"If an EMP ever hit, this might not make a whole lot of difference, however, many other scenarios that are more likely to happen will be effected by this single area. If we move from a recession to a depression, being debt free might mean the difference of whether or not you keep your homestead. And you can imagine the trickle down effect if you loose that! A job loss or natural disaster will still mean your bills are due, and while they may grant you a period of grace to get back on your feet, having your finances in order will determine how well you're sleeping at night! (Proverbs 6:1-11)"
Your family's comfort or survival may not hinge on being financially sound in every situation, but in most cases it will make a huge difference. And without sounding like an alarmist, I think it will be more so in the future. Let's face it. As Americans, our generation is finally coming to terms with the fact that life can be uncertain, and while being debt free isn't a guarantee that life will go well, it is an area that can really increase your grief if you haven't managed your finances well.
Our family has moved more and more toward being debt free over the course of our marriage and we were able to pay everything off several years ago with the exception of our mortgage. This was something we just assumed was a legitimate debt that didn't violate biblical principles - all because it appreciates in value and renting isn't necessarily cheaper. Honestly, I used it as an excuse not to pay it off quickly despite my husband's desire to do so. And now, things aren't as certain as they were a year ago.
Lesson learned. I get it now. So wherever you are in your financial walk, take some time to evaluate what you need to do to get your house in order. From paying off credit cards, a mortgage, saving for a rainy day, retirement, prepping supplies, evangelism, and so on, we need to take a hard look at where we are and where we feel God wants us to be.
Where do you begin? We will each have a different situation, but most financial counselors will recommend these basic steps in the following order.
1) Tithe. Many people wait until they feel they are financially sound to practice tithing, but you must understand that it is not biblical to do so. Remember the widow who gave all she had? That's not just a sweet Bible Story. It's in there to remind us that we can all give on some level, even when we are poor. God, who owns the cattle on a thousand hills, who knows every bird that falls from the sky, who knows the number of hairs on your head (do you even know this?); He knows your needs and will give to you what you need. (Matthew 6:19-34; )
I don't believe that we must give all our money. Some subscribe to a tenth based on Old Testament Scriptures while others believe in the New Testament idea of giving what you can sacrificially. Either way, the idea is not to give as little as you can, but to give as much as you can! Your children need to eat and be clothed, you need to pay your bills, and you need to pay for a roof over your head. Beyond that, it's all luxuries. We don't think like that in America anymore. I know I don't, but I'm trying.
We've set a personal goal to increase the percentage that we give whenever we get a pay raise and to take on one new para church ministry or mission project annually. This isn't always possible, but if you don't aim for a goal, you certainly won't reach it! Plan to sit down with your spouse and pray about and discuss a long term plan.
2) Emergency Fund. It's a good idea to have some cash on you in case of a disaster. If electricity is down, atm machines and credit cards won't work. You've heard the saying "Cash is King"? We'll you'll know it if the power is down for any length of time.
Be sure to keep an assortment of small bills on hand or you'll be forced to use larger bills and you won't be guaranteed change. We're talking about dealing with "the world" here and if there's a line for bottled water and diapers, ten people behind you will have the cash and willing to take the item if you can't or won't pay.
And since emergencies don't always happen when you're at home, keep some on you at all times. You may need the cash to get home! Keep at least $500 around, but I'd work up to $1000.
3) Pay Off Debts. Credit cards first (because of their high interest rates) and then your loans. There are lots of good resources to help you with this such as Crown Ministries, Dave Ramsey, and Mary Hunt, so I won't go into it other than to say... pay off the cards with the lowest balances first, consolidate to a no fee/no interest card if you can, and eat lots of beans and rice to funnel as much money to this as you can. Then cut up the cards and call to cancel all accounts. IF you are super disciplined, you can use a card if you pay it off monthly, but the first time you don't, cut them up. (If you are super disciplined, you probably won't find yourself in credit card debt to begin with).
4) Start A Freedom Fund. It's kind of like the old envelope system. Mary Hunt calls this a Freedom Account, but it's the best bit of advice for staying out of debt. Basically, you take your major bills that are due annually (such as taxes, insurance, and etc), and you take the total amount due and divide by 12. Then with each monthly paycheck you put aside 1/12 of the money so that at the end of the year, you have what you need to pay the bill. You can do this with your utilities by finding out what you spent last year, average it out for a monthly figure, and put this amount aside each time you are paid. This has been THE number one way that has helped my family stay out of debt. And don't rob Peter to pay Paul. Once you set it aside, it should stay there! (Mary gives tips for those who are self employed and on commissions - if I remember correctly! - in her book Debt Proof Living).
Don't forget to include major purchases such as a "new" used car, an appliance, or other need that may come along at some point. Because you're credit cards and loans are paid off, this is now something that is actually feasible.
And since we're talking about being prepared, this would be the time to set up a budget line item within your freedom fund or freedom account for prepping supplies. If you've read my previous posts, you know I don't recommend going out and buying everything at once. We'll talk about what to buy when at a later time, but for now, just know you need to add it to your budget here and discuss with your spouse how much that will be each month.
5) Pay Off Mortgage. Here is where I've had a major paradigm shift. Most financial counselors will tell you to start investing, and perhaps you can do both, but I would start making a major effort to pay off the house as quickly as possible, even if you have a low interest loan (and we do!). If you are willing to put this ahead of investing, you will more than likely pick a modest home over an expensive one. You can always save more money and "upgrade" later, but there is tremendous freedom in being 100% debt free and knowing you're living within your means.
And while we're talking about the house... I'm probably preaching to the choir here (I'm sure of it!), but women are notorious for buying all sorts of things to put in their home. To the point of clutter. Don't get me wrong. I love a beautiful home. And I'm not saying don't buy or put anything in your house. I'm saying be reasonable. Travel light in this world. God might call you somewhere else, even the mission field, and if you are bogged down with worldly stuff, you'll be like the rich young ruler, grieved because you have invested too much to loose. Mentally let it go now. Clean out. Have a garage sale. Keep only a few well placed items and call it good (and you'll save a lot of cash!).
6) Savings/Retirement. You could opt to start saving earlier and it wouldn't be unbiblical, but if you have reached this step and haven't started, you need to do so. This will allow you to be less dependent on the government, your children, and others. And you will have more resources to give as God directs. God warns those who seek wealth for their own gain to the neglect of others (Luke 6:24-25), but there is also joy in giving!
My husband once asked a friend how he could afford to give so much to others. He said, "I keep shoveling it out and God keeps shoveling it in. And God's got a bigger shovel.". You'll really believe this when you've reached this point because most likely you will not be hampered by a financial burden. And if God does see fit to bring a financial trial your way, you can know that you have been a faithful steward of what He has given you in the past and He will care for you in the future.
Speaking of which... I don't know what's in store for the future. And I can't tell you that we have all 6 of these locked down tight. But, we're a lot further down the list than we were a couple of years ago and we are feeling compelled to push ahead and get it done.
A lot of us know this stuff. You've read it before, but haven't gotten down to business. Ask yourself...
What's holding me up from doing what I know I need to do?
Why am I not putting these things into practice?
Why am I getting hung up at the same point each time?
What will it take to get me over the hump?
Am I growing weary in doing good? If so, where can I get encouragement to stick to it?
Have I prayed about this and sought God's will and direction in this area?
Am I obeying what God has told me to do?
Two things are certain. First... Until Christ returns, events will still happen. And number 2... God owns it all. We just get to use it for our glory or His. Which will you choose?
