This chapter will deal with the laws of economics. We live in a physical world that has laws guiding it such as the law of gravity. There are laws just as powerful for the creation of wealth. The thesis of this book is that people must realize that many laws of the universe have already been discovered, and it should follow them. For example, the Boy Scouts have an oath and 12 laws that I had memorized and they helped to guide my life. One of the laws that the Victorian founder of Scouting, Lord Baden-Powell taught was the virtue of thrift. In the 19th century most people owned their own home and rarely took out loans. The 20th century, as usual, threw it out for the instant money of loans. That is why there was a depression in the 1930s and half a million people file for bankruptcy every year. People want to get rich quick. The difference between the 19th and the 20th centuries is the difference between the hare and the rabbit in Aesop's fable. The hare won, the rabbit lost. Aesop lived thousands of years ago, and that truth will always be fresh. Men should save and accumulate money for many reasons. One of them is to invest in businesses. Zig Ziglar is a devout Christian and one of the greatest motivational speakers on salesmanship and wealth. He and others like him such as Norman Vincent Peale correctly interpret the Bible and teach how money is spiritual.
Leaders such as Franklin Roosevelt with his high sounding idealistic New Deal programs shifted power from men to Uncle Sam and emasculated the men of America. President Johnson's Great Society sounded good, as Satan makes his ideology sound good, but America became less great because men became less good. Why be good if solutions only come from the Emerald City from Washington D.C. Politicians threw out the virtue of paying as you go and now we have an astronomical debt. Robert Schuller has an excellent book on the debt and the grotesque deficits our so-called leaders run up every year called America's Declaration of Financial Independence. The inside cover says,"The American government is $5 trillion in debt! Is this any way to run a country? Eighteen percent of the federal budget is allocated to pay the interest on the national debt. The national debt is more than 70 percent of our Gross National Product."
The Power of Being Debt Free
"In 1985, Robert Schuller, popular author and pastor of the world's largest televised church audience...warned about the dangers of an escalating national debt in his book, The Power of Being Debt Free (updated to America's Declaration of Financial Independence ten years later). In a year when the debt stood at $1.8 trillion, they predicted that if America just 'muddled through," it would be $5.9 trillion." His prediction has been"frighteningly accurate." He shows in his book why and how it is possible to be debt-free."It's a moral issue," says Robert Schuller. 'Thou shalt not steal.' You have a right to borrow money, but you don't have the right to borrow money if you never intend to repay it. We are stealing from our children." I agree that it is wrong to have our children pay for our loans, but I'm not as casual as Schuller is about saying loans are all right. I feel the government should pay as it goes. And it should have a savings for emergencies, just as a family should. The only time to borrow money is if the U.S. is fighting a physical war with another country who is invading us. Let's look at WWII to illustrate. The Japanese invaded Pearl Harbor and the U.S. government needed to mobilize the country. It was right to borrow money and have the same generation pay it back. It was wrong that we were weak militarily. It was wrong that we were not debt free already. It was wrong that we did not have emergency funds. It was wrong to encourage married women to leave the home and work as Rosie the Riveters. It was wrong to incarcerate Japanese Americans.
There are many books on the national debt and our annual deficit spending. I think Sculler's book is the best to start out with. Being debt-free brings power. Burdening our children is immoral as Schuller says,"American children today are inheriting a burden they did not ask to bear the freedom to grow into healthy and happy individuals in a stable economic society. Not only are we stealing income from our children, but we are also robbing them of economic freedom. This is not just unfair; it is irresponsible, unjust, and immoral."
"The time has come for the people of the United States of America to call for a declaration of financial independence. Let us unite to pay off the national debt and give our children the opportunity of enjoying the fruits of their labor and creativity."
"We can be a debt-free nation! To be debt free would give us real wealth and real power: power to maintain our middle class; power to wipe out poverty; power to educate all citizens." It is difficult to walk the line and not cross over and do the wrong thing. We can be critical of Congress for poor leadership. Looking back and criticizing is easier than being there and fighting. I'm not trying to be a Monday morning quarterback criticizing the Presidents of the U.S. I don't mean to sound arrogant and negative. The U.S. did its best. Truman was gutless and fired McArthur. But I thank him for going in and at least saving the messiah's life. FDR made a mistake in creating Social Security and other domestic agencies, but he was strong in fighting Hitler. I could go on and on dividing the babies and the bathwater.
