1. Chapter 9 Setting Your Personal Financial House in Order

2. 2 Learning Objectives After reading and studying the chapter, you should be able to: After reading and studying the chapter, you should be able to: Define gross income; taxes; net spendable income; and the tithe. Define gross income; taxes; net spendable income; and the tithe. Describe a budget and identify rough percentages to be spent on housing, food, automobile and insurance. Describe a budget and identify rough percentages to be spent on housing, food, automobile and insurance. Describe some cautions in the use of credit cards. Describe some cautions in the use of credit cards. Define and demonstrate the ability to calculate present value. Define and demonstrate the ability to calculate present value. Describe the major types of insurance and the purpose for each. Describe the major types of insurance and the purpose for each. Describe and differentiate between Social Security, 401K plans, IRAs and mutual funds. Describe and differentiate between Social Security, 401K plans, IRAs and mutual funds. Define Check 21 and how it governs check floating and kiting. Define Check 21 and how it governs check floating and kiting.

3. 3 Budgeting In preparing a budget, a person should consider their gross income, tithing and tax obligations to obtain what Larry Burkett referred to as “Net Spendable Income.” Gross Income: The amount of money that you earn—the total of your salary or wages. Gross Income: The amount of money that you earn—the total of your salary or wages. Tax: The obligation you have to pay taxes on your income keeping with the principle to render unto Caesar what is Caesar’s. Most states have income taxes and federal income taxes are collected for the purpose of supporting a national defense and other federally funded programs including Social Security. Tax: The obligation you have to pay taxes on your income keeping with the principle to render unto Caesar what is Caesar’s. Most states have income taxes and federal income taxes are collected for the purpose of supporting a national defense and other federally funded programs including Social Security. Net Spendable Income (NSI): Defined by Larry Burkett and Crown Financial Ministries, NSI refers to the amount of income you have after you have tithed and paid your taxes. This is the amount Crown recommends using in determining a budget. Net Spendable Income (NSI): Defined by Larry Burkett and Crown Financial Ministries, NSI refers to the amount of income you have after you have tithed and paid your taxes. This is the amount Crown recommends using in determining a budget.

4. 4 Budgeting Tithe: Derived from the Hebrew, asair, meaning to give the tenth part (Strong's Exhaustive Concordance) it is a principle introduced in the Old Testament involving setting aside a tenth of the first fruits— the best—of a person’s income, for the purpose of giving to the Lord. Tithe: Derived from the Hebrew, asair, meaning to give the tenth part (Strong's Exhaustive Concordance) it is a principle introduced in the Old Testament involving setting aside a tenth of the first fruits— the best—of a person’s income, for the purpose of giving to the Lord. The first recorded instance of the tithe was from Abraham to King Melchizedek of Salem (Genesis 14:20). The first recorded instance of the tithe was from Abraham to King Melchizedek of Salem (Genesis 14:20). Eventually the tithe was codified in Mosaic Law, examples including: Deuteronomy 14:22-23, Numbers 18:21, Deuteronomy 14:28-29, Deuteronomy 26:12, and Malachi 3:10. Eventually the tithe was codified in Mosaic Law, examples including: Deuteronomy 14:22-23, Numbers 18:21, Deuteronomy 14:28-29, Deuteronomy 26:12, and Malachi 3:10. Tithing is not a requirement restated in the New Testament but the principle of giving is. See: Acts 2:44-45; Acts 4:32-37; Romans 13:7; 1 Corinthians 16:1-2; 2 Corinthians 9:7; 2 Corinthians 8:12 Tithing is not a requirement restated in the New Testament but the principle of giving is. See: Acts 2:44-45; Acts 4:32-37; Romans 13:7; 1 Corinthians 16:1-2; 2 Corinthians 9:7; 2 Corinthians 8:12 There is no set percentage of income demanded, except for the principle that 100% of all the Believer has been given to steward belongs to the Lord. There is no set percentage of income demanded, except for the principle that 100% of all the Believer has been given to steward belongs to the Lord.

