Stupid Mistakes People Make With Their Money
Hope for the Financially Challenged - Part 1
For those of you that have been at our church for some time, there is no need to make this disclaimer, its really for those who are not regular attenders here. Whenever we talk about money at our church, we do so without apology, without embarrassment, but we also do it without guilt and shame. I just want you to know that in the coming weeks you have nothing to be afraid of—we’re just going to talk honestly about what God’s Word says.
Also, just as freely as I admit my strengths, I will equally admit to you my weaknesses. I am not perfect; I am still learning about God and His Word along with you, and I also struggle, just like all of you do, with stewardship issues.
Know this: what separates us, what makes us unique are our talents and abilities. What we all hold in common is our pain. What we share are our vulnerabilities and our failures. We may not be able to relate to one another in the areas that we are strong, because that sets us apart. But where we are weak, we find agreeance. I hope that sharing my weaknesses and failures in this area that not only will you find identification, but you will find that God is the best source of grace and comfort.
You’ll find that there is a verse I put in your notes from Proverbs 23:4.
“... riches can disappear as though they had the wings of a bird!”
Proverbs 23.4 (Living Bible)
More than half of all Americans are struggling to get by, even though, on average, we make more money than most people than any other country around the world. That should really tell us something about the nature of our problems. Typically our problems are not as a result of how little money we’re making. Most often, they are a result of how we’re spending our money.
I believe that most people long to be financially free. But succeeding with your money is one of life’s most greatest challenges. And there are a lot of ways to blow it. Everything from little hiccups that cost us the delay of a goal, to major fiascos that cost us our dreams. They are stupid mistakes, most often (not that we are stupid people), there just dumb mistakes. Maybe we haven’t been trained, maybe this is what we learned from our parents, or its just what we see in our culture. These are very common mistakes that most of us make.
The first and biggest mistake that people make with their money is…
1. Counting on the Illusive “Someday”
“Dreaming all the time instead of working is foolishness..”
Ecclesiastes 5.7a
Now we probably all have said it: “Someday, I’m going to get out of debt. When I get my next raise, I am going to start giving. After Christmas, I am going to start saving for an emergency fund.”
Procrastination is easily the number one most common damaging mistakes that you can make with your money. Like someone has said, there is no date on the calendar called someday.
Have you ever been guilty of Someday thinking? I will give you some red flags that indicates whether this is a problem for you:
• If you have ever found yourself counting on a raise in order to break even
• If you find yourself hoping that your mom and dad will leave you a nice inheritance.
• If you thought, “If only I made more money.”
• You play the lotto, or otherwise hope that your ship will come in.
Parkinson’s Second Law
Back in 1960, there was a book that was a best seller entitled The Law and the Profits. The author, named C.
Parkinson, is widely quoted today largely by his very first principle. Here it is:
• “Work expands to fill the time available.”
No matter how much time you are able to save on the job, your workload will always increase to fill the time you saved. Isn’t that true? You get a labor-saving device, something that gives you more discretionary time during the day, and what happens? The work flows into that void, and pretty soon, you are working as hard as you ever, your just getting more work done than ever before.
That truth made Parkinson famous, but he had a second truth in this book that is ever bit as true:
• “Expenditures rise to meet income.”
Have you ever promised yourself that after your next raise, I am going to start paying off my bills and start saving more money? Only to be surprised that after a couple of months after the raise, the money is all gone! You have no idea where it went. Well, take heart. You’re not weird, and your not alone.
Parkinson understood human nature. He went on to say this: “Individual expenditures not only rises to meet income, but tends to surpass it. And probably always will.”
This is the road most traveled in our culture. It is the…
• path of too easy credit,
• instant gratification with the newest and the best,
• of putting off what needs to be done, while hoping and waiting for our ship to come in.
What goes along with Someday thinking is Someone thinking.
Someone else will take care of me.
Very few of us would admit this, but many of us entertain this fantasy in the back of our minds that someone will come along and bail us out of our problems. Maybe we think our government is going to do it. A former employer. Maybe our parents will leave us a nice inheritance and solve a lot of problems. What most of us dream of is that some long-lost relative, who is filthy rich happens to remember us in their will.
Now, if you’re thinking that the government will help you out, like social security, I want you to listen to these facts:
• America’s social security system was started back in 1935, as a federal initiative to help bring
the country out of the Great Depression.
