Archive for May, 2016

How to Manage Money: Conclusion and Powerful Illustration

This is the last post of what was originally going to be seven posts on how to manage money by my guest blogger Richard L. Blake. This eighth post presents a conclusion and a moving illustration. For the other seven posts, begin with 3/11/2016 with “How to Manage Money.”

FINALLY . . . .

We have considered the foundational biblical principles that God owns everything, and that we are his stewards who will one day give an account. The practical counsel offered is consistent with those biblical principles. Now is the time for an examination of your own stewardship. Are you ready to give account? Remember, the landlord in the Parable of the Talents came at an unexpected time and demanded an account. Wouldn’t today be a good time to ask the Lord to show you ways you can be more faithful with the assets he has entrusted to you? God is telling us to prepare for a long tomorrow by using our short todays to exchange earthly treasures for heavenly ones. Resolve now to build those riches for eternity.

 

I want to share with you the story of a man who did just that. In 1904 William Borden graduated from a Chicago high school. For his graduation present, his wealthy parents gave him a trip around the world. As the young man traveled through Asia, the Middle East, and Europe, he felt a growing burden for the need of the world’s hurting people for the Gospel. Finally, Borden wrote home that he desired to spend the rest of his life as a missionary. Upon hearing the news, one of his friends expressed disbelief that Bill was “throwing himself away as a missionary.”

William entered Yale University and soon began a small prayer group that gave birth to a movement that eventually spread across the campus. By the end of his first year, 150 freshmen were meeting weekly for Bible study and prayer. By the time Borden was a senior, one thousand of Yale’s 1,300 students were meeting in such groups. His father passed away during his years there, leaving him the vast family fortune that came from silver mining and real estate. Upon his graduation in 1909, Borden turned down some high-paying job offers, not because he was a wealthy heir but because he was still focused on fulfilling his missionary calling.

Borden went on to do graduate work at Princeton Theological Seminary in New Jersey. When he finished his studies at Princeton, he followed through with his plan to sail overseas in obedience to God’s call on his life, and in 1912 he set sail for China. Because he was hoping to work there with Muslims, he stopped first in Egypt to study Arabic. While there, he contracted cerebral meningitis. Within a month, 25-year-old William Borden was dead.

Was Borden’s untimely death a waste? Not in Heaven’s perspective. When the news of Borden’s death was cabled back to the United States nearly every major American newspaper reported on it. As stated in his biography, “A wave of sorrow went around the world . . ..” Borden had walked away from his earthly fortune to take the precious Gospel of Jesus to the nations of the world. Most regarded it as a tragedy; however, God took the tragedy and did something far greater than Borden could ever do himself. When thousands of young men and women read Borden’s story in the newspapers of America, it inspired them to leave all they had and give their lives to reach the nations with the Gospel of Jesus Christ.

Borden left an extraordinary legacy, one that extended beyond his brief life and example, as he bequeathed $1 million to Christian missions (equivalent to $24 million in 2016), including the China Inland Mission (CIM) that he was joining, Moody Bible Institute and Moody Church, Princeton Theological Seminary, several Presbyterian mission boards and other Christian agencies. CIM established and dedicated the Borden Memorial Hospital to ministry in Lanzhou in northwest China, an area populated with Muslims like those Borden hoped to serve. In her introduction to his biography, Mary Taylor wrote, “Borden not only gave (away) his wealth, but himself, in a way so joyous and natural that it (seemed) a privilege rather than a sacrifice.”

When Borden’s family was given his Bible, they found three statements he had penned inside the cover. Just after he renounced his fortune to go to missions he wrote in his Bible the words, “No Reserves.” Originally, his father told him he would always have a job in the company, but at a later point he told him he would never let him work in the company again. At that time Borden wrote in his Bible, “No Retreats.” And then below those two statements his family read these words written shortly before his death in Egypt, “No Regrets.”

No reserves; No retreats; No regrets.

Borden’s story exemplifies the biblical teaching of stewardship of all of life’s resources. And it humbles me. We must continually evaluate our lives by the teaching of sacred Scripture. We are all challenged to keep eternity’s values in view in the investment of our time, our talents, and our treasures. If we will do this, we too can live without reserve, retreat, or regret. Will you join with me now in humble commitment to this standard?

—Richard L. Blake, President, Xtend Ministries International

 

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How to Manage Money: Practical Counsel: Get Out of Debt, Save, Invest

Guest blogger: Richard L. Blake

For the introduction to this seven part series (this is part seven), see 3/11/2016 post “How to Manage Money”.

Get out of debt

         This is part of the matter of budgeting and spending control but I mention it separately because debt is a particular problem for many. I want to plainly state that you should avoid debt. It is not that debt, per se, is sinful, but that it is burdensome. Proverbs says, “The blessing of the Lord makes one rich, and He adds no sorrow with it” (10:22). Debt and payments are sorrowful; they are a burden, not a blessing.

The primary pathway to indebtedness for most people is using credit cards. In the United States in 2015, for example, the average household credit card debt was $15,355. Here in Poland the average debt per card is $1,675, much better than the U.S. but still a threat to financial peace.

