In this final lesson, Khaleef Crumbley examines multiple topics related to personal finances and biblical stewardship. Khaleef Crumbley discusses gambling, the difference between contentment and fear/laziness, and various financial concepts Christians should know. These concepts include:
- Time Value of Money
- Compounding Interest
- Expected Return
- Unintended/Indirect Costs
- Valuing Your Time
- Opportunity Cost
- Sunk Cost
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can you hear me okay okay making sure um all right well we have a lot to cover today this is our last um lesson on Personal Finance so I kind of had to throw together the last few things that were missing someone actually made a request and I just realized the person who requested the first topic isn’t here right now because he’s actually in new members class and we’ll be getting baptized later today um but hopefully he’ll be still be beneficial to those here so let’s go to the Lord and prayer and then we’ll begin our gracious God we just thank you for all that you’ve showed us in your word how you’ve revealed yourself to us we thank you God that you have given us given us a stewardship and we pray Lord that you would help us to be faithful over it just as we talk about these last few topics I pray God that you will shine light on your word and even in our hearts God where we may be sinning or will we may just be making unwise choices I pray God that each one of us will just come away blessed from this study and that you will then help us to develop better habits without money and develop a faithfulness and a desire to want to please you and everything that we do including how we manage our money and how we earn our money and we ask us in Christ’s name amen all right so our first topic we’re actually going to be looking at gambling and we’re going to be thinking about gambling in two ways as a wealth Creator and as a form of entertainment so we want to know if is it really equivalent to investing a lot of times we hear even when someone is afraid to invest they will say that’s just gambling or if someone wants to justify uh gambling they’ll say it’s like investing it’s no different than being in the stock market so we just want to look at that and see is it a legitimate form of wealth creation or um entertainment so here’s some some things about investing investing or the one who invests will seek to participate in or benefit from the creation of something valuable we talked about this when we talked about investing that it’s it’s about seeing is especially if you think about stocks um bonds work the same except you’re on the other injury you’re loaning money but you see a project a company that is worthwhile that you think is is actually creating value and that essentially that it’s undervalued at the time and that you want to take part in their growth and that’s what essentially what investing is extensive research available you can look everywhere from the company’s own filings to analysts that are hired solely to work for banks and analyze that one company and you can find tons of information about what’s happened in the past with this company and actually What’s Happening Now what they’re promising for the future mid to high probability of a favorable outcome if you take any long period of time I think over 10 10 years there’s I forgot the number but it’s over 95 percent of the time in any 10-year Span in the last I think 80 years in the stock market there has been positive gains so you have a relatively good chance obviously things happen depending on timing and things like that but it’s not a lot just like gambling and we’ll see that as we go through this it uses a systematic approach um you can some people don’t but you are you are able to use a system when it comes to investing how to evaluate companies how to evaluate governments and decide where to put your money investing can be part of a larger plan as we talked last week about retirement one of the things we looked at was saving for retirement but we looked at other things changing the way that we spend changing where we live there are a lot of things that you can do to help with the efforts of of investing so investing isn’t this cure-all that says do this and you’ll have a great retirement just open the 401K but there are other things that you can do as well so investing is part of overall plan the risk adverse can still benefit and this risk-averse just means you don’t like Risk you try to avoid risk whenever possible you can do that and still invest um there are options for limiting loss so you can invest ten thousand dollars and you can there are things you can do to make it so that you never lose more than two thousand of that ten thousand you know you can there are guards you can put in there actually many things that you can do um or stop loss is probably the the most common one but you can even have put so you can just look at uh stocks that are not correlated and make sure that essentially when one goes up one goes down you have a bunch of other stocks that usually go up that usually have an inverse relationship so anyway the things that you can do that’s much more sophisticated than that to limit the loss when you invest uh there’s ownership and or creditor status it just means when you buy stock you’re buying a stock in a company you’re buying a share of a company uh you can be accreditor by loaning money to a company or government and buying bonds and it benefits for the most part investing benefits from economic progress there are ways that you can actually benefit from recessions and things like that but investing for the most part you’re looking to benefit from uh progress that’s made in that company industry or overall economy gambling it’s a zero-sum game what does that mean that means that the gains are offset by the losses if you look at the entire system and we’ll talk about that a little a little bit more but what that essentially means is if I win a certain amount of money there has to be one or more losers that have lost the same amount of money there’s no value creation nothing is created or generated when we gamble it’s just money and other possessions trading between people even if you uh Gamble through an institution it’s just money going back and forth you’re not creating anything new there’s no reliable system for limiting loss so what you put in for the most part there are obviously exceptions to this but for the most part what you put in is all at risk there’s limited research available you can’t really go to a casino and know everything that’s happened at that blackjack table for the last 50 years like you can with the stock market and know what happened with a company or industry or even how economic Trends impact the market even when skill is involved you know there’s certain things especially cards where there’s a certain level of skill that will make you better at gambling it’s still heavily uh relying on chance so even when you have skill and don’t don’t give me where