Hello, I'm Shelley Quinn
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and welcome to
Issues and Answers.
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We're so glad
that you're joining us
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whether you're watching on TV
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or listening by the radio
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or perhaps you're
watching us over the internet.
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Thank you for joining us.
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Today we have a wonderful
guest returning to be with us
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and give us some
great financial counsel,
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and we are going to be
talking about something
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that's very near and
dear to all of our hearts
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and that is our
financial security.
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We are going to be talking
about not life after death
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but rather life
after debt, D-E-B-T.
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And so many people are in debt
and want to get out of debt.
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Returning to be with us
today is G. Edward Reid,
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he is the assistant
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to the president
of Planned Giving
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for Adventist World Radio
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and he used to be
the stewardship director
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for the North American division
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of Seventh-day
Adventist churches.
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And when I start introducing
you where do I start,
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you've got an M... A
master's in Divinity,
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you have a
master's of Public Health,
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you are a lawyer,
you have a law degree
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and you're a
certified financial counselor,
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you're a smart man.
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Well, I've learned a few things
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but the more you study,
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the more you
realize you don't know,
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that's unfortunate, isn't it?
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But it's true. That is true.
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Well, we're just really thrilled
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that you've come
back to us today.
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And I think that when
we look at the debt crisis
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around the world
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and I mean, not just individuals
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but the debt
crisis of governments.
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We see that this world is
kind of teetering on the brink
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of financial collapse.
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Talk to us just a little
bit about this debt crisis?
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Well, it's very interesting
that in the United States,
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you mentioned the world,
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I mean, countries
like Greece and others
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are at the point of
bankruptcy as you know,
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but the United States we have
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eight over eighteen
trillion dollars in debt
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and I give seminars,
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and I can just tell you that
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the average person has
no clue what a trillion is.
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So I'm just going to go
through this real quickly,
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a million is a
thousand thousands,
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that's a million.
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A billion is a thousand million,
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and a trillion is
a thousand billion.
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And the government is eighteen
trillion dollars in debt
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and this is unsustainable
by anybody's calculation
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and it goes more...
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almost three billion
dollars a day is added to that,
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that's very, very interesting
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but not far
behind are the people
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and that's people like us,
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not you and I, our families
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but because we follow
the biblical principles
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and we're debt free,
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but the idea is
that in the United States
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the credit card debt
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that's carried over
from month to month,
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the unpaid balance
totals over $800 billion
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just for the people
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and they're paying over 12%...
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Eight hundred billions? Yes.
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That's just the amount that's...
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Well, let's
just say it this way,
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when you get
your credit card bill
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it will say a
minimum payment due
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and whatever they pay.
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Well, if you pay that
than the unpaid balance
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you pay interest on it
over for the next month
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and there's $800 billion
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is carried over
from month to month
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on credit card people,
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holders in the United States.
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By the way it
used to be 900 billion.
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Do you know why it's
only 800 billion now?
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It's not because
people got smarter
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and paid their debts off,
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it's because they file
for bankruptcy protection
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and that you can
discharge these credit cards
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but you can't
discharge student loans or taxes
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you owe the government,
those kinds of things
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and we'll talk about
some of those in a minute.
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The interesting part to me is
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that people get
further and further
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and further in debt,
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and the next big crisis
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could easily be the
student loan crisis.
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Because believe it or
not, this is hard to believe
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but the student
loans outstanding now
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are over $1 trillion dollars
for just students, 1 trillion.
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And the reason
this is such a crisis is
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because even
Senator Tom Harkin said
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on the floor of the
United States Senate,
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this could be the
next tipping point
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that causes big
problems in America
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because if you have student
loans avoiding some crisis,
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this is going to
be very, very serious.
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Some people have student loans
that are 30 years amortizing,
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you know, like a house loan even
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and it's amazing
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because if you get a
government backed student loan,
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there's only two ways to get
out from under the obligation,
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one of them is to pay it
off and the other one is to die.
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So you cannot
discharge it in bankruptcy,
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this is incredible
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and that's why it's
such a big deal nowadays.
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Wow, that's amazing.
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What causes people
when you think about it,
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what are some
of the major causes
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for people getting into debt,
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and why is debt
growing this fast?
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Well, the
interesting thing about it
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is that it's a
real simple answer,
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people are spending
more than they're making.
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You see what I'm saying,
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they're not living
within their income...
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And they want
immediate gratification...
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That's what credit
card, you see something
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and I have a friend
and this is her logic,
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"I bought it and it's on sale,"
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but yet she pays the
minimum payment each time
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and I told her by
the time you pay that off
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you're paying
more than the double.
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It's not on sale anymore.
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Yeah, it's not on sale anymore.
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That's right.
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Yeah, there are
interesting things
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and frequently
people think they're poor
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and so they
want to buy something
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with their credit card
to satisfy some desire,
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you know, that they have.
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They're not satisfied or
contend as you mentioned.
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The big idea though
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I think is to recognize
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that there are
major things that cause it
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and one of them is a
consumptive lifestyle.
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For example, most people know
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that in the months
of November and December
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most retailers
make their profits
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during that part of the year
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because people just
are out there spending.
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And they're going
to spend something,
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they get gifts or do something
or for themselves or whatever,
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and they buy stuff
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and they end up
paying for it all year long
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and that's the interesting part,
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they'll put it on
credit cards and so on.
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By the way eight out
of ten American families
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have credit cards
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and only about one-third
of them use it for convenience
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which means that they
pay it off every month.
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But the other two-thirds of them
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are actually borrowers
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and they're actually
financing what they buy
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using their credit
cards at high percent.
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Those are real high finances.
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Yeah, it's
really, really incredible.
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What I'm going to
tell you as people ask me,
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"Should we even
have credit cards?"
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Well, if you travel you
have to have a credit card
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to rent a car
typically and so on,
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but I would think
that for most families
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one credit card
would be all you need
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either a MasterCard or Visa
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and the
interesting thing about it is,
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I would never recommend anybody
get a store brand credit card.
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No.
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Well, the reason is because you
can only spend it at that store
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and they know it,
see and that's the...
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they will also take
the Visa or MasterCard
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and that's
typically the best way to go.
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It will not hurt your credit
to only have one credit card.
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I'll give you an illustration,
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I've visited with a man once
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at an evangelical
stewardship meeting
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and he was a
pastor of another church.
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And he said to me,
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"How many credit
cards do you have?"
