Finances
- What is conspicuous consumption?
- Do you have a recommendation for budgeting?
- Is it ever okay to borrow money?
What is conspicuous consumption?
Conspicuous consumption is a financial term defined by lavish or wasteful spending thought to enhance social prestige. Buying something purely for the purpose of enhancing social standing is conspicuous consumption. This is not so much a moral issues as a spiritual issue. What will be your answer in the judgement when Christ asks, "What did you do for the poor? How did you use the assets I gave you for my glory?" Socially and spiritually we have been given a responsibility to share what we have been given. Conspicuous consumption is easy to define in general but difficult to quantify specifically. It keeps us from looking at the needs of others and become selfish in financial management.
I do not see conspicuous consumption as a moral breach but rather a failure socially and spiritually. Questions to ask about conspicuous consumption are: 1) Does this purchase set me apart from my social norm? 2) Am I purchasing this purely to impress others? 3) By purchasing this item, am I trying to build up myself for some other deficit I may have in my life? 4) If I purchase this item, will it cause others to be jealous, feel intimidated or feel less than me?
God calls each one of us to different stations in life: some are wealthy, some are poor, but all are blessed with all spiritual blessings. I do encourage you to reach out to all of your brothers and sisters, irrespective of their station in life. James has a good word on this in James 2.
1 "My brethren, do not hold your faith in our glorious Lord Jesus Christ with [an attitude of] personal favoritism. 2 For if a man comes into your assembly with a gold ring and dressed in fine clothes, and there also comes in a poor man in dirty clothes, 3 and you pay special attention to the one who is wearing the fine clothes, and say, 'You sit here in a good place,' and you say to the poor man, 'You stand over there, or sit down by my footstool;' 4 have you not made distinctions among yourselves, and become judges with evil motives? 5 Listen, my beloved brethren: did not God choose the poor of this world [to be] rich in faith and heirs of the kingdom which He promised to those who love Him? 6 But you have dishonored the poor man. Is it not the rich who oppress you and personally drag you into court? 7 Do they not blaspheme the fair name by which you have been called? 8 If, however, you are fulfilling the royal law, according to the Scripture, 'You shall love your neighbor as yourself,' you are doing well."
Do you have a recommendation for budgeting?
I have, for several years, encouraged couples to use a 70/30 plan as quickly as they can. This 70/30 is simply 70% of income goes to daily living expenses and 30% of income goes to long-term savings and charitable giving.
The 70% living expenses would include the following: 1) Monthly bills; food, transportation, utilities, etc; 2) Short-term savings for purchases, like cars or household appliances; 3) Life insurance; 4) Health care, including a savings account for medical expenses like orthodontia or other unforeseen medical expenses; 5) Entertainment and vacations. 6) Clothing.
The 30% long-term saving and charitable giving includes the following: 1) Investments in mutual funds and other financial vehicles used to develop wealth over a long-term investment life; 2) Investments in real estate beyond primary residence; 3) Charitable donations to church and Christian ministries consistent with your doctrinal belief system; 4) Charitable gifts to people in need in "your world."
With this strategy of budgeting a family has the power to live without fear of not having enough to meet needs. Remember, it is usually not the size of your income that matters, it is the way you handle what you have. Contentment is a powerful virtue to apply to your financial situation.
Is it ever okay to borrow money?
Borrowing money is unwise according to Scripture. I would not call it immoral, I would call it foolish. Most people in an affluent and indulgent society try to get what they can't afford without saving and waiting. They see what others have and they indulge themselves through a line of credit that could have an interest rate up to 22%. This is irresponsible and foolish. Scripture says that the borrower is the slave to the lender. With this in mind, we should be careful not to borrow money to avoid becoming slaves.
The question arises about borrowing money for a house. I believe it is important to consider the law of finances in borrowing money. Usually house prices go through a cycle every seven years. You can certainly be a good steward and borrow money for a house, and in many cases it is irresponsible not to borrow for a house. Make sure you can afford the mortgage and consider all expenses going into the contract, including taxes, lender fees and HOA fees if applicable.
I recommend you get out of debt, especially unsecured debt. The interest rates on unsecured debt are exorbitant. The best way to get out of debt is to pay off one unsecured debt at a time. Pay the minimum on all but one of your debts and then figure an affordable amount you can contribute to retire your debts, then apply it to that debt. After the first is paid off, apply the minimum payment for the first plus your debt retirement amount and pay off the next targeted unsecured debt. After the debts are paid off, take the total of the minimum payment you were previously paying plus your debt retirement amount and apply it to your mortgage. Start making principle payments to have an early pay off for your house, (See your lender about rules of special principle payments.)
Consider what kind of car you would like to purchase and figure the payment you would have to make if you took out a loan to buy it. Begin making this payment to a special account until you have enough money to purchase the car for cash. This way you will be paying yourself not a bank. In the meantime, drive a car that is less than ideal and thank God for the clunker everyday! You may need to ask Him to support your desire to be out of debt by keeping the clunker running.