The Wisdom of the Serpent

"Therefore be as shrewd as snakes and as innocent as doves."-Jesus (Matthew 10.16)

Last week Business Week had a report entitled "The Poverty Business." The report examined the business practices of companies that sell goods and services to those considered working-class poor. These poor families and individuals often pay an average interest rate of 25% for car loans, 30% interest rates for credit cards, and 800% for payday loans. Perhaps the most shocking statistic to me was the data provided by the Federal Reserve: In 1989 households earning $30,000 or less a year paid an average annual interest rate on auto loans that was 16.8% higher than what households earning more than $90,000 a year paid. By 2004 the discrepancy had soared to 56.1%. Roughly the same thing happened with mortgage loans: a leap from a 6.4% gap to one of 25.5%. The poor are paying a lot more than the "rich" to borrow. In a Detroit-area study, 23% of all sub-prime home mortgage borrowers were penalized for paying off mortgages early compared to two percent of prime borrowers.

Other businesses catering to the poor, such as rent-to-own and used car companies, use products to lure customers into financing arrangements they can't afford. Sometimes these same companies stall on providing the services already paid for by consumers, causing the consumers to eventually cancel services but never getting their money back. These companies may take several hundred dollars from consumers and never have to deliver a product. Car companies convince consumers to buy a car based on the monthly payment rather than the total cost of the car and its financing. Then, when the consumer can't make any more payments, the car is repossessed and resold netting the car dealer extra profit and the consumer extra financial burdens.

Sub-prime lending has been in the news recently with several lenders declaring bankruptcy. The pressure on companies to improve profitability has caused our economy to look for new sources of revenue. This is why the poor are now fair game when the business community has traditionally avoided them. In an ethics-free capitalistic system, it becomes increasingly important that the buyer beware. But even the savviest of buyers still has to struggle with two other economic factors: wages for most have remained relatively stagnant, and the price of housing, automobiles, and healthcare is skyrocketing.

We, therefore, live in an increasingly financially predatory society as businesses try to find more ways to separate us from our money. So what, in this case, is the wisdom of the serpent?

I only have room this week to briefly explain four basic biblical principles about financial wisdom in our economy. I am using the word, debt, as an acronym: D is for desire, E is for education, B is for budget, and T is for time. If we do not control our desires and decisions, educate ourselves about financing and terms, budget what money we do have, or take time to pay cash for things or defer buying we will truly be sheep for the slaughter.

I believe the way of Christ makes a difference in life when it is applied; even financial life. We'll spend some time looking at the four things above next week and what the Bible says about each.

~Shawn