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And I said, "Well,
I'll have just one."
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"So what do you
do with all those
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credit card
offers that come to you?"
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And I said, "Well, I
have a shredder by my desk,
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I just run it through there
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so I won't have
a tendency to do it
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or no one else
could do it on my behalf."
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He said, "Well, you
know, I... last year,"
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he said, "I filled
out and sent in every one
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of those credit
card offers that I got,"
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and he says, "Now I have
a $600,000 line of credit."
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And I said, "Well,
you just think you do.
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Go down to a car dealership
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and try to buy a
car on your credit,
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they won't sell it to you
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because you've
over extended yourself
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just from getting
that kind of credit."
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So, it's very, very difficult,
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but I think
consumptive lifestyle,
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just buying
stuff because we can.
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I'll tell you one other
thing that's very interesting
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that you have traveled
around and I've traveled around
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and we've seen
poor people in places,
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you know, like Haiti and
India and different places.
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If you own an
automobile in any condition
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you're in the top
5% of people worldwide.
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This is incredible.
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So no one in America
should ever say they're poor.
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We do have poor people
in relation to some others
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but, you know, we take
care of our people pretty much.
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This is pretty
interesting to see.
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Another one I think
is the ease of credit
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because even
students are sent offerings
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for credit cards and so on,
00:08:13.86\00:08:15.19
and they are
encouraged to get student loans
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and that kind of thing.
00:08:16.73\00:08:18.06
And then we talk
about adult toys,
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and I'll just give you
an illustration of this
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which is kind of
interesting to me,
00:08:21.96\00:08:23.80
and I've been
counseling people for many years
00:08:23.83\00:08:25.43
so I can just tell
you that frequently
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the women are
accused of busting the budget
00:08:28.87\00:08:33.31
because they'll go
out and spend some money
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on credit card to
buy another pair of shoes
00:08:34.74\00:08:36.21
and the husband already thinks,
well, you've got 50 pair,
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what do you
need another one for,
00:08:37.78\00:08:39.28
but typically it's the
men who bust the budget.
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They're gonna come
up with a new bass boat
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or a new pickup truck or
a new airplane or something
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that just shoots everything,
00:08:46.09\00:08:47.76
you see what I'm saying.
00:08:47.79\00:08:49.12
And I'll give people
a little bit of counsel
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right off the way and that is...
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That when Kathy
and I got married,
00:08:52.59\00:08:54.10
we decided the first year
00:08:54.13\00:08:55.70
that neither of us would
ever spend more than a $100
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without consulting
with the other one.
00:08:58.17\00:08:59.63
Well, we did
the very same thing.
00:08:59.67\00:09:01.00
We've always done
that. We did the same thing.
00:09:01.04\00:09:02.40
And the
interesting thing about it
00:09:02.44\00:09:03.81
is when you do that,
00:09:03.84\00:09:05.17
you make decisions about things,
00:09:05.21\00:09:06.54
so I would never
come home with a new car.
00:09:06.57\00:09:08.68
We've always buy
our cars together,
00:09:08.71\00:09:10.28
we decide what we want
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and you know, Kathy typically
chooses the color and so on.
00:09:11.91\00:09:15.48
The idea is when
you work together
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you don't have big problems,
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you see what I'm
saying those kinds of things.
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Another one is very interesting
and that is eating out.
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People don't realize it
but if you eat out once a day,
00:09:24.13\00:09:27.93
that will double
the amount of money
00:09:27.96\00:09:29.50
that you spend in a
month on your food bill.
00:09:29.53\00:09:31.47
And I've
actually counseled people
00:09:31.50\00:09:32.83
that ate all three meals out,
00:09:32.87\00:09:34.40
breakfast at McDonald's
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and you know,
dinner at Pizza Hut
00:09:35.80\00:09:38.27
and supper at Taco Bell
or something and that just...
00:09:38.31\00:09:40.78
That goes from like a
$200 a month bill up to $600
00:09:40.81\00:09:44.15
just right away.
00:09:44.18\00:09:45.51
It's not cheap to
even eat all fast food.
00:09:45.55\00:09:46.88
It's not healthy either.
00:09:46.92\00:09:48.25
That's the big deal.
00:09:48.28\00:09:49.62
Another one I think
is unexpected bills.
00:09:49.65\00:09:50.99
People think well, you
know we're both working
00:09:51.02\00:09:52.55
so we can take care of things
00:09:52.59\00:09:53.92
but typically a
couple that are both working,
00:09:53.96\00:09:55.76
they'll work
right up to their level
00:09:55.79\00:09:58.43
and if one of them is laid off
00:09:58.46\00:09:59.79
or one get sick or whatever
00:09:59.83\00:10:01.16
that'll bust the
budget or if you...
00:10:01.20\00:10:02.70
your car breaks down
or the freezer goes out
00:10:02.73\00:10:04.50
you've got full of food,
00:10:04.53\00:10:05.87
you've got to
get another freezer
00:10:05.90\00:10:07.24
and typically it goes on credit,
00:10:07.27\00:10:08.60
you know, those kind of
things are quite interesting.
00:10:08.64\00:10:11.04
There's just a number of
things that point to people
00:10:11.07\00:10:13.21
but probably
enough of the problems,
00:10:13.24\00:10:14.91
we could talk about
how to get out of debt
00:10:14.94\00:10:16.48
and some of the things like that
00:10:16.51\00:10:17.85
I think are really good.
00:10:17.88\00:10:19.21
I will tell you
that the Bible itself
00:10:19.25\00:10:20.82
and I try to teach
00:10:20.85\00:10:22.18
what I call the biblical
principles of money management.
00:10:22.22\00:10:24.69
The Bible talks
about debt about 26 times
00:10:24.72\00:10:27.52
and doesn't say you
shouldn't get in debt
00:10:27.56\00:10:29.59
but it encourages
people to be out of debt
00:10:29.62\00:10:31.46
and always it is
a negative context
00:10:31.49\00:10:33.66
where people get in debt.
00:10:33.70\00:10:35.03
So we want to see how
can we get out of debt
00:10:35.06\00:10:36.77
and how can we stay out of debt.
00:10:36.80\00:10:38.33
And I think that debt results
00:10:38.37\00:10:39.73
from a lack of
contentment sometimes,
00:10:39.77\00:10:41.34
we've talked about that before.
00:10:41.37\00:10:42.77
The Bible says godliness
with contentment is great gain.