5. 5 Budgeting Crown Ministries Budget Worksheet Gross Income:$88,000.00 Tithe: 8,800.00 Tax: 14,500.00 Budget Category Suggested PercentageAnnual AmountMonthly Amount Net Spendable:Net Spendable:*$64,700.00 $5,391.67 Net Spendable: Housing: Housing: 30 % 19,410.00 1,617.50 Housing: Food: Food: 11 % 7,117.00 593.08 Food: Auto:Auto: 13 % 8,411.00 700.92 Auto: Insurance:Insurance: 5 % 3,235.00 269.58 Insurance: Debt:Debt: 5 % 3,235.00 269.58 Debt: Ent/ Rec: Ent/ Rec: 7 % 4,529.00 377.42 Ent/ Rec: Clothing:Clothing: 7 % 4,529.00 377.42 Clothing: Savings: Savings: 5 % 3,235.00 269.58 Savings: Med/Dental:Med/Dental: 4 % 2,588.00 215.67 Med/Dental: Misc:Misc: 8 % 5,176.00 431.33 Misc: School/Childcare:School/Childcare:** 5 % 3,235.00 269.58 School/Childcare: Investments:Investments: 5 % 3,235.00 269.58 Investments: [1] See Crown Financial Ministries website for more information. Budget worksheet and calculator available at: http://www.crown.org/tools/budgetguide.asp. [1] See Crown Financial Ministries website for more information. Budget worksheet and calculator available at: http://www.crown.org/tools/budgetguide.asp. [1]

6. 6 Crown’s Four Minimum Standards Crown Financial Ministries teaches four minimum standards in personal finances for couples. God owns everything. We are simply stewards of that which we “own.” God owns everything. We are simply stewards of that which we “own.” Think ahead and avoid problems. Plan ahead and establish a budget. Think ahead and avoid problems. Plan ahead and establish a budget. Keep good records. Write down and track your spending. Know how much you owe. Keep good records. Write down and track your spending. Know how much you owe. Get educated. Learn how borrowing and interest work Get educated. Learn how borrowing and interest work

7. 7 Loans and Interest There are different types of loans and different types of interest rates. There are different types of loans and different types of interest rates. Loans: An agreement to borrow a set amount of money and to repay the principal with interest. Loans may be for homes (mortgages), or for personal purchases including everything from cars (usually made through banks or credit unions) to household supplies or even musical instruments (too often, unfortunately, made on credit cards). Loans: An agreement to borrow a set amount of money and to repay the principal with interest. Loans may be for homes (mortgages), or for personal purchases including everything from cars (usually made through banks or credit unions) to household supplies or even musical instruments (too often, unfortunately, made on credit cards). Interest: The amount of money a person pays on a loan which is in addition to the principal amount borrowed. Two common types of interest charged on loans include variable and fixed. Interest: The amount of money a person pays on a loan which is in addition to the principal amount borrowed. Two common types of interest charged on loans include variable and fixed. Variable interest rates go up or down throughout the term of the loan depending on market conditions. Variable interest rates go up or down throughout the term of the loan depending on market conditions. Fixed interest is set at a specific rate for the term of the loan. Fixed interest is set at a specific rate for the term of the loan.

8. 8 Comparison of Payment Plans Consider a $2,000 credit card balance with an interest rate 13% and making only the minimum monthly payment. Minimum payment Option: The first five months minimum payments will be:$ 44.00 month 1 $ 43.51 month 2 $ 43.02 month 3 $ 42.54 month 4 $ 42.07 month 5 The first five months minimum payments will be:$ 44.00 month 1 $ 43.51 month 2 $ 43.02 month 3 $ 42.54 month 4 $ 42.07 month 5 In addition to the 5 payments listed, another 190 payments will be required to pay off the debt. After all 195 payments have been made, you will have paid $1,674.11 in interest, plus the original balance of $2,000.00 (a total of $3,674.11 ). In addition to the 5 payments listed, another 190 payments will be required to pay off the debt. After all 195 payments have been made, you will have paid $1,674.11 in interest, plus the original balance of $2,000.00 (a total of $3,674.11 ). A Better Option: Make the same payment of $44.00 until the debt is paid in full. The payment schedule will be: $ 44.00 month 1 $ 44.00 month 2 $ 44.00 month 3...$ 44.00 month 62 $ 44.00 month 1 $ 44.00 month 2 $ 44.00 month 3...$ 44.00 month 62 You pay $756.37 in interest (versus $ 1,674.11 above). You pay off your debt completely in 62 months (versus 195 months above) and save $917.74 in interest. [1] You pay $756.37 in interest (versus $ 1,674.11 above). You pay off your debt completely in 62 months (versus 195 months above) and save $917.74 in interest. [1] [1] [1] Source: To view Crown Financial Ministry’s credit card payment calculator, go to: http://www.crown.org/Tools/creditcard.asp [1]

