(The following is a transcription from a video Linda and I recorded. Please excuse any typos or errors.)
The Bible is a wealth of knowledge when it comes to the subject of money. Recently, my wife Linda and I discussed relevant financial advice from God’s word.
We created a video that you can view, if you would like. In this video we discuss 3 practical tips for today when it comes to The Bible and Money.
In this article, you will find the transcription of our discussion.
We encourage you to leave a comment with your thoughts. Hearing from our readers brings us joy!
Our video on Bible & Money: 3 Practical Tips:
Bob: Three practical money tips from the Bible, that’s what we’re going to be talking about now. And if you haven’t already, head over to SeedTime.com so you can get your free email course from us on How to Master Your Money Using Biblical Principles.
1. Don’t Spend All Your Money
Number one, captain obvious, don’t spend all your money. This is the Passion Translation, which I really like. It’s a great translation. Proverbs 6:6-8 When you’re feeling lazy, come and learn a lesson from the tail of the tiny ant. Yes, all you lazy bones come learn from the example of the ant and enter into wisdom. The ants have no chief, no boss, no manager, no one has to tell them what to do. You’ll see them working in toilet and all summer long, stockpiling their food in preparation for winter. Notice that the ants are not eating every crumb that they pick up from the table, they’re stockpiling and saving. They know how to do that.
We as Americans, that’s something we’re not real good at. And really it extends way beyond America, but particularly in America, we’re pretty good at spending every dollar we have on something.
Linda: Then and more then we have.
Bob: Yeah. And even more, you know?
Linda: Let’s be real.
The 10-10-80 Plan
Bob: One of the things that we are starting to do with our five-year-old is teaching him this 10-10-80 plan, so to give 10 to save 10 and to live off of 80. And this is one of the things that I really hope I can instill this in him from the beginning, because the sooner you start these money habits, the easier it is.
The challenge is that so many of us don’t start anything like that and then maybe we try to give later in life, maybe we try to save later in life and it’s really difficult when you’re used to living off of 100% of your income. And so the sooner you can start something like this where you’re setting aside 10 and then giving 10 and then living off the 80, and yeah that’s just a rule of thumb, but it’s a really good just wise kind of thing to do if you can do that. If you’re young, start this now and if you’re old, start working towards it.
Linda: Yeah, I know when I first started working, one of the things they would tell me to do is my company would match a certain percentage of money that I would put into a 403(b). That is like free money. That’s what everybody would tell me. It’s free money. They are giving you money to invest into your future. So that’s I think one way to just start taking care of this immediately. Start saving.
2. Don’t Co-Sign For Others
Bob: All right. Number two is about co-signing. Your friend over here wants to buy a car. You co-sign with him, so your name is on the loan. And so if he doesn’t pay then it’s on you to pay. And Proverbs actually has something to say about this. Proverbs 17:18, and we’re doing the Passion Translation again says, “It’s stupid to run up bills you’ll never be able to pay or to co-sign for the loan of your friend. Save yourself the trouble and don’t do either one.”
Linda: This kind of sounds like Dave Ramsey wrote this.
Bob: It sure does, doesn’t it? At first glance I think co-signing seems like it’s a good idea because you’re helping your friend out, but the reality is the numbers prove that it actually destroys a whole bunch relationships, because a lot of times when somebody needs someone to help them co-sign, there’s a reason why. That’s not always the case or sometimes some legit reasons, but oftentimes when somebody needs some co-signing help, there’s a reason that the bank doesn’t want to give them the money.
And so you as a co-signer taking on all that risk, if things go sour just a little bit, it often is very strenuous on the relationship. I think one of the best ways to handle this is just to give the money. And if you can’t give the money then don’t co-sign. But if you view it as that, then that changes this whole thing completely.
Okay. So we were talking about this, trying to figure out is there a time when this makes sense to co-sign? It seems like, she gave me an example of a friend of ours years and years ago who was from a different country and couldn’t have gotten a loan, blah, blah, blah, blah, and another friend co-signed for them and that one worked out we thing great.
Linda: Yes, as far as we know.
Bob: So yeah, and I’m sure it works out plenty of times, but I think our thinking initially was, well, what if you just imagine in your head that you’re giving it to them while you’re co-signing so you mentally just decide that you’re giving.
And I think that’s good idea in theory, but I think-
Linda: It’s the relationship I think that needs to be protected.
Bob: The relationship aspect, because if I co-signed for a friend and he did great for an entire year, he was paying the bills every single time and in my mind, I’m trying to hang on to, all right, I’m paying the bills, but I’m not really, he is. But then he stops or something goes sour at that point and it’s a year later. Am I still going to be mentally strong enough to say, “Oh well I just assumed…” I think it’s going to hurt the relationship. I think it probably will.
A Study on Co-Signing
There was a study done at creditcards.com of over 2000 adults that talked about the negative results from co-signing loans and it said 38% of co-signers had to pay some or all of the loan because the primary borrower did not. And in 28% of the co-signers experienced a drop in their credit score because the person they co-signed for paid late or not at all. Because that’s the other thing people don’t think about-
Linda: I didn’t think about that.
Bob: that it affects your credit score. And then 26% of the people said that the co-signing experience damaged the relationship that for the people that they were co-signing with, it’s the Bible. It’s full of some really good wisdom.
