What if a mortgage was not a debt? July 24, 2008
Posted by BDO in Budgeting Concepts, Organizational.Tags: beat, beating, bible, bill, Debt, investment, loan, mortgage, real estate, reduce
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“Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.” – Romans 13:8
By definition, mortgage is debt. However, can it be viewed as a bill? Is it similar to a grocery bill, water bill, or day care bill?
Realizing that the median household income (before taxes) in America is $43,000 a year and the average house costs $214,000 (July 2008), how does that balance? How could the average American afford a $214,000 house? The only way is through a mortgage loan. Furthermore, looking at the Federal Reserve’s chart book, we see that even at the highest percentile category, the median income is still only about $145,000 a year, which will not buy the $214,000 house.
What happened to the price of a house? Do we remember a time in the 1800s when everyone had a house? Everyone got together to build the “Little House on the Prairie.” It might take a long time and might not be the trendiest house on the block, but everyone had a house.
According to today’s numbers, no one can have a house…unless they commit to 30 years of payments. Through the ease of loans and small payments, the market inflated the price of a home. There is no one to really blame because in our open market, buyers and sellers agreed to raise the price of the home to its current valuation.
I am a realist, and this simply is what it is. But what does a person fighting to beat debt do with this 30 year loan hanging over their heads? Can we reclassify this loan as a bill, even if it is a bill we will have for the next 30 years? What other choices do we have based on the Federal Reserves numbers? Can we rent so we don’t incur more debt? The answer is yes, we can rent, but isn’t that really a bill for living under someone else’s roof?
The way I see it, we can rent or have a mortgage. Either way, we are paying a bill to live under a roof for the next 30 years. Just like we have bills for electricity, taxes, and water, we have a housing expense.
By classifying our mortgage as bill, we create a couple issues. If we classify a mortgage loan as a bill, what happens to the investment aspect of the real estate? If we classify a mortgage loan as a bill, do we need to try to pay down the “bill” as soon as possible?
The only reason I want us to classify this loan as a bill is so we can earn our freedom. Looking at the numbers the Federal Reserve provided, it will take 30 years to earn the title of “Debt Free.” Who has the patience for that?
By realizing this situation, we re-classify the mortgage as a bill and then we can emphasize getting out of debt with more realistic goals like our credit cards, car loans, and education loans. These loans are not usually as large as a mortgage and can be reduced in a shorter period. In addition, mortgages do have investment and tax incentives that are not inherit in most other loans, so there are more advantages to paying off other loans first. Paying off all other debts first will help us experience the freedom away from debt and to choose our own destiny.
Use this knowledge to challenge yourself to beat debt, to live frugally, and to evaluate your family income in relation to how much house you really need.
Discussion Questions:
- How much is your mortgage loan? How many more years will you be in that loan?
- If you classified your mortgage as a bill, when will you now be “Debt Free”?
- Do you have too much stuff? What can we do to get rid of the stuff we have so we can live in a smaller valued house?
“Lock up your house, go across the railroad tracks, find somebody in need, and help that person. To overcome discouragement, don’t focus on yourself, get involved in the lives of other people.” – Karl Menninger
Photo by: GottShotts & DougWard
“Withhold not good from them to whom it is due, when it is in the power of Thine hand to do it.” Proverbs 3:27 KJV
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Non-Profit Group Begins Educational Ads July 22, 2008
Posted by BDO in Organizational.Tags: ad, ads, advertisements, beating, consumer, Debt, education, educational, finance, internet, loan, monthly, reducing
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Consumers owe $13.8 trillion dollars to loan companies. 54% of workers worry about how much they owe. Consumer debt is growing 6% annually. Facts like these do not get circulated enough. Starting August 1st, BeatingDebt.org will begin a new project of buying internet advertising space to gain more exposure that details the growing negative effects of debt.
