No. 317

Every once in a while when I am out on the road I get behind a big motor home that has a bumper sticker with the words, “We are spending our kid’s inheritance.” To this I say, more power to them. For people of means however, it’s good to leave a ‘nest egg’ for their kids and grandkids, especially if they understand what it took to get that ‘nest egg’ in the first place. Just don’t over do it because it could ruin them. Personally, I hope my Mother and stepfather spend every penny they have because they earned it and deserve to spend it.
When it comes to spending other people’s money I have some thoughts to share in a different realm that may be helpful, especially for young people just starting out and who may not have learned how to manage their finances. If this does not apply to you I hope you will share it with someone who may benefit from it. A while back I was counseling a young man in the area of personal finances and he laid out all of his expenses and income so we could get a clear picture of his current situation.
When we totaled up all of his monthly obligations they came to almost exactly what he was earning each month. This meant without overtime there was no extra money for unexpected expenses, savings and more importantly, no money to contribute to his church.
In today’s economy most people are fortunate to have a job, much less having to depend on overtime for a portion of their living expenses. For people like this, here is a real pitfall that drives them into debt and a harsh sentence on their future that is most often self-imposed.
The real pitfall is getting a big weekly paycheck and the feeling of power that comes with it. The temptation is to spend part of it on non-essentials and trying to pay their bills with what is left over. This is a trap that many young people fall into when they don’t pay their house payment, utilities, insurance, car payment, principle on their credit cards and other monthly obligations. This means that when they are not paying people they “owe” first, they are spending “THEIR” money. In reality, this money belongs to someone else.
Many times people who are robbing Peter to pay Paul turn to Payday Lenders to get by another week. When I say Payday Lenders I’m talking about all those check cashing companies that are set up for short term loans at high interest rates and who drag many people deeper and deeper into debt. A newspaper friend in Illinois shared the following true story with me. One of his relatives (a lady) needed some money so she borrowed $800 with payback time of 2 weeks or pay interest and extend. She said she could not remember the exact interest but it was 25% or more.
To make a long story short, she didn’t have the money to pay it back and kept extending and actually went to another location to borrow money to pay back the first loan. This poor lady kept going from place to place and playing the float game but piling up high interest fees. When her $800 became $2400 she called for help. They threatened court action to get the money. She had no way out. My friend loaned her the money with no interest with the stipulation that they sit down together, go over her finances and work out a payment plan AND get her on a budget.
She did remarkable and paid the loan in full in 10 months on a $24,000 annual salary. During this time she was able to pay a couple of major bills (insurance, new set of tires, and some auto repair) without borrowing money. She took the money from the savings she had built up. In the end, she learned a valuable lesson but an expensive one. The good thing is that she realized that she had to change spending habits and she did. Praise the Lord!! Now, she is spending “HER” money. (Jim Davidson is a motivational speaker and syndicated columnist. You may contact him at 2 Bentley Drive, Conway, AR 72034.)