I joke often that, in spite of my degree in finance and career in the banking world, had I just read the Book of Proverbs I would have gotten a much better – and much cheaper – financial education. In this series I’ll highlight a few key principles from Proverbs that you can apply to your finances today.
“The rich rule over the poor and the borrower is slave to the lender,” is written in Proverbs 22:7.
The first significant decision I made when I graduated from college was to borrow nearly $20,000 to buy a new car. Did I mention that I had a degree in finance?
I drove that car with a who-cares-you-always-have-payments attitude for one year. Then I had a light bulb moment: I was paying over $400 each month on the loan and losing over $400 a month in depreciation.
That’s a monthly loss of over $800 in value.
The relationship between a borrower and lender is typically very cordial – as long as every payment is made on time (if not, the master cracks his whip). But could there be some other implication in this verse from Proverbs?
What if you took that $400 monthly car payment (or credit card, student loan, personal loan, signature loan, home equity line, home equity loan, timeshare loan, or medical bill payment), and invested it for 25 years? You’d wind up with over $530,000.
And that’s exactly what the lender gets. With the interest lenders make on loans, you’re essentially investing your money to build their wealth.
A slave works for a master without any ownership of or rights to what he produces. Transferring your wealth building power – your income – to a lender will keep you in bondage. Instead, invest your income’s power in the liberation effort! Use every last cent to break the chains of financial slavery for good.
You can be the master.
