In this lesson, Khaleef Crumbley continues his discussion about budgeting by walking through a sample budget and how a fictional family could work to improve it. Khaleef Crumbley then discusses the concepts of credit and debt. Specifically, Khaleef Crumbley explains:
- The Purpose of Debt
- The Requirement of Debt
- The Bondage of Debt
Khaleef Crumbley also discusses credit scores and credit reporting.
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a budget very basic budget probably doesn’t have everything in it that you would include in yours but we’re going to look through through it and try to see what are some things we can change if there needs to be changes at all so actually that’s going to take us probably minutes or so to do but it would be very helpful in talking about credit and debt because some of the same things we have to do this exercise we’re going to do when we talk about credit that we’re going to go through kind of the same thought process so before we begin let’s go to the Lord in prayer father God we just thank you for your word we thank you God for the truth that you’ve given us we thank you God that you’ve called us all to be stewards that you’ve entrusted us with your resources in order to do your work so I pray God you would help us to be faithful in doing that help us to be faithful in how we spend your money how we allocate your resources and help us God to always be looking for ways that we can improve obviously looking for ways that we can give more and I pray that you would give us a generous heart God so the things that you give us we will be willing to give very easily and do it with joy so we just pray God you be with us during this time this lesson and um and you would be with me as well right now and just ask all this will be done for your glory and we pray this in Christ’s name amen okay so the first thing that we talked about last week we looked at uh why we need a budget and we looked at Proverbs 27 24 23 and 24 a it says no well the condition of your flocks and pay attention to your herds for riches or not forever so we looked at this and we talked about the importance of knowing where your resources are knowing where your wealth is knowing the condition of them are the things that you need to look out for things that you need to be wary of are the things that you need to correct if something changes would you be able to identify it if a problem comes up within your finances how long would it take before you actually knew about it and would you have the resources or at least a system in place to do something about it so another um slide talking about why we budget these were the five reasons that we looked at to accomplish a financial goal help us to handle shocks to our finances to identify areas of waste to ensure that any surplus not spent on frivolous items and it will help us to develop discipline then we looked at how to create a budget and these were the first steps that we took project your income we looked at the various ways of um allocating income throughout the month and figuring out based on the way you get paid the sources of income what’s the best way to represent it in a monthly budget then we talked about tracking expenses if you don’t have a budget set up how can you begin to set up one first thing is to track expenses know where your money is going I would suggest at least one uh possibly two months as possible as long as if as those months are representative of a typical for you with your finances um that you would use those track your expenses over that time and then while you’re tracking your expenses sorry didn’t need to go ahead um you will set goals and we talked about that is why why you would set goals at this stage when you’re tracking your expenses is unless you’re going to use Financial software that can give you a summary in five minutes tracking expenses is going to take time if you’re actually tracking as you go and going a month or two then you’re going to be thinking about praying about talking to people about your financial goals hopefully you’ll be looking back to when we talked about setting goals um last week and look at some of the things we talked about biblical goals that we set goals based on your particular situation um and goals based on the makeup of your finances then you’ll evaluate your expenses against those goals if you don’t have goals there’s what is what’s the point of looking at your expenses every decision you make with the arbitrary or it would be based on someone else’s recommendation who may not understand your financial situation so that’s why you set goals and then you evaluate your goals about your expenses based on those goals so this is the sample budget that we’re going to look at and I’ll just give you a second to look at it point out a couple of things income is at the top um these are the generic categories if you remember last week I had just a food budget which covered groceries and eating out and everything decided to separate it out now one thing I will say is that when you do your budget if you’ve never done one I would suggest creating categories that as simplistic as this once you have experience doing it you’re comfortable doing it then I would say break these things out to even greater detail so you know what makes up these Transportation could be a lot of things and so we need to know what are the components of it because it may not just be a change to the overall category but it may be you need to make a change to a sub category and so that’s how you’ll break this out even further but as we said last week the key to budgeting is to actually do it and it’s trying to create 40 categories and track them means that you’re probably not going to do it because it just seems too daunting it’s too overwhelming that I would rather you create something simplistic use that and then once you’re very comfortable with it or even if you have to ask for for help then you go and do something that’s much more nuanced so you can fine tune your finances so um some information about this couple they’re married they’re a family of four and they live in Somerset I’ve just figured it was easy to just put them here right maybe they live next door or something like that you know to get those people saved so we see one thing I mean there’s a lot of things that stand out to me um I don’t think we’re going to have time to actually go through and have everybody kind of that’s what I would love for everybody to say one