• Biblical Finance Class Debt - Part 3

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    Counting the cost is more than just the math it is deciding what is best for you. In this decision making process think in terms of 5 to 10 years rather than 5 to 10 days. In F.O.F. Biblical Finance Class Debt - Part 3 we start with a high level exercise that can help your decision making on using financial products. Although  math was not used it's still important to know what the numbers are telling you. In the video below you can see how a credit card may not be as good of a deal as advertised.

    Some other points touched on in the video that are worth expanding on are:

    1. Credit is NOT Money
    This is an important concept to understand especially as it pertains to debt. Most people have an idea of money so let's began with credit. Credit is receiving something of value now and promising to pay for it later, often with a finance charge (interest) added by the lender. Basically, it can be describe as borrowed money that you can use to purchase goods and services but must be paid back. Money on the other hand is a medium of exchange and allows people to obtain what they need to live.

    The main difference I see between the two is money can be used, with no strings attached, to obtain an item. If you make a purchase, you give a store money the store gives you the item you purchased, simple. Credit however, is allowing another entity to pay for your item and you paying the entity back at a later time typically with interest. This means you are paying more money for the item you bought as you pay the entity back the money you owe them. Using credit in this manner makes it very difficult to become wealthy. Also using credit in general will always introduce more risk into your financial situation even if you have the money to pay it off.

    Please do not get the two confused. If a company is offering you a "great deal" with a $10,000 credit limit it is not the same as having $10,000 cash. With credit you have to pay it back, with interest and a risk of not being able to pay it back (for whatever reason). With cash the purchase is done... no strings attached!

    2. Debt Creates Issues in Marriage
    Most people who are married, if they are being honest, will tell you that marriage can be a difficult journey with your partner. Don't get me wrong it is great and a beautiful union, but not an easy union. No matter the stage of marriage there is always something to learn about your spouse because as humans we are constantly learning, growing, and changing. As these shifts in us happen and we are hit with new circumstances we tend to see our self and our spouse in new situations which can often be uncomfortable. But with God and/or a strong will we can overcome obstacles strengthening our relationship with our spouse.

    With these normal fluctuations in marriage adding the pressure of debt onto it can cause arguments, money fights, sleepless nights, or worse... divorce. From personal experiences I see that steering clear of debt has helped my wife and I focus on more important things such as learning each other and growing with each other. I am not saying that getting out of debt will solve all of your marriage problems but I am saying that it will be one less MAJOR thing to argue about thus freeing up time to understand better your significant other.
    3. More Money Isn't Always a Blessing
    One of my favorite scriptures is Proverbs 10:22 which states, "blessings make one rich and with them there is no sorrow." I'm sure you've heard me use it before but I think it puts a blessing more into perspective. On the surface, obtaining a lump sum of 50 million dollars out of the blue would seem like God favors you and it is a sure blessing, but is that actually the case? What if you don't know how to handle that kind of money? Would it be a blessing or curse? If you bought a car and had to obtain an auto loan for it some would say the Lord blessed me with a car or even I was lucky to get this. But 6 months later you are having difficulty making the payment or the payment is stopping you from investing money, would this same car be considered a blessing? Is this car making you better and/or enriching your life? Or is there sorrow involved with it? If there is sorrow with it than it may not be the blessing you thought.

    This is why counting the cost is so important especially when it comes to debt. Is whatever you are about to buy with credit worth the interest you are going to pay on it? Once you pay it off, is it worth much less than what you bought it for? If so that means you spent less upfront to pay more later for an item that dropped in price. It seems like a win for the 5 to 10 day future you but a loss for the 5 to 10 year future you. How is that a good deal? On another note, whatever you wanted to buy can you wait a few months and save for it then make the purchase? If you didn't get anything out of this post I want you to get this: count the cost before getting into debt because most things are not worth it!

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