• The idea was that if they could get older workers to leave their jobs at age 65, then younger workers could come into the marketplace, and they would have jobs to work at. Then the money
they invested in social security would pay for those retirees.
• Back in 1935, you need to understand the average life expectancy in America a was 63. Our benevolent government set this age at 65, because they figured there wouldn’t be as many payouts if they wait until their 65. Most of the people would be dead. And those that weren’t
would die in 3 to 4 years.
• For the first 10 years of social security, there were 40 workers to every 1 retiree.
Well, things have changed.
• Today, life-spans have increased to the point that the typical retiree will draw benefits from social security
not from 3-4 years, but from 15-30 years.
• Now there are only 3 workers supporting the system for every 1 that is retired,
• Those who administrate social security tell us that by the year 2025, there will be only 2 workers for every 1 retiree.
In a recent survey of those under the age of 34, they are more likely to believe in UFO’s than they are to believe that social security will be around for them.
Falling for the Someday thinking, or Someone thinking is a huge mistake we make. Here’s another one:
2. Waiting Till it Pours to Think About An Umbrella
“Wisdom is a shelter as money is a shelter...” Ecclesiastes 7.12a
The Bible readily acknowledges that money is a kind of shelter. When there is a storm in your life, you’re
going to need a shelter. Money is a shelter. Its like this first point says:
? One thing is certain, life is uncertain.
We can face all kinds of things. I know that there are some people right now who are facing uncertain financial futures. Storms are inevitable. Storms are unavoidable. Each morning when you get up, you have no idea what the end of the day will bring you. Most of life’s storms cost money, and many times, a lot of it.
?How prepared are you, should the skies darken tomorrow?
Our nation, as a whole, is not a nation of savers. Americans, even though we live in the most prosperous country in the world, set aside less than 4% of their total gross income for long-term and short-term savings combined. In fact, Americans as a whole have spent more money in the last 6 months than they’ve earned. Most people feel like, “I just don’t have anything left to save.” There just making enough to get by.
But if you were to take a closer look at our actual expenses, you’ll find that there is money there.
Let’s say, on the drive to work in Des Moines, you stop by Starbucks. You get a large Espresso and a Bear Claw for 6$. Doesn’t sound like a lot of money, and it isn’t. But it works out to about a $132 habit.
You carry a cell phone that averages $58 a month. At home, we all have the latest high-tech digital connections for $69 a month. Or 5 credit cards, 3 of which we are making minimum payment, which equals to about $250 a month.
Now, all of us know that we should be saving for a rainy day, in case we get caught in a storm. We need to be putting away money for things like retirement. But life just seems to expensive right now.
Here’s the basic issue: We have made top priorities of things which a few years ago we considered luxuries. Ten years ago, did you even know what a latte was? Or high-speed internet access? By deeming these items as necessities, and putting them on the same level as our mortgage, and our food and our clothing, all of us have the ability to fritter away hundreds of dollars a month; thousands of dollars a year on unnecessary necessities. All the while we complain that there just isn’t enough money.
Let’s be honest: all of us have at least one habit that consumes a lot of money: buying movies, eating out, cigarettes.
Here’s the best news. And that is…
Making Parkinson’s Law work for you
Parkinson’s law is “Expenditures rise to meet income.” What you have to do is make that law work for you instead of against you.
This is the way the average American household works:
Our first priority and our largest expense is at the bottom: our living expenses. Home, electric bill, phone, groceries, clothing, taxes.
The second priority, and the second largest expense is debt services. Cars, credit cards, and store charges. Practically every penny we make is consumed by those 2 categories. There is virtually nothing left to save or to give. You would like that to be different. Most people would say, “I would like to be able to save more and give more to the church.” But there is just too much month at the end of your money.
What you have to learn to do is put last things first and first things last. Personally , I believe that the greatest priority for the believer is giving. Not from the left-overs of our income, but right off the top (like the Bible says, the ‘first fruits’). What I have learned by experience is that if we practice giving as something we’ll do if we have money left-over, then we’re probably not giving on a consistent basis. Since our expenditures are bound to meet our income needs, as Parkinson’s said, then you have to make sure that saving and giving become a fixed monthly expense just like your mortgage and your groceries. Instead of saving or giving only when we have some money left-over, we make saving and giving a top priority right up there with paying the house payment and food.
