commentary: Personal Finance
Given 26-Oct-19; Sermon #1513c; 13 minutes
The financial security we experience at the Feast of Tabernacles is an anomaly when compared to the rest of the year, when we are confined to a stringent budget. Indeed, most of Jacob's offspring are deeply in debt, some to the point of contemplating suicide. In addition to keeping God's tithing laws and applying the principles in the booklet, The Seven Laws of Success, we can also apply the practical financial advice from Dave Ramsey, who counsels that interest on credit cards and automobile loans will quickly deplete our wealth. If we would be content to own an older model car for which we could pay cash, and then begin putting aside a monthly allotment for a newer car, we could eventually step up to a newer model car without incurring horrendous debt service costs. Although some installment buying (such as a mortgage) may be inevitable, most installment buying is counter-productive in that it only puts us further into debt.
Those ten days or so we spend at the Feast are an anomaly for the rest of our year. We have some spending cash in our pockets. We are staying in a nice hotel and eating out, maybe even renting a new car for a week or so. The rest of the year, not so much. We try to live within a budget.
Someone not living on a budget is Eric Tse, the world’s newest billionaire. He’s 24 years old, and he woke up last Wednesday morning a newly minted billionaire. It seems that overnight his parents ‘gifted’ him with stock in their pharmaceutical company worth $3.8 billion. They also put him on the board of directors at a salary of $500,000 a year. He’s not worried about making his car note this month!
The subject of finances has been on my mind recently. This might be a little bit of a different commentary than we are used to, but one of our kids just finished their first third tithe year, and our oldest grandchild is 19 and on his own, trying to stay above water financially. Another grandson bought a book on personal finance at the Feast. He said he thought it was something he needed to learn, which was very good.
But the thing that got me the most was this: On the way home from the Feast on Tuesday, while driving, I got a phone call and learned that a man that worked for me for over 12 years—he left early last summer to start his own business—tried to kill himself a little over a week ago. He took a rope, went into the woods, threw it over a tree branch and hung himself. His wife found him and managed to get him down. He was air-flighted him to Grady Hospital in downtown Atlanta. He was in a coma for a few days and is now home. He says he’s okay. Really? After that? It seems he has been under a lot of financial stress, had a fight with his wife, and, I guess, decided to check out of life. I hear that he bought a new truck for himself and one for his son’s 18th birthday. Along with all of life's other expenses, he now had these car notes and it was too much for him.
Today I am going to speak to my grand kids. There's nine of them here—I see you guys. They are waving at me. There's nine of them here, not all of them; there's several not here, but they can maybe listen to the tape. Of course, Jake and Scarlett are too young to understand this. Maybe later they can have the tape played for them. But I want to speak to my grand kids about finance, and the rest of you can listen in.
Many years ago, Herbert W. Armstrong wrote a booklet called The Seven Laws of Success. The opening paragraphs speaks of how so few are really successful in life today, and so many commit suicide.
As an unenlightened man from a prehistoric era, I fought God all through my 20s. I had good jobs, but never seemed to have any money. God kept pushing and nudging me but I resisted. Finally I got tired of beating my head against a block wall and realized that if I quit fighting Him, came back to church, formed a relationship with God, then maybe the bleeding would stop.
It was a solid 10 years of stupidity on my part but that’s what it took for me. I hope it will be less painful for all of you. The number of mistakes I made, many of them financial, I cannot begin to number. When I began to study and pray and learn, going through the conversion process, I wrote those seven laws of success on a piece of paper and carried them in my pocket in my wallet for years. I don't know what happened to it, but I know I had it for years and I would review it from time to time. Those seven laws are:
- Fix the Right Goal
- Education and Preparation
- Good Health
- Contact with, guidance from, and help from God
You can find this booklet online; it's very easy. It is not very long, and it is worth your time to read it.
Within the framework of these seven laws, you could fit personal finance. And I did. I remember cutting up all our credit cards until we paid off all the balances, and we committed to never carrying a balance on any card again. I can honestly say, since age 30, I don’t think I have. It took too much out of me to pay off all those cards to ever let it happen again. I’m not saying we never had bills, oh buddy, we did; just that, in that one area, we made that change to try to live within our means and only buy what we could afford. At that time, we also went on a strict budget—so strict, the kids remember it well. They remind me often of how deprived they were!
The biggest thing I did—the best thing I did—was to faithfully pay tithes and offerings.