thing they see about this budget that stands out but this what what are some of the things that stand out to you in this budget good or bad I hear Whispering they man all right they’re in the right so if you can see here a little toy here um the balance is a negative fourteen hundred dollars so what does that mean that they’re borrowing fourteen hundred dollars every month just to survive anything else that stands out if this was your budget would you like is this fine is there anything you would say oh we could do better in this area okay dining got a few people said Donnie out dining out here is 250 a month and remember they’re borrowing fourteen hundred dollars every month just about Steve I’m very simple like to me there’s basic necessities and there’s one the United States has basic necessities right right so that’s so that’s something either cable um something that stands out phone especially since they’re borrowing money every month just to cover those expenses is there any anything that anybody else would do oh way above what should forget what housing half of their income I mean that’s that’s a huge problem and anywhere you go if you tried to borrow money and they looked at most of them asked how much is your rent or mortgage how much your housing costs per month and this is why because they want to see if your housing costs are creating this type of situation where you only have half and this is all this income whenever income here is going to be after tax um just we’re going to be simplistic with that um so half of your after tax income is left to fund everything else that you have to do in life let’s add some hoping to hear okay credit card Vern said credit card Mike there’s no tithing there’s no giving there’s actually no savings either so there are things that are missing in the budget as well Transportation costs they’re bringing home 3 600 a month and they’re spending 750. just to travel to bring home that 3 600 that’s seems like a lot of money see even character so if anybody needs to drop Transportation calls you can see Carol um and Steve um part of supporting groceries right so so Steve was just saying that one of the things that we’ve broken out or at least looked at further credit card payments to see if they’re paying a lot of interest or if if maybe they have a low or no interest card or offer card and this is just uh carrying most most principle and if so and we know that they’re probably using their credit cards because they’re 1400 every month they have to borrow from somewhere um and it’s a couple things I didn’t say about them and no one asked any questions it was so I’ll go a little further into explaining some of their situations say they’re married they have two kids twelve and eight wow they’re two boys so they’re renting a two-bedroom apartment uh they’re driving two cars uh one has a loan one is completely paid off they have smartphones for both adults and their older child they have a home phone and they have no savings because over the last few years they’ve poured everything they had into paying all student loans and so now they’re left in the situation with no savings and I didn’t say what happened but something happened that they that their income was lowered so we can either say they were laid off got back to the workforce or they had two incomes and lost some income whatever it is they’re in a situation now where third they’re losing fourteen hundred dollars every month and they’re borrowing money but it usually doesn’t happen where someone just says I want to borrow 1400 and put the expenses on a credit card what happens is you don’t have any money in the bank and you have to get gas you don’t have any money in the bank and you have to buy groceries you don’t or eating out or your cell phone bill was due and you don’t want to not pay it so you just put it on your credit card that’s just one month until I can catch up and those things just continue to add up and you end up in a situation like this it’s very rare that someone just says okay we know that we have to borrow 1400 this month a lot of us it’s very easy for us to become deceived about our financial situation when it happens small amounts at a time and so many of us may be in a situation that’s similar to this maybe not fourteen hundred dollars could be three hundred five hundred dollars could be 200 it could be month to month because of the way out income works and the way that we budget it doesn’t really work well because it leaves us in the red for some months so the first change that um I think I would look I mean there’s many ways to do this but because of what we covered in this course I would increase income I would think this couple came to me I would say Okay first before we dig into your expenses let’s look at the most simplistic things anyway you can bring home extra money that will not damage the fabric of your family you know meaning that you’re not going to be working 16 hours a day every day and never see your your family or it’s not going to cause you to uh take a child and put them in some type of Aftercare program because you can’t be there with them and you think that eight years old is too young to be on his own so you want them with someone and you’re paying just about everything that you’re making from a second job or from a second income and so you know we would look at that and say okay what can you do five hundred dollars able to make 125 every week um you know give or take and bring home some extra money so problems here is that they still have a 900 a month deficit so they obviously have to cut some expenses so one thing we can look at decrease credit card payments well some of the ways to do that many things they can do but here we were able to 350 off of their credit card and it’s considered this is just a monthly minimum this isn’t getting them ahead this is allowing them to really pay down their debt this is allowing them to stay even each month and just to make sure that their credit uh isn’t shot so uh they were able to call the creditors and get their interest rates reduced and they were able to take advantage of a zero percent box transfer offer that they had so they were able to at least for the short term get their get 150 off of a page monthly credit cards still doesn’t fix their problem doesn’t even fix their credit card problem so the next thing they do is uh decrease transportation because that’s the next biggest housing expense well it was so they decreased that to 400.