it looks but I used to actually watch poker on television a lot I went to a stage in my life where as long as it was on ESPN I would watch it so even like Lumberjack competitions I would I’m that I would sit there and watch people with chainsaws chopping up logs but I would watch you know especially poker when it was first starting to become really big and you would see people with great skill just fall and lose tens of thousands of dollars not because their skill was lacking but because their skill can only go so far and it still was chance and and things that were random to to their mind things that they could not know that eventually was their downfall it’s extremely time-bound and that just means that with investing if for the most part if things turn down in the economy or even if you’re in the housing market and it’s not a good time to sell a home if you’re able to you can hold off on trying to sell and trying to capture any gains if you see that the games will be too small or you’ll actually lose you can actually hold off and say I’m going to wait longer with gambling it happens one time the Super Bowl comes and goes and you can’t say oh I already put down this money and someone broke their leg now the odds have changed and I don’t want and the game happens and it’s done so looking at all those I I would say that gambling is not as you can see it’s completely different than investing even though there are people who invest and they’re so speculative that it’s essentially gambling and I would say that that’s just as unwise as someone who goes to casinos or someone who goes to a dog race or horse race and puts down the bet here are some verses that talk about again either our stewardship they talk about um trying to gain wealth quickly and here’s one uh Proverbs 28 19 to 20 and we see what the Bible says about these issues that are related to gambling and of course gambling is something where there isn’t like an 11th Commandment that says you should not gamble but we see many principles in the word of God that would speak to us about having wisdom and that for the most part um stepping away from from it so Proverbs 28 19 to 20 says he who tells his land will have plenty of food and he who follows empty Pursuits will have plenty in poverty a faithful man will abound with blessings for he who makes haste to be rich will not go unpunished and so this idea of getting rich quick or having your dreams fulfilled and especially the what is the lottery thing or it takes a dollar in a dream right and they’re selling this um I actually read uh article that was saying that in Chicago at one time there were Billboards in the poorest neighborhoods that showed a lotto ticket and said this is your ticket out and so they’re playing on people who are extremely impoverished it’s saying that this is the way that you get out take the money that you don’t have and buy lotto tickets with it and takes a dollar in a dream you can you can have your way out of poverty second Thessalonians 3 10 shows us the main way that God provides for us um is that for even when we were with you we used to give you this order if anyone is not willing to work then he is not to eat either work is the main way that God provides for us and those who are unable to work we see provision in his word that we’ve gone over in the last eight weeks that says that even if someone is unable to work there are ways that they are to be taken care of as well but we see for the most part god provides throughout work Proverbs 23 4-5 says do not worry yourself to gain wealth cease from your consideration of it when you set your eyes on it it is gone for wealth certainly makes itself like an eagle that flies toward the heavens and then something the pastor preached on several months ago Mark 8 36 says for what does it profit a man to gain the whole world and forfeit his soul and lastly Psalm 10 13 says the wicked boasts of his heart’s desire and the greedy man curses and spurns the Lord so we see greed covetousness are things that should not motivate our decisions but there is one other aspect and I think there are some people who would say but I don’t gamble to get money I don’t gamble because I’m greedy I don’t gamble because I want to take advantage of someone I gamble because it’s just fun so what’s the difference between me taking a hundred dollars going to gambling with it having some fun and you going to a football game spending a hundred dollars and after the day is done all we both have are our experiences and nothing else what’s the difference and so I would just list a few things about gambling that I think are important to consider if we’re going to look at it as a legitimate um source of entertainment for us so in many cases it does come out of greed and covetousness even those things could be hidden in the heart and the fact that it brings a thrill and excitement to us that many other forms of entertainment don’t are usually because it can it can hit those hidden things in the heart those hidden sins and so we have to take that into consideration when we gamble is that the thrill that comes from it a lot of times it’s tied to um sin even if it if it doesn’t seem like it or if you’re not saying I’m gonna go sin today um gambling gains always comes at the expense of another gambler and as we said it’s a zero-sum game it’s something where there is no value created so for me to win you have to lose so it doesn’t matter if you’re losing fun money or if you’re losing your rent for the month or if you can’t provide for your children because you lost I won and your money comes to me and so but it doesn’t matter because I’m playing it for entertainment I don’t just get to read the rewards only from people who are playing it for entertainment there are people who are gambling and we don’t know why and so again this isn’t something where we say oh that’s the reason we can’t do it but all these things should be in our mind as we consider whether we should or not especially as as believers gambling is highly addictive so even if you have for the last three six months two three years been able to do it once in a while it can be addictive extremely addictive and not everybody gets addicted to anything that’s addict addictive the first time they try it and so that’s something to consider as well as there is a real danger behind it and even if you’re doing it just for entertainment you still could fall prey to it and even if you don’t there are many people who are and you’re just you’re supporting and taking part in that gambling leads to financial ruin in many cases and we don’t have time to turn there but first Timothy 6 9-10 talks about you know the ruin that comes when people chase after wealth and uh love money gambling destroys homes and marriages in many cases those in poverty spend a larger proportion of their income on gambling than those who are wealthy and lastly many of the games of chance can be enjoyed without risking money so if you just like playing the game if you just like the activity