We all make mistakes, and learning from them is a valuable skill. But learning from other people’s mistakes is priceless. That’s especially true with mistakes involving money. The world is full of ways you can lose it, if you’re not careful. We’ll go over several of those mistakes so you don’t have to make them yourself. 
<ul><li>Our first way to lose money is a great example of biblical wisdom running smack dab into a financial decision: cosigning for someone else on a loan. Studies show that in the majority of cases, the cosigner ends up having to pay off the loan. Proverbs 22 warns us, “Be not one of those who give pledges, who put up security for debts. If you have nothing with which to pay, why should your bed be taken from under you?” Parents are often tempted to cosign for their children or maybe another family member. But the Bible is clear that we shouldn’t do that. Instead, look for other options like helping with the downpayment or lending the money yourself or even providing it as a gift.</li><li>Our next way to lose money is something we’re likely to hear more about in the coming days as interest rates rise: taking out an Adjustable-Rate Mortgage or ARM. Though these seem to make sense when interest rates are low, when they begin to rise, so do your monthly mortgage payments. You can get a great, low introductory interest rate with most ARMs, but after that, you’re just gambling that interest rates will stay low. It’s always better to go with a fixed rate mortgage for the shortest term you can afford. That means you’ll get a lower interest rate on a 15-year mortgage than on a 30-year loan. By the way, if for some reason you have to take equity out of your home—maybe for repairs—the same philosophy applies. You’ll want to take out a fixed rate home equity loan, not a home equity line of credit or HELOC, which almost always has a variable interest rate.</li><li>Here’s another way to lose money: taking on consumer debt. Borrowing for a home, business or education may make economic sense. The return promises to be greater than the cost. But that’s definitely not the case with credit cards, auto loans, and other forms of consumer debt. Now, granted, you may have to borrow money for a car. But since it’s a depreciating asset, you want to always be saving money for your next car. While there may be some return on other types of loans, there’s no return at all on credit card debt.</li><li>When you run up a balance, you’ll pay interest on it. That’s money down the drain. Ever wonder why credit card issuers are so quick to give you 1% or 2% rewards for using their cards? It’s because they know they’ll make that back 10 times over if you start carrying a balance. So get on a budget. Live on less than you make and save up an emergency fund so you don’t need credit cards. Sign up with one of our volunteer coaches at MoneyWise.org if you need help.</li><li>Making risky investment decisions. Buying cryptocurrencies is all the rage these days and, no doubt, some people have made a lot of money on them. But others have lost just as much. Often, by the time you hear about what a fantastic investment some cryptocurrency is, it’s already peaked in value and is on the way down. Proverbs 21:5 tells us that slow and steady plodding brings prosperity and hasty decisions bring poverty. Instead of looking to make quick money, invest long term with a properly-diversified portfolio and avoid the fads.</li><li>Time for one more way to lose money and it’s a big one that you may not have thought of: losing your job. Lots of people lost all or part of their income during the COVID shutdowns. While for many people that was unavoidable, there are always things you can do to give yourself more employment security such as committing to do excellent work on the job, asking for more responsibility, looking for ways to improve your company’s bottom line, and taking classes to increase your skill set. Your job is a blessing from God, just like everything else He provides. It’s important to be grateful for it and never take it for granted. </li></ul>On this program we also answer your questions:
<ul><li>What is universal life insurance?</li><li>I’ve sold part of the annuity that my mother left me after her death. If I want to sell part of it to take care of some personal &amp; financial needs, would I pay tax on that?</li><li>I have a company-paid pension. When I decide to retire, I have the option of taking a lump sum or a monthly pay-out. What do you think about this?</li></ul>Remember, you can call in to ask your questions most days at (800) 525-7000 or email them to <a href="mailto:questions@moneywise.org">Questions@MoneyWise.org</a>. Also, visit our website at <a href="http://moneywise.org/">MoneyWise.org</a> where you can connect with a MoneyWise Coach, purchase books, and even download free, helpful resources like the free MoneyWise app. Like and Follow us on Facebook at MoneyWise Media for videos and the very latest discussion! Remember that it’s your prayerful and financial support that keeps MoneyWise on the air. Help us continue this outreach by clicking the Donate tab on our website or in our app.

FaithFi

Faith & Finance is a daily radio ministry hosted by Rob West. The program offers a practical, biblical and good-natured approach to managing your time, talents and resources.

Faith & Finance with Rob West

We all make mistakes and learning from them is a valuable skill. But learning from other people’s mistakes - especially mistakes involving money - is priceless.

5 Ways To Lose Money

FaithFi | Dec 28, 2021

Show Notes

Where Faith Meets Finance

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