Many consumers do not know about the debt epidemic that is growing in our households. Collectively, consumers are contributing more to the nation’s debt than its own government is. Many organizations advertise the government’s irresponsibility with finances by creating their version of a “National Deficit Clock.” However, looking at it more broadly, consumers are borrowing more at a greater percentage than the federal government is, according to the Federal Reserve (http://www.federalreserve.gov/releases/Z1/Current/z1r-2.pdf). From August 1st, BeatingDebt.org will sponsor educational advertisements to alert consumers of this growing problem and the many problems it creates in their personal finances.
Many social problems stem from the mismanagement of personal finances. BeatingDebt.org is dedicated to bringing this knowledge to consumers to help turn the tide of growing debt. Through these educational advertisements, BeatingDebt.org will help raise awareness of the growing negative effects of debt.
If you would like to more information on this project please contact us at: http://www.beatingdebt.org/EducationalAds.htm.
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We Can, But Should We? Finances July 15, 2008
Posted by BDO in Budgeting Concepts, Spiritual.Tags: allowed, beat, can, card, check, choices, Corinthians, credit, Debt, finances, loan, permissable, priceless, rebate, should, we
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“We are allowed to do all things,” but not all things are good for us to do. “We are allowed to do all things,” but not all things help others grow stronger.
We live in a time that debt can be attained through easy means. Debt “enables” us to purchase almost anything imaginable. With a meager salary and a credit card, we can have products and services similar to a person who makes five times the amount we make. The false freedom that comes from purchasing anything our heart desires quickly gets slapped away when the credit company (that now owns your true freedom) wants your paycheck and the time required to gain that paycheck.
Through the ease of credit, American companies make it easier every day for us to buy ourselves into slavery. There are websites dedicated to the promise that if you take credit, your life will be priceless. This is NOT true. Where are the stories that show the person struggling to pay off what their marketing claimed would make their lives wonderful?
These companies know that if they heavily market to us, we eventually cave in and purchase items we don’t need on credit. [1] We must understand the long term effects of those decisions. In the Bible verse above and below, we see it is important to understand that God gave us free will, but that does not mean that everything we can do, should be done.
“Everything is permissible for me”-but not everything is beneficial. “Everything is permissible for me”-but I will not be mastered by anything.
Let us take a second look at this verse, where it says that we are able to do anything, but that does not mean that it is beneficial. Now let’s apply it to our finances. We can go out and spend our rebate checks on a new car, but that does not mean that there are not more beneficial ways to spend that money. We can go out and spend our loan money on new furniture, but that does not mean that we should take out loans. We can even put weekly splurge items on our credit card, but that does not make it right, especially when we are still in debt.
Our money, and the credit that is offered to us, allows us to buy almost anything we want. But that does not mean we should. The “we can” financial management style sounds like a world of possibilities, but it leads to sadness and slavery. Conversely, the “Should we?” financial management style sounds like a world of stagnant boredom. However, this is the financial “straight and narrow road” that leads to intrinsic exhilaration and financial independence.
Discussion Questions:
1. How often are you tempted to purchase something through debt, just because you can?
2. What motivations remind you of what you should afford?
3. What ways can you apply to your life that makes your finances a “Should we?” style of management?
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“Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal, there is no human relation between master and slave.” ~ Leo Tolstoy
“Withhold not good from them to whom it is due, when it is in the power of Thine hand to do it.” Proverbs 3:27 KJV
Photo by: Freefoto.com
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Independence from Debt July 4, 2008
Posted by BDO in Misc, Spiritual.Tags: 4th, beat, children, day, Debt, economic, finances, freedom, independance, individual, july, liberty, marathon, race, run, security, slavery
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July 4th celebrates the United States’ independence from King George, who sought to over burden the fledgling colonies with taxes without representation. This 4th of July let us recognize the similar burdening debt load that is crushing Americans. Let us see the destructive effects of this burden and how it robs our freedom. Let us renew our commitment to beating this debt and run the financial marathon to eliminate this burden. Finally, let us celebrate with others that this 4th of July we decided to stop spending money we do not have so we can use our financial resources to beat debt instead of creating it. Commit today to paying down those debts and let us be encouraged on this 4th of July for a bright, debt free future.