you can do it without putting up hundreds of dollars so those are things to just consider you know as we look at it for the most part most people who talk about gambling especially those who talk about it and have either come to Christ after who have really thought about prayed about it will admit that there was something in their heart besides just I want to be entertained so now we have to move on to um contentment and I want us to consider contentment against two other uh Concepts that usually come up when we’re seeking to be content so a good way to describe your attention the contentment is being satisfied with God’s current provision as well as this ability to provide for us in the future so it’s not just saying I like where I am right now I’m comfortable like this it’s knowing that if we lost our job God can still provide it’s being content in knowing that God is a true source of our Pleasures not things that he provides for us and not the things that we can buy and First Timothy 6 6-8 says but godliness actually is a means of great gain when accompanied by contentment for we have brought nothing into the world so we cannot take anything out of it either if we have food and covering we shall be content so you see Paul’s words here is that it’s very simple if you have food and covering and you know we see that those are things that we actually do have that God has promised to us um even if we are unable to work God still has set ways to to provide those things for us so we should be content we should be satisfied with God’s provision so a few things to note about contentment God provides every believer with these Basics and we actually saw that in Mark 10 29-30 and I think you know pastor preached on that recently or at least it’s one of his his recent sermons when we get a full picture of what Jesus said when he promised that those who have left everything to follow him would not be without houses and land and mothers and fathers in this age or in the next and part of that in this age was talking about the provision of the Saints and those who are we are supposed to support God’s main vehicle for this provision as I work as we looked at earlier since we must work for this provision we can’t be lazy and that’s one of the things we have to look at laziness can creep in if we mistake the idea of contentment for inaction contentment doesn’t mean that you do nothing contentment doesn’t mean that if you need more income to survive that you just sit there and say well this is what God has provided and that’s it rather than trying to get a raise get a better job or get a second job so contentment contentment means I’m satisfied with God as my provider and I’m satisfied with how God Is providing but God many times provides for us or can provide for us in ways that we’re not seeking and not looking for them or not wanting to do the hard work when God has opened the door for your hard work to be wore to to be rewarding is laziness if we’re not looking for opportunity those opportunities it may be that God has only provided a certain amount but if we’re not looking for those opportunities then that really is laziness look Proverbs 13 4 says the soul of the Slugger craves and gets nothing but the soul of the diligent is made fat Proverbs 14 23 says in all labor there is Prophet a mere talk leads only to poverty a couple more things about contentment that I think we have to be careful with and even when we try to comfort others who may be going through uh problems and seem discontent we have to be careful with these things so contentment isn’t telling ourselves it’ll get better in this life it isn’t telling ourselves that this is only temporary because this job may come through or this thing may happen or as soon as my spouse gets their act together then I’ll be happy that isn’t contentment or contentment isn’t solely built on that so it will obviously get better for the believer because we will one day be glorified and be with God forever but in this life we have no promise that it will get better and that is not the what we Comfort ourselves in even if it does even if God brings a situation that ends that suffering that we’re going through that’s not what we put our trust in that’s not where our hope is I hope it’s not the end of our suffering in this world in this age our hope is in Christ and so we have to make sure that our our comfort is not the fact that well this may end next week or once I get paid or I’m expecting this big windfall and when it comes everything will be okay because timid isn’t telling ourselves it could be worse so it isn’t telling us or US telling someone else that’s not really a comfort I don’t know about you that’s not a comfort for me I mean if I’m in intense pain and someone says it could be a little bit worse that does it in my pain it doesn’t bring any amount of comfort knowing it could be worse I mean it’s it’s sometimes a good thing to consider but it’s not the source of our contentment and it really isn’t the source of our comfort again it’s it’s Christ contentment comes from trusting in God’s character and his provision in Hebrews 13 5-6 it says make sure that your character is free from the Love of Money being content with what you have for he himself has said I will never desert you nor will I ever forsake you so that we confidently say the Lord is my helper I will not be afraid what will man do to me that’s the picture of contentment so a couple more things contentment shouldn’t eradicate our ambition or give us an excuse to give in to fear and that’s another thing many of us have things that God may have put on our heart we have different desires we have abilities and as we talked about I think in the third week when we looked at entrepreneurship and even getting you know other jobs we looked at that and talked about fear and um looking at risk so being content doesn’t mean that we live without ambition without Godly ambition I would say of course Larry Burkett has a quote that I really liked so one of Satan’s favorite tools is the question what if and that is probably one of the most crippling questions that we can ask ourselves it doesn’t mean it’s unwise I think it’s very wise to look at something and consider what can happen if I go this way and are there safeguards that I can put in place that’s that’s wise that’s why we talk about having emergency funds and while we talked about having insurance and those things because of what if because we can’t presume to know the future we can’t presume to know that God will hold back things that are considered catastrophes so we can’t presume on on God in that way so the question what if is an important one but it can be a very very crippling one it limits us a lot of times for Ministry opportunities because we say what if what if I’m not good enough what if I make a mistake what if I say the wrong thing I mean honestly we would have had this class years ago if I didn’t keep asking a what-if question you know this was something that we talked about probably four or