I recently listened to a message by Andy Stanley. He noted that shortly after he and his wife were married, they took a personal finance class. The leader of the class made the statement that there are only two kinds of people in the world:
- People who make interest.
- People who pay interest.
The trick is you need to decide which kind of person you want to be and reorder your financial life accordingly.
The problems with being a person who makes interest:
- You can’t have everything you want.
- You can’t even have everything you could afford.
- You have to live on a budget.
- When the money runs out you have to quit spending.
In our American society today we have become much smarter than this. We have learned how to reach into the future and spend tomorrow’s dollars today. We can have what we want now. No need to tell ourselves no. There’s no limits.
Or are there…
Problem is eventually the credit runs out. We hit a bump in the road. The minimum payments grow to where we can’t make them. And we find ourselves in a place where we have to:
- Come to terms with the fact we can no longer have everything we want.
- We learn we can’t afford all those payments that we have accumulated.
- Our only choice is to learn to live within our means.
- When the credit runs out you have to quit spending.
There are some differences though.
In the first case you learn to tell yourself no. In the second case the banker tells you no. In the first case financial “pressure” comes from how can I earn more money so I can get the stuff I want. In the other, financial pressure comes from trying to figure out how to earn enough to get out from under the mess I wish I had never made.
In one case if you hit a bump along the way, you simply go into recovery mode for a while. Hit the emergency fund perhaps. Do what is necessary to get back on the path to success. In the second case bumps in the road can end in ugly, painful words like bankruptcy, foreclosure, or divorce.
In one case you are planning for the future. In the other you are cleaning up the past.
See the thing is our great grandparents thought it was very bad to allow yourself to be in debt. It was a sign of failure. Then our grandparents’ generation started to borrow on just a few things. Our parents borrowed on many things. Now today our generation thinks it is nothing to buy a happy meal using credit. In fact, many people I talk to almost see paying cash for things as a foreign concept. We have sold our financial future for convenience and impatient desire to have what we want, when we want it, regardless of the cost or whether we can afford it. If you use cash then you must just not be sophisticated enough to understand how to “beat the system”.
But if you are a Christian and you accept the Bible as being God’s Word then you can not escape the truth of Proverbs 22:7.
The rich rule over the poor, and the borrower is slave to the lender.
When we place ourselves in a position of debt, we give up a piece of our freedom. We are no longer able to do all the things we want because we have placed ourselves in a position of servitude under another.
So we return to the question of the day. What type of person do you want to be? A person that makes interest or one that pays interest.
If you choose to be a person that makes interest understand that means disciplining yourself. You probably can’t have everything you want at the moment you want it. But what does it mean if you are willing to make those choices?
- Sleeping well at night knowing you have a several months of savings in an emergency fund, so when the bumps in the road hit, they will just be temporary detours.
- Having sufficient funds saved so that you know someday you’ll be able to retire with dignity.
- Knowing you’ll be able to help your children get a college education and that they won’t have to graduate several thousand dollars in debt before they ever start as is normal for young people today.
- When your friends and neighbors are in a panic about the latest bad economic news or when your boss tells you some cuts are coming and he’s not sure who will have a job and who won’t, you have the peace of knowing that regardless of what happens, you’ll be ok.
- Being able to help financially those around us that are in need.
- Having a real peace in the area of money.
So which life are you going to lead?
I adapted the ideas for this post from a message by Andy Stanley. I highly encourage you to check out the whole message at The Spending Crisis.