Now keep in mind here, I am talking about priority here, not dollar amounts. It’s a fact that you’re still going to spend most of your money on your living expenses. But priority is about moving something from the bottom of the list to the top. Its about taking something that we considered unimportant and unnecessary and making them number one.
For almost all of us, this scares us, because we have a finite sum of money and an infinite number of bills. The natural inclination is to pay everybody else first, and then by some miracle you have a nickel or two left over, you give it to God.
Invert this pyramid, and make sure they become priorities, not in terms of large dollar amounts, but by making sure that they are done. The best strategy is to learn to live on 70% of your take-home pay. Now many of us aren’t even close to that—we’re living on 95% or even 99% of our take-home pay. Yet, this is a goal, and
you can move in that direction, and you can learn how.
3. Feeding the Monster
Feeding the monster is about continually reaching for more than what we have. I heard a great story out of India that illustrates this view.
There is a spiritual guru that had a disciple. The disciple had done really well, and the guru thought that it was time for him to be on his own. The disciple moved to a little village and lived in a mud house. He begged for his food everyday, the mornings he spent in prayer and in the afternoons he would wash his loin cloth and hang it out to dry.
Well, one day, he goes out to get his loin cloth, and he discovers the rats have eaten it. So the next day, he has to beg for his food, and a new loin cloth, which he gets. So he washes it again, and he hangs it out to dry, and the rats eat his loin cloth again.
He said, “This isn’t going to do. I need a cat.” So he gets a cat. And it takes care of the rat problem immediately. But now he has to beg for food for him to eat, and milk for his cat. So he says, “This isn’t going to do.” So he gets a cow to supply milk for his cat. He thinks, “This is great; an endless supply of milk for my cat.”
Now he’s just pushed the problem back one more stage. Now, when he begs for food, he has to beg for fodder for his cows. . So he says, “This isn’t going to do.” So he tills the ground and plants grass. But his whole day is consumed by managing grass, and the cows, that he has no time left over for prayer. So he says, “This isn’t going to do.” So he hires servants to tend to the grass and the cattle.
Well, pretty soon he realizes the servants need supervision. He is spending his whole day supervising his servants, and has no time to go out and beg for his food and praying. So he marries a wife. He says to his wife, “Honey, can you supervise these servants, because I have no time whatsoever left over for prayer.” So she does.
She supervises the servants who farm the ground that takes care of the cow who provides the milk to the cat so that the rats don’t eat his loin cloth.
Lo and behold, his guru comes to visit him. When he comes to the place where the mud hut used to stand, its no longer there. There is this palatial mansion surrounded by these ripening fields, hundreds of cattle, and many servants. The guy has become the wealthiest man in the village.
The guru comes up to him and says, “What’s the meaning of all this?’ The disciple said, “You won’t believe it, but there was no other way I could keep my loin cloth!”
This is the same reason we get into debt--because we need just one more thing.
Who’s determining your standard of living?
There’s a phrase that’s been around along time. Sounds trite, but its true: Keeping up with the Jones’. Now, keeping up with the Jones’ is seldom a conscious act. Its usually a lot more subtle than that. It begins by noticing that other people have certain things, and wondering why you don’t. Or how people at your life stage are beginning to purchase these things, and there’s no reason why you shouldn’t have them to. Boat. New car. New Harley. New addition. Four-wheeler. New John Deere combine.
I told you I was going to confess some stuff, so here it goes. Kim and I were living in Auburn, Alabama where I was on staff at a church. We purchased a new house there, and financially, we were happy. Well, we heard God’s call to go to another church, one located in Norfolk, Virginia. By going there, we took a hefty pay cut, but the pastor promised that the church would make it up in our next raise. Well, the raise never came, and we found ourselves in financial jeopardy.
Both Kim and I became very angry because of our financial setbacks. Not only could we not afford to buy anything in Virginia, we could barely afford rent (our rent was over $400 more than our new house payment in Alabama). We started looking around at what the other staff members could afford: $175,000 to $200,000 houses, and we couldn’t afford rent. Other people who had been in the ministry a much shorter time than I had could afford a whole lot more. We began to want what others had. It would be one thing for those thoughts to pass through my mind, but they didn’t just pass through; I began to dwell on them. We we’re trying to keep up with the Jones’.
