“Coming from a theological standpoint, what is your opinion on it as far as retirement savings, assets vs. liabilities, etc.? ”

I have touched on this a bit on my blog, but basically I think it is a matter of the heart. Proverbs mentions the wisdom in saving and preparing for the future as well as Joseph saving for 7 years to prepare for the 7 years of famine. So, I think there is some good biblical support of saving for retirement, but it has to be within balance. I found myself trying to insulate myself from having to trust God by building a large enough retirement portfolio. Looking back on it, I wasn’t much different than the builders of the tower of babel. So, to answer your question I don’t think it is something that needs to be prayed about and decided on prayerfully. Saving is good, but putting your trust in anything but God is going to get us in trouble…

@Authur Eiss: You make a really good case when you figure in inflation. That’s part of what under-girds the whole idea of a house increasing in value.

However, I think the stronger argument was the one made earlier– that being in debt is taking a gamble on the future. If you’re in debt without an emergency fund and something happens, you’re more likely to go deeper into debt– at just the time you need debt the least.

If you’re looking to have financial peace, then you’d want to be out of as much debt as possible.

Let’s use our first example of the financial planner. Take a car note and invest in a fund. OK, 10000 for the car at 5.25% and 10000 in the fund at 8.00%. I’m assuming both interest rates are annual.

Let’s just look at one year: Your car cost you $525 to finance and your fund returned $800. However, in the mean time inflation is estimated at over 12% year to date, so lets assume it stays at just 12% for the year. 10800 – 12% = 9514 … so that’s the value of your investment once you consider inflation.

So what happens to your car? 10525 – 12% = 9262. So your real debt has decreased. However, you are still in debt which means whoever holds that note has you in an obligatory labor position. You work for him.

See how inflation encourages debt? In fact the whole Federal Reserve system was designed to perpetuate debt. Check your history on this one because it’s the single most important thing politically for the American people today. One cannot have political freedom unless one has private property rights.

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I’ll tell you one thing, I am so done with credit cards! I have been asked at my bank if I am interested in getting everytime I deposit my Avon payments! Arghh…NOOO! I don’t want a friggin…credit card!

If I cannot afford to pay something up front, then I really don’t need it.

We learned the hard way about credit card debt and we are finally seeing the end of our struggle.

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I’m sorry to hear about your (potential) loss on the house. I can’t imagine how frustrating that is.

I won’t presume to know anything about real estate investment. My (limited) expertise is in the market side of it – stocks, bonds, funds, portfolios, etc. I don’t deal with nor know much about uber-risky stuff like hedge trading and day trading. My primary responsibility at my old job was individual financial analysis. I would gather and analyze financial info about clients, see where they were spending and saving the most, and make recommendations to how to 1) get them the most return on their money (it was a secular firm obviously) and 2) get them out of any high-interest or revolving debt. Of course I couldn’t formally recommend to the client their options; that had to be done by a professional CFP. So I did all the work and he drew the big paycheck – though I can say what I learned from him was worthwhile.

The thing is, you are taking a risk with ANY investment you do. As for our particular situation with the car, we have the money set up to where if the market tanks tomorrow we’d still have enough to pay off our car loan. Even if we’d paid it off and invested the leftover money, if the market tanked tomorrow we’d lose most of that anyway. It’s a risk that is taken regardless of when or how much you invest. I’m sure one could make a case that investing (even if the person has no debt) is sinful because it could be a form of gambling.

I don’t want to confuse anyone to think I am pro-debt or anything like that. I don’t believe in revolving credit card debt or financing something just because you need it “right then.” I think that goes back to MIn’s original point, that people try too hard to live on other people’s money. I merely questioned the logic of renting versus mortgage. Obviously if you can live somewhere for free and save every dime to pay cash for a house, that would be great. But what percentage of the population can actually do that? My folks wouldn’t be too thrilled if we moved back in with them rent-free just so we could save all our money to pay cash for a house (and obviously from MIn’s comment earlier, this isn’t Ramsay’s credo – it was just presented to me in that way).

Anyway, where our car is concerned, we did not do this to try and make a quick windfall on the money (I don’t believe in taking large amounts of risk for short-term investments). We saw an opportunity to make a little more putting it all in versus paying off the car so that’s what we did. Worst case scenario, there’s enough there to pay off our car debt (especially since we have to rent right now) and if we don’t make anything on the leftover, well, it’s not like we’re really losing anything either. And again, I would never recommend this to someone who has trouble with financial discipline. The thing I’ve found working with and coaching people with their money is it is a case by case basis – there is no blanket recommendation because everyone has different levels of financial self-control.

Two cents are worth a quarter now? That’s pretty funny! Thanks for sharing your opinions.

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We talked to our friends about the mortgage situation right after we purchased our house back in 2004. They chastised us for jumping in to a mortgage so quickly (and I of course rallied over the wasting of so much money for rent). The thing was our house was not large, we got an excellent deal on it, and when I worked out the figures of interest to the bank versus spending rent money and trying to save, we would have spent more on rent before we could have actually had enough to pay cash outright. Plus not long after we moved in I quit my job at the investment firm to go work part-time for our church, so that was a drastic income change for us. I hope when the time comes for us to buy a house again interest rates will be back to the lows they were at in 2004 (wishful thinking) so we could have more to put to principle.

Unfortunately, the investor in me says to put money in savings instead of paying off a low-rate mortgage because the return is so much greater, especially if you are looking at long term savings like IRAs. As much as I loved what I did, I sometimes wonder how that mentality matches up with biblical standards. Obviously this isn’t a subject that is going to make or break salvation (my uncle would call it “disputable matters” a la Romans 14). At the time I quit I was beginning to study for my CFP – part of me wishes I had finished it and then had a good Bible-based instruction on finances to see how they match up.

Coming from a theological standpoint, what is your opinion on it as far as retirement savings, assets vs. liabilities, etc.? Our accounts are with a Christian financial planning firm and their mission statement is full of verses from Proverbs about preparing for your family. I’ve never studied it biblically; I’ve only gotten the academic and professional side. I’d be interested to hear your thoughts.

Rachels last blog post..Reason #1,457,396 Why God Is Awesome

We just fixed up a nice house, right before the market crashed, we expected to get a huge sum to add to the next houses’ down payment, or principal… Turns out, that house has sat on the market for a year, without ANY offers. We aren’t gonna reap a big windfall here, we MAY take a loss.

Why? Because we presumed upon the future, and we were WRONG.

Debt IS a curse, even a mortgage keeps you bound. But know what I recently discovered. Even if I own my own house, I still won’t really EVER own my own land. Property tax is gonna get me in the end.

Seems like in our (the U.S.’s) economic situation there is no true freedom, only varying degrees of it.

I don’t think that a bill is *quite* the same as a debt, but a bill which comes due regularly, which you are helpless to pay off completely, and are helpless to live without (see electricity you COULD turn it off), not so with property tax… well, seems alot like the bondage of debt.

(And that is one reason why I agree with the poster about not renting… see that bill comes due over and over and over, and is in my opinion, *almost* as bad as debt. Therefore I think a mortgage which you are paying off and can eventually end is probably better.)

Just my big fat quarter (inflation you know)
Mrs.Meg Logan