Shawn (00:00):
Are you facing a major financial decision and unsure of the right path? In today’s episode, we’ll explore 10 steps to making wise choices guided by Biblical wisdom and practical insights. Discover how to align your finances with your faith and make decisions that honor God. Let’s get some perspective. Welcome back to Christian Financial Perspectives. My name’s Shawn Peters. This is Bob Barber. And today we’re going to be covering 10 steps to making wise financial decisions. And for this, it’s going to be covering for anyone if you’re dealing with a major financial decision and what you should do. Now, Bob put this together. So today we’re going to have some scriptures as always, but we’re going to be a little bit different format and we’re going to kind of let Bob do most of the talking.
Bob (00:51):
Really, Shawn, I’m always having such a hard time getting in there.
Shawn (00:55):
Hey, believe it when you see it. Okay, so I did say that was the goal. So feel free to call me out in the comments.
Bob (01:03):
So let me tell you, I want to tell you first though, before we get into this because about these 10 steps to making wise financial decisions. When I wrote this, I wrote this pretty quickly and I wrote it just a few months ago because I was dealing with a major financial decision. We haven’t made it yet, actually, because one of the things is going to be exercising patience. But I was thinking as I was looking at this major financial decision, what are some things I need to think about before making it? And this is where I came up with it and as I was writing this down I thought, wow, this would be a great program.
Shawn (01:38):
Yeah, yeah, for sure. So for our first scripture, we’re going to go with Ecclesiastes 3:1, “There is a time for everything and a season for every activity under the heavens.”
Bob (01:49):
Exactly.
Shawn (01:50):
Yeah. Well you don’t worry though, we’re not going to list all of the different time for this and a time for that. We’d be here for a while.
Bob (01:56):
We’re not.
Shawn (01:57):
Bob, what are some examples of specific major financial decisions that kind of brought this to mind?
Bob (02:03):
Well, one is we were actually looking at a vacation home in Keystone, Colorado because we go there every year. We’ve been going there every year for 40 years and we’ve been renting and as I become semi-retired, we’re going to be spending at least two or three months up there. And I’ve looked at what it would cost, what we’re going to pay in rent every single year and we’ve thrown away a lot of money over the years in rent and would this be a good decision? And it has to do with selling another piece of real estate, and so I’m really looking at this from the perspective, is this wise or not? Or should we just keep renting and actually getting nothing, no return on our money. And I looked at the last 20 years of returns and it’s a good 6% return and it’s all tax deferred.
Shawn (02:54):
Is that 6% from rental income potentially or is that mostly appreciation?
Bob (02:58):
That’s just appreciation and I looked at it from that point of view, but before I would make a big financial decision, which we have not made that decision yet. I thought I’ve got to think about this first.
Shawn (03:08):
For those tuning in, you mentioned a potential property, but do you have some specific example?
Bob (03:15):
Oh, a car. A car is such a major financial decision today. If you’re going to buy a new home, do something like a big remodel. Down in South Texas, we’ve got our big farmers and ranchers that buy a tractor that cost a hundred thousand or more.
Shawn (03:28):
Oh yeah, yeah. Depending on the tractor, it could be a lot more.
Bob (03:30):
These are all big decisions that…
Shawn (03:34):
Maybe RV, boat, some people can buy planes.
Bob (03:38):
They do. We have some clients that have bought some planes. We sure do. And a matter of fact they said it’s cheaper to rent than to buy in that case.
Shawn (03:44):
Yeah. Bob, what’s the first step? What’s step number one?
Bob (03:47):
Step number one, I believe for a Christian, is you’ve got to pray about it. You’ve got to ask the Lord for wisdom. Seek out his word and pray about it. And if you don’t have a peace about this at all, don’t do it for goodness sakes, right?
Shawn (04:01):
Yeah.
Bob (04:01):
I mean I feel like that’s the Lord stepping in and saying this is not a wise decision. Now sometimes God just may be silent on this and this is where you need to turn to scripture, but I really think you need to use wisdom nd James 1:5, I know you pulled that one up. Read that for us.
Shawn (04:18):
It was actually we were both working on this and we both
Bob (04:21):
Came up with that.