Linda: I know. This seems like such a hard one though. Because it does seem like a good thing to do.
Bob: Yeah. And it seems like it, but I don’t know. I think it’s just a whole lot better to just give it, just flat out give it. I think that’s the way to do this and-
Linda: It’s the wise way.
Bob: to really make it clean.
Linda: To protect all aspects of it.
Article from The Atlantic
Bob: One more piece I want to add to this. This was actually an article in the Atlantic, not at all a biblically focused article, but he came to the same conclusion and he said the same thing. He said, ultimately you should just give them the money if that’s what you want to do. If you want to help give them the money. If not, don’t co-sign.
And he goes on to argue that there’s no way I could afford to give it or whatever. And his point is, I’ll quote this, he says, “Well my friend, given the default rates of primary borrowers, that’s what you’re doing when you co-sign. With the additional cost of origination fees, interest payments, late fees, collection fees, a black mark on your credit report, and probably a destroyed relationship. When the primary borrower defaults, you are on the hook, not just for the loan, but also for any late charges and collection fees that may have accrued.
If it’s a car, the repo man will sell it for cheap at auction and then sue you for the difference. There are no non-recourse auto loans. Meanwhile your credit will be trashed. Contracts don’t always include notice requirements for the secondary borrower, so you may not even find out about the late payments until it’s in collections.”
Bob: So that’s a pretty good, pretty compelling argument not to do it.
Linda: I’m not co-signing for any more of your loans. I don’t care what it is.
3. Stop Trying To Keep Up With The Joneses
Bob: Number three is to stop trying to keep up with the Jones’s. And for anyone who doesn’t know, keeping up the Jones’s, I don’t know where this expression came from, do you?
Linda: No, I just know Keeping Up with the Kardashians.
Bob: Basically, the idea is that you’re doing something that your neighbor is doing, other people are doing, just to kind of keep pace with them. So they bought a new car so I need to buy a new car. They bought the latest gadget or gizmo and so then you feel like you need to do the same thing.
Linda: Because you can see everyone on the face of the earth. You have access to what everyone is doing with social media, with the internet?
Bob: And it was never like that before. In the history of the world, really up until social media, we were limited to our localized region and who we saw. And so really the last 100 years, things have changed dramatically, but before that all you knew what was going on in your town. And so maybe your neighbor had something better that you’re chasing, but now it’s like we’re all chasing everybody we see all over the world and it’s insane.
Linda: Yeah, I mean I think before you would kind of see celebrities and be like, “Oh, they’re a celebrity, they can do dah, dah, dah, dah, dah.” So, that was just kind of in a separate category. But now I feel like the playing field is leveled, because you’re seeing people-
Bob: Because everybody’s a celebrity.
Linda: who are not celebrities doing the same thing the celebrities are doing, so you think, “Oh, well I have to be doing that too. I need to look like that. I need to buy that. I need to have my house that way.” These are the things I think about obviously.
Bob: So there’s a proverb that talks about this. It’s Proverbs 13:7, and it’s the Passion Translation again, it says one pretends to be rich, but it’s poor and the other pretends to be poor but is quite rich.
And there’s a little sub kind of thing here and it says, it’s never godly to be a phony. It’s always better to be who you are and avoid pretense. I love this, and it says there’s another who pretends to be poor is actually quite rich. And so this is the idea from the book, The Millionaire Nextdoor, which I read many years ago, where it’s basically this idea that so many of the wealthy people actually don’t show their wealth and they’re much more private about it and they drive older cars and you wouldn’t be able to tell because they’re not flashing all their money trying to impress everybody, which is kind of confusing because a lot of us think that that’s what it means to be wealthy and that’s what you do because we see some celebrities doing that or whatever, rap videos, like that type of thing.
And the reality is that that’s not the way it has to be and really shouldn’t be. And I’m not sure who said this, but somebody said so many people try to buy things to impress people who they don’t even like. And I think that’s what it is. A lot of the keeping up with the Jones’s thing, it’s like we’re trying to impress people who we don’t even really care about, we’re not even maybe even friends with in some cases it’s just the person across the street or somebody we’re following and social media and anyway, it makes no sense.
A Friendship Destroyed
Linda: You know what is true also? I had a friend years ago who I felt like she was in competition with me all the time and it was so bizarre because I was not. In my mind, I was not in any competition with her. She was clearly cooler. She clearly had more money than I did, you know what I mean? But for some reason every time I would get around her, she would have to show me all this stuff that she got and look at this, well this is nicer than what you have. It was so weird. I think she was like, my wedding ring is bigger than yours, like kind of did this whole thing and I just didn’t want to be around her.
It was so true that it was like she kind of destroyed that relationship because she was basing it off of her being better than me. It was never really a relationship at all. It was not a friendship at all. So I mean I think being on the receiving end of it, it’s just icky, but also I think on her side, I wasn’t a real friend to her ever because she wouldn’t allow me to be.
Bob: Yeah. All right, so those are our three money tips that we found in the Bible. I’d love to hear from you in the comments below what else you have found, share them down there. Hit the like button. Let us know if you enjoyed this and we’ll see you in the next video.