Two More Basic Financial Principles

Last week I wrote about two financial principles: Spend less than you make and A budget is a must. Today I want to add two more principles that are just as important. 

Two More Basic Financial Principles

Debt Is Slavery

Credit, interest and debt are just poor stewardship. Take Del and Elaine for example. They buy two brand-new mountain bikes for $475 apiece. With tax, their investment is a little more than $1,000. They put their new purchase on a credit card that offers 18 percent interest. Two years later, they are still paying for the bikes they have ridden only twice, and now the cost of the bikes is approximately $1,400.

Here’s what the Bible says about debt: “The rich rule over the poor, and the borrower is servant to the lender” (Prov. 22:7). With debt, you literally become a slave to the lender. Deuteronomy 28:1-2 tells us:

If you fully obey the Lord your God and carefully follow all his commands I give you today, the Lord your God will set you high above all the nations on earth. All these blessings will come upon you and accompany you if you obey the Lord your God.

Debt even extracts a physical toll. Debt often increases stress, which contributes to mental, physical and emotional fatigue, which in turn stifles creativity and harms relationships.

Delayed Gratification Is the Answer

What would have been the better use of Del and Elaine’s money? As much as they desired the bikes, they didn’t have the cash to buy them, so they should have waited. They either could have developed a savings plan for the bikes, or “bike fever” would have gone away and they would not be strapped with a huge bill and no place to put the bikes that they seldom use.

Children see; children do. If you ask a five-year-old boy (or girl) whether he would like a double-decker ice cream on a hot day or a $50 savings bond for college, which do you think he would take? No doubt, the ice cream. However, after years of watching his parents make delayed gratification decisions, he will eventually begin to get it.