9. 9 Applying Present Value Present Value: Current value of an amount of money to be received in the future, or the current value of a future cash flow. Helps address questions of investing. The basic calculation for present value is PV=FV/(1+i) n. An alternative expression is P=S/(1+rt). Present Value: Current value of an amount of money to be received in the future, or the current value of a future cash flow. Helps address questions of investing. The basic calculation for present value is PV=FV/(1+i) n. An alternative expression is P=S/(1+rt). Suppose you needed $25,000 in four years. Using present value, determine how much you need to invest now to attain that amount assuming a simple interest rate of 5%. Suppose you needed $25,000 in four years. Using present value, determine how much you need to invest now to attain that amount assuming a simple interest rate of 5%. Divide $25,000 by (1 + 0.05)4 to get $21,370 for our initial investment: Divide $25,000 by (1 + 0.05)4 to get $21,370 for our initial investment: PV=FV/(1+i) n or P = S / (1+rt) PV=FV/(1+i) n or P = S / (1+rt) = $25,000 / (1+.05)4 = $25,000 / (1+.05)4 = $25,000 / 1.1699 = $21,370 = $25,000 / 1.1699 = $21,370 So, if you had $21,370 to invest today, in four years you would have accumulated the target of $25,000; you’ve calculated present value. So, if you had $21,370 to invest today, in four years you would have accumulated the target of $25,000; you’ve calculated present value.

10. 10 Insurance Fact Sheet Having insurance is critical. Following are basic facts in planning appropriately. Health Insurance: Some employers provide health insurance coverage that offer group rates. Two common types of health plans include HMOs, Health Maintenance organizations and PPOs, a Preferred Provider Organization. Health Insurance: Some employers provide health insurance coverage that offer group rates. Two common types of health plans include HMOs, Health Maintenance organizations and PPOs, a Preferred Provider Organization. HMO: Prepaid health care plan in which you use doctors who are members of the HMO. In an HMO, the physician is paid a flat fee every month for each of the patients on his list, whether the doctor actually sees the patient that month or not. HMO: Prepaid health care plan in which you use doctors who are members of the HMO. In an HMO, the physician is paid a flat fee every month for each of the patients on his list, whether the doctor actually sees the patient that month or not. PPO: Hospitals and doctors agree to provide clients with health services at a discounted rate. Insurance company pays doctors a discounted rate each time they provide services to a patient. PPO: Hospitals and doctors agree to provide clients with health services at a discounted rate. Insurance company pays doctors a discounted rate each time they provide services to a patient.

11. 11 Insurance Fact Sheet Life Insurance: Life insurance needs depend on your obligations to others and the risk you are willing to assume. As couples marry and have children they have a greater need for providing money to sustain survivors. Two of the most common types include term and whole life. Life Insurance: Life insurance needs depend on your obligations to others and the risk you are willing to assume. As couples marry and have children they have a greater need for providing money to sustain survivors. Two of the most common types include term and whole life. Term life insurance is a no-frills policy with no savings element. Relatively inexpensive, premiums typically increase as you get older. Term life is a policy that is bought for a specific term or period of time. Term life insurance is a no-frills policy with no savings element. Relatively inexpensive, premiums typically increase as you get older. Term life is a policy that is bought for a specific term or period of time. Whole life insurance has a cash value that accumulates over the years it is held. If you cancel the policy, you receive a lump sum. It combines a death benefit with cash value accumulations and so is used by some as a savings plan or investment plan. Whole life insurance has a cash value that accumulates over the years it is held. If you cancel the policy, you receive a lump sum. It combines a death benefit with cash value accumulations and so is used by some as a savings plan or investment plan.

