on business trips, travel rewards are aimed at getting you to spend more. Choose credit cards that comes with discounts to your regular bills, like gas, groceries, regular payments, things that require you to pay regularly.

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.

The Bible does show many ways to overcome any financial crisis and reach financial freedom. 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.

Bottom Line

If you haven’t already done so, check your credit report. And make sure you clean your credit cards.

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.