00:10:42.80\00:10:45.34
We brought
nothing into the world,
00:10:45.37\00:10:46.71
we can take nothing out with us,
00:10:46.74\00:10:48.08
you know, that kind of thing.
00:10:48.11\00:10:49.44
Yeah.
00:10:49.48\00:10:50.81
And when you think about,
00:10:50.85\00:10:52.18
you know, people who are
trying to get out of debt
00:10:52.21\00:10:55.95
typically what you
run into are people then
00:10:55.98\00:10:58.39
who are talking
about investments.
00:10:58.42\00:11:01.56
And they're interested in
00:11:01.59\00:11:04.53
how they can get rich
quick to get out of debt.
00:11:04.56\00:11:07.46
So could you talk
about that just a little?
00:11:07.50\00:11:10.50
Well, let me tell you
something interesting.
00:11:10.53\00:11:12.30
It just happens while we don't
00:11:12.33\00:11:13.84
usually wrench
in dates on the air
00:11:13.87\00:11:15.37
but that we're
recording these in the winter
00:11:15.40\00:11:18.87
and the winter is typically
00:11:18.91\00:11:20.31
when people get involved
in get rich quick schemes.
00:11:20.34\00:11:22.34
I don't know whether
it's cabin fever or what it is
00:11:22.38\00:11:24.25
except I can tell
you that in our church
00:11:24.28\00:11:26.31
we typically have like
00:11:26.35\00:11:27.68
a sundown worship on Sabbath
when in the Sabbath closes.
00:11:27.72\00:11:30.32
And no one goes
to bed at 6 o'clock
00:11:30.35\00:11:32.09
even though the sun may set down
00:11:32.12\00:11:33.46
and so some of
your friends may say,
00:11:33.49\00:11:35.36
why don't you guys come over to
our house for pizza or popcorn,
00:11:35.39\00:11:37.19
we got something to tell
you about this just wonderful,
00:11:37.23\00:11:40.20
A multi level
marketing. There you go.
00:11:40.23\00:11:42.06
The interesting thing is
that the people get involved
00:11:42.10\00:11:44.13
in get rich quick
schemes is very interesting.
00:11:44.17\00:11:46.50
They typically learn
about it from their friends
00:11:46.53\00:11:49.24
and their friends
sincerely think and believe
00:11:49.27\00:11:51.61
they're doing their
other friends a favor,
00:11:51.64\00:11:53.61
then when the
whole thing goes sour,
00:11:53.64\00:11:55.64
it messes up
friendships, hurts churches,
00:11:55.68\00:11:58.78
you know, all kinds
of things in that way.
00:11:58.81\00:12:00.65
But I will tell people
00:12:00.68\00:12:02.02
how to discover
get rich quick scheme
00:12:02.05\00:12:03.95
and what to avoid.
00:12:03.99\00:12:05.32
One of the reasons is that
00:12:05.35\00:12:06.69
there's a
promise of high returns,
00:12:06.72\00:12:08.06
inordinate amount
of money will come in.
00:12:08.09\00:12:09.99
You're going to, you know,
be giving a six figure income
00:12:10.03\00:12:12.56
and you know,
that kind of thing.
00:12:12.59\00:12:13.93
Another one is something
you don't really understand.
00:12:13.96\00:12:16.80
Could I add
something to that? Sure.
00:12:16.83\00:12:19.03
I remember where, you
know what a Ponzi scheme is...
00:12:19.07\00:12:21.94
Oh, sure.
00:12:21.97\00:12:23.30
Where somebody is,
you're only receiving money
00:12:23.34\00:12:25.91
based on you're
getting everybody else's...
00:12:25.94\00:12:27.74
New customers. New customers.
00:12:27.78\00:12:29.51
So there was a Ponzi
scheme that went around
00:12:29.54\00:12:32.38
when we were in Dallas.
00:12:32.41\00:12:33.75
This is when we
first were married
00:12:33.78\00:12:35.48
or back in the early '80s.
00:12:35.52\00:12:37.79
And people were being,
00:12:37.82\00:12:41.19
I mean, their names
are getting arrested,
00:12:41.22\00:12:43.29
and they're being, you
know, lawyers, doctors,
00:12:43.32\00:12:45.23
people are in the...
00:12:45.26\00:12:46.59
their names are
right there in the paper.
00:12:46.63\00:12:48.46
But then not too many years ago
00:12:48.50\00:12:50.67
less than 10 years
ago there was a Chris...
00:12:50.70\00:12:54.60
somebody put
Christian twist on it
00:12:54.64\00:12:56.37
where you were gifting people...
00:12:56.40\00:12:58.04
Oh, yes.
00:12:58.07\00:12:59.41
And suddenly I even saw
pastors getting involved in this
00:12:59.44\00:13:02.84
and it was the same idea,
00:13:02.88\00:13:04.28
you know, you put in
your 50 or 100 whatever it is,
00:13:04.31\00:13:07.32
then there you
bring in so many people
00:13:07.35\00:13:09.32
and you make such a big return.
00:13:09.35\00:13:11.72
People need to know
00:13:11.75\00:13:13.09
that these kind of
things are based...
00:13:13.12\00:13:15.22
It's a house of cards,
00:13:15.26\00:13:16.59
and as soon as people
quit bringing in new people,
00:13:16.62\00:13:19.29
there's no money that
people are gonna lose money.
00:13:19.33\00:13:21.23
Yes, exactly. Don't
get you interest at all.
00:13:21.26\00:13:22.76
This is interesting
that the Ponzi scheme ideas,
00:13:22.80\00:13:24.90
they've taken in money
to pay the people at the top
00:13:24.93\00:13:26.84
and then as soon
as they get to the top
00:13:26.87\00:13:28.20
there's not gonna
be much money left,
00:13:28.24\00:13:29.57
that's the big problem.
00:13:29.60\00:13:30.94
Another one is
they have to risk money
00:13:30.97\00:13:33.64
that they can't afford to lose.
00:13:33.68\00:13:35.01
Somebody like
if we were together
00:13:35.04\00:13:36.54
and I was telling you about,
I'd say now, we need $10,000
00:13:36.58\00:13:39.48
to get you in on
the ground floor here
00:13:39.51\00:13:40.88
and you've got to have,
00:13:40.92\00:13:42.25
you know, make
your decision by Monday
00:13:42.28\00:13:43.62
and that's the fourth one,
00:13:43.65\00:13:44.99
you have to make
a quick decision.