five years ago at least doing and it’s just now happening now because even though I kept asking the what-if question you know finally I just said you know what this this is God I’m using God’s word this isn’t just going to be my wisdom and so even if I make a mistake even if I say the wrong thing even if I don’t describe something well then I have to trust that the Lord will still use this so we have to make sure that the what if question doesn’t stop us from doing things that God would have us to do and a couple of patches that we looked at and thinking about risk Ecclesiastes 11 4-6 and it says He Who Watches the wind will not sow and he who looks at the clouds will not reap and if you remember what that was really talking about was the person who who was so overly cautious about bad weather coming that they would never sow and they would never reap because they would never go out I can’t sew it’s too windy my seeds will be scattered I can’t soak I can’t reap look at the clouds it’s going to start raining it’s bad weather and they stop themselves from doing these things that are beneficial because they’re saying I can’t there’s something that bad that could happen verse 5 just as you do not know the path of the wind and how bones are formed in the womb of the pregnant woman so you do not know the activity of God who makes all things verse six sow your seed in the morning and do not be idle in the evening for you do not know whether morning or evening sowing will succeed or whether both of them alike will be good so if you have the opportunity to do something you have the gifts the talent stability or the desire to do something do it because you don’t know if this is the thing that God plans to prosper and you don’t know what success looks like in this area anyway because God’s plans are different than our plans and just because it isn’t a successful business venture and doesn’t make us a millionaire it doesn’t mean God hasn’t used it and here’s another passage I think probably my favorite in talking about this Ecclesiastes 9 10 says whatever your hand finds to do do it with all your might for there is no activity or planning or knowledge or wisdom Shield where you are going and of course Ecclesiastes 9 10 and then Matthew 25 24-27 provide um more encouragement to take on wrestling and of course there were caveats with it that we can’t go into now but I believe it was the third lesson in this series that we talked about all the different things to be careful of when we are taking on risk now we’re going to talk about evaluating financial decisions and actually this contentment versus fear laziness kind of fits into this so there are some Concepts that I think are extremely important for us if we’re going to evaluate financial decisions we don’t need to memorize definitions or formulas there’s only one formula here anyway just for people who are curious we don’t have to remember those things we have to just think through these Concepts and learn better learn how to think through some of these financial decisions I personally think that anyone who goes to college should have a minor in economics because it really helps you to think through different Financial topics and just making decisions so one thing that we have to consider is the time value of money and all that means is money available in the present is worth more than having the same amount in the future and there’s a formula here if anyone cares it’s actually a pretty simple formula it just has to be written out that way just because of the limitations of the software but it is really simple if you look at all these things it just says whichever thing you want to know if you want to know how much money you’ll have in the future then you need to know how much money you have now then you need to know what the interest rate is the number of compounding periods in a year again and then how many years you’re going to invest so pretty much just saying what’s your interest rate how often is that interest going to be calculated and how long are you going to be investing and that’s how you know what you’re gonna what your money will be in the future and we’ll talk about compounding in a second so have an example to try to make this a little more clear so assume that somebody’s going to invest ten thousand dollars for one year at ten percent interest so we go to our formula and we stick in everything 10 interest divided by one year one year um and we come up with eleven thousand dollars so that one’s easy ten percent you know you know ten percent of ten thousand is going to be one thousand so at the end of the year they will add one thousand dollars to your account now we can also use this to figure out the future value of money in today’s or the value of future money in today’s dollars so the first one said if I have money today and I know how long I want to invest it and I know how long or yeah let’s say the long long one invest it I know um how much interest I’m going to gain and I know how they compound it then I’ll know how much money I’m gonna have in the future so it’s the thing that says is it worth it for me to put this money here or could I do something else with the money and have more money later this says and this is the present value this says if someone comes to me and if Mike says Khalif I want you to do this for me and in a year I’ll give you ten thousand dollars in my mind I have to think it’s not worth ten thousand dollars because things will be more expensive in the future right so I can’t look at what my parents were making as far as their salary and say I’m doing much better than my parents were because look at my salary compared to theirs because things are so much more expensive you know I think uh you know my parents first car was something like five thousand dollars like they bought it you know um I mean it was a new car design it was five thousand just talking to someone who was contemplating buying a vehicle for thirty five thousand dollars that was new so unless our income is seven times as much then they may have been better off considering everything so with inflation we understand that as we move forward our money is worth less and less and less and so we would look at that and I would say gee if I was able to get 10 interest on money then what you’re saying is you would give me today nine thousand and ninety dollars so that’s how much ten thousand dollars a year from today is worth if you’re able to get 10 on your Investments so then you ask yourself well if somebody wants to give me money in the future for instance if you loan someone money and you’ll say I’ll give you this ten thousand dollars now and you pay me back ten thousand dollars a year from now they’re not paying you back ten thousand they’re paying you back nine thousand ninety dollars and so when that happens when you go to a bank what’s the one thing that they do to make up for that interest right that’s part of the reason why they charge you interest is to me is to make up for inflation to make sure