In case you haven’t noticed, it’s getting harder to make and keep a dollar these days. You don’t have to be an economist to see that financially, things have gotten pretty bad in this country and that a whole lot of people are hurting. Every time I land in a new city to teach and preach God’s financial principles I hear folks “stressing” over money. I’m sure you’ve seen it too:
- Major financial institutions have gone out of business, been forced to merge, or rescued by the government (Lehman Bros., AIG, Bear Sterns, Fannie Mae, Merrill Lynch, Washington Mutual, Wachovia Bank, to name a few)
- Fewer dollars and checks are being dropped into church collection plates (giving is down at most churches)
- The family and friends you used to think had it goin’ on are hitting you up for loans
- Your 401k is going the wrong way and you’re wondering whether you’ll ever be able to retire
- You’re looking sideways at your paycheck because it’s not enough to cover the bills (forget about having enough left over for savings)
It’s getting ugly out there. A whole lot of folks are losing jobs and falling deeper into debt with every passing day. I’ve even noticed that the once-popular “prosperity pep-rallies” that were so popular in some churches years ago have come to a screeching halt! The way I see it, people are tired of the hype. What they really want is a concrete way to earn and hold onto money, and more importantly, make it through this financial crisis.
For starters, let’s look at what God says about making it through tough financial times. We need to be like the sons of Issachar (1 Chronicles 12:32), knowledgeable about the times in which we live. Armed with knowledge, we’ll know what to do, in good times and bad. Unfortunately, too many of us turn a blind eye to what’s going on around us economically and as a result, don’t have a clue what to do. But you can flip the script in the few minutes it takes to finish reading this article because I’m going to give you the abbreviated version of today’s economic affairs and a few pointers on how to stop the pain.
Here’s the news update:
The Bottom Fell Out of the Housing Market
The average house value in America declined by fifteen percent or more in the past year! For the “lucky” homeowner, that means if your house was worth $150,000 last year, you lost $22,500 in equity, making your house worth only $127,500 today. But that’s just the average decrease; in many parts of the country home prices have plummeted as much as forty percent! This has placed too many folks in an abysmal “negative equity” situation where they owe more on the house than it’s worth.
Sub-Prime Mortgage Crisis
Just because the sub-prime mortgage crisis has been all over the news lately, doesn’t mean everybody understands what’s really going on. Here’s a simplified explanation: a sub-prime mortgage is basically a “high-cost / high -risk” mortgage loan usually given to people with low incomes or jacked-up credit (unfortunately, many Blacks and Latinos fall in this category). These loans start out with low, adjustable rates (also called teaser rates) then they escalate, unlike fixed rates which do not change. In the past few years the rates on many of these loans have increased, even though homeowners’ incomes have not, making it difficult or even impossible for them to afford the higher monthly mortgage payments. What happens when you can’t pay your mortgage for a few months? The house goes into foreclosure, leaving somebody homeless and the bank or lender holding the bag.
The drop in home values and the sub-prime mortgage chaos have led to a record number of foreclosures and it looks like the problem will get worse before it gets better. The government is talking about stepping in and helping out homeowners caught up in the nation’s mortgage crisis, but don’t hold your breath. So far nobody can agree on what to do.
Wall Street Firms Are Going Out of Business
The Sub-Prime mortgage crisis has had a deleterious impact on some very well-known Wall Street firms. Many of these companies that packaged the Sub-Prime loans to sell to investors have lost billions of dollars and have gone out of business or are either close to going out of business.
The Government’s 700 Billion Dollar Bailout
Can you believe that the very people (firms) that started this mess are getting help from the government to bail them out? The so-called rescue package would enable the US Government to spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions. According to experts, if the bailout is successful it would enable frozen credit to begin flowing again and prevent a deep recession.
Recession Fears and a Declining Stock Market
Whenever people don’t feel good about the economy they stop spending. Whenever spending declines, economic growth (as measured by the GDP which means Gross Domestic Product) slows. When economic growth slows significantly, then we are susceptible to a recession. Anytime people start worrying about a recession, the stock market usually declines.
Now that you know what’s up on the economic front, let’s talk about what you can do to bolster your personal financial situation.
1. Get some more knowledge
Begin subscribing to financial monthlies like Money Magazine and Black Enterprise (you’ll still have time to read Ebony, Essence, and Jet, I promise). While you’re waiting for your new subscriptions to arrive, start reading the business section your local newspaper. You’ll find advice about everything from 401Ks to the stock market. Remember, Hosea 4:6 says, “My people are destroyed for lack of knowledge.”
2. Identify your financial weak spot, then “cover your butt”.
“A prudent person foresees the danger ahead and takes precautions; the simpleton goes blindly on and suffers the consequences.” (Proverbs 22:3 NLT) Just because God can do anything, doesn’t mean He’ll do everything! This is a team effort – you have a role to play, just as God has a part to play in managing your financial well-being. Do your part.
Find out if you have a sub-prime mortgage. If you are falling behind on your mortgage payments contact your lender and work something out. Try to get your interest rates reduced on your credit cards. In other words, be proactive!
3. Pray and Ask God for wisdom
There’s always room for God, so don’t let your knowledge or lack thereof fool you into thinking that you don’t also need to pray. Ask your grandmamma, prayer works. James 1:5 (NLT) says, “If you need wisdom-if you want to know what God wants you to do-ask him, and he will gladly tell you. He will not resent your asking.”
4. Reexamine Your Lifestyle and Cut Spending.
Cut corners where you can: brown-bag your lunch instead of going out for lunch every day; switch to basic cable instead of the luxury digital package; decrease your visits to the beauty salon, barber shop, and manicurist. If your money is funny, now is not the time to splurge on extravagances like a flat screen plasma TV, new car or, or luxury vacation. If you’re in a lean season, don’t try to front like you’ve got money to spare. Tighten your budget and eliminate unnecessary expenses until things stabilize.
5. Try to Make More money and Save More money
If shaving your expenses, doesn’t provide enough relief, it may be time to get your “hustle on.” Back in the day, it was normal for our parents to hold more than one job, and there’s nothing wrong with it now. Pick up an extra job or start a business on the side to bring in extra cash. When you do get a little extra money, save it!
6. Don’t short-change the Lord
The biggest temptation people face when going through tough economic times is to stop tithing. That’s a big mistake; it’s like saying, “God, I no longer have faith in your power to change my life.” Do the best that you can to continue honoring God with your tithes and offerings so that God will rebuke the devourer for you (Malachi 3:11).
7. Realize this too shall pass
Tough times never last, but tough people do. You’ll get through this. Things will get better. Like famines; bad economies come and go. America is resilient, and so are you.
“For I know the plans I have for you,” says the Lord. “They are plans for good and not for disaster, to give you a future and a hope.” (Jeremiah 29:11).
Although Lee Jenkins’ professional client list consists mostly of affluent individuals, his ministry is targeted towards any individual who wants to see their financial life improve. Licensed as a minister in 1991, he is a keynote speaker for the international men’s ministry Promise Keepers, where he has addressed groups of over 50,000 men. He is the Founder of Lee Jenkins Ministries and can be contacted at firstname.lastname@example.org