Financial Discipline

Love of this world has taken hold in many people's lives today. Big screen TVs, a fancy car (or two) in the garage, nice clothes, vacations in fashionable places, and the like all cry out for attention. And those items get attention-- and onto people's credit cards and the like. According to some information I've seen online, the average American family is several thousand dollars in debt on their credit cards. Some people may not mind that right now, because the economy's been booming for a while and the stock market's in the stratosphere. But, if anything should happen-- either on a national level (recession) or a personal level (losing a job, unexpected medical expenses), that debt can be a huge burden you can't deal with. Even in these outwardly prosperous times, personal bankruptcies are also booming-- CNN notes that there were 1.4 million of them in 1997, up 95% from 1990.

Now, as Christians, is this form of behavior the world practices something we should also be doing, or something we are called to a higher standard on? Like many other subjects, the Bible specifically tells us how we are to behave on this subject, and this may be an area of our lives that we need to yield greater control over to God.

Some short verses on this are "Do not love the world or anything in the world. If anyone loves the world, the love of the Father is not in him." [1 John 2:15] and Jesus's words saying "Then he said to them, "Watch out! Be on your guard against all kinds of greed; a man's life does not consist in the abundance of his possessions." [Luke 12:15] Possessions, and money (which is easily traded for possessions), are not in and of themselves wrong and sinful, but the love of them above your love for God is when they cross the line and become a problem.

The basis for all financial matters is simple: it's all God's stuff, anyhow. God created this world, we didn't. God is the one who sets up our employment, not us. God is the creator, and we're just playing around in what he's made. Moses noted "To the LORD your God belong the heavens, even the highest heavens, the earth and everything in it." [Deuteronomy 10:14] God owns it all, and has granted us some gifts temporarily. And so, we are to manage God's stuff well, not poorly.

The Old Testament makes it clear that because of God's granting of things to us, we are to return stuff to him. "When you have entered the land the LORD your God is giving you as an inheritance and have taken possession of it and settled in it, take some of the firstfruits of all that you produce from the soil of the land the LORD your God is giving you and put them in a basket. Then go to the place the LORD your God will choose as a dwelling for his Name" [Deuteronomy 26:1-2]

So, what are the firstfruits? The first produced, grown, earned, etc. The first 10% (tithe) of the year's crop of grain was given to God, not the last 10% (that was reserved for widows and aliens-- see Deuteronomy 24:19-22). God should be important enough in people's lives that they give to God first, and from the best parts of the crop.

The condition of one's gifts shows the importance of the gift's targets in their minds. If you give away a broken microwave, 99.9% of the time the recipient won't be able to do much with it other than toss it in the trash. If you give away a car in need of serious repair, that gift may be faced with huge bills to get things working. So, in what you give God, do you give him what's left over in your wallet each week at Church, or do you have a plan to give at least a regular amount? [I'd say that the 10% off the top (gross income, not net (take-home pay) income) is that you should be aiming for, in following the examples and laws laid down in the Old Testament.]

Again, in the Old Testament, God at one point specifically declared that the lack of giving to God hurt the prosperity of everyone: "Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this," says the LORD Almighty, "and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it. I will prevent pests from devouring your crops, and the vines in your fields will not cast their fruit," says the LORD Almighty. "Then all the nations will call you blessed, for yours will be a delightful land," says the LORD Almighty." [Malachi 3:10-12]

That passage from Malachi is very clear about it: if you give God what you should, he'll bless you abundantly in return. God dares his people to trust him, and give him what he asks. And in return, God promises that he'll more than make up for that given to God-- he'll make the 90% you keep bigger and do more than the 100% you would have had before. This comes down to a position of faith and trust: do you have faith that God's words are faithful and true? Do you trust God's promises? Then do what he says here: "bring the whole tithe" to God.