I say all this to lay the groundwork for something specific. I made a financial mistake at age 22 and continued making it until I was in my 30s: financing a car. I owned my first car at 16 or so, a $300 Ford Falcon that I had to share with my mom. Then a '65 Bonneville, a '71 Montego, a '70 Ford Econoline Van that I customized, then a '71 Olds Cutlass. The common denominator was that I had no car payments on any of these.
But in 1977, after college, I got a job that came with a $200 a month car allowance. So, being the brilliant financial man that I am, I put that $200 in the bank and drove the car I already owned. Right? No. I bounced right on down to the car dealer and bought a beautiful '74 black Gran Prix. That $200 car allowance went right to the dealer every month. After a bit, I traded that one in on a '77 silver Gran Prix. Oh, it was nice—it had T Tops, honeycomb mags.... Of course, the payments were a bit more. That trend continued until I was in my early 30s when I realized that car payments are just unnecessary. I was going to have to be smarter about this. Just as we made a commitment to never carrying a credit card balance again, we made a commitment to never have a car note again.
There are several good article on this, but I'd like to read one from Forbes magazine (“The #1 Payment Killing Your Wealth” by Jeff Rose; Oct. 2, 2018)
All across the nation, families are struggling to get ahead. For some, the rising costs of healthcare chip away at their gains. For others, stagnating wages and college bills are a real problem. Then there are those who claim raising kids makes it impossible to grow wealth. But what if I told you some financial pain is this country is self-inflicted? What if I told you one financial decision in particular has been absolutely catastrophic for people at every income? ... According to a recent State of the Automotive Finance Study from Experian, the average new car payment reached $523 per month last quarter. Worse, the average new car loan is 68 months long!
Dave Ramsey, a financial expert with a syndicated radio show, says about the amount and length of car loans, “THAT IS STRAIGHT UP STUPID. That much invested would be over $5 million at retirement.”
If I could do a “Back to the Future” moment, I would tell my 1977 self, “Marty McFly, walk away from that black Gran Prix.” That is what I am telling you now—you kids right here that are thinking about getting a car: Walk away from your own version of a '74 Gran Prix. Save your money, buy something you can afford.
Back to the Forbes article:
We blame our employers for not giving us the raises we deserve, or our parents for not educating us enough. We blame health insurance premiums, the price of groceries, the housing market, and even the price of gas. But, do we throw shade at our car payments? [Of course] not.
Somewhere along the line, we’ve become socially conditioned to believe a huge car payment is a fact of life. We tell ourselves that everyone has a car payment, and that it’s normal and okay. And heck, if we’re going to have a car payment, we might as well get the car we want, right?
This kind of thinking is so widespread it’s practically an epidemic. The thing is, it’s also absolutely wrong….and it's killing our wealth.
There are times in everyone's life, I am sure, when a car note is necessary. Maybe you really need the warranty. Maybe you saved the cash but then found out they are offering 0% APR. There are reasons. I mentioned Dave Ramsey earlier. He has said the single biggest reason Americans have no money is car payments. I would say it’s because we don’t obey God, but I could make car payments the second reason.
There are many articles available on the web, talking about this very problem. These articles show you how much wealth you could accumulate if your car payment went instead into savings or investments. If we could just make ourselves drive our paid-off car longer. If we could learn to live without that “new car smell.” If we could resist the peer pressure, or the sheer weight of the car ads—I mean, they are everywhere!
Financial experts say borrowing money for a depreciating asset is almost always a bad deal. That great new car will lose 60% of its value in just 5 years. What that means is, that $26,000 car will cost you $33,000 (after interest) and will only be worth $10,400. What kind of a deal is that? A bad one!
Dave Ramsey has a great article on his website on how you leverage older cars into new ones in a short time. He suggests that you buy a car for, let's say, $2000 and put into the bank each month the average car payment (let's just use $500). After 10 months, you’ll have around $5300 or so! You sell that car, and with the $5300 and the money from that car, you buy something nicer—let's say a $6000 car. In another year you’ll have another $6,000 in savings, plus the $6,000 car. Sell it, and with your savings, buy a $12,000 car. Within two years, you are driving a very nice car that doesn't have a car note. Or, if you are happy with your used car, invest the car payment money. Save the money. But don’t throw it away on a car loan!
Proverbs 22:7 (Good News Bible) Poor people are slaves of the rich. Borrow money and you are the lender’s slave.
In other words, debt is a form of slavery.
Proverbs 21:20 (Good News Bible) Wise people live in wealth and luxury, but stupid people spend their money as fast as they get it.
That is something to remember well, kids.
On this past day of Trumpets, we started a new year. Why not make this the year we commit to not giving money to the banks and loan companies for cars They’ll be fine, don’t worry.