I wish I had a nice, clean way to wrap up this illustration to make everybody feel really good about their
pastor. But I don’t. The only thing that I can tell you is that I come confessing it. The book of James says that…
Therefore, confess your sins to one another, so that you may be healed.
James 5:16
Maybe God can use this story in one of your lives, because you also are trying to keep up with the Jones’. This whole attitude of looking at what other people have can come into all of our lives.
We live in a culture that breeds dissatisfaction. Henri Nouwen wrote a wonderful book entitled The
Return of the Prodigal Son. It is a top 10. He made this statement.
Many consumeristic economies stay afloat my manipulating the low self esteem of their consumers. By creating spiritual expectations through material means, as long as I am kept small, I can be easily seduced into buying things, meeting people, and going places that promise a radical change in
self-concept, even though they are totally incapable of bring this on.
Could you find a more true and indicting statement about the nature of our society and Madison Avenue. You are made to feel discontent with who you are and what you have, but you’re offered a way to feel better: “Drink this beer and have these friends.” “Where these clothes and be the life of the party.” That’s why spending makes us feel better—for a little while. But ultimately, it makes us feel worse. Because we wake up after the purchase, the fog clears, and the feelings we didn’t want to face return.
Can you see why Jesus talks about the deceitfulness of wealth? That having money and buying things
can never fill a void in our life—only He can do that. This is what Jesus said:
“Don’t fuss about what’s on the table at mealtimes or if the clothes in your closet are in fashion. There is far more to your inner life than the food you put in your stomach, more to your outer appearance than
the clothes you hang on your body.”
Luke 12.15 (The Message)
The question is this: Who or what is going to be your source of value, worth, security?
“Be on your guard against greed in any shape or form. For a man’s real life in no way depends on the number of his possessions.”
Luke 12.15 (Phillips)
Every one of us will eventually get to the point where we will ask the most fundamental questions of life: Who am I? Where am I going? Why am I here?
Ultimately, when you ask those questions in the presence of God, it will lead you to a blood-stained cross. There God made the ultimate statement about our value to Him.
You know, they say ‘Things are worth what you’re willing to pay for them.’ If you were to come to the heavenly Father and ask Him, “What am I worth, God?” He would say, “Look at that cross, and I will tell you. You are worth my Son to me. Your value to me is everything that is dear and precious to me, so that you could be forgiven. So that you could know Me. So that we could have life together.
That’s your value to God. He is saying, “You are worth more than you own, and you are worth more
than you owe. You are worth My Son to Me.”
4. Borrowing Trouble
Many of us have gotten really comfortable with debt. We accept the fact that I will always owe money, and we take the nonchalant attitude, “I will always owe, so what’s it matter?” So we develop a pattern in our life, that we charge a certain amount of stuff, and we pay a little bit. Charge a little more, and pay a fraction. That pattern gets repeated over a year or two, pretty soon you have a large balance on your Visa, and you have no idea what that money represents, and nothing to show for it.
“Where did all this debt come from? How did this balance get so big so quick?”
Instead of getting used to debt, the Bible teaches something far different. Rather than just accommodating debt,
we should remember…
“Just as the rich rule the poor, so the borrower is servant to the lender.”
Proverbs 22.7 (Living Bible)
Now, if you’re like me, every week you get another offer from a credit card company saying that based on your outstanding credit history, you’re already pre-qualified to enjoy the prestige and the convenience of owning your very own Platinum card from the Bank of Perpetual Payments.
What the Bank of Perpetual Payments will not tell you, except in microscopic print, is that 0% finance offer is very short term, and if you’re payment is off even as little as 24 hours, then they have the right to jack your interest rate to 19-22%, and they will have no embarrassment about doing it.
Another thing that they tell you is that they hope that you pay back your debt very, very slowly. So they can keep compounding interest against you balance. This is how the banks make their big bucks, and the way you loose yours.
Now typically, we don’t acquire a credit card with the intention of running its balance up into the stratosphere. Our rationale is, “It will be handy for emergencies.” And then emergencies come along—like the emergency dinner out, the emergency vacation, and the emergency movie that just hit best buy (there’s confession number 2!)