12. 12 Insurance Fact Sheet How much life insurance do you need? How much life insurance do you need? Consider the following replacement income table: Current Annual IncomeYears Until You Retire 10152025304060 $10,000$92,000$132,000$168,000$201,000$231,000$283,000$361,000 $20,000$184,000$263,000$336,000$402,000$461,000$565,000$722,000 $30,000$276,000$395,000$504,000$602,000$692,000$848,000$1,083,000 $40,000$368,000$527,000$672,000$803,000$923,000$1,130,000$1,444,000 $50,000$460,000$659,000$840,000$1,004,000$1,154,000$1,413,000$1,805,000 $60,000$552,000$790,000$1,007,000$1,205,000$1,384,000$1,696,000$2,166,000 $70,000$643,000$922,000$1,175,000$1,406,000$1,615,000$1,978,000$2,527,000 $80,000$735,000$1,054,000$1,343,000$1,606,000$1,846,000$2,261,000$2,888,000 $90,000$827,000$1,185,000$1,511,000$1,807,000$2,076,000$2,544,000$3,249,000 $100,000$919,000$1,317,000$1,679,000$2,008,000$2,307,000$2,826,000$3,610,000 $110,000$1,011,000$1,449,000$1,847,000$2,209,000$2,538,000$3,109,000$3,971,000 $120,000$1,103,000$1,581,000$2,015,000$2,410,000$2,768,000$3,391,000$4,332,000 $130,000$1,195,000$1,712,000$2,183,000$2,610,000$2,999,000$3,674,000$4,693,000 $140,000$1,287,000$1,844,000$2,351,000$2,811,000$3,230,000$3,957,000$5,054,000 $150,000$1,379,000$1,976,000$2,519,000$3,012,000$3,461,000$4,239,000$5,415,000 First Column: Annual income to be replaced. Top Row: Years of replacement income required. Table Body: Lump sum life insurance required. Assumptions : Annual inflation rate assumed to be 4.0%; Annual investment return assumed to be 6.0%. Source: Motley Fool (www.motleyfool.com) Source: Motley Fool (www.motleyfool.com)

13. 13 Insurance Fact Sheet Disability Insurance: Some people rely solely on Social Security’s disability insurance, but this does not protect all of a person’s income. Disability insurance is designed to replace anywhere from 45-60% of income should a worker suffer an injury or illness that prevents him or her from working and earning an income. Disability Insurance: Some people rely solely on Social Security’s disability insurance, but this does not protect all of a person’s income. Disability insurance is designed to replace anywhere from 45-60% of income should a worker suffer an injury or illness that prevents him or her from working and earning an income.

14. 14 Insurance Fact Sheet Property and Casualty Insurance: A person should consider holding policies that provide 100 percent of the replacement cost of a home and belongings if the insured owns a home. Property and Casualty Insurance: A person should consider holding policies that provide 100 percent of the replacement cost of a home and belongings if the insured owns a home. Renters should insure belongings through renter’s insurance. Renters should insure belongings through renter’s insurance. It is advisable to inventory and even videotape the contents of one’s home. It is advisable to inventory and even videotape the contents of one’s home. Common types of losses often covered include fire, tornado and natural disaster, and burglary. Common types of losses often covered include fire, tornado and natural disaster, and burglary. Flood insurance is not available through private insurers but may be obtained through the federal government’s national flood insurance program. Flood insurance is not available through private insurers but may be obtained through the federal government’s national flood insurance program.

