Caveat Emptor
"Therefore be as shrewd as snakes and as innocent as doves."-Jesus (Matthew 10.16)
Last week I talked about a Business Week report entitled "The Poverty Business." The report examined the business practices of companies that sell goods and services to those considered working-class poor (making less than $30,000 a year). We live in an increasingly financially predatory society as businesses try to find more ways to separate us from our money (caveat emptor-let the buyer beware). So what, in this case, is the wisdom of the serpent?
Using the word "debt" as an acronym, we can remember four basic principles about being good stewards of our resources: D is for desire, E is for education, B is for budget, and T is for time.
D: We must control our desires and decisions. Sometimes we want more than we can realistically pay for or even use. A December 2006 poll by the PEW Research Center exemplifies this principle. They asked Americans what was essential to daily living. Forty nine percent said cell-phones. Fifty one percent said home computers. The majority of Americans believe that cars, washers/dryers, air conditioning (home and vehicle), microwaves, and televisions are essential to daily living. It's funny how luxuries become necessities. Necessities are food, shelter, utilities, and transportation. Our desires, however, will determine the kinds of food, shelter, utilities, and transportation we try to obtain.
E: We must educate ourselves about financing and terms. One reason the poor and many middle class people are paying higher interest rates and making bad decisions about goods and services is because they won't do their homework or read the paperwork before they sign. Had I not read "Home Buying and Selling for Dummies," the mortgage people would have made thousands more off of me than they did. Don't agree to finance a car or home because of the monthly payments. Fight for a lower interest rate. Hunt for the best deal you can get to buy something you have to have.
B: We must budget what money we do have. We must live well within our means. Yet the majority of Americans are living now on what they will make in the future, even those making $250,000 or more a year. Americans have a negative savings rate. It took Peggy and me years to get a workable budget, but we've been using the same one now since 2004. Dave Ramsey helped us a lot in this area. Give God your first 10%. Give yourself the next 20% (savings/investment), and live on the other 70%. After you deduct your necessities from the 70%, you'll know what you can reasonably afford. It will help you set aside cash every pay period to buy things with cash, rather than having to finance them. This will save you lots of money in the long run.
T: We must take time to pay cash for things, avoid impulse buying, and hunt for the best deals. If you see something you want, go home and write it down on a list. Never buy on impulse. Look around your house and think about the money you spent buying something on impulse that you have never or very rarely used. If it takes time to track down the very best deal, then take the time. Many people get into trouble because they can't wait-they can't wait for tax-refunds (and so lose up to 40% of them to get them now), they can't wait for cell phones, computers, or even furniture. They then make themselves easy targets for the payday loans, rent-to-own businesses, and quick refund places.
Remember Proverbs 22.7, "The rich rule over the poor, and the borrower is servant to the lender."

~Shawn