God is for being debt-free. There are always exceptions. A mortgage on a house is the only one I will consider. Never on cars, furniture or credit cards. I don't even think loans for college or to start a business are right. There is too much risk of going bankrupt. We must become masters of money. We have to become greater than Christians like Zig Ziglar and greater than Mormons like Stephen Covey and Marriott. Father wants us to be awesome and superior. It is all right that he borrows money, but it is not right for the average person. If we borrow we will end up losers like the rabbit. We have to go down a different road than this world.
Some people are beginning to see the fallacy our century has done by rejecting some of the old-fashioned values. The most famous Christian finance counselor is Larry Burkett. He is a best-selling author and teaches why and how to get debt-free. I don't believe everything he says, but he is basically on target. Satan corrupted economics by 1920 to thwart the Messiah by creating a chaotic environment. Knowing that, we can read even more significance into what it really means when we read, "Prior to the 1920s, Americans were characterized as frugal, self-reliant people who had a strong faith in God. Debt was certainly not unknown, but it would have been unusual for the average American to borrow for anything other than the purchase of a home, and even that loan was for no more than seven years or less." Some financial advisors, like Larry Burkett, teach that everyone should pay off a home as soon as possible. Make double payments and pay it off in 10 or 15 years instead of the usual 30. I believe that any loan is deadly. Everyone should rent until they can buy a home with cash. We should be absolute in our values and we should absolutely not take a loan at any time. If we ever need help we should ask for a gift and never ask for a loan. Loans destroy relationships. I know. I know. You're thinking that this is too much. Some people have taken loans and managed them their whole lives. Some people have taken loans and used the money to start businesses and became wealthy. My argument would be to compare with the example of smoking. Some people smoke until they are 90 and some people who don't smoke get lung cancer. Loans are as deadly as cigarettes. It is a spiritual law of the universe that we should not smoke because we are to be physically healthy. Likewise we should not take loans because we are to be financially healthy. And we should be financially healthy for generations. Taking loans by individuals and by governments has caused the downfall of many individuals and nations. There would never have been the stock market crash of 1929 and the depression of the 30's if the country had not gone crazy going into debt in the 1920's.
Burkett writes, "Having a debt-free home should be one of your primary financial goals. If you're like most homeowners, you probably did a double take when you read this principle. After all, the common wisdom is that it's always best to have a mortgage on your home so that you can take advantage of interest write-offs on your tax returns."
"But I take issue with this common advice. In the first place, it's relatively recent common advice. As mentioned earlier, during the 1920s nearly everybody in the United States owned his home debt free. But today, nearly everyone leases a home with a mortgage attached. In other words, we've shifted from a principle of outright home ownership to a principle of home leasing through indebtedness. Not only has this trend placed the average American family in peril of losing its home, but it has also driven the cost of homes out of the range of the average family's income. Any sizable financial crisis will find most families unable to make their house payments."
"There's a tendency these days to look at people who redirect assets toward paying off their home as a little 'odd.' On the contrary, the person who works to own his or her own home is one of the wisest among us. The simple truth is, a mortgaged home is always in jeopardy of being repossessed. It only takes an occurrence only a matter of the right (or wrong) economic conditions. A debt-free home represents economic security."
"In our high-inflation economy, why should you want to pay off your home? And what about the loss of your tax deductions for mortgage payments? First of all, nobody ever made money by paying out interest to a bank, and especially not at the exorbitantly high rates lending institutions now charge. The only way you can make money on a mortgage, except through whatever equity increase you may get on the underlying property, is to put the money that might go for a house purchase into income-producing investments that can earn more than the interest paid on the mortgage. That's hard for most people to do consistently, and it still leaves the home in jeopardy. For example, what happens if the investment dries up?"
"Also, having the security of a place to live, even if you're without a regular job, is an almost immeasurable psychological advantage in hard times. I counsel many professional athletes, who have quite high incomes for a short number of years and then often have very little coming in during the transition period between leaving their sport and finding a regular job. One of the first goals we encourage is to pay off their homes."