they were able to do certain things so one of the things that can be done is to make any adjustments with insurance that’s one thing especially if you just have one car or something you do desperately need it insurance is one thing to look at if your car is not being financed then you have a lot more wicked room if it is being financed it’s the property of the bank and you can do anything about it the bank determines what insurance they need on their car um but look at your coverage see if there’s anything that can be taken off if your car is only worth a thousand dollars you probably don’t need Collision you know they’re things like that you can look at or that you can even ask an agent to have one or you can even ask other people who may know a little bit more about insurance order at least appoint you into good resources take advantage of any discounts you have being you know having a clean driving record taking any defensive driving courses um any points that are removed from your license make sure that the insurance company knows about this knows about what your driving record looks like now and adjust what you’re paying for insurance based on that um being a good student sometimes that gets um kids and you know the end of high school or in college gets them discounts um based on their GPA or other things any memberships you know if you’re if you’re a member and you get a discount because of being a member or you’re a member of an association that provides insurance or at least has eyes with insurance companies like a triple A or Costco then at least look at those and see if there’s any way to get your rates lower obviously shop around would be the number one thing that I would that would suggest um any life changes I and don’t do this but I do remember one time I needed to save money and I went to my um to the insurance agent it was a State Farm um I think I’m allowed to say that so it was State Farm and then and I just said okay this these are too high I was actually paying more for insurance than I was from car loan each month so um yeah I was single I was paying about 350 a month just in car insurance just for me and this was in the 90s so you know imagine what that would be now in 2016.
so um I went there and she said okay you needed your insurance reducer she also had a girlfriend I said yes so she said okay how long have you been married um I I’m not married what are you talking about it’s like oh no no you are you are married how long have you been married I don’t know what you mean she’s okay you’ve been married two years all right so now your insurance rates just dropped by this and you know she gave me some new number and I I didn’t even know what was going on because I didn’t know that my insurance rates would be cheaper if I was married because apparently they see especially for a male they automatically think that you’re more mature if you’re married and so you pay less for insurance so you know that’s not something that you do but that shows how changes in your circumstances in life if you move somewhere you can move across the street but that change in address can be enough to turn off your rates especially if you’re on a border or something like that so make sure that they understand everything that’s going on in your life with your cars obviously you downgrade your car get rid of the second car this family and if I mentioned oh yeah I did mention that they had two cars um so your car or both cars will allow you in public transportation another good thing is to not neglect maintenance a lot of people will do that and think that they’re actually saving and then when doing something that costs 120 dollars grows into a thousand dollar problem that you have to fix it would have been able to spend 120 even when you felt like there was a stretch to do that so they’re big items that are still left on here but now they’re only in a Hole by 400 each month and all this can be done at least the planning for it all can be done in one day so they at least essentially reduce their um their deficit by a thousand dollars in one day they made a couple phone calls they found out what found out what they could do with their vehicle and now they’re doing better so housing and food are the largest items that are left food is much easier to tackle but we’re going to try to do both um one thing though that that we thought was funny so he actually showed this to me yesterday that really Paints the picture of how many people live especially when they’re not paid weekly and this here look at the picture of if you’re paid bi-weekly and this is usually what happens this is what your meals look like week one and week two you get closer to pay they have an ice suit so um we don’t want to be like that we want to make sure that we plan it out and we’re not just struggling to paycheck and limping along until we get paid the next time so we want to do things to strengthen up um you know our finances so we’re not in that situation so this is what they did they reduced housing and they reduce uh groceries or sorry dining out well both actually um and I tried to be realistic here if you’re eating out a lot and you reduce that expenses you still have to eat so the food’s going to come from somewhere so you’re not going to see a drastic uh reduction in your groceries you could but then they’ll you have to buy groceries more often to buy more groceries even if you find a better way to shop you start using coupons look for sales you compare prices of different supermarkets you maybe buying bulk if you don’t have a large enough family to buy in bulk on your own you find someone else who does and you guys go together and you maybe go half on membership to one of these Warehouse clubs you just find different ways to shop more efficiently more effectively eliminate any waste that you have there are a lot of things that that you can do so housing costs I mean and this is just a sampling of some of the things at least to get us thinking about more than just we need to find a place that’s cheaper obviously that’s one thing to do and downsize your home you can find a roommate if possible you can even negotiate or uh barter with your landlord and see if there are things that you can provide that um or not monetary and things things that they need you know this is the whole idea of someone living in a apartment complex and being a super and getting discounted or free rent and taking care of the grounds you know being one of the people to take care of the ground so um you can try things like that even if it’s not in a traditional setup that’s not just for people living in an apartment building you may pull something to your landlord especially you know in this case we’re looking at rent you may propose something to your landlord that they didn’t even think that they need but then wow that’s a really good idea you would take a heavy burden off of me okay I can reduce your rent if you do something like this for me of course if you have a mortgage you can refinance your home paying private mortgage insurance stop make as many payments as necessary to get to that point if you’re in a red it’s not possible but if you have the ability to do it then do that even weigh the