By David Sanford, Crosswalk.com
Experience is the best teacher—especially other people’s experiences. This is doubly true when it comes to finances. Skip other articles, but not this one! First, God wants you to “act smart” by applying knowledge, discernment, understanding, and wisdom to your finances. Second, life is too short to waste a ton of money.
A dozen individuals and couples used this article’s financial advice for a year and reported saving tens of thousands of dollars. You’re sure to come out way ahead too.
First, how to save thousands of dollars on insurance coverage over the next few years.
Second, how to budget monthly for current and long-term housing costs.
Third, how you can save thousands of dollars fleeing high-rate debt.
Fourth, how to immediately correct financial mistakes that otherwise mess up your monthly budget.
Fifth, how to escape the mountain of debt that follows any catastrophic medical crisis. Such crises can put you or a loved one in the hospital for days or weeks. The higher the mountain, the greater the potential savings. Individuals using this advice reported saving anywhere from $6,000 to $56,000. It works!
Read this article and you’ll be ready to reap financial rewards for a lifetime.
1. Buy Essential Insurance Coverage
Not all insurance policies are created equal. You want to choose the right companies and policies that best fit your needs. Thankfully, you probably need to buy only five policies.
First, health insurance. Co-pays don’t matter quite as much as deductibles. Know what you’re getting and how much it will cost you.
Second, disability insurance. No one plans to turn fifty or sixty and suddenly become disabled like my friend Gordon and me respectively. Decades ago, we both bought disability insurance policies. Gordon’s policy is great. Mine pays $500 monthly. Ouch!
Third, term life insurance. Look for a low monthly price that’s locked-in for the next twenty or thirty years. Typically, in a few years it’s wise to buy a second policy if you have a family.
Fourth, auto insurance. Buy comprehensive, not collision. Ask for a $250 deductible.
Fifth, home-owners insurance. Make sure “flood” is covered in case (say) a dishwasher hose springs a leak. Water, like fire, creates a lot of costly damage in a hurry.
2. Count Housing Costs
Buying a house used to be part of the American Dream, but it’s not always the best option today.
Housing costs look vastly different between renters and homeowners. So, your budget needs to accurately reflect your current situation and future probabilities.
If you’re looking to rent an apartment, don’t invite two friends to live with you. Instead, invite them to consider co-signing a six- or seven-month lease with you. Better yet, find an apartment or duplex that doesn’t require a lease, let alone first and last month’s rent. More importantly? Start saving every month for a better place (and eventually for a house down payment).
If you’re looking to buy a house, don’t ask a realtor to show you houses. Instead, make sure you have a sizeable down payment saved up. Then ask a banker to pre-qualify you for loan. Make sure that loan’s interest rate will be low and fixed (not adjustable long-term). Then sign with a realtor who’s enjoyed a good track record the past two years.
Upfront, make sure your realtor knows your spending limit. No matter what, don’t stretch it. Trust your banker!
3. Flee High-Rate Loans
Loan costs can vary dramatically. So, you need to have a plan to avoid or diligently pay off any high-rate loans.
Even if the interest rate starts at 0 percent, never (!) use credit cards to boost the size of your proposed house down payment. There’s no way you’ll be able to pay off that much money before you’re hammered with 23 percent to 30 percent interest. Suddenly, you no longer owe $12,000. Instead, you owe $18,000. . .and then $23,000. . .and are hopelessly upside down financially.
Don’t let that happen! Except for your spouse (and children), everything else in your house and storage needs a price tag. Sell as much as you can for a good enough profit to pay off your worst loan. Then, sell more stuff to pay off any other high-rate loan.
If necessary, take a second job for a few months.
One final word: Never co-sign someone else’s loan. Nearly ninety percent of the time you’ll end up paying the terrible loan for their car, boat, or whatever. “A word to the wise is sufficient.”
4. Correct Small Financial Mistakes
When you make a small financial mistake, don’t eat it. Instead, take immediate action to un-make it.
If you’ve just bought something you can’t afford, return it or exchange it for something you can afford (with some cash back in your wallet). What’s not okay: Criticizing one of your spouse’s acquisitions. Instead: You should ask your spouse, “In light of our budget, is this particular purchase that I made okay?” Model—only.
If you’ve incurred a first-time overdraft charge, drop by your bank, apologize, promise it will never happen again, and then ask, “This one time, is there any way this first-time overdraft charge could be reversed?” The phrase, “This one time,” is crucial. So is the phrase, “is there any way. . . ?” If the answer is no, don’t say anything. Just breathe and count to ten. The teller probably will study your eyes, go talk with their manager, and say yes “this one time.”
If you’ve incurred a first-time late payment fee, do the same online or by phone.
5. Respond to Huge Hospital Debts
When you get hit with catastrophic medical bills, don’t immediately think bankruptcy. Instead, come back to this article and re-read it. Better yet? Share this article with any family member or friend who gets hits with enormous medical bills.
America has slightly more than 2,900 community hospitals. The IRS recognizes 59 percent of them as non-profit. This includes the majority of hospitals with religious names such as Adventist, Beth, Holy, Providence, Sacred, Saint, Samaritan, Sinai, and Sister.
These hospitals often have a benevolence fund, sometimes overseen by a related charitable foundation. Each is required to give away a certain amount of money every year. Sometimes those funds are invested in medical research, including buildings, equipment, and staff. Other funds are used to help anyone who finds it difficult, if not impossible, to pay their hospital bills.
All you need to do is... well, contact me at [email protected] and I’ll help you write a one-page letter asking for debt forgiveness. It works!
“The blessing of the Lord makes rich, and he adds no sorrow with it” (Proverbs 10:22 ESV).
“For the protection of wisdom is like the protection of money, and the advantage of knowledge is that wisdom preserves the life of him who has it” (Ecclesiastes 7:12 ESV).
“Put your outdoor work in order and get your fields ready; after that, build your house” (Proverbs 24:27 NIV).
“The rich rule over the poor, and the borrower is slave to the lender” (Proverbs 22:7 NIV).
“God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work” (2 Corinthians 9:8 NIV).
“For where your treasure is, there your heart will be also” (Matthew 6:21 NIV).
5 topics covered in this article:
- buy essential insurance coverage
- count housing costs
- flee high-rate loans
- correct small financial mistakes
- respond to huge hospital debts
Lord, life is too short to waste a ton of money. Help me “act smart” by applying knowledge, discernment, understanding, and wisdom to my finances.
Excerpted and adapted from Life Map Devotional for Men. Copyright © 2020 Barbour Publishing Inc. and used by permission of the publisher and author.
Photo Credit: ©Thinkstock
The late David Sanford’s book and Bible projects were published by Zondervan, Tyndale, Thomas Nelson, Doubleday, Barbour, and Amazon. His latest book was Life Map Devotional for Men published concurrently with his wife Renee’s book, Life Map Devotional for Women.