Shawn (04:22):
That was our first one we both came up with. So James 1:5, “If any of you lacks wisdom, you should ask God who gives generously to all without finding fault and it will be given to you.”
Bob (04:32):
You’ll be shown that. And if you ask for that wisdom, God will give you that wisdom and immediately.
Shawn (04:38):
But be open to it might not be the answer you wanted.
Bob (04:40):
Exactly.
Shawn (04:40):
He might say no.
Bob (04:43):
And if he does say no and really the step one, in my opinion, if you do not feel a peace about this and God’s saying this is just not something within my will, you need to stop right there. You don’t need to go to any of the other steps I’m going to mention today.
Shawn (04:57):
Exactly. So stop there if you don’t get past this one, but if you do, we’ll go to the rest of them. So Bob, what’s step two then?
Bob (05:05):
Step number two is using patience. You’ve got to be patient. Don’t let your emotions get involved and think about it when they think about “it.” I’m putting the “it”, whatever it is, whether it’s buying that new car, buying a new home, buying maybe a second vacation home because you go to the same place every year, which Rachael, like I said, we’ve been going to Keystone for 40 years now every year. “It” is going to be there and you have a tendency, as an example in our case, you see maybe a property you like, you really, really like, but the timing’s not there yet. Don’t get ahead of yourself because maybe that will not be there, but there’ll be another one that will come along. Then many times by waiting and being patient, God is showing you something and you’ll notice…
Shawn (06:02):
Not letting your emotions dictate.
Bob (06:04):
Exactly. You’ll notice we found some properties we like, but we’re like, it’s not timing yet. I have a feeling if we’re patient and we wait on God, when the property does come along, it’s going to be so much better.
Shawn (06:16):
Amen. So alright, next is step number three.
Bob (06:23):
Well, look at really the good and the bad long-term consequences of the financial decisions or the decision. Example: will it be worth more or less in 10 years. Now in the case of an rv, no it’s going to be much less.
Shawn (06:41):
RV or a car is definitely going to be worth less over 10 years.
Bob (06:44):
Real estate has a long record. I mean basically history itself, real estate, unless it’s just really a bad spot…
Shawn (06:54):
Or you just time it really really bad.
Bob (06:54):
It’s never gone down in value.
Shawn (06:55):
Maybe you bought it a super, super peak time and then it just so happened that it was a short term drop 10 years later.
Bob (07:06):
But usually 10 years is enough time and real estate keeps right with it. At least inflation, something like that. But you think about these other big decisions, will it be a good long-term decision? And that’s very important.
Shawn (07:20):
For this. We have Proverbs 21:5, “The plans of the diligent lead to profit as surely as haste leads to poverty.”
Bob (07:26):
Yes. Yeah.
Shawn (07:27):
It’s a good one. Alright, so what’s the next step, Bob?
Bob (07:30):
Is it going to put you in debt? That’s a big one.
Shawn (07:33):
Step number four, will it put you in debt?
Bob (07:35):
And give you an unwanted burden that you just didn’t want and you cannot handle? And emotions can get you there. You’ve got to be careful of that, getting in that debt and don’t ever buy based on monthly payment. When you go buy a car, how much can you afford per month? Think about it because that could be anywhere. They could say, well you could say, well I can afford $300 a month. Well we can charge this person 15% interest then because based on what they’re going to spend. So look at that debt and it can last for so long, too. So quickly you can get in debt and then it can take so long to get out of it.
Shawn (08:19):
Yeah, that’s true.
Bob (08:19):
Yeah, “The rich rule over the poor and the borrower is slave to the lender.” Proverbs 22:7. You’ve heard us say that one on this program many times.
Shawn (08:31):
All right, so what do you do next? What’s step number five?
Bob (08:34):
Well step number five is are you sure you’re going to be happy with the financial decision that you made six months from now or are you going to be happy with it in the long term? You’ve got to pull back and pull those emotions back and say am I going to be really happy I made this decision?