Credit cards facilitate impulse buying, typically for unnecessary and self-indulgent purchases. When using credit, consumers buy more, buy what they don’t need, and pay more for it.

The “buy now, pay later” mentality brings people into debt that often entails exorbitant interest. People decide to buy on credit, thinking they can afford to make the payments. A person who carries a $2,000 balance (at 19.5 percent interest) is told he can pay just $75. But he doesn’t realize that the first $32.50 of that $74 is interest! And if you carry a $7,000 balance on an 18 percent credit card and pay the 2 percent minimum payment each month, you’ll end up paying more than $20,000 for that $7,000. That’s selling yourself into slavery!

Some people use credit cards for the convenience, paying off the full amount each month so they don’t ever pay interest costs. I do this myself. While this has advantages, it also has drawbacks. Citibank, a global financial company, calculates that a consumer using a credit card will buy 26 percent more than he would if he were carrying cash, even if he pays it all off without interest charges.

Here is helpful counsel if you use credit cards:

  • Never use credit cards for anything but your budgeted purchases.
  • Pay your balance in full each month.
  • The first month you have a credit card bill you can’t pay in full, perform plastic surgery—cut your credit card in half and don’t get another one.

If debt has you in its grip, resolve right now to do something about it. Make debt repayment a significant part of your monthly budget, paying off the highest interest balances first and then adding that monthly payment to the payments you are making on other debts. Cut all future expenditures to the minimum until you have paid off all debt. And especially, do not incur any new debt. Operate on this principle: “If I can’t afford it now, it isn’t God’s will now.”

This is a complex subject that is worthy of more time than we have now. Yet you must start now dealing with this danger. Proverbs speaks a relevant word to us about this: “A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences” (22:3).

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Image title: Marines and sailors get paid twice a month to pay their bills, necessary expenses and travel expenses, regardless if they are driving out of town or driving to work. In order to have extra spending money for holiday gifts, personal attire or video games, a Marine or sailor needs to ensure they limit themselves to how much money they can afford to spend.

 

Save

         Any money management plan must also include savings. The Bible speaks plainly at this point: “The wise have wealth and luxury, but fools spend whatever they get” (Proverbs 21:20). A good biblical example of this is Joseph, who led the Egyptians to save the produce of the ground during seven years of abundance so as to be prepared for the future seven years of famine (Genesis 41:25-57). Saving plans for an uncertain future.

Saving is good practice for at least two more reasons. First, it brings needed discipline to our lives. It helps us to say “no” to impulsive and unnecessary spending.

Furthermore, saving helps to build wealth not only from mere accumulation of money but also from the amazing effect of “compounded interest.” Compound interest means that the interest you earn each year is added to your principal, so that the balance doesn’t merely grow, it grows at an increasing rate. This is one of the most useful concepts in finance. It’s the basis of everything from a personal savings plan to the long-term growth of the stock market.

The longer money compounds, the faster it grows. Money growing at 6 percent per year will double in about 12 years, but it will be worth four times as much in 24 years.

You may think the amount you can save is too small to matter, but it adds up faster than you think. If you were to save $5 per month, at 5 percent interest compounded each month and did that continually for 10 years you’d have put $600 into savings. But the account would be worth $776. And, even if you didn’t add a single dollar, it would be worth more than $1,500 in another 15 years.

1-1204463487cJKyCredit cards and other open-ended accounts use compound interest against you. That’s why “minimum payments” are likely to keep you in debt forever. But when you save, this principle is a great help to you. Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

Compound interest requires you to sacrifice today to reap a benefit tomorrow. It may be that you’ll have to adjust your lifestyle a little to save a few dollars today. But, it’s certain that the future reward will be greater than the sacrifice.

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Please note this, however. Saving should come after giving. A good personal rule is to tithe 10 percent, save 10 percent, and live on 80 percent. And that’s just a place to start both in giving and savings. John Wesley, whom I mentioned earlier, offered this wise counsel: “Make all you can; give all you can; save all you can!”

Invest

         The wise woman of Proverbs 31 “considers a field and buys it; out of her earnings she plants a vineyard” (verse 16). This is an illustration of investing. It is using a smaller sum of money wisely in order to get larger gain, or return on investment, at a later time. Sound money management would include investment of some of your savings in some venture after you have gotten your financial house in order, that is, after you’ve adjusted your lifestyle and have done all the things we’ve just mentioned.

Silver-Coins-Public-Domain-300x225Common places where you may invest your money include stocks, bonds, mutual funds, real estate, and business ventures (even your own). Other investment opportunities are also available. Be on guard against supposed “great opportunities” to get rich overnight. Those are nothing more than gambling. But if you will do your research carefully, pray diligently, and be willing to wait for the return, you can help to provide for your family in the future. Your gain can also free you up for other opportunities to give and minister—to lay up treasures in heaven. That’s the ultimate investment opportunity!

Before investing in any area, make sure you get wise counsel from people who are experienced and knowledgeable about that investment product. Never trust your instinct. And the more important the decision, the greater should be the number of counselors. “Plans fail for lack of counsel, but with many advisers they succeed” (Proverbs 15:22).