they don’t lose money there’s other reasons why too but they make sure that they’re not losing money and that’s part of it so that’s something we have to consider when we have any financials even if it’s ten dollars a hundred dollars it’s enough for us to say what’s really the equivalent here we’re talking about money today are we talking about money in the future and understanding they have different values even if we use the same figure they have different values to us because they have different values in the overall economy and there was a famous quote that well okay at least it’s famous to me I don’t know it looks like I’m probably Bound in the middle of the age I see a lot of people younger than me a few people a little older than me so a lot of people may remember this quote some may not I’ll gladly pay you Tuesday for a hamburger today and that was Mr J Wellington wimpy and that was something that he used to say all the time he’s from the Popeye comics and cartoons and stuff and this is what he would say all the time I’ll gladly pay you Tuesday for hamburgers today of course he would because Tuesday the money that he gives us is worth less than it is today he knows that so he’s probably sticking his money in the bank until Tuesday earning a little couple of cents on interest and then paying us what we what he owes us and doing that over and over and every time he’s saying hey if you give me this today then I’ll give you that late and what is that credit right so this is again what we talked about with being extended credit so technically if he did this he would be in debt to us for the price of one hamburger but this is why he’s willing to do this is because he knows he’s getting a better deal he’s getting something today and not having to pay for it and that essentially is what puts many of us into financial trouble is that we consume things today and have to pay for it in the future but in the future we’re not benefiting from that consumption for the most part because we buy things that have don’t have too much of a lasting value and so we’re no longer benefiting from that consumption and so we have all this money going out and it doesn’t even contribute to our happiness it doesn’t even contribute to our goals because we’re paying for past things we’re paying for something that we already bought and we enjoyed we used up we threw it away it’s gone it’s done we totaled it Whatever happened it’s over and we’re still paying for it so there’s another um there’s something else that makes this even more powerful and that’s compounding interest and we talked about a little last week uh when we talked about saving for retirement and we use the example of one person who invested two thousand dollars a year for six years and someone else who invested two thousand dollars a year for 37 years but since they started at different points they ended up pretty much the same exact amount of money at the end twelve thousand dollar investment versus seventy four thousand because of compound interest what does that mean so you have uh sum of money you invest you gain interest on that then before interest is calculated again they add the interest that you already earned to the principal so now you’re earning interest on your original investment plus the money you earned in the past so here’s one example you know using the ten thousand dollars still so this is how it would work the first year again you put in ten thousand dollars you get your ten percent interest it compounds at the end of the year you end up with eleven thousand dollars now when you earn interest you’re earning interest on eleven thousand dollars ten percent of eleven thousand is Eleven Hundred you end up with twelve thousand one hundred so you’ve earned an extra hundred dollars because your interest is compounding there are other forms of compounding here um I mean you can think of any type of of scenario really depending on who is the one who’s handling the money but we have quarterly monthly and daily and these are the formulas but as you can see here quarterly four times a year a monthly 12 times a year your money compounds and uh daily would be actually I think for the most part daily would be 360 not 365 but you know for the sake of this we see it it um so it can make sense here so this is at the end of one year how much money we would have depending on how uh our money compounds and credit card companies most of them they will quote and charge you an annual rate but they calculate interest daily so obviously it doesn’t mean that they’re calculating the entire thing it means that they’re dividing it by you know 360 or 365. and but you’re paying that you actually see on your credit card statement what the daily rate is if that’s what they’re doing some of them wait to the end of the month and they say what was your average daily balance and then they um charge the daily rate to that or they can charge the monthly rate it really depends and it’s always in a very small fine print you know when you first get a credit card and it seems like a package that’s like 10 pages and it’s written at like four point font and it’s all these things on it and and it’s somewhere in there that’ll tell you the methodology that they use of course you should be able to call and ask them provided the rep knows about this so compounding interest is something that’s extremely powerful because it means that you’re not only gaining on the money you’ve invested you’re gaining on the money you’ve earned so you’re it’s it’s a big snowball and as you earn more money then they give you interest for all of that and now you’re earning a lot more interest and now that larger amount of interest is added to the principal and of course if you’re adding more to the principal yourself each year then you see this huge amount and that’s how you can start off with you know three four hundred dollars or even a hundred coming out of uh your paycheck for a 401k and then when you’re close to retirement look at it and it’s seven figures that’s how that works and the fact that your 401k won’t be taxed that’s another huge benefit to that another thing that can um concept to consider is expected return so this is the profit or loss that you expect to receive from an investment or group of Investments so in Texas to account all the factors that are involved if you have a um and this is considered like a portfolio of Investments and the portfolio is not just some professional thing it’s everything that you have that you’re using to earn income make money so multiple inflows and outflows of money and you would use weights and probability so you would say well this one has a 50 chance of earning x amount of dollars and so you weight that by you take half of that and say this is what I expect to return because you only have 50 50 chance so I mean there are obviously ways to do it they’re actually free calculators online that will help you do something like this um you would take into account what the risk is uh what the risk-free interest