"Many of the tax attorneys and accountants disagree with this advice, pointing out the usual tax-write-off arguments of a mortgage. But these athletes and particularly their wives have a much more solid foundation to operate from when they know they have a place to live. The knowledge that their families are secure in a debt-free home has gone a long way toward reducing marital tensions and heading off potential divorces."
"It is unfortunate that most Americans have been duped into accepting long-term debt on their homes as normal. With the prices of homes being what they are today, most young couples need extended loans to lower their monthly payments initially. But any couple can pay their home off in 10 to 15 years simply by controlling their lifestyles and prepaying their principal a little bit each month."
"A simple investment strategy to follow is to make the ownership of your home your first investment priority. Then use the monthly mortgage payments you were making to start your savings for education or retirement. If you can retire your home mortgage before your kids go to college, they can graduate debt-free (and you too)."
"The most common argument against paying off a home mortgage early is the loss of the tax deduction for the interest. Allow me to expose this myth once and for all." I can't quote forever. You'll have to read his books to get all the arguments. He knows what he is saying is controversial, especially with financial planners. They will say this makes no economic sense. Members should be the sharpest people in the world and see through Satan's lies. He is a master at making his ideology seem good. Everyone should be debt-free and should stay away from financial planners. There are good books on finance. Don't have blind faith. Brothers especially need to manage money and not give that responsibility to their wives or someone else. The very first thing a brother needs to do is make sure he has a ton of life insurance so his family can live in a debt-free home and have income from investments if he dies. Most insurance companies push whole life that gives very little protection. Term insurance is what everyone needs. And lots of it. Almost all financial planners are snakes. One of the best articles on the reason to buy only term life insurance is Venita Van Caspel's chapter in her book Money Dynamics. Use this chapter to fight off financial planners who push whole life.
And don't take money out of equity to give to a financial counselor to invest in distant mutual funds. Impersonal mutual funds are not spiritual. We should invest only in what we can love and control. Where would you want your money if the economy turned bad? In mutual funds or in a rental unit you own? You have no control over the mutual funds. You don't even know what companies you are investing in. You do know your little rental house for rent, and you probably can do something to make it produce wealth. You can lose your mutual fund at the blink of an eye. You have a chance with your rental unit. And if it's paid off all you have to come up with are taxes. You probably won't lose anything. It would be better for brothers to get together and buy rentals or little businesses and love them. Let's build our own local little mutual fund companies that consist of friends loving a piece of ground and buildings that they can touch and personally make things blossom. There is no love involved in mutual funds. The managers of mutual funds are not loyal to any company. They will drop them in a second and rush over to some other company. What has this got to do with being spiritual? Spiritual means to look long-term, not short term profits.
Mary Pride in her book All the Way Home has a chapter on personal finance that goes into this concept of personal investing. Burkett gives good reasons for paying off a home instead of listening to financial counselor's reasons that it is smarter to take advantage of tax deductions on the mortgage and invest in their securities. This is Satan's trap. Run from them.
We can't witness unless we have peace of mind and money problems cause so much anguish. Don't depend on distant, impersonal companies. Get a home paid off as soon as possible. Maybe there will never be a depression again, but if it comes you will have a roof over your head instead of some financial counselor for some New York investment firm calling you up to say he is very sorry, but you have lost everything overnight. My mother is retired and trusted one of these big companies and lost a good part of her investment because he invested in some Houston real estate investment trust that went belly-up and in some gold mine in South Africa that practically went bankrupt. There are too many books out there showing the horrors and tragedies these investment counselors have caused. There is risk in anything, but we must not gamble. And mutual funds are gambling in my book. You will need Larry Burkett to give to financial sharks to explain why you're first financial goal is to have a debt-free home and to never take equity out of it. Burkett has spiritual reasons as well. One of them is that women need a home that is safe. As long as there is a big mortgage, she isn't safe.
James Paris is a Christian financial writer who is not concerned with the national debt and sees people like Burkett as gloom-and-doom. He says good things like buy term insurance over whole life and no load mutual funds over paying a commission to a broker, but I feel it doesn't matter if the economy goes under or not, it is best to live in a community that helps each other and invests locally in things they control.