pros and cons and we’re going to talk about that in two weeks how you examine these things and know what’s the best decision to make at least the wisest decision you can make with the limited information you have but way the pros and cons of um being out much of your savings in order to pay down a mortgage enough to where there’s a gap in what the home is worth and what you’ve paid for or what you owe and so you can get the mortgage company to remove the probably mortgage insurance you can sell your home and you can rent um you can rent out a room in your home there’s many other things that you can do one thing to note is now they did enough with housing and food that they have a uh credit they have a service each month and we didn’t even touch everything I mean you see there’s still things that still health care we don’t know what’s going on there they sell cable and phone so there’s a lot of things they can cut but I wanted to just get the idea of how you go through your own budget and look at your expenses and start tracking seeing wow spending this month most people that I talk to who don’t have a budget and I have them go through and exercise first of tracking their expenses and then looking and and I I don’t I don’t I never look at a budget this is what you need to get rid of just say okay what stands out here wow I didn’t advise I was paying that much for this I didn’t realize that you know Drive making these extra trips and spending this much on gas or wow my car really costs a lot of money when you add in maintenance and everything else that goes along in the car is there something I can some way I could not own a car and still you know get around so those are things that usually happen while I’m eating out this much I can’t believe it I can’t I was spending this much money and I did talk to my friend who I told you guys about a few weeks ago who budgeted a lot of money for uh eating out she said at the highest it got to 700. a month um but he had a unique situation and it actually seemed like it was the the best thing for her to do um you know she was working 80 hours a week and so was her husband doing a lot of odd jobs that they had to do at random times and and neither one of them actually knows how to cook you know so there were a lot of things involved and it was actually much more efficient much more efficient use of their time also they own two homes renting out one and they ran out of room in the second in the home that they fit in and so they did a lot of things they they were saving thousands of dollars every month actually putting into savings for different things um so they were in a position where they could do they looked at it as this is how we Splurge but also this is how we avoid spending x amount of hours a week doing it so in their case it was very unique and rare case where it actually made more sense not just when they looked at their finances but when they looked at the overall quality of life to do it and actually they’ve reduced that by a lot now um and started to change I think I think he cooks more than she does because he’s more stable because now they both work from home um so you know he’s he’s able to do that more but at that time it made more sense for them to help get them to the point where they are now where they both quit their jobs and work from home so it’s very rare but I did tell you about this and I would get more information to tell you why it seemed to make sense for them so the last change that we made here was just uh adding the things that we uh took out or that weren’t there to begin with giving saving at the bottom so again this wasn’t complete and we’ll actually go through uh just a little talk about this a little more but I just wanted to get you to see what you know what is possible just thinking through this and and saying when I look at my situation unless I have all the details laid out with this and actually even further detail from this I can’t broke because we don’t know where your money is going if you don’t know and you just assume it’s because you’re not making enough then you need to do something like this and you need to figure out where all the waste is and remember this isn’t just so you can breathe easily this is so you can be a good Steward of God’s money God has given us resources and we can’t be wasteful with it part of being a steward means that we have to have a good account we have to keep good records of how we have used God’s money and so we can use it more effectively and just to highlight that here so now we’re going to look at uh credit and debt we’re going to look at that in particular we talk a little bit about their credit cards and just said oh they just lowered the interest rates and that was good enough but I wanted to look more into Credit in that with the time that we have uh remaining so we’re going to look at it in this way we’re going to look at the purpose of that the requirement of that and the bondage of that so first we’re going to look at the purpose of that and so here’s credit and arrangement for deferred for deferred payment of a loan or purchase and I have a note there that this can be done either by the merchant and two examples that are going to a doctor’s office and you know they usually will work on a payment plan with you if you can’t afford to pay your total out of pocket costs at the time of the visit you know if it’s something big they’ll say Hey you owe us a thousand dollars pay us a hundred dollars a month for the next 10 months you know that’s essentially you’re using credit um about this is these new phone plans that you know come out where you’re supposed to go into it and it’s this phone is not subsidized but they allow you to essentially Finance the phone for zero percent for 24 months and so they’ll put 20 30 dollars extra on bill each month which is the cost of you paying down um a phone so you’re using credit there too they’re extending credit to you credit can also be extended by using a credit card so the merchant is paid immediately so they’re not extending credit to you they get their money right away you repay the bank because the bank is loaning you money so that’s the difference there and that that’s the other side that is now the money that you owe after using credit or it’s an obligation to pay someone even if you haven’t borrowed money from them so when you know we talk about credit and debt that really they’re really the same it’s just usually it’s the perspective that you’re you’re taking on it are you thinking about someone extending credit to you or are you talking about the amount of money that you owe to someone that’s the amount of debt that you have so um most of the time actually before we talk about the the requirement of that I’ve noticed that at least in talking to people and helping people through budgets um most borrowing happened the fund once and not needs most of the bond that’s done is not to fund basic living expenses in the case where we looked at with that budget even though it was their basic living expenses we put vacations on there or anything else that that is not a necessity but in this Society they tell you it is a necessity we didn’t even put those things on there but we saw a