rate is and usually the one-year t-bill is the treasury bill is the um proxy that’s used to figure out the risk-free rate but the point of all this is to be able to look at a collection of Investments as a unit and see how one particular move will infect affect that entire unit of Investments even considering our house and everything else we can look at this especially if you own either rental property or you even renting out a space in your main residence you can see how doing different things will impact your overall uh cash flow now and also you’re projected in the future so that’s again everyone won’t need to do that but it’s something to consider even with the smallest financial decisions you consider money today and money tomorrow are not worth the same even over talking about the same amount because of inflation and also because of um compound interest that you have ways to not only generate on the money you put in but the money you earned from that as well and expected return is considering if you do something if you loan someone money if you buy something sell something then you consider what the impact is in your overall finances so unintended or indirect costs so these are expenses that aren’t directly related to a particular choice but they’re necessary to support that choice so some of the things would be gas food energy time maintenance taxes Insurance do you need training licenses there are a lot of things that we purchase or a lot of moves that we make and we don’t consider everything that’s involved in it and actually we’re going to look at some of the things that may not jump out at you for two of those things which are college costs and housing and we’ll look at that in a couple minutes but it’s we have to know that before we enter into any Financial agreement the purchase price is usually not the only cost associated with owning something and so we have to consider or even just consumption there are other things involved so we really have to think through it really pays to talk to people who’ve been been through whatever you’re about to do even if it’s purchasing insurance or anything else it pays to get a perspective of someone who’s done it because they’ll say look I didn’t consider this I didn’t know this was going to be so large I didn’t know we were going to have to spend so much money in this area I thought I was just going to enjoy this thing after I put out the initial amount okay so valuing your time and this is probably the no I think I’ll say that a few times that this is probably the biggest thing to me or at least the thing that I that I love looking at but I’ll say that more than once here um there’s a quote by I have no idea uh it says you can earn more money but you can’t earn more time and I think that’s just such a valuable thing I mean I feel like just like closing the prayer now I mean you know you can earn more money you can’t earn more time and so when we think about that trade-off many times it’s worth it to buy time if we can so there are a couple of things that we have to consider when we think about value in our time the first one is we refuse to pay for convenience and I was a king of this when like especially when I first started driving and you know I didn’t have much money at all but I still wanted to just go out and do things so I thought I was really slick and I thought like I can just I don’t say get over but I thought I can like avoid certain things so a couple of things I would do and I talked about this and um and actually a blog post I would drive out of the way just to avoid a toll I mean it got so bad it was like a joke among all my friends that I would really especially because where I live if you look take the Garden State Parkway if you guys ever go north of here and you’ll notice that as soon as you get into Irvington and North there’s like a toll at every exit like every mile they charge you a toll so okay I’m gonna get off of Maplewood then and then the Union toll went up all right so I’m gonna get off at that McDonald’s right before the toll go through Union and I’m gonna come and I would do all of this crazy stuff just so at that time it was 25 cents avoid paying 25 cents so I would add 20 minutes to my trip sometimes because I would avoid the tolls and then get back on after the tolls so I would like drive through North and I’m driving through the largest city in this state it’s probably the most packed City in this state dealing with that type of traffic because I didn’t want to pay a couple quarters and and I just thought I’m saving money I didn’t consider my time I didn’t consider even gas money gas that I was burning or wear and tear on the car by going from highway driving to stop and go traffic in a big city I didn’t consider any of that I just said I’m not putting those quarters in the bin and that was enough for me another thing wait in the line or driving far to get cheaper gas now there’s a Costco that opened up I don’t know maybe like two years ago um by us and they always have the cheapest gas right and I actually put in the number so I wouldn’t forget how much many times I go it’s after work and there will be a 25 to 30 minute wait for gas now I know someone personally who pumps the guys there but she never gives me the hookup she never like Steps out or waves my car in anything like you know I don’t get it I’m not gonna look over in her Direction you know because Melinda Melinda may think I’m looking at her but I’m not looking at Melinda so but I’m I’m not gonna look over there but you know I don’t even get the hook up there so I could I have to wait 30 minutes just to get gas or I could just drive two blocks up the highway and pay 10 cent more per gallon and save a half hour so what do I do do I save that dollar 40 for the full tank or do us wait in line for a half hour well a dollar forty for a half hour is 280 an hour if I offered you a job and said I’ll pay you 280 an hour would you take it oh of course not but many of us are willing to wait a half hour to save a dollar forty it’s it’s the same it’s the same concept and maybe it’s a little more if you have a bigger tank than me uh or if you wait till your tank gets on E which you wait till your tank gets on E you probably shouldn’t be sitting idling for a half hour in a line but um you know you get the idea though we have to value our time and many times these little conveniences that were unwilling to uh to pay for Rob us of ours out of every week trying to stretch inexpensive perishables now this is something and these are just examples I remember from my childhood but adding water to ketchup oh that was the thing I mean you really sit there at it shake it up and then get into anything really anything that comes in that type of bottle and I just think about all of the time I spent doing that and especially doing it with name brand ketchup so I’m spending more money for it initially unless they have a coupon spending more money for it initially but I want to do that it’ll be better to buy the cheaper store