The bible teaches us to tithe and live debt-free. These practices bring disciplines to our lives by crucifying fleshly desires, and requiring us to trust God for provision. In order to faithfully use these financial principles we must exercise contentment and self-control by seeking to live off less than 70% of our net income. To help meet this goal it’s better to pay down credit card, car note, furniture account, and other higher interest debt before paying down and eliminating home mortgage principle.
You should not use money in 401k and IRA plans to pay off any of the above debts because removing money from these tax-deferred plans will increase your income tax burden and you will have to pay a 10% penalty for withdrawing the money without a resulting increase in savings and investments over the long run. You would have to pay the IRS approximately 50% of the amount withdrawn, which generally makes such withdrawals a very bad decision.
Yet, it may be feasible to stop your current contributions to these plans and use this money to pay your debts down to reach the land of debt freedom from every type of loan other than your mortgage. The reason being that revolving charge card and many other non-mortgage loans usually have much higher interest rates (10% to 30%) that impede your ability to get ahead financially. Continuing to obtain these types of loans and making minimum payments on them will keep you in bondage for many years into the future.
Once all non-mortgage debt is paid off, you should then re-direct all of your excess income to build your emergency fund to six months of income and afterward you should redirect your excess to pay off your mortgage and commit to remaining debt-free once it is paid off.
Finally, you should then put at least 10% of your monthly income into retirement accounts including a Roth IRA (both husband and wife). Any remaining excess income should be redirected toward other investments and larger charitable contributions to your local church and other worthwhile ministries. You should not speculate on investments that require you to borrow money in order to try and leverage growth. Debt-freedom is the high position the Lord wants for you.
There are too many horror stories of foreclosures on property and brokerage houses calling margin loans for them to be the tool you use to try and build wealth. Very few people make it out of the bondage such loans bring on them. Save your excess cash until you have enough money to make an educated cash purchase of the property or equity position (after much expert counsel from other people that have prospered under God’s financial plan) that you believe will provide great future growth.
Following this pathway, you will find over the next 10 to 20 years that the combination of debt-freedom, diversified retirement account investments, and paying cash for diversified investments outside of retirement accounts will catapult you into the wealthy place that God has for you whereas the debt-ridden position you formerly held would have subjected you to financial bondage and its resulting negative consequences (broke, busted, and disgusted all your days).
Please pray for this ministry and email any questions. May God bless you richly as you follow His plan!!!
Deuteronomy 28:12, Proverbs 3:9-10, Luke 14:28-30, Romans 13:8
Please forward these bondage breaking articles to other people who can use helpful insight!!!
You can find books authored by Randy and Karen Parlor at www.Amazon.com
No comments:
Post a Comment