lot of areas of waste and if they removed a lot of that waste then they at least came down to a place where their living expenses were more invisible and they didn’t have to borrow and many times that’s the case not at that time but many times that’s the case when we borrow money we borrow for a one and not a need or we borrow for what’s a need but we add a bunch of once onto it you know it’s one thing to say I need to have shelter it’s another thing to need a 750 000 home you know wants and needs are are totally different and it’s it’s the most basic concept in finance and even when we think about us serving in the body of Christ or things that we want things to need and you know we talk about especially if it’s our wants for someone else’s needs their needs come first but it’s a lot it’s something that we just have this this selfish nature that wants us to want more and we’re living in a Society where billions of dollars are spent every year to convince us about once we’re convinces that wants or needs or to convince us of things we didn’t even hear of before we saw the commercial or read the ad it’s something that’s now a one we didn’t even know what existed yesterday but as soon as we see it we have to have it we need it and you know it’s funny I remember when um Abigail ponzo um her parents are trying to get her to understand this concept and whatever she would would ask for something they would just say this is something you want not something you need so that then she started whatever it was can I have that toy no but I need it I need it and she just would cry out that she needed this thing that she just wanted because she knew that they would tell her just the one so she just tell them up front this is a need I have to have this toy or whatever it is and that’s a lot of times how we are when it comes to um money one other thing about that when we look at the purpose of it is that it allows us to buy things um it could allow us to buy things that God has not provided for I mean essentially that’s what it is if God is the one who provides out in something God is giving us what we’re able to spend able to afford and when we borrow um it allows us to circumvent that it allows us to go after something that’s outside of the provision that God’s given us and we’ll actually talk more and said about evaluating expenses and knowing how to do it from a financial perspective and also using some biblical principles and obviously some things some arrangements that happen um in our culture and other cultures that allow us to do this but still do it in a responsible way and you know thinking about mortgages the way that mortgages are set up allows us to still be responsible without money and there’s some cases where that type of borrowing or borrowing for bigger items it makes more sense tomorrow if you can get a low enough interest rate and have your money freed up to other things while you’re paying it off at a very low interest rate so we’ll look at some of that and and look at how we can determine if it’s actually a low interest rate or we we’re doing the right thing here um there was some statistics that we found well when I say we I mean sharian found um there was a study on stress the American Psychological Association and they found that 72 percent of Americans a report being stressed about money at least some of the time 72 percent that means every time I look at a group of four of you three of you are stressed out about money so I’m trying to find groups of four there’s one the Combos and Dan there’s a group of four three of you are stressed out about money right now according to this okay so it’s Magda Alexa and Dan are sticks out about money no but you need to get the idea most people are stressed out about money and even though they didn’t separate this out to professing Believers I I can’t imagine A number being that much lower 54 of people in study say that they have just enough or not enough money to make ends meet at the end of the month this is more than half of people that they studied say that they don’t have enough or they barely have enough money to take into me 44 say that paying for the essentials is a significant source of stress so again almost half of people’s study said that it stresses them out just paying for basic living expenses so what’s the requirement of that what do I mean by that well simple way to say this we’re obligated to repay any money that we borrow I mean that makes sense right no one is looking like oh that was so deep you know this we get that right you borrow money from someone you are telling them you’re loaning this to me and I’m going to repay you Psalm 37 21 says the wicked borrows and does not pay back but the righteous is gracious and gives and then in Romans 13 8 um after Paul just finished telling Christians that they’re responsible to pay taxes even to a wicked government they’re responsible to pay taxes he then says owe nothing to anyone except to love to love one another for he who loves his neighbors fulfilled the law so we want especially looking at this it’s not just borrowing from people it’s borrowing from Banks it’s falling from the government you know think about student loans we talked about people talking Sallie Mae um you know a couple weeks ago that this is this is this concept that if if we owe it owe it we pay it you know whether it’s taxes whatever it is we owe it we pay it no working under the table so that the money the income you make is not reported to the government and you say okay they’re paying me in cash and we’re not going to report it so I don’t have to pay taxes that’s wrong it’s wicked and we have with those types of things um so bankruptcy is something and actually before we get into that I want to keep these verses up and talk about bankruptcy will I do that um it is legal in many cases the legal way to get out of paying repaying um that they borrowed but there’s no Clauses here for bankruptcy there’s no Clauses here for financial distress there are other things that the Bible talks about in the Bible talks about generosity uh us having generous Hearts um and seeing people in need and helping those that are in need but that’s what someone else does that there’s no from my perspective if I’m the one who owes there is no obligation that that I can place on anyone else to help me with my debt and and I don’t have the right to have the courts force a creditor to say okay we just won’t get paid and that’s what happens we file for bankruptcy and bankruptcy says that you don’t have to pay this obligation so then here’s here’s an order to show to all of your creditors and we’ll let them know that whatever you owe them they’re not getting it in some cases though depending on the type of bankruptcy they’ll make you sell your assets and repay what you can based on that but you can even um cry hardship and get out of those types of things so um even though it’s something it’s something that you may hear if you’re in financial uh having financial difficulty to just file for bankruptcy but it’s not something that honors God because you went into an agreement and you gave someone your word that if you loan me this money I’ll repay it we’re not just talking about faceless