15. 15 Insurance Fact Sheet Automobile Insurance: Insuring against losses related to driving and your vehicle. Automobile Insurance: Insuring against losses related to driving and your vehicle. Liability: States require drivers to carry liability insurance on their automobiles. This type of insurance covers damages the owner’s vehicle causes to others. Liability: States require drivers to carry liability insurance on their automobiles. This type of insurance covers damages the owner’s vehicle causes to others. Collision: Insurance against damages that result from an accident, even if it’s the policy holder’s own fault, is called collision insurance. Collision: Insurance against damages that result from an accident, even if it’s the policy holder’s own fault, is called collision insurance. Comprehensive: Similar to collision insurance, comprehensive insurance provides coverage against damage caused by an unknown party or an “Act of God.” Vandalism, theft or fire damages are examples of potential losses covered by comprehensive insurance plans. Comprehensive: Similar to collision insurance, comprehensive insurance provides coverage against damage caused by an unknown party or an “Act of God.” Vandalism, theft or fire damages are examples of potential losses covered by comprehensive insurance plans.

16. 16 Personal Finance Retirement Planning Bear Market: a trend in the stock market in which prices are falling over several months; investors who make decisions based on a belief that the market is going to continue downward are called “bears” or are said to be “bearish” on the market. Bull Market: a trend in the stock market in which prices are rising over several months; investors who make decisions on a belief that the market is trending upward are called “bulls” or are said to be “bullish” on the market.

17. 17 Retirement Planning Fact Sheet Many estimate that a person should plan on utilizing about 80 percent of their pre-retirement income in order to live in a manner to which they’ve grown accustomed. Following are some basic means of planning for retirement years. Social Security: June 8, 1934, President Franklin D. Roosevelt, announced his intention to provide a program for a social insurance plan similar to those that began in Europe in the 19th century and first adopted in Germany in 1889 under the leadership of Chancellor Otto von Bismarck. Under Roosevelt’s plan, the U.S. began social security payments of monthly benefits in January 1940, authorized for aged male retired workers, their aged wives or widows, any children under age 18 and surviving aged parents. Under Roosevelt’s plan, the U.S. began social security payments of monthly benefits in January 1940, authorized for aged male retired workers, their aged wives or widows, any children under age 18 and surviving aged parents. Since then, Disability, Medicare, and Supplemental Security Income (SSI) programs have been added to the entitlements offered through the Social Security Administration. [1] Since then, Disability, Medicare, and Supplemental Security Income (SSI) programs have been added to the entitlements offered through the Social Security Administration. [1] [1] Social Security is an unfunded pension plan, paid for with cash flows from individuals currently taxed to cover the payments to those receiving benefits. Social Security Benefits Calculators: To calculate your own Social Security benefits, access the Social Security Online “Benefits Calculators” at http://www.ssa.gov/planners/calculators.htm Social Security is an unfunded pension plan, paid for with cash flows from individuals currently taxed to cover the payments to those receiving benefits. Social Security Benefits Calculators: To calculate your own Social Security benefits, access the Social Security Online “Benefits Calculators” at http://www.ssa.gov/planners/calculators.htm [1] For more information, see the Social Security Administrations website at: http://www.ssa.gov/history/briefhistory3.html [1] For more information, see the Social Security Administrations website at: http://www.ssa.gov/history/briefhistory3.html [1]

18. 18 Retirement Planning Fact Sheet 401K Plans: Employer-sponsored retirement plans in which employees defer a portion of their salary into an investment choice, usually selecting from several options. Employers often contribute to the employee’s 401k by matching a portion of the investment. 401K Plans: Employer-sponsored retirement plans in which employees defer a portion of their salary into an investment choice, usually selecting from several options. Employers often contribute to the employee’s 401k by matching a portion of the investment. For example if an individual invests 5% of his or her income, the employer may also match that up to 5%. If the person put in 10% of his or her income into a 401K plan, his or her initial investment would actually be a 15% contribution with the 5% match. For example if an individual invests 5% of his or her income, the employer may also match that up to 5%. If the person put in 10% of his or her income into a 401K plan, his or her initial investment would actually be a 15% contribution with the 5% match. Investment options may include stocks (including the company’s stock), bonds and money market funds. Investment options may include stocks (including the company’s stock), bonds and money market funds. All of the funds in the 401k are allowed to increase tax-free and may be withdrawn when the employee reaches age 59 ½. When withdrawn, income tax must be paid on the funds. All of the funds in the 401k are allowed to increase tax-free and may be withdrawn when the employee reaches age 59 ½. When withdrawn, income tax must be paid on the funds. For nonprofit organizations, such plans are referred to as 403B Plans. For nonprofit organizations, such plans are referred to as 403B Plans.

