It Costs More To Be Broke Than To Be Wealthy
Not long ago I was doing financial counseling with someone who was seeking to get out of debt. They began to talk about all the bills they had accumulated over a number of years which has grown into a large amount of debt. They had gotten into the cycle of using credit cards to satisfy their wants and now needs due to the lack of cash flow they desperately needed a plan to help them get back on track and headed towards financial freedom.
We discussed their plan to pay off their debt which began with a simple exercise of having them add up all of their debt which included writing out the annual percentage rate (APR) for each credit card or loan. After everything was added up we discovered a disturbing fact – they could not afford their debt. High interest rates combined with minimum monthly payments was diminishing their cash flow and making it an impossible task to reduce their debt. I came to a startling revelation that it cost more to be broke than wealthy.
Many of us do not take the time to familiarized ourselves with our own debt. We are so blindsided by the instant gratification that swiping the credit card provides that we don’t realize that the item that we just paid for will take us years to pay off. It is important that we begin to take steps to educate ourselves about the debt that we are acquiring. I believe the more we understand our debt and know what we are paying off we will more incline to pay by cash, delay gratification or decide that we do not need that item after all.
Let’s do a simple exercise.
Know Your Debts:
Add up all of your credit cards including how much you spend on overdraft payments, over the limit fees and late fees. Also, make sure you add all loans and mortgages, this includes check cashing loans (I know these hurt but add them up anyway.) and students loans. Calculate how much is owed and how much interest is being paid on each debt.
Proverbs 27:23 Be sure you know the condition of your flocks, give careful attention to your herds…
What Did You Discover About Your Debt?
When you complete this exercise, think about what you discovered about your debt? Below are a few suggestions that should come to mind.
Pay off the current debt now!
Stop the cycle of debt by not acquiring more credit card debt.
Renegotiate terms of the credit cards or loans.
Do you need to take steps to renegotiate your credit terms?
Write or call your creditors to renegotiate the terms by asking to lower your interest payments. Ask for a new and lower repayment schedule, request a lower interest rate or just ask to settle the debt for a lower amount.
Close your eyes for a second and imagine what you would be able to do it if you took all the money that you were spending on credit cards, loans, overdraft payments, late fees, check cashing and used that same money to invest in stocks, for a business or your retirement where would you be now. Investments have a risk but you always loose with debt.
Financial Stewardship:
It all starts with a dollar for every dollar that you make there is 3 things you can do with it.
1. Spend it – We will not spend time on that I am sure you know how to do that.
2. Lend it – Put it in the bank so the bank can lend it out.
3. Own Something – Buy something that can be worth more in the future like business, a homes, stocks and other investments.
To be good stewards we need to be responsible for how we are managing our money. It is our responsibility to managed how much we spend, how much goes into the bank and how much we invest. Let’s look at how you spend your money and where you spend every dollar and how much do you save and invest?
This is my first official message to you. I will be encouraging and challenging you every week to become better stewards over what God has blessed you with. I am dedicated to making sure you are equipped with the right information, resources and tools to become A BETTER YOU!
Three Dimensions of Stewardship: 3T’s -Time, Talent and Treasure:
God requires that you are a good steward over these three areas of your life: Time, Talent, Treasure. Time, you must learn to manage your time; talent you have skills and gifts and lastly treasure, your finances need to managed appropriately. All of these areas work together, when they are managed properly you will be able to become A BETTER YOU!
Tell me what you discovered about your debt?
What new choices do you have to make?
Are you ready to take the steps to get out of debt and move towards financial freedom?
What is holding you back?
Next Week: We will be getting you out of debt. God Bless you and tell a friend.
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Comments
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Don’t know where to start with Soular…LOL. I guess from the top..
Lending money is a service, or a favor. The exchange or return of the favor is interest. Usury, is excessive interest where it is so high the loan could never be repaid.
Taxation. Corporations are willing to pay taxes for things like national defense, roads, sewers, etc.. Things that either protect or improve the community. They’re not willing to pay for things which consume finances, like run-away beauracracies. Besides, there’s nothing you can do about taxing them and they raise the price of goods as a result. They will never truly pay taxes.
Lastly, people naturally think in terms of what they got and don’t got. That’s the only way they have to measure how much of the culture they’re a part of or privy to. And that’s the basic issue of being human. How much of the culture are you part of, and or relevant to. The only true measurement of that is reflected in your possessions….
i thought not having money was the worst part of being broke. silly me
damn dont remind me
for yall religious kats….
this is why the Bible/Quran is against “USURY” aka borrowing money and having to pay interest on the loan. it puts you in a bad spot
plus the tax laws are setup to make employees (servants) pay most of the taxes…. Corporations got more rights but less responsibility than natural-citizens these days
we gotta stop tryin LOOK LIKE balling, if we aint really got it like that….
but ONE THING I GOTTA STRESS…. is that we gotta stay away from the ‘lack’ or poverty-mentality. if all we think about is what we DONT GOT then we are attracting negative cash flow…..be careful with ya thoughts n emotions cuz whatever you think/feel, you gonna draw that to yaself wether good OR bad
now playing-
CAN I BALL by Mac & Soulja Slim
UNTIL WE RICH by Ice Cube & Krayzie Bone
This is great! I believe this will help people get back to “basics” with their finances. In order to accomplish our dreams, we need to come to reality with our choices … regardless, if choices were good or bad.
I have already made steps to my FINANICAL FREEDOM by bring lunch to work, recycling plastics and cans … not a lot of money but it’s great to know I’m doing my part in saving the world! =0)
Actually it’s the producers that are the problem, not the consumers. Most consumers have little choice in their spending habits, although I admit they do tend to impulse spend too much. However, those expenditures while adding up, it’s only due to a proportion of their income. Which doesn’t amount to much.
At any rate, the issue in reality is that producers want to pay rock bottom wages for production, yet collect top dollar at the sale.
As a result, consumers are only willing to spend at rock bottom at the point of sale.
Natural forces however have no opinion or preference and will find a happy medium for both tendencies. You can tell when this occurs because of the word “clearance items”. LOL.
But, this is the reason jobs are going to places like china and underdeveloped countries, as we all know. Producers don’t want to pay much in wages and consumers therefore can’t pay much in prices. If they do, there is are no savings, if there are no savings there are no loans. If there are no loans, there is no growth.
Which is fine if you have a stagnant population. With a growing population, you have a shrinking of the pie, obviously.
Now, it would be impossible to regulate all of this with perfect symmetry. So, we have good times, ok times and hard times.
But, since everyone pretty much has this figured out I think the people with the problems simply have given up on trying to get ahead or even be more sensible because they feel as though they have no choice. The forces at work are so far out of touch with them, they feel no real connection, even to the choices they make.
What good does it do them? All it takes is a bunch of crooks to screw up this or that financial system and they’re out of work, lost all their collateral, principal, equity and savings, no matter what….
LOL