00:13:45.02\00:13:46.42
Those are the kinds of things
00:13:46.45\00:13:47.79
that you see in
the Ponzi scheme,
00:13:47.82\00:13:49.16
Ponzi scheme but also
the get rich quick schemes.
00:13:49.19\00:13:51.29
And the real
interesting part about it is,
00:13:51.33\00:13:53.80
you don't want
to invest any money
00:13:53.83\00:13:55.16
that you can't afford to lose,
00:13:55.20\00:13:56.53
that's the big deal.
00:13:56.56\00:13:57.90
I've been, I've been
involved in hearing about...
00:13:57.93\00:13:59.40
Not even in the stock market.
00:13:59.43\00:14:01.87
Hearing about many of these,
00:14:01.90\00:14:03.81
and I don't know
if any one person
00:14:03.84\00:14:05.67
that I've ever met
00:14:05.71\00:14:07.04
that actually made
a good living from it.
00:14:07.08\00:14:08.68
The idea...
00:14:08.71\00:14:10.05
I do want to say this one thing
00:14:10.08\00:14:11.58
multi-level marketing
00:14:11.61\00:14:12.95
frequently is
involved in these things
00:14:12.98\00:14:14.32
but it's not totally bad.
00:14:14.35\00:14:15.68
We have some good
companies like Amway
00:14:15.72\00:14:17.25
that do multi-level marketing.
00:14:17.29\00:14:18.85
But in general they will
try to mock that or follow it,
00:14:18.89\00:14:22.42
but the idea is
you want to stay away
00:14:22.46\00:14:24.23
with from these
get rich quick schemes.
00:14:24.26\00:14:26.33
Good hard work is
what the Bible says
00:14:26.36\00:14:28.16
is going to be
rewarded in the future
00:14:28.20\00:14:29.63
and that's what the Psalms
00:14:29.66\00:14:31.73
and Proverbs talk about as well.
00:14:31.77\00:14:33.84
And the Bible does talk
about the bondage of debt
00:14:33.87\00:14:37.97
and essentially talk to
us about the tyranny of debt.
00:14:38.01\00:14:41.91
Well, this is an
incredible thing to understand.
00:14:41.94\00:14:43.71
The Bible says the
rich rule over the poor
00:14:43.75\00:14:45.85
and the borrower is
the slave of the lender
00:14:45.88\00:14:47.78
or the servant of the lender
00:14:47.82\00:14:49.15
and it is always true,
00:14:49.18\00:14:50.52
and this is Proverbs 22:7.
00:14:50.55\00:14:52.52
By the way it's interesting
00:14:52.55\00:14:53.89
the verse right
before at verse 6,
00:14:53.92\00:14:55.26
it says, "Train up a
child in the way he should go,
00:14:55.29\00:14:56.62
and when he is old he
won't depart from it."
00:14:56.66\00:14:57.99
So we should train our kids
not to get involved in debt.
00:14:58.03\00:15:00.86
Well, what, you
know, but what is debt?
00:15:00.90\00:15:02.53
Let's explain this for
someone that's watching
00:15:02.56\00:15:05.03
because there are times
00:15:05.07\00:15:07.34
when, you know, you
have, you've got a medical bill
00:15:07.37\00:15:10.57
that comes in that's debt
00:15:10.61\00:15:11.94
but that's
something you couldn't avoid.
00:15:11.97\00:15:13.61
There's times when, I mean,
do you take a mortgage out...
00:15:13.64\00:15:17.05
We're thinking about
discretionary borrowing
00:15:17.08\00:15:20.38
and you just talked about
some non-discretionary things.
00:15:20.42\00:15:23.12
If you get sick
you have to get well
00:15:23.15\00:15:24.49
but discretionary things,
00:15:24.52\00:15:26.82
I would just suggest,
00:15:26.86\00:15:28.19
I'll give you an illustration...
00:15:28.22\00:15:29.56
So we're talking about
debt as being discretionary.
00:15:29.59\00:15:31.46
Well, it's living today on money
00:15:31.49\00:15:33.33
that you expect to
earn in the future.
00:15:33.36\00:15:35.26
So it actually robs
yourself a future use of money
00:15:35.30\00:15:38.13
because you
already obligated it today.
00:15:38.17\00:15:40.07
Okay.
00:15:40.10\00:15:41.44
You see what I'm
saying? Yeah, absolutely.
00:15:41.47\00:15:42.80
That's the idea.
00:15:42.84\00:15:44.17
I want to talk just
briefly about bankruptcy
00:15:44.21\00:15:45.54
because this is
an interesting topic.
00:15:45.57\00:15:48.24
Back in 2002
when things were great
00:15:48.28\00:15:51.05
and this is before
2007, '08, '09 and '10
00:15:51.08\00:15:54.15
when 12 million
families lost their homes
00:15:54.18\00:15:56.45
through foreclosure and so on,
00:15:56.48\00:15:57.92
so many who lost their jobs
00:15:57.95\00:15:59.29
and the unemployment rate
00:15:59.32\00:16:00.66
was way, way up there and so on.
00:16:00.69\00:16:02.56
In 2002, 30,700
families in the United States
00:16:02.59\00:16:06.46
filed for bankruptcy
00:16:06.49\00:16:07.93
every week, 1.6 million families
00:16:07.96\00:16:10.87
because people were spending
more than they were earning
00:16:10.90\00:16:12.77
and could not
keep up the payments.
00:16:12.80\00:16:14.54
Incredible is that
happens, really amazing.
00:16:14.57\00:16:17.51
But, you know, who ends up
00:16:17.54\00:16:18.87
paying for all
of that in the end
00:16:18.91\00:16:20.24
because if a
company takes a hit,
00:16:20.28\00:16:22.21
a financial hit if
they can't pay back their...
00:16:22.24\00:16:25.08
if, if I take bankruptcy
00:16:25.11\00:16:26.95
and I can't pay back
the companies that I owed,
00:16:26.98\00:16:29.32
those companies have to end
that passing that cost on...
00:16:29.35\00:16:32.25
Yeah, it's a snowball
all the way through society.
00:16:32.29\00:16:34.69
It's incredible
when you think about it.
00:16:34.72\00:16:36.22
No wonder it's hazardous.