19. 19 Retirement Planning Fact Sheet Individual Retirement Account (IRA): There are two predominant types of individual retirement accounts, the Traditional IRA and the Roth IRA. Individual Retirement Account (IRA): There are two predominant types of individual retirement accounts, the Traditional IRA and the Roth IRA. Traditional IRA: a tax deductible option—that is, the contribution you make is not taxed as income until you withdraw funds. Traditional IRA: a tax deductible option—that is, the contribution you make is not taxed as income until you withdraw funds. Roth IRA: named for Senator William V. Roth, Jr. of Delaware, became effective in 1998. A Roth IRA is one in which your contributions are made after the taxes on it are already paid. Money earned on it is tax free, meaning that no taxes are due on the funds withdrawn from it as long as the IRA has been open five years or longer and the holder is at least 59 ½ years old. Roth IRA: named for Senator William V. Roth, Jr. of Delaware, became effective in 1998. A Roth IRA is one in which your contributions are made after the taxes on it are already paid. Money earned on it is tax free, meaning that no taxes are due on the funds withdrawn from it as long as the IRA has been open five years or longer and the holder is at least 59 ½ years old.

20. 20 Retirement Planning Fact Sheet Mutual Funds: There are an estimated 12,000 or more different mutual funds in which an individual may invest for retirement. Mutual funds allow a group of investors to pool their money which is managed by a fund manager who invests in specific securities, usually stocks or bonds. Mutual Funds: There are an estimated 12,000 or more different mutual funds in which an individual may invest for retirement. Mutual funds allow a group of investors to pool their money which is managed by a fund manager who invests in specific securities, usually stocks or bonds. Investing in a mutual fund is actually purchasing shares or units of the mutual fund. Investing in a mutual fund is actually purchasing shares or units of the mutual fund. Pooling money in a mutual fund allows an investor to diversify money across several types of investments, providing greater protection against loss should a single company’s stock plunge. Pooling money in a mutual fund allows an investor to diversify money across several types of investments, providing greater protection against loss should a single company’s stock plunge. Mutual funds allow buyers to purchase stocks or bonds at lower trading costs than buying and trading individually. Mutual funds allow buyers to purchase stocks or bonds at lower trading costs than buying and trading individually.

21. 21 Personal Finance: Check 21 Check Floating: the practice of issuing a check before the funds are actually deposited in the account; individuals who float their checks, do so believing they will be able to make the needed deposit before the check clears. Check Floating: the practice of issuing a check before the funds are actually deposited in the account; individuals who float their checks, do so believing they will be able to make the needed deposit before the check clears. Check Kiting: a type of fraud in which money is drawn from a bank account that does not have sufficient funds and to cover it, a second check is drawn from another checking account. In some cases, there is no money in the second account either but the scheme operates in hope that the “lag” allows them to draw on the account before the check is cleared. Check Kiting: a type of fraud in which money is drawn from a bank account that does not have sufficient funds and to cover it, a second check is drawn from another checking account. In some cases, there is no money in the second account either but the scheme operates in hope that the “lag” allows them to draw on the account before the check is cleared. Check 21: Check 21 is a federal law, passed on October 28, 2004. Designed to speed up the check clearing process, it allows banks to discard the paper check and substitute an electronic check. This allows the bank to debit your account for the amount within minutes of them receiving your check. Check 21: Check 21 is a federal law, passed on October 28, 2004. Designed to speed up the check clearing process, it allows banks to discard the paper check and substitute an electronic check. This allows the bank to debit your account for the amount within minutes of them receiving your check.