Freedom is not merely the opportunity to do as one pleases; neither is it merely the opportunity to choose between set alternatives. Freedom is, first of all, the chance to formulate the available choices, to argue over them — and then, the opportunity to choose. – C. Wright Mills
Choose today to beat debt.
Freedom is like taking a bath — you have to keep doing it every day! – Florynce Kennedy
Be Encouraged! Shop Responsibly!
True individual freedom cannot exist without economic security and independence. – Franklin Delano Roosevelt
Secure your individual freedom by earning your freedom from debt.
None are so hopelessly enslaved as those who falsely believe they are free. – Goethe
If we have debt, we are not free.
There are only two lasting bequests we can hope to give our children. One is roots; the other, wings. – Hodding Carter
The family gives roots. Debt free status gives your children wings.
Is life so dear or peace so sweet as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take, but as for me, give me liberty, or give me death! – Patrick Henry
Freedom lies in being bold. – Robert Frost
It is no dishonor to be in a minority in the cause of liberty and virtue. – Sam Adams
And finally the ultimate word for this Independence Day:
I will walk about in freedom, for I have sought out your precepts. – Psalms 119:45
The Spirit of the Sovereign LORD is on me, because the LORD has anointed me to preach good news to the poor. He has sent me to bind up the brokenhearted, to proclaim freedom for the captives and release from darkness for the prisoners, – Isaiah 61:1
Celebrate today that you have the means to earn your freedom.
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Relieving Financial Stress July 3, 2008
Posted by BDO in Spiritual.Tags: beating, bible, christian, Debt, feelings, financial, proverbs, rich, slavery, stress, worry
3 comments
Do not wear yourself out to get rich; have the wisdom to show restraint.
We read many stories of people racing after riches and ending up poor. For example, many lottery winners are expecting all dreams to come true. However, in reality, most are worse off than before their 15 minutes of fame.[1] Research also shows that over half of all employees are dissatisfied with their personal financial situation. [2] This dissatisfaction causes stress that can lead to loss of sleep, less money for self-care, and unhealthy emotions.[3]
Why do we do it? Why do we lose sleep over getting wealthy? Two answers: GREED and SELFISHNESS. These two reasons are exactly why the Bible pleads with us to have the wisdom to not wear ourselves out in trying to get rich. The Bible also states,
“But those who want to get rich fall into temptation and a snare and many foolish and harmful desires which plunge men into ruin and destruction.” 1 Timothy 6:9
Now don’t misunderstand the Bible; it is not only addressing those of us who seek riches through the lottery, buying/selling stocks, or working hard at their job to make a buck. Proverbs 23:4 also talks to those who wear themselves out trying to look rich.[4]
“One man pretends to be rich, yet has nothing; another pretends to be poor, yet has great wealth.” Proverbs 13:7
This verse looks at the hypocrisy of man. It shows us how we try to deceive others, and maybe ourselves, to gain honor. Sadly, this honor is only in the sight of man. This drive to reach the title of “rich” in man’s eyes is not the goal of one who is working to beat debt. Remember,
“Rich and poor have this in common: The Lord is the Maker of them all.” Proverbs 22:2
Since God is in control of the rich and the poor, don’t worry about who He chooses to be rich or poor. Stop wearing yourself out trying to be or look “rich.” Commit to beating debt and live life within your means, being satisfied with how the Lord blesses you.
Discussion Questions:
1. Have you tried to purchase something to make you look better or richer than what you really are?
2. How did that purchase make you feel? How do you feel about that purchase now?
3. What things in our lives are making us look rich, when in reality we are deep in debt?
4. What action steps can we take to lessen the financial stress we have in our lives?
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When beggars and shoeshine boys, barbers and beauticians can tell you how to get rich it is time to remind yourself that there is no more dangerous illusion than the belief that one can get something for nothing.
-Bernard Baruch, 1929
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“Withhold not good from them to whom it is due, when it is in the power of Thine hand to do it.” Proverbs 3:27 KJV
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A Kid's Guide to Managing Money (Ready-Set-Grow Series)