brand catch up and then just don’t worry about that I mean because there’s other ways to still get the savings and you know you so you have to consider those type I mean these are like little trivial things but these are things that show where our mindset is uh when we consider these things so one thing I say is sometimes the free time that comes with paying for convenience makes the additional cost worth it and that’s really what we have to consider we really have to evaluate whether it’s better to save the time or save the money we may be in a position where we have to get that savings today we have to get that that Financial savings we may be in that position and there is nothing wrong with it there’s nothing wrong with saying I’m going to take extra time to make sure I save money because things are tight right now no in the long run is probably more beneficial to get the time savings but some of us don’t have that luxury we’re not in a position where we could just say oh okay I’ll pay the extra no problem you know many of us don’t have that luxury to do it and many times we’ll find that it’s not worth it many times that convenience is just a way to get out of hard work or thinking um thinking through something and thinking for better Solutions but sometimes it is that we’re actually in a position where we should be looking for the time savings um another aspect of this is not considering we don’t consider trading time for money so one thing that I’ve kind of learned in trying to start a business is outsourcing is a great way to maximize your time but focus on the things you do well and the things that are important there’s sometimes the way that your life is set up you can’t do everything and trying to do everything yourself doesn’t doesn’t make sense doesn’t work or sometimes the trade-off is better as we talked about I don’t know maybe a week or two ago one of the examples that we looked at is a family that has two incomes and maybe Works longer hours but they’re able to do more things financially but one of the things they have to do is eat out more and we looked at that and saying you know what that can be a very wise move in their situation and it’s something that those are the types of things that we have to evaluate some do-it-yourself Endeavors may be Noble yet unwise especially if you don’t know how to fix something I mean you know like I love to be be like Steve and just like you know what my car needs a new engine all right let me just take this weekend pop out that engine and just put in a new one I mean you know this is not a common thing people walk around doing if I tried to do that I I would be taking Uber for the next half of a year just trying to figure out how am I going to get this thing out the car so for me it doesn’t make any sense to try to do that at all but it makes sense for someone who has the skill and the ability and so there are things that we and you know what there are people who take on projects and say I didn’t know anything about this when I started I wanted to do it I went to Home Depot took a class I looked online I did this and it turned out great look at my bathroom look at my kitchen look at what I was able to do to my car because of YouTube videos and those things work out but there are times when they just won’t and trying to do it yourself to save money isn’t always worth it if you’re going to do a horrible job and end up having to pay someone to fix it anyway or you end up spending so much time on it that you don’t get any benefit from it one thing I would suggest is to assign a value for each type of hour so whether it’s work work is easy because we actually get paid so we can figure out what we’re paid an hour for the most part um church family time devotion time Leisure so what I’m saying is if I ask you to take an hour out of one of these activities how much would it be worth for you what would you charge I tell you now if you ask me to do something while I’m at work I know exactly if I have to not get paid for an hour you need to at least make me whole you need to at least cover that amount but if you ask me to take away time spending it with my wife it’s gonna be a lot more I like her a lot more than I do Ruckers so I’m going to charge you a lot more if you want me to take away family time than take away time that’s I’m just sitting watching TV or something like that so that’s something that we have to consider now I’m going to try to rush through a couple of Concepts opportunity cost oh man I could talk about opportunity costs like oh for so long but it’s the benefit of your next best option so I’m gonna write something long and talk about it quickly if you have more than one option on how to spend your time your money or other resources your opportunity cost is a potential benefit of the option that you didn’t choose so what that means in English the classic one is whether someone should go to college after high school or work right and so choosing to go to college what your opportunity cost is now there’s other costs associated with college but the opportunity call says what was the benefit of the thing that you gave up so the cost of choosing to go to college is all of the income you could have had if you were working full-time if you were working all those hours that you were taking classes so even if you choose to work while you’re in college you still have a lot of time when you can’t work because you’re doing school work you’re doing other activities or you’re in classes so all that time is time you could be working and so the the opportunity cost is all the money you gave up by choosing to go to college so that’s the idea and everything in life has opportunity cost if we have more than one option we have options that’s one way to consider it besides all the direct costs of this activity another cost is what am I giving up by not doing that activity and it’s not the price of the whole the benefit of the whole set it’s the benefit of the very next best choice it’s what we would be doing if we weren’t doing this that’s the opportunity cost the opportunity calls for all of you being here now is more sleep that’s what you all gave up to come here early now there could be other things maybe somebody wants you to do something for the most part for me I know slink I was telling someone I went to bed like five something and woke up at what seven seven fifteen so yeah I’m going on like two hours sleep now so my opportunity cost to stand up here is sleep so that’s that’s something that we have to consider another thing sunk costs these costs represent money that you already spent and can’t recover or gain additional value for here are some examples repairs or non-fundable deposits here’s a couple more and this one Sherry and really is going to latch on this one continuing to watch a horrible movie because you feel like I’ve already invested an hour in this movie I need to find out how it ends even if it’s horrible so but it’s a sunk cost you’ve already spent that hour watching and and terrorizing