Faith & Finances: Part 2

Posted on February 04 2009

I found myself reflecting back 30 years to a testimony I heard from a high school teacher during my senior year. This teacher had just purchased a new house for $30,000 on a 30-year loan. The teacher told the senior class of her and her husband’s encounter with the bank. She said by the time they were done paying off the house it would cost them three times what they had purchased it for due to interest. As a frugal high school student, I remember how my jaw dropped as I thought of a $30,000 house actually costing $90,000 due to interest. Of course, that would be ‘chicken feed’ compared to the prices of houses today, but it was enough for me to say, “There’s got to be a better way.” Today many people will end up spending $300,000 in interest by the time they pay off their house. Imagine nearly a third of a million dollars of hard-earned money spent on interest for your house alone! (as a donkey once said… hee haw!). Think of how many hours a person would have to work to earn a third of a million dollars. A person will wear themselves out for decades working like a dog, day in and day out. The whole system is propped up by those who profit from it. Mr. Rothschild, who built a huge banking dynasty, called compound interest “the eighth wonder of the world”. Imagine taking that same $300,000 and keeping it in your own pocket to wisely invest and live off of during your retirement. Now, so far we’ve only discussed your house loan. Imagine the other interest paid on cars, furniture, electronics, credit cards, etc. Americans are paying enough in interest to ‘choke a duck’. Americans are singing “I owe, I owe, so off to work I go” (insert whistling here).

Whatever happened to the ‘old days’ when you earned the money before making the purchase? (What a novel thought!) It seemed to work ok for Grandpa and Grandma, or Mom and Dad. The problem today is the ‘Me’ generation trying to instantly reproduce the same lifestyle it took Mom and Dad 30 years to acquire. At the bottom of it all, we find something called pride! So few are willing to drive a more humble car or live in a more modest house. The goal is to pay off these items and then move up; but it takes patience. Are you willing to practice ‘delayed gratification’? What would make life happier and more stress-free: fancier houses and cars with high payments? Is it really worth it? What financial condition will you be in five years from now if you continue on the same course you’re currently taking? What if you were to pay off all debts, operate on a ‘cash’ basis, and focus on future wealth building?

Reprinted with permission. © 2008 by Pastor Tony Scheving, Fargo, ND. (Part 2 of 3)