Shawn (08:52):
That’s a good one. Definitely a good perspective. And for that we’ve got Proverbs 3:5-6, “Trust in the Lord with all your heart and lean out on your own understanding. In all your ways. Submit to him and he will make your path straight.” So what’s step number six?
Bob (09:10):
Okay, so we’re halfway through.
Shawn (09:11):
Yep.
Bob (09:11):
Step number six, is it going to lower your cash reserves to a dangerously low level in order to purchase this? And when I say dangerously low, is it going to lower your cash reserves to less than six to nine months of living expenses? Don’t do that. Don’t get close to that edge of that cliff. And most people will say, are you kidding? I don’t even have six to nine months of cash reserves. Well then you don’t need to be making this financial decision.
Shawn (09:39):
I would say then stop here, build up your cash reserves, then come back later.
Bob (09:43):
Exactly. That’s right.
Shawn (09:44):
And for this we have Luke 14:28, “Suppose one of you wants to build a tower, won’t you first sit down and estimate the cost to see if you have enough money to complete it?” I know we’ve used that a few times. That’s also a good one. So what’s step number seven, Bob?
Bob (09:59):
Well step number seven was another one I put in here and I thought about because I know in this case we were looking at real estate and I thought about how much time will this take and will it positively or negatively affect those that you love around you? And will you have to devote so much time to “it” that it would take away time from those that you care about? In other words, if we buy something in Keystone, Colorado and we’re down here in Texas, how much time is that going to take? That’s why I wouldn’t want to buy a home. I would want to buy, say a condo, that takes care of everything so that I don’t have to do anything. Set up automatic bank draft for the electric payment. Utility payment, things like that.
Shawn (10:45):
The things you are involved in you can do remotely, more or less.
Bob (10:48):
Yeah.
Shawn (10:49):
That’s a good point. And Philippians 2:4, “Not looking to your own interests but each of you to the interest of the others.” So you’re making this point in step seven of, it’s not the financial aspect of it, but it’s like you said, the positive or negative of how is it going to affect the people around you, the people you care about. Yeah, but that’s important.
Bob (11:10):
It is. It’s very important. And I don’t think most people think about that when they do the financial stuff.
Shawn (11:15):
It’s not purely a financial decision.
Bob (11:17):
Yeah.
Shawn (11:18):
Wow. So thinking about how it will affect those close to you. Alright, what next, Bob?
Bob (11:22):
Well we got step number eight and is something bad going to happen if you don’t make this financial decision at all? Most of the time, really, there’s nothing that’s bad going to happen. In other words, is it totally a voluntary transaction that’s one that you just don’t have to do? Now think about this. We were thinking about even a big remodel, you’re remodeling to put new types of colors in your…you are going from a formica countertop to a granite countertop. Okay? Granite is much nicer. Or stone countertop, much, much nicer.
Shawn (11:57):
Or maybe you’re going from the white or black plastic looking appliances and you want to get all new black stainless steel.
Bob (12:03):
Right, exactly.
Shawn (12:04):
Well I guess the question then, is something bad going to happen if you don’t upgrade the appliances or you don’t upgrade the countertops? No, you just don’t get the newer looking thing or the nicer looking.
Bob (12:16):
But it’s an important thing to think about when you’re going to make a financial decision. In other words, you’re doing this voluntarily. No one’s forcing you to do it. And you’ve got to think about that. And I used that actually when I was talking to a realtor up there about this property. I was saying, this is a voluntary transaction, I don’t have to do this.
Shawn (12:37):
Yeah, there’s no real urgency.
Bob (12:39):
Don’t put pressure on me. I don’t have to do it. It’s voluntary.
Shawn (12:42):
That’s a good point.
Bob (12:43):
Yeah.
Shawn (12:45):
First Corinthians 10:23, “I have the right to do anything you say, but not everything is beneficial. I have the right to do anything, but not everything is constructive.”
Bob (12:55):
You picked that scripture, that’s a really good scripture to go with that one. I like that.
Shawn (12:59):
There’s a lot of good scriptures. I found there seems to be a lot of really good wisdom.
Bob (13:02):
There’s scripture for everything. You’ve got it.
Shawn (13:05):
Alright, so just stopping for a minute to determine is this necessary or voluntary? Is it a good idea? Alright, so step number nine, what is it Bob?