00:16:36.26\00:16:37.59
There are two other
things that I wanted to mention,
00:16:37.63\00:16:38.99
one about bankruptcy, we
just mentioned bankruptcy.
00:16:39.03\00:16:41.16
Somebody says to me,
00:16:41.20\00:16:42.53
"Well, bankruptcy
is a biblical concept."
00:16:42.56\00:16:44.40
But Deuteronomy 15:1
talks about something
00:16:44.43\00:16:47.30
that may indicate like
bankruptcy, you show...
00:16:47.34\00:16:50.21
Once every seven years
00:16:50.24\00:16:51.57
you should grant
a release of debts,
00:16:51.61\00:16:52.94
it says in Deuteronomy 15:1.
00:16:52.97\00:16:54.41
Well, since you
can file for bankruptcy
00:16:54.44\00:16:55.91
only once every seven years
00:16:55.94\00:16:57.28
people think, well
that was bankruptcy
00:16:57.31\00:16:58.65
but when you
read verse 2 it says,
00:16:58.68\00:17:00.12
this is the way the creditors
00:17:00.15\00:17:01.52
or the lender
should treat their people,
00:17:01.55\00:17:02.88
they have to forgive the
debt at the end of seven years.
00:17:02.92\00:17:05.05
So it wasn't bankruptcy,
00:17:05.09\00:17:06.49
it was God's mean of
limiting long term indebtedness
00:17:06.52\00:17:09.86
to a maximum of seven years.
00:17:09.89\00:17:11.33
And that's very interesting
00:17:11.36\00:17:12.69
because the council was written
to the creditors, the lenders,
00:17:12.73\00:17:15.20
so at the end of
every seven years
00:17:15.23\00:17:16.56
any outstanding
debts had to be forgiven,
00:17:16.60\00:17:18.40
this is pretty amazing.
00:17:18.43\00:17:19.90
There's one other
thing is very interesting
00:17:19.93\00:17:21.54
that we need to talk
about in this section
00:17:21.57\00:17:23.10
and that is surety, surety
00:17:23.14\00:17:26.21
and people don't
realize what surety is
00:17:26.24\00:17:28.01
but that's
cosigning for someone.
00:17:28.04\00:17:30.25
In the Book of Proverbs
alone just that one book,
00:17:30.28\00:17:33.62
it says five places
00:17:33.65\00:17:35.35
that you should
never cosign for anyone.
00:17:35.38\00:17:38.52
Now this is
amazing, never cosign.
00:17:38.55\00:17:40.89
So let's just say
that I'm a good credit risk
00:17:40.92\00:17:43.53
that I've worked at
the same job for 30 years,
00:17:43.56\00:17:45.23
my cars are paid off
00:17:45.26\00:17:46.70
and I'm just about
to pay my house off
00:17:46.73\00:17:48.06
and I come for a loan,
00:17:48.10\00:17:49.43
I would probably
be a good credit risk
00:17:49.46\00:17:50.80
and the bank
would loan me money,
00:17:50.83\00:17:52.17
but if I came
00:17:52.20\00:17:53.54
and there's somebody who
had just repossessed my car
00:17:53.57\00:17:55.67
and I had 10
credit cards maxed out
00:17:55.70\00:17:57.64
and I was about to lose my house
00:17:57.67\00:17:59.24
would you give me a loan.
00:17:59.27\00:18:00.68
No, but you want to get
the interest on the money
00:18:00.71\00:18:03.04
so you say if you get
your pastor or Shelley
00:18:03.08\00:18:05.05
or somebody to cosign for you,
00:18:05.08\00:18:06.58
we'll give you the money
and hold them responsible.
00:18:06.61\00:18:08.75
The Bible says you
should never do that.
00:18:08.78\00:18:10.92
Not even for your children.
00:18:10.95\00:18:12.29
Well, that's
kind of interesting.
00:18:12.32\00:18:13.66
Yes, I believe that's the case.
00:18:13.69\00:18:15.02
The only exception
that I would see to that
00:18:15.06\00:18:17.26
is if someone
wanted to help their child
00:18:17.29\00:18:19.76
to get a student loan
only for the amount of money
00:18:19.79\00:18:21.96
that they needed to
finish the school year
00:18:22.00\00:18:23.73
for a job that would
bring them better income
00:18:23.77\00:18:25.57
and a lifetime of security.
00:18:25.60\00:18:27.17
But because I believe parents
owe their children in education
00:18:27.20\00:18:29.90
but in general
no, not for a car,
00:18:29.94\00:18:31.97
not for those kind of things.
00:18:32.01\00:18:33.38
Yeah, I mean, I
could tell you stories
00:18:33.41\00:18:34.74
after stories of parents
signing for their children
00:18:34.78\00:18:36.95
and wishing,
wishing, wishing they hadn't.
00:18:36.98\00:18:38.81
I've got many people coming,
00:18:38.85\00:18:40.18
I wish you'd just
been here two weeks before,
00:18:40.22\00:18:41.75
you know, because of getting
involved with things like that.
00:18:41.78\00:18:44.85
Well, another one
is personal surety
00:18:44.89\00:18:46.35
and that's the idea that you...
00:18:46.39\00:18:48.46
It's the difference between
what you owe on something
00:18:48.49\00:18:50.39
and what it's actually worth.
00:18:50.43\00:18:51.96
Well, let me break the
news to the viewers here.
00:18:51.99\00:18:54.60
Almost everybody who is
making monthly payments on a car
00:18:54.63\00:18:58.93
owes more on the
car than it's worth.
00:18:58.97\00:19:00.97
That's right.
Isn't that incredible?
00:19:01.00\00:19:02.40
Oh, it's...
00:19:02.44\00:19:03.77
And you know, the thing
that when I was in college,
00:19:03.81\00:19:05.77
I worked for a little
while as a finance manager
00:19:05.81\00:19:08.18
for a car dealership
00:19:08.21\00:19:09.74
and I guarantee you,
00:19:09.78\00:19:11.11
I learned all the
tricks of the trade how they...
00:19:11.15\00:19:12.71
Oh, my.
00:19:12.75\00:19:14.08
And that's something that
00:19:14.12\00:19:15.45
as soon as we were
able to pay off a car
00:19:15.48\00:19:17.29
and we got our
first car paid off
00:19:17.32\00:19:19.52
and we continued to drive it,
00:19:19.55\00:19:20.89
but I kept, I put away
00:19:20.92\00:19:23.49
I put away the same amount
of that car payment in savings
00:19:23.53\00:19:26.96
and then when we had a
couple hundred thousand
00:19:27.00\00:19:29.60
on the other car we
were able to pay cash.
