December 1, 2019

Program 6 – Six_Nevers_for_Financial_Sanity.mp3

These are things Not to do:

1. Co-sign a loan

• Never co-sign a loan. If a bank won’t loan someone money, there’s good reason you shouldn’t either.  Your child, boyfriend, relative, or wonderful friend of your relative are all putting you at risk by asking you to do this.

  Co-signing a loan means you’re responsible for the debt if they don’t pay.  If they fall behind on payments your credit score could be damaged. Just don’t do it!

2. Transfer titles

• Changing your home title to another means its not your home.  Change happens, relationships change.  Transfer your car title only if you are giving it as a gift or selling it.

3. Buy a variable annuity

• A variable annuity is an insurance product. When you deposit money into a variable annuity, the money is typically invested in mutual funds. These are poor investments.  You pay the mutual fund costs and the insurance company fees.  There are better investments for your money.

4. Make risky decisions with retirement money

• Markets fluctuate, restaurants close, businesses fail.  Proverbs tells us that its better to have little and the fear of the Lord than great treasure and trouble with it.  Invest in what you understand and know

5. Take money from 401K

• If you’re tempted to prematurely pull money from your retirement account to pay off credit cards or other debt — don’t. Prematurely withdrawing from your 401k can subject you to fees and taxes. Even if you are in deep financial trouble, your 401k is protected against bankruptcy. Borrowing against your retirement account then puts you at risk of losing your future financial security — an investment you might never recover.

6. Make hasty decisions

• When life brings unwanted and unexpected change, typically thinking is clouded.  The emotions we discussed in program 3 kick in.  If at all possible, wait until you are thinking clearly, have talked with trusted advisors, and fully understand the long view of any decision.

7. Life Insurance

• Never buy whole life, universal or variable life insurance. Permanent life insurance like whole life, universal or variable life insurance offers investment features.  But don’t mix insurance with investments.  These products carry high commissions for insurance agents. Insurance should be temporary — not long term.  There are better ways to save and invest money.  Term insurance is adequate for most needs. The difference you save on term insurance can then be invested elsewhere.

8. Do nothing   

• Inflation grows at 3%

  While we say don’t make hasty decisions, don’t ‘freeze’ and do nothing.  The parable of the talents states clearly that we are expected to invest what God has given us for multiplication.  Give that inflation grows, means that our talent will shrink.  Learn, study biblical principles, get wise council, and ACT.