Let’s talk about another huge borrowing trouble, and that’s the way we buy cars. We all need reliable and hopefully, attractive transportation. But with rare exception, most cars will loose up to a third of their value within the first three years of ownership. You combine high price, interest, and lightning fast depreciation, and its not unusual in the first 2 years to owe more on your car than its worth.
Let’s get logical—let’s think this through. Logic tells you that you need a clean, reliable vehicle that will get you safely where you need to go. Logic also tells you that the cost of this vehicle (gasoline, insurance, and payment) should leave you with enough money at the month so that you can save and give.
Logic also tells you that you don’t need a brand new Hummer to make yourself feel free. You know that if you just spent $60,000 for a vehicle, you’re not about to take it off road! You wouldn’t dare scratch it!
You know what amazes me about this day and time? There are more 4-wheel drive SUV’s on the road today that will never be engaged in 4-wheel drive than in any other time in our history! What does that tell you in why we need those cars?
Listen to me—everybody drives a used car. The moment you buy a new one, drive it off the lot, it is a used car. Don’t believe me? Turn around and try to sell it—because you’re going to get a used car price for it; it’s no longer new.
Here’s another principle—the least expensive car is usually the one you already own.
5. Passing Poor Financial Habits on to Your Kids
“Teach your children to choose the right path, and when they are older, they will remain upon it.”
Proverbs 22.6 (New Living Translation)
Look at the verse that comes after it:
Just as the rich rule the poor, so the borrower is servant to the lender.
Proverbs 22:7
Immediately, when Solomon says, “Teach your kids the right way,”, the first thing he teaches them about is money. You prepare your kids financially.
Kids are born with priority inversion. Their first need is “They want what they see, and they want it now.” That’s the way kids operate.
Now nobody here sets out to ruin your kids. Our intentions are very honorable, but we have huge pressures on us:
1. By our culture to be good providers for our children
2. By advertisers
3. By what other kids in the neighborhood have
4. We also have pressure to prove our love in tangible ways.
And then we put this pressure on our self, because we know we don’t spend enough time with our kids, so we buy them things, when what they really want is our time.
It’s not unusual today to have kids with their own cell phones, cars, TV’s in their room, their own computers, MP3 players, designer clothes, and shoes that cost more than all of the shoes you have ever worn.
There is a term for this: enabling. We are passing on the idea of entitlement to the next generation. Because of the way we are dealing with our finances, we are sending the message, “You have a right to what you want, whenever you want it.”
This happens in government assistance programs all the time. By the way, they call them ‘entitlements’. These services were meant to provide a temporary relief to people who were in dire need. But many of these programs ended up mushrooming out of control. Why? Because the programs themselves inadvertently taught people to expect that kind of assistance to continue all their lives. They aren’t bad people; this is human nature. You receive money, you grow accustomed to getting it, and you begin to feel you have a right to. That’s entitlement. And many of our kids have learned about instant gratification without learning a thing about delayed gratification.
Do you know, when the Bible compares our spiritual reality to life, it often does so by comparing it to having a debt. You have a debt. And this debt is against God. And it is every bit as real, and every bit as
draining financially. There was an old song churches used to sing that went like this:
I owed a debt I could not pay,
Jesus paid a debt He did not owe,
I needed someone to wash my sins away,
and now I sing a brand new song,
Amazing Grace all day long,
Christ Jesus paid a debt I could not pay.
Regardless of your financial condition today, even if you are on the brink of bankruptcy, I want to tell you the Bible says that our spiritual condition before God was far worse. We were without hope, without help of ever paying this huge surmountable debt that God had against us.
But the good news, the Gospel is this: God knew that, and He said, “I will pay the debt.” The reason Jesus Christ came, and died on the cross, was so that the debt you had against God that you could never pay in a thousand lifetimes, would be paid in full. In fact, the very last words that Jesus said on the cross before He died, translated in our Bibles as, “It is finished!”, the phrase is Tetelestai, and it literally means, Paid in Full!
Jesus final pronouncement as He gave His life on the cross—“It’s paid in full!” The privilege that you and I have is to know that the debt that is greatest in our life—that makes us anxious, that takes all of our energy—is the sin debt we have before God—and its already paid. All we have to do is except it. I want you to apply Jesus’ payment on my life. And He will listen to you and do it.
