BE WISE WITH MONEY
Date: August 7
"The rich rule over the poor, and the borrower is servant to the lender."
This is a very powerful statement of truth. In very simple words, this verse states the difference between the rich and the poor, the borrower and the lender. This verse is written in a parallel format. The rich and the lender are parallel with one another, while the poor and the borrower are parallel. A rich person is one who can lend to others. A poor person is one who has to borrow from others. Nobody desires to be a borrower. We all would like to be rich. There is a way to become rich and it takes hard work, effort, and wisdom to know how to handle your money. A lady I once knew said, "Take care of the cents and the dollars will take care of themselves." In other words, if you don't know how to take care of what little money you do have, how will you be able to take care of the riches that you desire? It's the little spending you do that will destroy your overall finances.
We must all work and earn an income. Once we earn money, the purpose of that money is not to spend it. The first purpose of that money is to give from it. We must first give God our tithes and offering. If you read Proverbs 22:9 it says, "He who has a bountiful eye shall be blessed, for he gives of his bread to the poor." In other words, he who is blessed is one who gives. That 10% of our increase belongs to God anyway. If we keep it, then we are robbing God (Malachi 3:8-10). On top of that, there is an offering we are to give God as well.
Then the second purpose of our money is to save it. You are to save a minimum of 20% if not more. Preferably you should save more than that. That money is to be invested into a good vehicle that will bring more money back to you. For example, real estate is a good tool of investment. Let's say you decide to buy a townhouse to rent out to others. A nice townhouse would probably cost about $250,000 depending on the size of the house and the area. Let's say you decide to put 25% down and take a 15-year amortization mortgage (instead of a 25-year mortgage). If you do that, then you don't have to pay insurance for your mortgage. So that means that you have to have $62,500 saved up. As the rental income comes in, that money helps you pay the mortgage.
Let's say you decide to make weekly payments instead of monthly payments. That will cut 2 years off that mortgage. Then let's say you decide to increase your weekly payments by 15% more than what you have to pay. That means adding some of your own money to every payment. That will cut your mortgage another 3 years. But also, let's say you decide to put another 15% down of the principal on every anniversary of the mortgage. So you have to save your own extra money in order to do that (in order to do this you will probably have to reduce or eliminate other expenses like hollidays, restaurants, movies, clothes etc.). But if you do, then your 15-year mortgage will be paid off in just 4 years. That's a tremendous difference! It may sound difficult and it may require a lot of sacrifice, but it's worth it to have a rental property debt-free. Now all that rental income would be yours to keep.
The third purpose of your money is to pay for the essentials. That includes your food, clothing, shelter, etc. That doesn't include your "wants" – your vacations, your expensive car, your expensive jewelry, your fancy dinners, etc. In order to be debt free (a borrower to nobody) it takes discipline. It takes denying yourself of those "wants" for now so that you can be financially well off later. If you follow this process with each and every pay cheque you receive, then you'll never run out of money. You'll always have money aside and you'll always be a lender and not a borrower.
Many people (especially the baby boomers), who are getting ready to retire, may be in for a big surprise when they stop working. Most of them might have to live with financial stresses because they weren't wise with their money when they were working. The majority of us in our society today will earn about $1-2 million in our lifetime. But when retirement comes, how much of that are we going to have left? The amount of money we have at the end of our work years really depends on us. So let's be wise with our money now. Let's give God our tithes and offerings and let's save and invest at least double that amount for our own future. Make some sacrifices now. If we do that, we will never be poor and we will never have to borrow. But instead, we can be a lender to many!