Moving toward personal financial freedom
November 29, 2005
“The rich rule over the poor, and the borrower is servant to the lender.” Proverbs 22:7
At one time I was the pastor of a new and young church that displayed some very interesting financial dynamics. One morning I was contemplating our church’s overall stewardship in the previous three months. Gifts to the church revealed that there definitely was not a biblical understanding of tithing. By simply taking the county’s median income per family and multiplying it by the number of families we had in the church, the result revealed what our church family’s income potentially should be. Ten percent of that result should total the gifts received by the church. We weren’t even close!
What broke my heart about this was that I knew there was a dimension of victory in the Christian life that most of our people were not experiencing. God had so much more in store for them! As a result, we then took the month of May and prepared an in-house series of Sunday School lessons that the whole church learned together in every age group. The topic for the month was what the Bible has to say about tithing and giving. In tandem, I preached a series of messages about these subjects and in just four weeks, our church’s giving more than quadrupled! It continued to grow every month and never dipped again … until the following January. What happened?
The scripture tells me that as pastor, I should know the condition of my flock. So I began to pray and ask the Lord to help me understand what was going on in my church family and I asked Him to restore the spiritual victories so many had told me about and to restore a heart of obedience in our church family. By mid February, the dip in giving was gone and we resumed a growth pattern again. I believe the Lord then revealed to me what was going on.
We had a young church and many young families made up the membership. In fact, I was pastor for seven years before we had a funeral. It occurred to me that the January dip in giving was due to Christmas! What was happening was our people were heavily using their credit cards for Christmas purchases. The bills were being paid in January and February. Now we had a new set of lessons to consider.
So, we then began the adventure of discovering total biblical stewardship principles in an effort to be released from financial bondage. What we taught our people about personal finances, the church as a whole had to demonstrate in its own financial practices. In most families, the largest stone around one’s neck is a home mortgage. In about four years we eliminated the church’s mortgage as we set the example.
There are several disciplines you can exercise toward personal financial freedom. One that will save you hundreds of thousands of dollars is a simple plan of principal reduction on your mortgage. A small amount paid on the principle each year will pay off your mortgage in about 15 years rather than 30 years. The result will be a personal savings of hundreds of thousands of dollars! Here are three simple ideas.
1. Make one extra mortgage payment toward principal reduction each year. This 13th monthly payment to principal will cut the time of your mortgage in half!
2. Another, less painful, approach is to make a double principal payment each month. The amount of principal payment is usually stated in your payment book. Or call your bank. They will provide it if you ask.
3. Call your bank and ask them what the payment schedule for your 30 year loan would be IF it were on a 15 year amortization schedule. Then make your payments according to that schedule. It is, generally speaking, a 20 per cent higher payment per month. A $500 monthly payment would be increased to approximately $600.
These may hurt just a little each year, but the result will be a savings of interest dollars that are enough to buy three more houses just like the one you are in!
Now, avoid the BIG temptations! In a few years, when your debt is much smaller, the great temptations are to (1) buy a bigger more expensive home or (2) get a home equity loan to purchase a new car or other “luxury”. There may be other reasons to sell your home and buy another, but don’t do it to simply get a bigger one. To do so will defeat the purpose of this strategy to get you to become a homeowner, not a “mortgage payer”. Just think of the kind of things you could afford to do if you had NO house payment!
The most common objection to paying off a mortgage that I’ve heard is “I’m letting Uncle Sam pay for my house because I am claiming the mortgage interest as a tax deduction. I don’t want to lose those deductions”. This argument is a money bucket with huge holes in it.
The issue is not taxes, the issue is money that is leaving YOUR pocket and going into someone else’s pocket. Does it really matter to you if Uncle Sam gets your money or a bank? The fact is that someone else is getting your hard earned money! I asked a CPA to figure for me the actual COST to me if I had no mortgage versus the income tax deductions that were available to me. His response was immediate. He said, “If you have a mortgage, you will make twelve (12) payments to the bank. If you have NO mortgage, you will make the equivalent of three (3) mortgage payments to Uncle Sam in the form of income tax. This means nine (9) monthly mortgage payments stay in YOUR checkbook instead of going elsewhere.” Now YOU decide what you should do.
If you and/or your church want to explore the larger picture of how to be released from financial bondage, contact Spencer Hutson, your Missouri Baptist Convention’s Stewardship Specialist. You can reach him in several ways. Call him anytime day or night at (800) 736-6227 extension #222 and you can leave a message. Or, e-mail him at shutson@mobaptist.org. Spencer has many fine tools to assist you in this great Biblical adventure.