00:19:29.63\00:19:31.33
So I want to ask you a question,
00:19:31.37\00:19:32.70
how did you learn to do that?
00:19:32.73\00:19:34.07
What made you
think of doing that?
00:19:34.10\00:19:35.44
Did you hear it somewhere?
00:19:35.47\00:19:36.81
No, I just...
Saving your car payment.
00:19:36.84\00:19:38.17
No, it was just...
00:19:38.21\00:19:39.54
That's one of the
so-called tricks of the trade
00:19:39.57\00:19:40.91
to get ahead financially
00:19:40.94\00:19:42.28
as to when your car is paid off
00:19:42.31\00:19:43.65
typically I ask
people what time is it
00:19:43.68\00:19:45.01
when you pay your car off
00:19:45.05\00:19:46.38
and it's time
to get another one?
00:19:46.41\00:19:47.75
That's what they want you to do.
00:19:47.78\00:19:49.12
But if you keep driving it,
00:19:49.15\00:19:50.49
if you keep your car
for 10 years or longer,
00:19:50.52\00:19:51.85
it pays for itself.
00:19:51.89\00:19:53.22
Absolutely.
00:19:53.25\00:19:54.59
And I mean, to me, you know,
we get a good car but we...
00:19:54.62\00:19:55.96
it's not a status symbol,
00:19:55.99\00:19:57.53
it's to be good transportation.
00:19:57.56\00:20:00.30
And the idea of paying
00:20:00.33\00:20:02.66
a finance charge on
that charge on that car
00:20:02.70\00:20:05.33
and it's more than what
they just finance rate you see,
00:20:05.37\00:20:07.97
there's all kinds of little
things they do in there too.
00:20:08.00\00:20:10.31
Well, I want to give you some
tips on how to get out of debt
00:20:10.34\00:20:12.67
and this will be
very helpful to people.
00:20:12.71\00:20:14.84
And it's just a three step
plan and it definitely works,
00:20:14.88\00:20:17.25
it's very, very interesting.
00:20:17.28\00:20:18.61
The first one is
you establish the tithe.
00:20:18.65\00:20:20.98
Remember we're looking at this
from a Christian perspective,
00:20:21.02\00:20:22.95
so you want to
be faithful to God,
00:20:22.98\00:20:24.32
so you're in line
to get His blessings.
00:20:24.35\00:20:26.12
Then the first step
00:20:26.15\00:20:27.49
is you declare a
moratorium on additional debt,
00:20:27.52\00:20:28.99
no more credit spending.
00:20:29.02\00:20:30.46
Now if you're
always used to borrowing,
00:20:30.49\00:20:31.86
this is going to
be very difficult,
00:20:31.89\00:20:33.23
it's almost like stop breathing,
00:20:33.26\00:20:34.63
you know, and it's difficult
but no more credit spending.
00:20:34.66\00:20:37.30
The second one is you make
a covenant or promise with God
00:20:37.33\00:20:39.77
that as He blesses you,
00:20:39.80\00:20:41.37
any extra income
you get from any source
00:20:41.40\00:20:43.71
when you get it you
know why it came in,
00:20:43.74\00:20:45.41
it goes on debts,
00:20:45.44\00:20:46.78
that's pretty interesting.
00:20:46.81\00:20:48.14
And then the last one
00:20:48.18\00:20:49.51
is what we call
the snowball effect
00:20:49.54\00:20:50.88
and that is to list your debts
00:20:50.91\00:20:52.25
from the largest to the smallest
00:20:52.28\00:20:53.62
in descending order,
00:20:53.65\00:20:54.98
typically you have on
the top your home mortgage,
00:20:55.02\00:20:56.35
you pay that one off
last for two reasons,
00:20:56.38\00:20:58.99
typically it's the
largest bill you own
00:20:59.02\00:21:00.72
or take you longer to get to it
00:21:00.76\00:21:02.09
and another one,
00:21:02.12\00:21:03.46
the interest is
still, still tax deductible
00:21:03.49\00:21:05.23
and lower
interest typically as well.
00:21:05.26\00:21:06.76
But you just pay off
00:21:06.80\00:21:08.30
the minimum payment on every one
00:21:08.33\00:21:09.66
but the one on
the bottom of the list
00:21:09.70\00:21:11.03
you add up to it
any extra you get
00:21:11.07\00:21:12.73
and it's the snowball,
once you get that one paid off,
00:21:12.77\00:21:14.70
you can pay it on the next one
00:21:14.74\00:21:16.07
and the next
one and the next one
00:21:16.10\00:21:17.44
and many, many people,
00:21:17.47\00:21:18.81
most people get out from
under their debt in two years
00:21:18.84\00:21:20.18
if they're willing to do that.
00:21:20.21\00:21:21.54
Yes. Very, very...
00:21:21.58\00:21:22.91
And there's other
things that people can do also
00:21:22.94\00:21:24.28
and I mentioned that
and there's Your Money book,
00:21:24.31\00:21:26.75
chapter seven in the book talks
about how to get out of debt.
00:21:26.78\00:21:29.42
And talk to us for just a moment
00:21:29.45\00:21:31.09
because you've
authored a number of books
00:21:31.12\00:21:32.75
and you actually did a
couple of series here before
00:21:32.79\00:21:35.52
called, It's
Your Money, Isn't It?
00:21:35.56\00:21:37.26
I love that title
00:21:37.29\00:21:38.63
and then the first time I
ever saw you on television
00:21:38.66\00:21:40.93
was with By My Spirit,
00:21:40.96\00:21:42.66
but talk to us about this
book, It's Your Money, Isn't It?
00:21:42.70\00:21:46.17
Well, it's just a
simple 12 chapter book
00:21:46.20\00:21:48.17
with illustrations and lessons
00:21:48.20\00:21:49.80
and counsel on how
to get out of debt.
00:21:49.84\00:21:51.77
One whole chapter, I
think is chapter five,
00:21:51.81\00:21:53.48
I said seven
earlier, it's chapter five
00:21:53.51\00:21:55.64
and it talks about
first our relation with God,
00:21:55.68\00:21:57.88
a relation with our fellow men
00:21:57.91\00:21:59.25
and also planning for eternity,
00:21:59.28\00:22:00.62
so it's a good basic
book It's Your Money,
00:22:00.65\00:22:02.35
and it's on our website so...