Bob (13:15):
Well, could it affect your long-term giving goals, especially if it’s going to put you in debt. Is that going to affect those giving goals and God wants us to be a cheerful giver and if it’s going to create a burden where you can no longer give, X that one out.
Shawn (13:35):
Well it’s like the live, give, owe, grow kind of thing where if you take on too much of what you owe, then it’s going to have to pull from something else.
Bob (13:46):
That’s right. And in this case where we were looking at that property, again, the ongoing financial burden of just the taxes, insurance, and maintenance, well we can easily get enough in rental income renting it just two or three months out of the year, especially during ski season, to pay for all that. I’ve already figured all that out there. So it wouldn’t be an additional financial burden because I’m using one piece of real estate to buy that real estate.
Shawn (14:10):
So at least it’s not going to negatively affect your giving goals.
Bob (14:12):
You’ve got it.
Shawn (14:13):
For this one we have 2 Corinthians 9:7, “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion for God loves a cheer giver.” So considering the effect on giving is a great way to stay grounded in what is and isn’t important. Alright, so what’s final step, Bob? Step number 10.
Bob (14:32):
The final step is can you “try it on?” Now, in our case we’ve been going again, we’re using that example. We’ve been going to the same place during the summers for nearly 40 years. So we’ve tried it on.
Shawn (14:48):
And you still like that area.
Bob (14:49):
We love it, especially because the weather’s so nice in June, July, and August and September compared to Texas where it’s so hot. But we’ve been able to try that on. But let’s just say somebody goes up there only one time.
Shawn (15:06):
And they feel like they fell in love with the area, for example.
Bob (15:09):
Yeah, you need to try it on more.
Shawn (15:12):
Or they went on one RV trip where they rented an RV for two or three days and then they decide I want to live in an RV now. Which is a little different.
Bob (15:20):
Yeah, it sure is, but I like at least there you’re trying the RV, okay, before you just go buy it, go rent that RV four or five times. You can rent a boat. You can borrow a boat before you go do that or a certain car. You can go rent that kind of car. I drive a Nissan Pathfinder. When we were on vacation recently, they were renting Nissan Pathfinders. You could rent one for a couple weeks to see if you like it or not before you go buy it.
Shawn (15:50):
It’s not a bad idea. Then if you rent it for a few weeks, then you get through that new feeling and, “Oh you know what? Oh, I don’t like the seat doesn’t come up as much as I wanted,” or, “Oh, this doesn’t have as much room to get in the back,” or something like that.
Bob (16:06):
Well I know your wife, my daughter, she drove our Nissan Pathfinder and she didn’t like it. It felt kind of like she was sitting lower. She wanted something where she could just sit a little higher.
Shawn (16:18):
And it was this weird combination that I wouldn’t have noticed. I drove it and I thought it was fine, but for her and just where she’s sitting, bringing the seat all the way up the shape of the dash is where she kind of felt like she couldn’t see over it as good. But that was something that had we just drove it one time real quick, might not have noticed.
Bob (16:38):
Exactly. Driving it a few times helped that. So try it on before you make that big financial decision.
Shawn (16:44):
And for this we have Proverbs 24:27, “Put your outdoor work in order and get your fields ready. After that, build your house.”
Bob (16:52):
So in the conclusion here, Shawn, I thought about this, we need to put this in some kind of a little handout because everybody needs to look at these 10 steps before making a large financial decision like buying that next new car or buying that next new home or doing that big remodel. You need to look at all these steps, you need to think about every one of them. And I think it will keep you from making an unwise financial decision.
Shawn (17:20):
Alright, well thanks for joining us as always, and hope this was helpful to you. God bless, and we’ll see you next time.
[DISCLOSURES]
* Investment advisory services offered through Christian Investment Advisors Inc dba Christian Financial Advisors, a registered investment advisor registered with the SEC. Registration as an investment advisor does not imply a certain level of skill or training. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Shawn Peters, and their guests. Bob and Shawn do not provide tax advice and encourage you to seek guidance from a tax professional. While Christian Financial Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