22. 22 Personal Finance Usury and Interest: A Christian Perspective Psalm 15 outlines principles which should characterize the believer. One of the prohibitions given is the charging of usury. Some translations simply refer to interest. Usury is charging exorbitant interest rates above what is customary or reasonable. Psalm 15 outlines principles which should characterize the believer. One of the prohibitions given is the charging of usury. Some translations simply refer to interest. Usury is charging exorbitant interest rates above what is customary or reasonable. Deuteronomy 23:19 states: “Do not charge your brother interest on money, food, or anything that can earn interest.” Nehemiah was particularly incensed when it was discovered that the Jews were not abiding by this prohibition (See Nehemiah 5:7-11). In addition to Psalm 15:4-6 and the passages from Deuteronomy and Nehemiah, other references to this prohibition include: Exodus 22:25; Leviticus 25:37; Ezekiel 18:7-9; Esekiel 18:12-14 and Ezekial 22:12. Deuteronomy 23:19 states: “Do not charge your brother interest on money, food, or anything that can earn interest.” Nehemiah was particularly incensed when it was discovered that the Jews were not abiding by this prohibition (See Nehemiah 5:7-11). In addition to Psalm 15:4-6 and the passages from Deuteronomy and Nehemiah, other references to this prohibition include: Exodus 22:25; Leviticus 25:37; Ezekiel 18:7-9; Esekiel 18:12-14 and Ezekial 22:12. Prohibition against interest does not seem to hold when dealing with those outside the family of faith however. Deuteronomy 23:20 states: “You may charge a foreigner interest, but you must not charge your brother interest, so that the LORD your God may bless you in everything you do in the land you are entering to possess.” Prohibition against interest does not seem to hold when dealing with those outside the family of faith however. Deuteronomy 23:20 states: “You may charge a foreigner interest, but you must not charge your brother interest, so that the LORD your God may bless you in everything you do in the land you are entering to possess.” Usury is always prohibited. For example, "You must not exploit a foreign resident or oppress him, since you were foreigners in the land of Egypt” (Exodus 22: 21). Even in dealing with “strangers” or “foreigners,” the Jews were commanded to be fair in charging interest on loans. Usury is always prohibited. For example, "You must not exploit a foreign resident or oppress him, since you were foreigners in the land of Egypt” (Exodus 22: 21). Even in dealing with “strangers” or “foreigners,” the Jews were commanded to be fair in charging interest on loans. The New Testament refers to the collection of interest on money deposited with a bank or lender. But are the parables in which this is mentioned meant to condone the practice? After all, the parables were not about interest or usury. In Matthew 5:42, Jesus urges His followers to lend to whoever asks for a loan. Should the Christian refrain from charging interest? The New Testament refers to the collection of interest on money deposited with a bank or lender. But are the parables in which this is mentioned meant to condone the practice? After all, the parables were not about interest or usury. In Matthew 5:42, Jesus urges His followers to lend to whoever asks for a loan. Should the Christian refrain from charging interest?

23. 23 Personal Finance Usury and Interest: A Christian Perspective General Guidelines: Neither lending nor borrowing is specifically condemned in the Bible. Jesus taught His followers (Matthew 5:42): “Give to the one who asks you, and don't turn away from the one who wants to borrow from you.” Christians may lend to anyone as in Luke 6:34-35: “And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners to be repaid in full. But love your enemies, do [what is] good, and lend, expecting nothing in return. Then your reward will be great, and you will be sons of the Most High. For He is gracious to the ungrateful and evil.” Neither lending nor borrowing is specifically condemned in the Bible. Jesus taught His followers (Matthew 5:42): “Give to the one who asks you, and don't turn away from the one who wants to borrow from you.” Christians may lend to anyone as in Luke 6:34-35: “And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners to be repaid in full. But love your enemies, do [what is] good, and lend, expecting nothing in return. Then your reward will be great, and you will be sons of the Most High. For He is gracious to the ungrateful and evil.”

24. 24 Personal Finance Usury and Interest: A Christian Perspective In making a loan, Christians should not charge interest on loans made to other Christians. This would keep with the general teaching of Scripture and is consistent with teachings in both the Old and New Testament. In making a loan, Christians should not charge interest on loans made to other Christians. This would keep with the general teaching of Scripture and is consistent with teachings in both the Old and New Testament.