00:22:02.38\00:22:03.75
And what is your website?
00:22:03.79\00:22:05.12
It's Omegabooks.com.
00:22:05.15\00:22:06.49
Omega books, that's
O-M-E-G-A books.com.
00:22:06.52\00:22:11.86
And then you can also I
believe we still carry the DVDs.
00:22:11.89\00:22:15.03
Yes, you have the
DVD's that we did here
00:22:15.06\00:22:17.43
and they were shown
on 3ABN several times
00:22:17.47\00:22:19.63
and that series is
available also on the website
00:22:19.67\00:22:22.74
and people can go there.
00:22:22.77\00:22:24.41
The main thing I'm
telling you about this for us
00:22:24.44\00:22:26.37
because people want and
need help and we're not...
00:22:26.41\00:22:29.44
with the books are available
if they should they want so.
00:22:29.48\00:22:31.68
Amen, amen. Yeah.
00:22:31.71\00:22:33.05
And that's something...
00:22:33.08\00:22:35.28
And I don't know we've
only got five minutes left.
00:22:35.32\00:22:37.69
Let me ask you this question.
00:22:37.72\00:22:39.05
Do you have just
a second to explain
00:22:39.09\00:22:41.49
the amortization schedule
00:22:41.52\00:22:43.22
and how whether it's
better to do a 20 year
00:22:43.26\00:22:47.36
or 30 or 15 year, 20
year or 30 year mortgage?
00:22:47.40\00:22:50.03
I can talk about that.
00:22:50.07\00:22:51.40
The typical mortgage in
the United States is 30 years.
00:22:51.43\00:22:54.54
For most people if you are able
00:22:54.57\00:22:56.24
and willing to
add just $100 a month
00:22:56.27\00:22:58.04
or up to $200 a month
00:22:58.07\00:22:59.41
depending on what the
size of your mortgage is,
00:22:59.44\00:23:00.78
you could pay it off in
half the time in 15 years
00:23:00.81\00:23:03.04
or if you do the
bi-weekly payment thing
00:23:03.08\00:23:05.81
where you pay half of
a payment every two weeks
00:23:05.85\00:23:08.42
you typically take 11
years off your house payments
00:23:08.45\00:23:11.32
and you know, this is amazing
00:23:11.35\00:23:14.69
that what people can do with it.
00:23:14.72\00:23:16.12
So Kathy and I
have had two mortgages,
00:23:16.16\00:23:18.39
and we paid both
of them off early
00:23:18.43\00:23:19.76
by prepaying principal
00:23:19.79\00:23:21.13
and so we're not going to
be talking about retirement
00:23:21.16\00:23:23.93
but I can just tell you that
there are three prerequisites
00:23:23.97\00:23:27.80
people have to think
about for retirement.
00:23:27.84\00:23:29.24
One is to be debt
free, totally debt free
00:23:29.27\00:23:30.94
including their home mortgage.
00:23:30.97\00:23:32.31
Another one is to have a
reasonable income stream,
00:23:32.34\00:23:34.04
and the third one is
to have health insurance.
00:23:34.08\00:23:36.11
So if you plan on
getting out of debt
00:23:36.14\00:23:38.41
and paying off your debts
and living within your income,
00:23:38.45\00:23:40.65
you have a much more
pleasant time during retirement.
00:23:40.68\00:23:43.12
But let me go ahead and
answer more specifically
00:23:43.15\00:23:45.25
the one that you ask
about the housing thing.
00:23:45.29\00:23:47.66
Typically when you
pay on your mortgage,
00:23:47.69\00:23:49.92
there's two parts of
it aside from interest,
00:23:49.96\00:23:53.56
excuse me, for the
taxes that you pay.
00:23:53.60\00:23:56.26
You have the principle
00:23:56.30\00:23:57.73
that you pay out
on the interest due.
00:23:57.77\00:23:59.73
And typically in the
first part of your loan,
00:23:59.77\00:24:01.64
for the first 20
years of a 30 year mortgage
00:24:01.67\00:24:03.84
you're paying more
interest than your principal.
00:24:03.87\00:24:06.41
But so when you
make your principal
00:24:06.44\00:24:08.21
your regular payment
00:24:08.24\00:24:09.58
you can just add
another principal payment
00:24:09.61\00:24:10.95
and save the
corresponding interest to it.
00:24:10.98\00:24:12.85
And that's all in
chapter eight in the book
00:24:12.88\00:24:14.65
and it's explained very well
00:24:14.68\00:24:16.02
with
illustrations and everything.
00:24:16.05\00:24:17.39
And you can get that,
00:24:17.42\00:24:18.75
I mean, that's great
advice for all of them.
00:24:18.79\00:24:20.12
Oh, that's awesome stuff, yeah.
00:24:20.16\00:24:21.49
And it's in this book,
It's Your Money Isn't It?
00:24:21.52\00:24:23.46
So you want to
check out omegabooks.com
00:24:23.49\00:24:27.33
which features its books.
00:24:27.36\00:24:29.40
All right, I'm sorry
to interrupt with that.
00:24:29.43\00:24:30.87
Okay, well, I'll
tell you one other thing
00:24:30.90\00:24:32.53
and that's the other things
00:24:32.57\00:24:33.90
that people can do
to get out of debt.
00:24:33.94\00:24:35.74
I just really,
really harp on this.
00:24:35.77\00:24:37.77
If I was a musician I'd have
a guitar with just one string
00:24:37.81\00:24:40.11
and that would be get out
of debt, plunk, plunk, plunk.
00:24:40.14\00:24:42.81
And the reason is you
live so much better out of debt
00:24:42.84\00:24:46.92
and you're so
much more satisfied.
00:24:46.95\00:24:48.82
People would
like you to be in debt
00:24:48.85\00:24:50.99
that is creditors,
00:24:51.02\00:24:52.35
you know, they want to
loan you money and so on,
00:24:52.39\00:24:53.72
but I can share
some other things,
00:24:53.76\00:24:55.09
one of them is
establish a budget
00:24:55.12\00:24:56.62
and this is kind of
a duh thing, you know,
00:24:56.66\00:24:58.53
but a lot of people just
live from paycheck to paycheck,
00:24:58.56\00:25:00.86
they don't really
know how much is coming in
00:25:00.90\00:25:02.30
or how much is going out.
