Credit

Discussion in '2003 Archive' started by TheOliveBranch, Feb 8, 2003.

  1. TheOliveBranch

    TheOliveBranch
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    I have heard that it is good to buy with the money you have, and to not buy on credit if you cannot pay before the interest is added. The Bible tells us to "owe no man anything", and that the "borrower is servant to the lender".

    To borrow is great when the need is at hand, but when the unexpected happens, the problems become serious. Is the Bible telling us to be aware of what we borrow and who to borrow from, or that we should just save and pay as we go?
     
  2. Helen

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    Essentially, yes, that is what it is saying. I think a number of people make exceptions (and I can sure understand this!) for homes and cars. It's really hard to go cash out on these two items. But ideally saving for what you wish to have and paying for it immediately is the best, leaving you free.

    That being said, there are some mighty tempting temptations now that we all need to beware of.

    The ads saying "buy your bedroom set now and no interest until 2004!" and such things can get you into a dreadful position in 2004 unless you KNOW for sure your rich uncle is on his deathbed and you are the primary inheritor! In other words, if there is no expected change in your income, there should be no expected change in your outgo! In fact, because of unexpected problems, having a savings account for when your car quits, emergency medical or dental bills, etc., is a wise idea.

    The other side of that 'no interest until....' is that it is deceitful. You think you will be saving money, but you won't be. You will be paying a higher sales price than if you could pay in thirty days.

    That being said, we have two credit cards: one gives us free airline miles and so we charge everything from food to gas to clothes to the phone bill....AND pay it off fully at the end of each month. Having trips to take and a husband who lives in Australia a good part of the time, this has been a real boon. Our second credit card is for emergencies only -- like last week when I (for the first time in my LIFE) lost our primary credit card and we had to cancel and ask for a new one!

    The other thing we have done recently is apply for a line of credit on our home. With this, we pay nothing until we actually use some of the money. It will be used to fix up 15 years of kid marks and dents and such, so we can sell now most of them are gone and move into a smaller place. This will be paid back from the sale of the house (whatever we use of it -- unlike a mortgage, the bank keeps the money themselves until we write a check off of that special account for some of the work, etc.), so we know where the money is coming from. This will enable us to get a significantly higher selling price for the house, so it is like an investment where we know we will have a good return.

    In the long run, however, anyone who reads Proverbs will find that borrowing is strongly warned against (and that is what credit cards really are, and your interest and fees will be quite high if you don't pay it off each month), as is putting up security for another person borrowing.

    If one was to take a general lesson from the Bible where money handling is concerned, it is that we should not be a slave to it by over-spending, but should be extremely conservative. This gives us all more with which to both help others and cushion emergencies.
     
  3. Dr. Bob

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    Best policy I've found is to never borrow/buy on credit (which is essentially borrowing you understand) for anything that depreciates or is consumable.

    Land/house/remodeling should appreciate. A car may be necessary for work, but even it should be functional only and as soon as possible start an account so you can pay cash for your next one.

    Pay off all bills 100% each month, for a borrower truly is servant to the lender.
     
  4. Johnv

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    Good words, Dr Bob!!! [​IMG]
     
  5. rufus

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    Dr. Bob Griffin, Rufus says AMEN!!

    Rufus [​IMG]
     
  6. ruthigirl

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    I also agree with Bob for the most part. [​IMG]
     
  7. David A Bayliss

    David A Bayliss
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    The bible tells us to avoid borrowing and even lending.

    This is what I believe and what I try to do. In truth I have one major compromise; my house is bought with a mortgage.

    The standard excuse for that is that it is an appreciating asset; thus you could sell it and redeem the loan. This is not always true; houses do sink in value.

    Other than the house we buy what we can afford; it is a simple but effective manner of budgeting.

    Now we do have credit-cards; I have quite a few; but I pay them off each month. I just like the conveniance and safety of plastic over carrying huge wads of bills around.

    DAB

     
  8. TheOliveBranch

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    One of the things going on in the NYC area is the rise in cost of homes. In the past year, homes have doubled in price. Small, older three bedroom homes sell for over $200k. We are renting a three bedroom home built in the thirties, hasn't been maintained veery well, has a small backyard, no driveway, and is about four feet from the neighbors home. It is in a middle to low income neighborhood. They are selling it, currently on the market for $200k. It is not sided, not insulated, and has some newer windows, one bathroom, no basement. This is typical of homes in this area. One year ago, they would have sold this home for around $100k. Real estate is being exploited because of the low interest. But the interest won't stay that low, and homes will not sell for these prices at inflated rates. I agree, a home can depreciate.

    Do we have job security to ensure that if we borrow for a home, that we will not be servant to that lender if the job dissolves?
     
  9. Karen

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    Seriously, Olive, you have moved before. Move to Oklahoma, and the house you live in can generally be purchased for less than $35,000. One of my friends lives in an older, kept-up well neighborhood in my town, in a house she bought for less than $15,000. It has 2 bathrooms, 3 bedrooms. And yes, four walls and a roof.
    And I live in one of the more expensive towns in OK.

    Karen
     
  10. David A Bayliss

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    If it makes you feel any better: A 100 year old 2 bedroom 700sq ft home in Cambridge UK (my college town) works out at around $500K.

    We bought our apartment for $100K in 1989 (the year we got married) it sold for $60K in 1994 ... you can indeed become a slave to the mortgage.

    On the other side we bought a house in 1994 for 140K which is now worth around 400K.

    To me it is one of those decisions a Christian has to make. Are you getting into the "capital" business. If you -are- then I'm not sure it is possible (at least where I lived) without borrowing.

    DAB

     
  11. Pete Richert

    Pete Richert
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    Just don't move to the bay area. A two bedroom will cost you 300k, and anything bigger will put you in 500s.
     
  12. Johnv

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    The average cost of a home in the Los Angeles area is not floating around the $340,000 mark. It appears I'll never be able to dump my condo!!!
     
  13. Padre Bob

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    I don't consider a home morgage to be a debt any more than a long term lease would be. I've found the costs are similar and the morgage is a better investment. In other areas of buying, I am earnestly trying not to borrow our use my credit card for anything I can't pay off in full when the first credit card payment is due. In my experience, I'm learning that faith is much harder when I have a credit card. It's too easy to trust my own ability to budget rather than to trust God to meet my needs. Looking back, I wonder how often I have paid for things that God would have provided freely had I had the faith to wait on His provision instead of using my credit card. :confused:
     

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