|Photo credit: Lendingmemo|
The “other side” of the bank is lending and debt (the REAL reason the banks is in business).
The bank uses the savers money to lend it to the borrower.
A case in point:
Joe got his first credit card at 18 years old. He bought $1,500 in junk the first 6 months and only made the minimum $25 payments every month.
3 years later at 21 he was still using the card. He added more balance to it. As he kept up making the payment each month, the company added more available credit and he maxed that too.
He was still making the minimum possible payment and most of his bill was from the original purchases he made back at 18 years old.
The majority of his payments had gone to interest. Very little of it went to pay off the balance he used therefore he has a never ending balance.
“You must borrow, you must have it NOW!"
~DEBT: Good or Bad?~
God told the Jews that He would make them lenders and not borrowers in Deuteronomy 28. God wouldn’t make them lenders if borrowing was a sin. God won’t be a part of helping someone sin. At the same time He said He would make them lenders not borrowers.
If you don’t have peace on the inside, if you have a funny feeling in your gut that makes you uncomfortable regarding a decision you are about to make, you had better cancel it and take a step back.
Used wisely any of the various tools offered by banks can be useful for you to leverage your time, money, and to improve your life quality. Used badly the loans will become a vice to crush you.
~Rent VS Buy~
What I want to examine here are the principles to consider when thinking about using credit.
Many times the owner has a mortgage so you are already paying a loan; it’s just not your loan. The bible says that the borrower is servant to the lenderand anyone who has rented for any time knows that is true.
By renting you borrow the house or apartment from the owner. The owners or managers come in often to update this, or inspect that. You are limited to what you can and cannot do to the property. Most won't even allow you to paint the walls yourself.
They even call the owner a “land lord” The owner is the lord over your land.
The bank owns the house, but you are usually freer to do as you want than you would be in an apartment. The bank owns the house and has the right to foreclose on the house when you fail to pay.
Of course so does the apartment.
You must decide which entity you are going to borrow from. The land lord or the bank? Both have merit.
Rent from the bank
If you want to rent, fine, rent from the bank. We'll keep your rent payments fixed and in 30 years we'll give you the house for free!
Of course you will want to be seeking God to get that house debt free faster, but it is a good point.
- Follow the Peace of God. Don't move if you have a sense of unease about it.
- Always seek a payment LOWER than you can afford. Houses have a way of taking on extra payments. Many apartments cover water, sewer, and trash; however as a home owner that is now your cost. Houses often have Home Owners Association Dues (HOA) which can be expensive.
- Pray until you have clear direction from God.
- Learn as much as you can about credit, credit scores, and the loan process before you jump in. Take courses for free online at various websites (see the resources at the back of this book).
- Get a firm grasp of the process you will go through if you “buy”.
Render therefore to all their due: taxes to whom taxes are due, customs to whom customs, fear to whom fear, honor to whom honor.8 Owe no one anything except to love one another, for he who loves another has fulfilled the law.
If you have a tax bill due, pay it. If you have a light bill due, pay it. If you have an auto loan due, pay it. Don’t get behind if it’s in your power to do so.
He made provisions in both the old and new covenants to help people become debt free. The jubilee laws of Israel in the Mosaic Law were the very foundation of our bankruptcy laws in western societies. Lawyers studied the bible to help create these laws to remove debt from peoples’ lives. If however it’s in your ability to do so, make paying your bills a high priority. If you agree to something you had better make sure your word is your bond and you keep that promise. That’s also known as integrity. If you expect God to honor His word to you, He expects to you to honor your word to Him and to others.
~Secured VS Unsecured~
~Open VS Closed~
~Lines of Credit~
~Using Open Credit~
~Using Open Ended Credit~
A great rule of thumb here: “Any big decision should be able to wait 48 hours.”
The Insider is a BIG fan of Dave Ramsey:
- Go read/listen/watch Dave Ramsey and he'll teach you how to do it right!
- Listen to The Dave Ramsey Show (HERE)
- Or by his most popular book: (HERE) The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness