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Preparing to Buy a House – Mike Church (Post-College Life 2017)
Future Planning and Investing – Rick Littlejohn (Post-College Life 2017)
“He who is faithful in what is least is faithful also in much; and he who is unjust in what is least is unjust also in much. Therefore, if you have not been faithful in the unrighteous mammon, who will commit to your trust the true riches? And if you have not been faithful in what is another man’s, who will give you what is your own?” Luke 16:10-12
Motive
Our use of money is serious business. It is not our own. We are only stewards of it for the glory of God. Scripture has 1000 references to money, more than any other subject except love. Jesus talks more about money than heaven and hell combined. Dave Ramsey rightly observes that financial management is only 20% about head knowledge, but 80% about motivation. His focus on motivating people is what has made his counsel so successful in many lives. In talks like these, speakers like me generally appeal to your self-interest in trying to motivate you to save, invest and prepare for the future. Indeed, you do have a significant self-interest in learning to delay a certain amount of present gratification for a future of expanded possibilities. But self-interest is not and should not be our primary motive. Indeed, the fear of falling prey to greed prevents many Christians from being wise stewards. Our motive should be obedience to God. The main virtue which comes to mind in this area is Prudence, upheld by a measure of Fortitude. What do the scriptures say about money, future planning and investing? The verse at the top is a great key verse to guide your thinking. But what does being faithful mean? The general counsel of Scripture points to adequate self-provision with a generous portion left over to share. Genesis 1:28 – Then God blessed them, and God said to them, “Be fruitful and multiply; fill the earth and subdue it; have dominion over the fish of the sea, over the birds of the air, and over every living thing that moves on the earth.” NKJV One way of looking at this initial command is to produce more than you consume. Build things, don’t take life as you find it and use it up, but leave the world better than you found it. Those things aren’t necessarily or even primarily financial, but even monks who take vows of poverty spend their time doing useful work to support themselves, build a surplus from which to minister, and a surplus to plow back into greater future provision. (cp. Pr. 13:22) 1 Timothy 5:8 But if anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever. These are strong words. Diligence in self provision is key. 1Th 4:11-12, 2Th 3:11 The apostle Paul also points to his self-provision as an example and to not burden the churches he is forming. 2 Corinthians 9:7 So let each one give as he purposes in his heart, not grudgingly or of necessity; for God loves a cheerful giver. Furthermore, we are to produce enough to joyfully share. (Gal 2:10, 3 John 8).
Method
Proverbs 12:11 He who tills his land will be satisfied with bread, But he who follows frivolity is devoid of understanding Prove rbs 12:24 The hand of the dilige nt will rule , But the lazy man will be put to forced labor. Lam 3:27 It is good for a man to bear the yoke in his youth. Your first priority for building wealth is diligence in pursuing your calling. Don’t waste this time of your life. Diligence now brings long-term rewards. No plan of savings or investing will work unless a surplus can first be earned to fund it. Wisely assess your current situation, your gifts, your interests and develop a career that will provide for you and leave you something to invest and share. Seek godly counsel, find a mentor, and apply yourself. Investing in your own ability to produce whether through education, time management, work methods, better tools, or just diligent practice will produce the highest returns.
Some form of budgeting is key. Once again, only 20% of the success is due to knowledge, 80% is due to motivation and self discipline. I use and recommend youneedabudget.com because it supports envelope budgeting in which every dollar gets a job as you earn it, downloads transactions automatically from your accounts. It currently costs $5.00 per month and will save you many times that amount if you actually use it. I have attached in the miscellaneous section some budget guides from Crown Financial Ministries. (https://www.crown.org/resources/spending-budget-guides/ and https://www.crown.org/wp- content/uploads/2017/08/EstimatedBudgetW.pdf ) They have a number of other free resources you might want to check out. Their percentage guidelines should not be treated as law, but as guidelines which may suggest areas for additional savings or permission to be less strict with yourself in other areas if you have a surplus.