companies here the fact that they have insurance on default the fact that they know or they have a good estimate on how many people are going to default they actually bake those those uh defaults into the amount of Interest they charge across the board has nothing to do with our integrity nothing to do with the fact that we have to repay what we borrowed the one case where we wouldn’t have to is if the Creditor themselves agreed to forgive part of all of our loan and that’s that and we actually see an example of that in Matthew 18 in the second half of Matthew 18 you have to talk about the church discipline it talks about forgiveness and you know gives the example of a king forgiving one of the concerns for a loan um and then that servant seeing someone else that owed the money and he choked them and puts them in jail even though he was just forgiven for a month that’s way more than what he um was owed by the other person and so we see an example of that we see an example of someone saying you owe me a deck no you don’t you don’t owe me this that anymore I I forgive this alone and in those cases then obviously you’re free and clear and I actually known of people um who were in those positions and when they got in better Financial positions they went and paid back those people who forgave their loans because they felt such a burden to repay what they borrowed even though the Creditor said you don’t owe me anymore so we have to this is a part of us taking off the world’s mindset when it comes to managing money and seeing ourselves as stewards of God’s resources and seeing ourselves with those who represent Christ another thing to say about this is bad record keeping or forgetfulness they’re not excuses for not repaying what we borrow the first we looked at earlier Proverbs 27 23 know well the condition of your flocks and pay attention to your hurt that means it’s your responsibility you have to set up some type of system to remember obligations and this is what this slide is pointing to we have to remember obligations getting Communications from creditors so if they’re going to send everything electronically make sure that you’re checking your email diligently make sure you’re checking your spam folder to make sure that they’re not sending you anything that says oh we changed some of the uh some of the elements in the some of the terms of of our agreement with you making all scheduled payments if you have to put it on the calendar every month if you have a smartphone and you need to just make a recurring um thing one week for current appointment one week before the payment is due every single month pops up on your phone oh I have to pay this then do that whatever it is you have to make sure that you know what you owe and you know how to repay what you owe and the terms behind that there’s no excuse to say I’m just kind of forgetful or I get so much junk mail I just kind of get the mail and I don’t even pay attention to it and it piles up this High that’s not good use because we are representing Christ here and and we have to do everything with integrity and that includes how we interact with big huge companies that everyone wants to convince us just wants to Rob us about money and they don’t deserve our integrity it’s not about them it’s about us and Christ and so we have to ensure that we manage our money with integrity at all times so the last one is the bondage of that we looked at the purposes that we looked at the requirement of that now we’re going to look at the bondage of that and actually this is here the Bible describes in and debt as slavery and we’ll look at the verse and then I want to say something about it Proverbs 22 7 says the rich rules over the poor and a borrower becomes the lender slave I mean those words are pretty clear the fact that we don’t have debtors prisons doesn’t change of this scripture the fact that someone can’t just say you owe me some money and you didn’t pay me today I’m going to throw you in jail as in that story in Matthew 18.
and change the truth of this because we don’t sell ourselves into slavery now it’s still that still doesn’t change the truth of what the word of God says here and we see that even in the American culture that the borrower becomes a slave of the lender I actually heard um you know someone say well this is really just talking about being a a servant and basically as you work you’re working for that uh for the lender even if you’re not working for them directly you’re getting money and you’re working giving it to them this is always versus talking about it’s not talking about some type of restriction and there’s there’s nothing in language here that would indicate that that’s the way to take this first um yeah habakkuk 2 verses six through seven I’ll just start actually in the middle um here with the wall this is a woe against the Chaldeans and we can’t go into the full context now so we don’t have the time um but it says woe to him who increases what is not his for how long and makes itself rich with loans will not your creditors rise up Suddenly and those who collect from you awaken indeed you will become under for them and this is actually talking about a nation and one of the things that at least I can say quickly is that it was talking about them extracting uh taxes and basically extorting their neighbors uh this Empire because they had power and they were able to do so over over those that were around them they would go in they would conquer them they would subjugate them and then they would say you owe us this ridiculous amount of tax now just for us letting you live which was a common practice but one of the the this is a series there’s five roles that are that are um issued here in this passage and this is the first one and the first one is they’re going to rise up and they’re going to revoke and one of the things it it looks at what it says you owe them money you’ve taken what you did not deserve speaking what didn’t belong to you and so now in a sense you owe them and they have become your creditors and you have a debt to them and there’s going to be a day where they rise up and they take that that and since you will become plundered for them and you know we get this type of language and if we were to apply this to how uh credit landscape is in this country you know we can almost say the same thing we talk about predatory lending and things like that we use that type of language to show how it is to owe someone money and not be able to repay so we’re going to look at how to get out of debt and before this is a two-step plan to get out of debt as I feel like that we have a best-selling book or something just get out of debt in two easy steps right but um there are a couple things to consider about that and why we want to rush to get out of it um so if we’re in debt especially if we’re paying interest um we have less to give we have less to to use to be generous to others you have less to give in church um but another thing is that we’re enslaved to the Creditor so we lose a level of Freedom when we are in that we a lot of people are unable to move when they unable to help people in need we’re unable to completely provide for our family we can’t many times pursue opportunities