00:25:02.33\00:25:03.67
I've had people tell me,
00:25:03.70\00:25:05.03
"Well, we make a
pretty good income
00:25:05.07\00:25:06.40
but we don't know
where it's going."
00:25:06.43\00:25:07.77
And I say, "Well, there's
someone stealing from you?"
00:25:07.80\00:25:09.14
"No, no, no, we're spending it."
00:25:09.17\00:25:10.51
But you just
have a simple budget,
00:25:10.54\00:25:11.87
it doesn't have
to be exhaustive,
00:25:11.91\00:25:13.24
it can be on the computer
00:25:13.27\00:25:14.61
or it can be
just on a single page
00:25:14.64\00:25:15.98
or whatever and we have a
budget in the book as well.
00:25:16.01\00:25:17.71
But another one is
set goals for your family.
00:25:17.75\00:25:20.38
And the goal...
00:25:20.42\00:25:21.75
I ask people for example,
00:25:21.78\00:25:23.12
how much do you
owe on your house
00:25:23.15\00:25:24.49
and their
answer is I don't know.
00:25:24.52\00:25:26.65
Well, you should know.
00:25:26.69\00:25:28.02
And another goal
would be for example
00:25:28.06\00:25:30.59
to prepay the mortgage
00:25:30.63\00:25:31.96
but a simple goal would be,
00:25:31.99\00:25:33.33
you know, by this time next year
00:25:33.36\00:25:34.70
we're going to pay our car off,
00:25:34.73\00:25:36.06
we're just going
to work together,
00:25:36.10\00:25:37.43
all family is
going to work together
00:25:37.47\00:25:38.80
and we're going
to pay that car off
00:25:38.83\00:25:40.17
and then save the
payment like you said
00:25:40.20\00:25:41.54
for paying cash
for the next one.
00:25:41.57\00:25:43.41
Several times when Kathy
and I paid cash for a car,
00:25:43.44\00:25:45.97
the dealership
has tried to talk us
00:25:46.01\00:25:47.88
out of paying cash withdrawal.
00:25:47.91\00:25:49.28
Oh, absolutely.
Isn't that incredible?
00:25:49.31\00:25:50.78
Well, they make a lot
of money on the finance.
00:25:50.81\00:25:52.15
They make a little
money on their financing.
00:25:52.18\00:25:53.52
Yeah, that's incredible.
00:25:53.55\00:25:55.32
Another one and
this one is interesting
00:25:55.35\00:25:57.02
is destroy credit cards.
00:25:57.05\00:25:58.59
And I have it...
00:25:58.62\00:25:59.95
if there in my notes
00:25:59.99\00:26:01.32
and there if is if you
find that you're spending stuff
00:26:01.36\00:26:03.83
just because you can
buy it with your credit card
00:26:03.86\00:26:06.29
even for people who
pay it off every month,
00:26:06.33\00:26:08.26
study shows that if
you have a credit card
00:26:08.30\00:26:10.23
you'll spend more than
if you just pay with cash.
00:26:10.27\00:26:12.80
I use a credit card quite a lot
but we pay it off every month
00:26:12.83\00:26:15.44
and it's interesting
when we get our statement
00:26:15.47\00:26:17.01
for the end of the year
00:26:17.04\00:26:18.37
I'll say how much money we
spend on the card and so on,
00:26:18.41\00:26:20.18
then it'll say how
much interest you paid.
00:26:20.21\00:26:22.51
I like when I see zero,
00:26:22.54\00:26:24.31
we don't pay any interest.
00:26:24.35\00:26:25.85
But one thing that I
guess today we have to add
00:26:25.88\00:26:28.48
because since we travel so much
00:26:28.52\00:26:31.79
and I don't have time to shop,
00:26:31.82\00:26:33.15
there's a number of times
00:26:33.19\00:26:34.52
that I will have done a
little internet shopping.
00:26:34.56\00:26:37.59
And that certainly
00:26:37.63\00:26:38.96
when they're
sending along a deal,
00:26:38.99\00:26:40.33
I found myself
guilty of this too
00:26:40.36\00:26:42.36
is that I bought
from a couple of places
00:26:42.40\00:26:44.33
suddenly they're
sending you something
00:26:44.37\00:26:46.00
and you're
going, "Ah, great sale,"
00:26:46.03\00:26:47.54
and I get it just because
I put it on my credit card
00:26:47.57\00:26:50.51
and they sent it to me
00:26:50.54\00:26:52.14
and I didn't really need it.
00:26:52.17\00:26:53.51
Yeah. It's interesting that...
00:26:53.54\00:26:55.14
We've only got about 30 seconds.
00:26:55.18\00:26:56.81
Okay, I'm gonna
say the last one then
00:26:56.85\00:26:58.68
is have a sale.
00:26:58.71\00:27:00.35
Most people have
stuff in their possession
00:27:00.38\00:27:02.08
that they'll never use
again as long as they live
00:27:02.12\00:27:04.55
and this is
somebody else's treasure
00:27:04.59\00:27:06.05
it's your trash,
00:27:06.09\00:27:07.42
you know, you
carry stuff around.
00:27:07.46\00:27:08.79
Kathy and I lived in
Maryland for 20 years,
00:27:08.82\00:27:10.19
there was about eight
boxes we didn't unpacked
00:27:10.23\00:27:11.99
the whole time we lived there
00:27:12.03\00:27:13.36
which means
whatever is in those boxes...
00:27:13.40\00:27:14.73
You didn't need. We didn't need.
00:27:14.76\00:27:16.10
So I would just say have a sale
00:27:16.13\00:27:17.77
and use the
proceeds to go on your debts.
00:27:17.80\00:27:20.17
Oh, that's very
excellent advice,
00:27:20.20\00:27:22.70
and thank you because I have
to attest that life after debt
00:27:22.74\00:27:28.38
is the best life that there is,
00:27:28.41\00:27:30.05
it's a stress free life.
00:27:30.08\00:27:31.91
And we just want
to thank you so much.
00:27:31.95\00:27:33.58
And our prayer for you is that
00:27:33.62\00:27:35.28
you will take these
financial suggestions to heart
00:27:35.32\00:27:39.55
and that you
will get out of debt.
00:27:39.59\00:27:41.96
May the Lord
continue to bless you richly.
00:27:41.99\00:27:44.36
Bye-Bye.
00:27:44.39\00:27:45.73