yourself for another and your husband for another hour is not going to get you back that first hour if you and the classic one is is repairs on a car if you have spent 500 to fix your car two months ago then last month you had to do something else that was a thousand dollars and now you have a 300 break job you can’t say I’ve already put fifteen hundred dollars in this car that has nothing to do with your brakes and and it’s very in economists talk about how irrational considering sunk cost is and I think that really shows it you can say I’m gonna give up on this car because it costs cause problems in the past and so I’m not going to deal with this car anymore and I’m gonna go buy a new one because it won’t have these problems we can’t think about the thing the money that we put in already because we’re never going to get that back the fact that we put in that money means we have new parts on the car that we’ve increased hopefully increased the longevity of the car possibly increase the value of the car depending on what we did so having a car today means I have this situ this this choice this decision in front of me today which way do I go a sunk cost is something that you shouldn’t consider because it’s money that was already spent and no matter what you do now you can’t get it back and you can’t get any more value from it we should also when we’re evaluating decisions consider our spiritual goals and I’m just going to list them there because we talked about them in depth um in the earlier session two things that we have to do as well prayer and seek wise Godly counsel for any decision that we make and here are two things and unfortunately I don’t have time to like go through and do full examples but here are some of the things if you’re considering College here are some of the some of the things to consider with it tuition books fees uh which are like uh school fees and then loan fees application fee supplies that you will need equipment like a laptop or something else if you go away where you need a car uh will you travel that’s something else to consider as well if you’re leaving home how often are you going to fly to college and fly back and are your parents going to fly out to see you and fly back that’s all the cost of your education right lost opportunities so you had the opportunity to Apprentice maybe you could have traveled you could have take gone to Europe and whatever people do in Europe you could have done that for a year right so you could have just I don’t know walked around and ate baguettes and well were they cheese and stuff from France I don’t know so you could have done that right you could have done something that had that type of benefit you could have been an apprentice and learned learned the trade you could have went to a trade school instead of going to a full College time it’s something else that’s a cost and I just put the stat there nearly 60 of students take six or more years to graduate so there’s no I’m going into 18 coming out at 22.
that’s actually the minority of people who go into college who have that experience future income 59 of people with master’s degrees and 22 of phds are under employed so these people paid for degrees and aren’t using them and possibly aren’t even getting paid for them housing there’s a bunch of things to consider with housing I’ll say uh maintenance maintenance the suggestion is to s that you will spend or prepare to spend at least two percent of the value of your home every year so if your home is worth four hundred thousand dollars then you have to spend or at least be prepared to spend eight thousand dollars a year some years you’ll spend none some years you’ll spend 20 or 30. so be prepared to spend two percent of the volume and like I said there are some other things here another one to consider is loss of freedom that’s a big one many people own a home can’t just get up and move you know if you get a job offer you may have to sell your home for a loss or you may not be able to take certain opportunities and one thing I would just say for us to consider when we look at things that we think that we need uh easy credit which is ability to to borrow easily has allowed everyone to be able to afford anything there’s no longer a separation between you know the Hat there’s not the Haves and the have-nots as there used to be you can’t there’s no real middle class because everyone who’s middle class borrows their way into looking like they’re upper class so four big ones a health care housing autos and education where they’re funded primarily through loans the standard of what is considered livable continues to increase again watching these housing shows people going to a bathroom or kitchen is working perfectly fine and say all the appliances aren’t matching we this is a total gut job I mean I mean that type of mindset that says oh this is the stainless steel I can’t use this it’s it’s that mindset that we have now that wasn’t there 20 years ago because we can borrow and and change those things industries where purchases are fueled by debt have all experienced price increases that are not tied to wage growth they’re tied to borrowing the fact that we can borrow more helps us to spend more it’s not that we have had increases in wages and increases in productivity that allows us to spend more which is why we had a housing market bubble um a few years ago luxuries to become standard and these industries are experiences unsustainable price increases so as you go out and consider wants and needs first just remember what uh Paul said you know as long as you have food and covering with those things you should be content and if you’re going to go into debt or be a bad Steward just to try to reach this level because you feel like everything people have in society is something that you deserve or you’ve earned then you really should pray about that consider all the things we talked about and seek the advice of wise godly people that you trust let’s go into prayer God we thank you again for how your word instructs us we thank you God these practical issues that we have to deal with with being in the world that we’re not left alone we’re not left guessing but that you have given us instruction you’ve given us principles to apply to many of these things and we pray God that we will be wise and that we will be faithful God to you realizing that this is not our home that we aren’t here forever that we’re just passing through whereas pilgrims whereas those who are looking forward to our Heavenly Home looking forward to a city not built with hands and I just pray God that we always have that perspective looking forward to to the hope of the coming of our Lord and I just pray God that you would just be with us during the service you will bless our time bless the word is his preach and that you would even bless our time of fellowship before and those of us who will be in home group you’ll bless that time as well and that all will be done for your glory and honor and we ask this in Christ’s name amen