that come up all because of that um you know I think about in my case in 2000 four or five something like that a little more than a decade ago I wanted to master Seminary and I actually went you know to Rutgers and I did a bunch of courses in Greek and everything just to prepare myself to go to the Seminary and but my financial situation was such I really investigated trying to live out in California and you know hope I opened them to be married soon after and soon after leaving workers and then moving out there and I realized that because of my debt I couldn’t do it and if that’s not the that’s not the epitome of what slavery could be in a modern era where actual enslavement is in this country is is illegal um I don’t know what a better example is of having a tremendous opportunity in front of you something you want to do and not be able to manage of it because you owe someone else and the master says you have to pay me and because of that you can’t get out of that obligation and you can’t take advantage of something else so if you’re in debt you have to do everything in your power to God’s debt and so here’s a Two Steps step one create a surplus in your budget step two apply that Surplus pray and go home now right right I mean it’s it’s the work may not be simple but the concept is simple there’s no way that you can pay off debt there’s no way that you can even save or do anything else unless you have a surplus in your budget if you have zero dollars at the end of the month after taking care of your expenses you can’t do any of those extra things so what does creating a surplus look like what are your options well there’s only a couple things you can do really you can increase your income a huge fan of decrease your expenses which is which can be profitable and you should do it even if you’re not that you should look for areas of waste as we talked about but there comes a point where you’re limited when you just can’t go any further you know what some people don’t have a family or don’t have a situation and so they have to pay for their own housing there are people who have children and they have to take care of their children there are things that come up that you have to do and someone else may be in a situation where they say oh okay I can just move back home with my parents and you know you can be 30 or 40 and still have that as a as an option and use your job or you just need to pay off debt and you say all right I’m gonna go back home and live here for a year or two years and try to either save up for something big or I’m going to pay off debt or do whatever it is um that option so cutting expenses only is going to go so far where increasing income is actually Limitless depending on what you do and how God blesses you know uh what you do or you can sell items which again is limited because you run out of things to sell so with all those things that you should do you should exhaust those first and then you know how much you have to increase your income and that way you can put a limit on the amount of work that you do and it’ll help you even to not think that money is the answer money answers everything so applying the Surplus this is kind of the order that I would go in take care of collections judgments any items that have fallen behind so basically you want to become current on all your debt that’s the first thing you want to take care of anything where you fall in behind and you have not kept your end of the deal with um painting on time or just not paying at all you want to list your remaining debt in order from highest interest rate you make the minimum payment amounts on all of your accounts then you apply any extra money anything budgeted or just one time things that come in to the debt with the highest interest rate and this will be a priority account then once that’s paid off you apply the minimum from the previous account to the next uh one in line so you just continue to do that so you’ll have a bunch of debt lined up and you’re just going to pour everything into pain one while still being current on the rest then you pay that off and now you take the minimum payment that you were paying on that and then you move it to uh that b and then you start paying that off and then any extra money you get you attack that then once that paid off you go to see you go and you’re still doing the other things you’re still trying to get your interest rates lower still trying to see if it makes sense to take a balance transfer offers because even if they’re offering zero percent it may not make sense because you usually have to pay a fee to transfer so you have to see if the saves interest is going to be greater than the fee but those are some of the things you do you’ll keep doing those things until all of your accounts are paid off so we’re gonna at least start looking at a credit report and credit score now when I talk about that the paying off debt remember that it’s it’s not once once you’re done that’s not the only like you still have to have that mindset there’s other goals paying off debt should be a priority but we’re talking about saving and again one thing saving for retirement um you know you would mix that in especially with every money involved again your situation is going to be different so I can’t just give you a blanket approach to this outside of what I just gave you um but attacking debt has to be a priority but once it is you still have the same level of discipline with other areas when it comes to saving when it comes to freed up money to be able to give when it comes to having that giving fund that we talked about I think it was last week where you’re just saving money and it’s essentially an emergency fund for someone else’s needs so when the need comes up you can take money out of that and you’re not interrupting your normal budget but you actually have money set aside to help someone else in need so there’s a way that our um out country has and sorry not just our country um but we’re looking here first there’s we have credit reports and actually a credit score and this really it determines what people think of you and your ability to borrow and pay back so a credit report and take the history of your own and your credit score provides an estimate of your ability or willingness to repay a loan and your credit report and things more than that but for what we’re talking about the history of of your borrowing and it allows lenders to be able to see uh what type of risk you are and if everybody wants to know how at least your FICO score and I’m using the FICO score here even though some you know the other the bureaus have their own scores Michael scores are used and I think 90 of all lending so wow it just got dark but um but this is how your FICO score is determined 35 percent of your um credit scores calculated by your payment history so do you have a history of paying on time thirty percent of your scores determine on the amounts that you owed or you overextended you know that’s what they want to see are you borrowing too much money are you using too much credit then that means you’re probably overextended and you may not be able to pay you you want to aim for a credit utilization ratio of less than 30.