Consider also what you do with your money: with the 90% that's yours (more like 60% after the Caesar, err, the IRS, gets their hands on it), what do you spend it on? One principle that I like is the idea that you should be able to use possessions for multiple purposes, especially within the church. I bought a car three years ago, and I had a choice: 2-door or 4-door. While 2-door cars may be faster and look nicer, a 4-door car was cheaper, and able to carry more stuff. On many church retreats, I've carpooled up others, or carried extra gear and luggage. So, I saved money upfront, and was able to use my possessions to help others-- a good thing. Similarly, in picking a home, a large living room is useful for hosting small groups, handling visitors, and the like-- while a home with huge bedrooms isn't as useful for such things.

To extend what was noted above, average Americans are way in debt. Why is this bad? Because you start paying lots of interest, so that what gets paid back is much larger than the original debt. This way, if a $20 gas bill is left on a credit card for months, it may end up being $25-30 after you pay off all the interest. Is paying an extra $5-10 when you don't need to a good use of God's money? I don't quite think so, any more than using dollar bills to help start a barbecue. Debt is an obligation to another, and it's not a useful obligation, such as the roles of everyone in a family. While in debt, you are, to some degree or another, in the lender's mercy. And, the lender may not believe in the concepts of grace, mercy, and the like. Some forms of debt, such as a home loan, are useful for tax deductions, but just about all other forms of debt are harmful.

How exactly does debt become so bad? Two words: compound interest. Starting with a loan of say $100 at 10% interest for a year, you'd expect that you'd need to pay back $110. However, that extra $10, if not in the lender's hands, is charged interest on as well, and interest on interest, and the like.

For truly compound interest, the mathematical formula is D=P*e^(r*t), where * is multiplication, ^ is exponentiation, D is the debt, P is the principal (initial loan amount), e is the transcendental constant 2.7182818... (it's a cousin of Pi), r is the rate, and t is the time.

So, plugging in our example above, D=100*e^(.1*1) = 110.51. Ok, so there's an extra fifty cents here. Doesn't seem bad at all. Now, take a car at say $20,000 and 7% interest for 5 years. Crunch the math, and the total cost is really $28381. The compound interest has piled up, adding almost 42% to the cost. Do you get 142% of a car for that? Nope. But the lender gets a whole lot more of your money.

However, the flipside also works to debt: if you pay off more than the minimum payment, the interest doesn't have as much to compound from, and any more money is more effective that you'd think. So, with debt, a good rule in any case is to, as much as possible, pay more than the minimum required, and you'll get more back.

One solution that I've seen for getting out of debt in the LA Times is summarized as 'targeting.' Stop adding to debt, and get recent statements for your debts (do a budget if you need to), and sort them by the interest rate. For every debt but the highest interest rate, pay the minimum. But, take every dollar you can from elsewhere in your budget, and pay down that highest debt. Once it is gone, take whatever was going to the highest, and add it to the minimum payment on the next highest until that's gone-- essentially paying off as fast as possible on whatever the highest interest rate debt is, and not reducing the decision to get out of debt as some debts are retired.

Once all your debts are gone, take that same amount you were paying that last debt, and start putting it into savings, 401(k) plans, and the like-- where compound interest is on your side. One thing that I'd add to this plan of targeting is that tithing must be integrated into this as well. If you don't have the discipline to give God the first 10% of your gross pay (not net), you're probably not going to have the discipline to deal with debt without getting more into debt.

The disadvantage of the above is that bulking up savings waits until the end. In some ways, this is good-- debts almost always have higher interest rates than savings, so money is most effective in dealing with debts. However, you'll need to balance this against some sort of cushion against unexpected monetary needs. In dealing with the possibility of unemployment, etc, it's been suggested that you have approximately 2 months pay handy in savings (or other liquid assets) as a buffer. However, given that most people are thousands of dollars in debt, the concept of savings is as alien to them as the need to read the Bible or believe in God's judgment.

Finances require discipline, to set yourself firmly on a course of action, and stick with it over weeks, months, and years. However, that's a similar course to the walk as a Christian-- we are called to a course of action that takes years to "complete." The roads to financial discipline can be just as hard as the roads to true faith and surrender to God's will in your life, but God can help in all aspects of your life.