At some point, people who become debt-free decide that enough is enough. Their old lifestyle wasn’t working, and they’re ready to make some serious changes. Are you?
Financial Peace University is mainly for individuals and families but the principles apply to business as well. There must always be a budget, and money is kept in separate accounts (personal vs company). At least 25 percent also must be set aside for taxes, in a separate account that will not be touched.
Debt: The borrower is always a slave to the lender (Proverbs 22:7)
- Borrowed money always increases risk.
- Borrowed money always magnifies mistakes.
- Borrowed money always hurts and even destroys cash flow.
Myths about Finances, Debt and Credit:
Myth: Borrowed money is needed to start or expand a business.
Truth: Starting or expanding gradually increases cash flow and reduces risk. Dave reminds us that the tortoise always wins. Build your business with a crock pot rather than a microwave.
Myth: A line of credit is needed to cover cash flow fluctuations.
Truth: Cash flow fluctuation can be predicted with forecasting and budgeting, and having cash saved will help cover your needs. If you have a seasonal business you can plan for fluctuations in cash flow, and still not go into debt.
Myth: A credit card is needed for online and phone purchases and travel.
Truth: A debt card will do everything that a credit card will do, except create 18% debt.
Myth: A credit card will help me keep my expenses organized.
Truth: Use an accounting system, so a debit card does the same thing.
Myth: Large purchases require a business to use a credit card.
Truth: Avoid risk and mistakes by renting, outsourcing, buying used and paying cash.
Kids and allowance? Children learn about welfare with an allowance but they learn about a paycheck when they work. When the son comes to you and says he needs money, Dave says that he doesn’t need money, you need a job.
Never by anything that is not designed to make a profit. Don’t rationalize your wish list. Never purchase anything because you think you need a tax write-off. It’s a myth.An item that costs $10,000 that is an allowable deduction saves someone in a 30 percent tax bracket $3000 in taxes. So buying something that isn’t needed is like trading $10,000 for $3000. If your CPA suggests buying something you don’t need purely for the write-off, fire them.
Dave says that 60 percent of all small businesses start up with $5000 or less. Never make your decisions based on fear. Caution is OK, because that can bring peace.
In Good to Great, the author advises that we get the write people on the bus, then get the right people in the right seats on the bus.
A worthy goal in business is to shamelessly make money to benefit others. Churchill said that we make a living by what we get, but we make a life by what we give. In a book called, Thou Shalt Prosper, the author says that business is serving; work is a higher calling.
At the Men’s Breakfast last weekend, Terry Rae, Executive Director of Africa for Christ, gave a challenging talk, hitting the hearts of men. He asked a blunt question, “What would you do if you knew you had only 40 days to live?” I thought a hard sell evangelistic message was on the way, but I really appreciated the insight he shared directed toward men. He pointed our attention to Jesus, between his resurrection and his ascension… 40 days, and what Jesus did with the time he had left.
Jesus expressed love to people: he found Mary at the tomb and expressed love for her and the others. She did not recognize him at first; she thought he may be the gardener (John 20:14-16). How often do we not see those around us who are in need of an encouraging word, a thoughtful deed, or a random act of kindness? Men need to express love to those around them, especially to your wife and children. Rae said that the essence of love is giving. If we open our hearts to God’s love, then we will be able to receive it and share it with others.
Jesus healed broken relationships: Peter had denied Jesus in the temple courtyard, something he strongly denied he would ever do. Once the predicted event happened, Peter was in turmoil over what he had done (Matthew 26:33-34). After the resurrection, Jesus finds the disciples fishing and invited them to the shore for a little breakfast in Galilee. Peter was asked if he loved Jesus, three times, and he was able to be restored into good relationship with his Savior (John 21:15, 16, 17). What relationships do you have in our life that need extra attention and reconciliation?
Jesus left a memory box: As the two men were on the road to Emmaus, Jesus caught up to them and asked the topic of their discussion. They did not recognize Jesus all day, until the time of the evening meal, when Jesus took the bread and blessed it. Then they recognized their guest to be Jesus. The memory box was the Lord’s Supper, to be done as often as we remember the sacrifice of Christ (Luke 22:19, 1 Corinthians 11:24, 25). It is a memorial. For men, husbands and fathers… what will you leave to your family? What legacy are you building in your children? For what will your family remember of you after you’re gone? May I recommend a letter? This summer I intend to challenge each of us to become letter-writers; one each to your wife, children, parents and finally one to be left behind when you leave this world. I’ll share more about writing letters this spring.
Jesus spoke about the kingdom: He had a message of life after death, and he spoke about declaring this message throughout the whole world… it is called the Great Commission (Matthew 28:19-20, Acts 1:8). We must also ask how we are personalizing this final word of Christ, and how we might help others to understand the reality of the Christian faith.
Jesus paid out debts: On a spiritual level Jesus sacrificed himself in order to bring salvation to a lost and dying world (2 Corinthians 5:20-21). Practically, how can we make sure what we leave behind to our family is debt free? I dare say this will also involve sacrifice of our personal desires for more toys and pleasures. We need to also pass on to our kids the passion to stay out of debt… a worthy goal having been through Dave Ramsey’s Financial Peace University! (see Proverbs 22:6, 7)
Next time I intend to address the issue of a father’s blessing on his children. Have a great week, our next get together is on Saturday, March 27 at 7:30.