that sorry so for all of development credit you have it’s considered um a good utilization rate if you’re using less than 30 percent of every thing that you could possibly use of all the money that could be loaned to you if you’re using less than 30 percent of that then you’re considered a good risk for um getting a length of your credit history 15 generally longer history is better because they get to track you over a longer period they get to see what you do during the recession how you respond doing different things happening in the economy they see it over a long period and see where the ever periods where you were unfaithful new credit is 10 opening several credit accounts in a short period of time makes you a higher risk um the mix of things that you have is 10 so car loans student loans uh recurring accounts with uh credit cards personal loans all those things of types of things that different credit you can have and they want to send a mix of all of that to be able to see how you handle different types of credit so there are things that your credit report and scores are used for credit card approvals ability to finance a car mortgage rates apart applications job applications so we see why having an accurate credit report and a high score are important even if you don’t regularly borrow money and that’s one of the things that we look at if anyone’s ever heard of Dave Ramsey he is someone who basically says your credit report credit means nothing don’t even worry about a credit score because you never want to borrow money why do you care about a credit score if you don’t ever want to borrow money who cares pay for everything in cash and you don’t have to worry about your credit score well your credit score isn’t just used by people who want to loan you money but if you’ve got people that want to give you a job or it’s used if you want to rent a home and they use your credit score to determine if you shouldn’t well they should give you a job and so what this is this is showing the world how faithful you are with money especially with with borrowing so here’s some things that don’t impact your credit score and I’m just going to put them all up so your age where you live they may be on your credit report um you know your race your religion marital status none of the stuff affects your credit score they now I just talked about the insurance company deciding that if I was married then I was a low risk but that’s not something that’s in your your credit score your salary is actually not in your credit score it may be used to determine whether you can borrow money that’s not in part of your credit score itself um even if you participate in credit counseling that’s that’s nothing to do with your credit score so I am going through this quickly because I wanted to get to this slide here are ways that you can get your credit report um for free you know Credit Karma and Credit Sesame are third parties that allow you access to and I should have written it down which ones because they’ll allow you access to one report each I think you lose different ones annualcreditreport.com is actually a government site even though it’s.com that allows you to see your credit report for free so don’t go to any other credit report site that says it’ll get you a free credit report even a free creditreport.com the law says you have to be able to see a copy of your credit report from each of the three main credit bureaus um transient Equifax and Experian once a so all of these sites have come up to say hey you can get a free credit report from us um but they’re not the ones that the government has said you are going to be the one to fulfill this obligation this annualcreditreport.com so these are ones that you can look at and I’m going to look at what you look on your credit report and then we have to close um so you look at your credit for two things obviously you want to see if there are errors on your credit report but you also want to set their signs of identity theft so your local credit card charges that you don’t recognize um look for new credit cards or statements and though that will be coming to you you also look for accounts that you didn’t know if there’s anything you don’t recognize in your credit report then you should take a look at that information in your credit report that you don’t recognize such as different accounts or addresses if you want to take a look at that because someone has tied your social security number to an address that’s not yours and so you want to make sure you take a look at that information that should no longer be on your credit report and here are two things bankruptcy should be off in 10 years and account history should be off in seven years and I would say there’s other things that we can look at as well um with that but we’re actually out of time now so I’ll just leave you with that and I’ll we’re going to pray I’ll put up the slide without email addresses as usual if you have any questions come see us the point of this is just to let you know that more than 25 of people who were participating in the study found that there was an error on their credit report and they should go through you see that 20 of people who had an error experienced a large enough increase in their credit score just by correcting an error that it dropped them into a lower risk tier so it’s it’s material and it’s something that we all should do because again this is a record of our stewardship of any type of loans um if you need to give massage or any information on them come see me or email me either one and we’ll have them ready now let’s go to the Lord in prayer uh father God we just want to thank you because your word is so rich even on areas such as this when we get into details of our finances we can still apply principles on your word he’ll help us God if any of these areas are areas where we have to repent was to be moved in our hearts to repent God you know for not paying loans for not being faithful to our word um or mismanaging or even just wasting the resources that you’ve given us help us to repent and turn from that and turn to you God and we pray that you would help us to have wisdom when it comes to managing our finances there are a bunch of tools in this world God to do so but we know that none of it will mean anything if we’re not doing it for your glory and we’re not seeking you as we do it so I pray God that even as we do these things you will give us a deep spiritual motivation and that you help us God to want to honor you and to give you glory that’s how we manage our money or we manage your resources uh for the update of your kingdom and to minister to your people and we just thank you God even now for the food in the back we thank you God that you allow us to assemble to worship you together as a body and we pray God that we will be blessed by the word as uh Brother David preaches today and that even the music will help stir our hearts God and Aid Us in worshiping you and living a life of worship and we ask this in Christ’s name foreign