Financial Peace in Troubled Times


Unless you’ve been marooned near Fiji the last little while, you’ve likely caught wind that a blustery financial hurricane made landfall on about 43 continents. And if you’re concerned about rising prices, the housing crisis, or your investments, it’s nice to remember that you’re not alone. Consider Maurice Greenberg. Listed 135th on the most recent Forbes 400 list with his $2.8-billion fortune, the former chairman of AIG can no longer be found there. “In a little over a year,” he told the Financial Post, “I, and other shareholders, have watched the company that I helped build over 35 years into the largest and most successful insurance company in history and one of the strongest and one of the most profitable financial companies in the world lose over 90% of its value. Despite repeated assurances from management and the company that everything was under control, it is now clear that nothing was under control.”

          Ernest Rady, whose net worth was a lowly $2.1-billion last year, is off the list too. Clemmie Dixon Spangler Jr. just posted a $900-million loss and Sanford Weill saw his net worth tumble by $500-million because of his Citigroup stock.

          And I, my friends, have likely lost hundreds! There’s something wonderful about having your fortune elsewhere, isn’t there? (more on this later).

          Of course, none of these mentioned above will be coming soon to a soup line near you, but their losses should remind us that in this life there are few guarantees. Sometimes money talks. And sometimes it says goodbye.

A matter of life and debt

If you wonder how we got into this mess, please consider the following ad a U.S. bank gave us some time ago: "We will lend you enough money to get you completely out of debt." One night my wife and I sat down at the dining room table to figure out how we were doing financially. Our net was looking pretty gross, so I said, “You know, the bank will lend us enough money to get us completely out of debt.” Then I realized what I said. It’s amazing how smart some of us are. Until we start talking about finances. If you are about to back your bank-financed car out of your bank-owned garage to drive with credit card gas to open a charge account in order to fill your mortgaged home with furniture because a sign promises “No payments until February,” please accept the following advice.

First of all, list your assets. “Liquid” assets are measured by how much you have invested in milk, orange juice and root beer. “Solid” assets are the ones that will outlive the expiry date on your milk carton. For us, this includes a small dog that we paid $300 for, or roughly $100 per brain cell. Seriously, here are seven commandments for surviving the current crisis.

1. If thy credit cards outspend thee, cut them off. The credit card was invented by Jacob in Genesis 25 when he allowed his brother Esau to order a meal on credit. Last year U.S. consumers racked up an estimated $51 billion worth of fast food on their personal credit and debit cards, up from $33.2 billion in 2005. Here are some more staggering current statistics (from Freedom Financial Network):

  • At least one in ten consumers has more than 10 credit cards in their wallets. The overall average number of credit cards per consumer is 4.

  • Approximately half of all credit card holders pay only their minimum monthly payments.

  • Median amount of credit card debt carried by Americans: $6,600

  • Mean (average) credit card debt: nearly $9,900

  • 61% carry over debt each month on their credit cards; 31% pay off balances monthly (7% have no credit cards).

  • Two years ago (latest stat I could find) American credit card holders owed $850 billion on all cards, including $745 billion on general-purpose credit cards ($641 billion on VISA and MasterCard, and $104 billion on American Express/Discovercards), and $105 billion on limited-purpose cards or store/gas credit cards.

  • Of households that carry balances forward each month, 61% of those 111 million households, or 68 million households, revolve their credit card debt monthly.

Cartoon: "No one care how much Howard owed. Until he missed a mortgage payment."


To complicate things, the average interest rate for standard bank credit cards now tops 19%, compared to 16.5% in 2003. And it gets worse. Since there are no usury laws for credit card debt, try missing a payment and your interest rate can skyrocket over 30 percent.

More fun stats on debt

  • More than 4 out of 10 young consumers between the ages of 18 and 21 who surf the Web now own a credit card, and 65% of these young consumers used the Web to apply for a credit card.

  • 2003 was the first year in which plastic and other electronic payment methods beat out paper.

  • Debit card payments are increasing at an annual rate of 23.5 percent, more than credit cards and other types of electronic payment.

  • Cash and checks now account for only 45 percent of consumers' monthly payments -- down from 57 percent in 2001.

So...NEVER, NEVER, NEVER buy with credit what you wouldn’t buy with cash. Pay your credit cards off each month. If you can’t, cut them up and clip them to the forks of your child’s bicycle and see how much noise they’ll make.

2. Acquaint thyself with cash. I know it may sound impossible, but try using only checks and cash for the next 30 days. The debit card doesn’t count (many come with fees and the point of this exercise is to watch the cash go through your hands). You’ll be surprised how much you save when you have to fork it over. I'm part Scottish, and I've always hated parting with cash. So do most of us. Credit cards make spending seem painless and lead to DidIbuythatitis, the condition caused by piling purchases onto plastic then squinting at a crowded monthly statement in a tiny font and saying, “What? I bought this?" Experts believe that the widespread use of credit is profoundly altering our financial reasoning. Duh. I hope they didn’t spend much studying this. Relying on credit can create a carelessness about your personal finances, a blind spot the size of the Titanic, and pave the way for a lifestyle anchored by debt.

3. Earn more than you spend. When our children were old enough to appreciate what money could do, we showed them how to put their small allowance in envelopes labeled, “for God,” “for the future,” and “for me.” If there was more month than money, they learned a valuable lesson: ask your dad for more.

4. Buy a lottery ticket every 250,000 years. Years ago, our government initiated a special tax for people who are bad at math. It is called the lottery. Experts claim that if you purchase one lottery ticket a week, you have a decent chance of winning the jackpot once every 250,000 years. Remember Proverbs 28:20: “…the person who wants to get rich quick will only get into trouble.”

5. Remember “new” is not always “improved.” During the average span of your working career, you can save more than $150,000 by buying 3-year old vehicles as opposed to new ones. Some love the peace of mind of driving a new car, I have found even greater peace knowing that no one in town is going to steal my 1976 Dodge Dart.

6. Put not your trust in retirement accounts. While Ramona and I have taken steps to plan and save for the future, we must remember that there are no guaranteed investments here. God gave the Israelites manna, but instructed them not to hoard it, perhaps because He knew their need to trust Him daily. Too often our investments become a safety net in case God was kidding when He promised to supply all our needs. So follow Jesus’ advice and “store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal” (Matt. 6:20). 

7. Give stuff away. The reason we find giving tough is because we fear the future. Will God really provide for us? If we truly believe He is our great provider, we will hold the stuff of earth loosely, helping those in need. I wish I could convince Martha Stewart and Jerry Seinfield of this. Martha owns 16 televisions. Jerry has 60 cars.  

So invest in eternity. Support your local church and the organizations that are impacting people for good.

The current financial crisis may be a wonderful test to help us discover if our trust lies in the temporary or the eternal.


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