25. 25 Personal Finance Usury and Interest: A Christian Perspective In the practice of lending, it can be argued that charging interest on a loan made to a non-believer is permissible, but that under no circumstance should the interest be outside of normal, accepted rates. Usury is prohibited in the practice of lending in all situations. In the practice of lending, it can be argued that charging interest on a loan made to a non-believer is permissible, but that under no circumstance should the interest be outside of normal, accepted rates. Usury is prohibited in the practice of lending in all situations.

26. 26 Personal Finance Usury and Interest: A Christian Perspective These principles are intended primarily for individual believers in their personal decision making. They may not directly apply to an institution such as a bank or mortgage company in which a person is employed and made responsible for granting loans. In such a case, the Christian is not making decisions to lend from his or her personal supply, but on behalf of a corporation; they are investing the money of others. There appears to be no prohibition for a Christian working at a bank to make a loan consistent with the rules and regulations set forth by their employer, state and professional codes of conduct, and as long as the employer is not using unethical practices or charging usury. These principles are intended primarily for individual believers in their personal decision making. They may not directly apply to an institution such as a bank or mortgage company in which a person is employed and made responsible for granting loans. In such a case, the Christian is not making decisions to lend from his or her personal supply, but on behalf of a corporation; they are investing the money of others. There appears to be no prohibition for a Christian working at a bank to make a loan consistent with the rules and regulations set forth by their employer, state and professional codes of conduct, and as long as the employer is not using unethical practices or charging usury.

27. 27 Setting Your Personal Financial House in Order Discussion Questions What is the difference between gross income and NSI? What is the difference between gross income and NSI? Describe and differentiate between the four retirement planning options outlined in the chapter. Describe and differentiate between the four retirement planning options outlined in the chapter. Define check kiting; check floating; and Check 21. Define check kiting; check floating; and Check 21. Describe the major types of insurance discussed in the chapter. Describe the major types of insurance discussed in the chapter. Briefly describe why the practice of making the minimum monthly payment on a credit card debt is poor stewardship. Briefly describe why the practice of making the minimum monthly payment on a credit card debt is poor stewardship.

28. 28 Setting Your Personal Financial House in Order Activities Construct a personal budget for you or your family. Check it against the budget guideline in the text. Point out any significant changes in your percentages and in one to two sentences describe your reasoning for each line item. Construct a personal budget for you or your family. Check it against the budget guideline in the text. Point out any significant changes in your percentages and in one to two sentences describe your reasoning for each line item. Use the formula for present value to calculate the amount of money you need to invest right now in order to have $50,000 in ten years. Assume a six percent interest rate. Use the formula for present value to calculate the amount of money you need to invest right now in order to have $50,000 in ten years. Assume a six percent interest rate. Use the Replacement Income Table from Motley Fool to identify the recommended insurance needs for the following individuals (assume a retirement age of 65): Use the Replacement Income Table from Motley Fool to identify the recommended insurance needs for the following individuals (assume a retirement age of 65): a. a 25 year-old who makes $30,000 per year; b. a 40 year-old who makes $85,000 per year; c. a 50 year-old who makes $120,000 per year.

29. 29 Setting Your Personal Financial House in Order Integrating Faith and Discipline Read the short chapter notes on usury and interest. In your opinion, should a Christian charge another Christian interest on a loan? What about charging a non- Christian? Relative to deciding whether to charge a non- Christian interest, what are some guidelines to consider? Read the short chapter notes on usury and interest. In your opinion, should a Christian charge another Christian interest on a loan? What about charging a non- Christian? Relative to deciding whether to charge a non- Christian interest, what are some guidelines to consider? Explore the website of Crown Financial Ministries (www.crown.org). Select an article about personal financial planning and write a one-page summary of the article in a memorandum format. Explore the website of Crown Financial Ministries (www.crown.org). Select an article about personal financial planning and write a one-page summary of the article in a memorandum format.