Investing Your Surplus
The budgeting guides I have supplied recommend from 8% – 20% of your spendable income going toward savings and investment. In general, you should consider funds savings if they are applied to a specific near term (< 2 years) goal. These should be placed in a bank account. They include your emergency fund. Investments are for anything beyond that period. Investing is for the longer term.
Dave Ramsey’s 7 baby steps are a good guide:
1. $1000 to start an emergency fund
2. Pay off all debt using the Debt Snowball
3. 3-6 months expenses in savings
4. Invest 15% of household income into Roth IRAs and tax-advantaged retirement accounts
5. (Optional) College savings for children
6. Pay off your house early
7. Build wealth and give
If your job offers a match for its retirement plan (typically a 401k), make every effort to at least put away enough to maximize that match. This represents a 50% or 100% instant return on your investment. If you are able to do more you should put as much as you can into a Roth IRA.1 Roth IRA funds enable you to both invest toward retirement and toward earning a down-payment for your first house in the same tax- advantaged type of account. You may not know when and if you will be in the housing market. Furthermore, you may be torn between saving for retirement and saving for your first home. The Roth IRA enables you to save for both now and make the decision on how to allocate funds when you are ready. Both owner occupied homes and Roth IRAs offer similar tax-free gains opportunities.2 Both have advantages. Ultimately most of us need both to have a place to live and an account that will provide spendable funds in the future. The Roth IRA allows you to withdraw contributions at any time without tax or penalty.
Furthermore, you may withdraw up to $10,000 in earnings tax free in order to help make your down-payment on your first house. There are rules regarding the timing of this withdrawal, so get professional advice or check on them at the irs.gov website before taking such a withdrawal and always keep a record of your Roth IRA contributions and save the Form 5498 that your account custodian will send you each year in the event you need to prove the source and purpose of funds in a tax audit.
The Mechanics
You can set up an online account quite easily. I recommend using a discount brokerage firm that allows commission free trading for a large number of exchange traded funds (ETFs). Four of the best known of these firms are TD Ameritrade (who we use in our business), Schwab, E*Trade, and Fidelity. Even with commission free funds, the goal is not to trade (as there are small costs related to the bid/ask spread in security prices, but to buy and hold. You should not worry about the ups and downs of this long-term money. You should view each purchase as purchasing a claim on a future stream of income, as these securities usually pay dividends on a quarterly basis that have historically grown about 2% per year faster than inflation. I can’t go into more detail in the scope of this talk, but heartily recommend that you download the free 15 page book If You Can by William Bernstein available here (https://www.etf.com/docs/IfYouCan.pdf ). Also feel free to reach out to me at rick@covenantinvestments.net. While most of you probably don’t need professional services at this stage of your life (as Bernstein points out), I’m happy to answer any questions free of charge – up to a point. I would add that in a Roth IRA or other account, his minimum 3 fund approach is better than simply buying a Target Retirement Fund in the event that you do need to access funds before you retire. Then you aren’t forced to sell a stock fund in a bad market. Think Stock Funds=Growth, Bond Funds=Stability.3 The bond fund is the one you’re likely to access if you use the Roth for a down-payment.
| ALL 2017 Post-College Life Conference Talks |
Wisdom from Above V
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Introduction
The fact that this prophetic warning is located just on the threshold of God’s judgment of Israel in 70 A.D. does not prevent it from providing us with a number of useful warnings. They were told to look back at similar times of affliction in the Old Testament, and so we have two sets of such historical warnings. Locating this in the first century, therefore, does not make this irrelevant to us, but rather doubly relevant.
The Text
“Go to now, ye rich men, weep and howl for your miseries that shall come upon you. Your riches are corrupted, and your garments are motheaten . . .” (Jas. 5:1-20).
Summary of the Text
The rich are instructed to weep for the coming miseries (v. 1). The wealth they have, and the luxuries they possess, are all coming apart (v. 2). Their gold and silver is corroded, and will both testify against them and devour them (v. 3). They have made piles of treasure for the last days (v. 3). The next judgment tells us what kind of rich men we are talking about (v. 4). They can hire roomfuls of lawyers to keep the working man in bondage to the fine print. They are sensualists, fattening themselves for God’s charnel house (v. 5). They are rich men who kill just men (v. 6).
So the brothers ought to be patient in waiting for the coming of the Lord, just like a farmer waits (v. 7). They should strengthen their hearts as the coming of the Lord approaches (v. 8). Don’t break out into squabbles . . . the judge is at the door (v. 9). Christians in the first century should take a page from the Old Testament prophets (v. 10). We consider men happy who endure misery through to the end (v. 11). Count Job a happy man therefore.
Whatever you do, don’t swear by created things. Let your yes be yes (v. 12). The afflicted should pray (v. 13). The merry should sing psalms (v. 13). The sick should ask for the elders to come (v. 14). The prayer of faith will raise up the sick, and sickness is more closely related to sin issues than we might want to think (v. 15). Confess your faults and failings to one another, so that you might be healed (v. 16). In this humbled, honest context, fervent prayer avails much. Elijah was a man with problems like we have, and look how God answered his prayers (vv. 17- 18). Go after those who wander off (v. 19). Let the one you are chasing know that he is being pulled back from death, and that a multitude of sins is being covered (v. 20) . . . which is the task of love.
Injustice on the Threshold of Judgment
The Bible describes the run-up to the destruction of Jerusalem in 70 A.D. in terms that should make us think of the denouement of The Odyssey. We see rich and insolent suitors devouring what is not theirs, while justice is right at the door. This chapter describes this kind of scene for us well.
The rich here are the same ones in chapter two, those who mistreat the saints (Jas. 2:6). Their wealth is not like that of Abraham or Solomon, but rather was wickedly obtained (v. 3). They rob their laborers of wages that were promised to them, keeping the wages back by fraud (v. 4). They live in wanton luxury (v. 5). They use their wealth to murder just people (v. 6). Foolish saints are tempted to flatter such men, but what is required is for us to stand against them with a prophetic courage.
For all their wisdom (the kind of wisdom that is from below), these rich people do not know they are on the precipice of disaster. They have heaped up piles of loot for the last days (v. 3). A mound of gold at your feet in Hell will just melt and run away. Those afflicted by these people are told to be patient to the coming of the Lord (v. 7). The coming of the Lord is drawing near (v. 8). The judge is standing right at the door (v. 9). From these descriptions, this had to have happened in the first century. But this does not make such warnings irrelevant to us —all of us will meet God within one lifetime . . . our own.
Sickness and Sin
We know from the teaching of Scripture that sin and suffering are not automatically connected. James mentions Job here as a patient and happy man (v. 11), and not the sinner that his three counselors thought he was. And of course, Jesus effectively countered His disciples who thought a man was born blind because of his or his parents’ sin (John 9:3).
But the fact that there is not an automatic connection does not mean there is no connection. When the elders pray, it says, healing and forgiveness are closely connected (v. 15). This is why we should be honest with each other (v. 16). Being honest means that we will not treat the whole thing as a cosmic karma machine, but neither will we shuffle off all responsibility as though there could not be a connection.
Merriment and the Psalms
The psalms are like the blues. One of the striking things about the blues is that singing them makes you feel better. Even though the subject of many blues songs is pretty grim (“nobody loves me but my mother, and she could be jiving too”), the overall effect of the blues is pretty upbeat.
The same thing is true of the psalms. Notice that James says that if someone is merry, he should “sing psalms.” He does not say that the merry one should sing Psalms 148, 149, and 150. The book of psalms is full of affliction, and yet God tells us that it provides us with our vocabulary of joy and godly mirth. Psalms of distress, psalms of war, psalms of fear, psalms of imprecation, psalms of penitence . . . into the hopper.
Confession and Accusation
Remember that the world runs on envy and accusation. Remember that God gives more grace. But what sense does it make to confess my faults to others when anything I say can and will be used against me? We are not to confess anything in an attempt manipulate God, or as we try to get Him to do our bidding. We are to confess our sins in Christ, and we are to be lifted up in Christ. Confession must not be a “work.” It must be all of grace.