Take Decision Making Seriously

Proverbs 14:15 (New International Version) 

“A simple man believes anything,

but a prudent man gives thought to his steps.” 

Times are tough.

In a crisis we may have to make imprudent decisions quickly or “from the gut”.  But, the majority of our lives are not spent in crisis and we shouldn’t make quick, uniformed, poorly thought through decisions. 

Additionally, making money decisions based upon desire for an item you can’t really afford, or making major financial decisions that are influenced by people (family, friends or other loved ones) who are a party to the process but will benefit by you acceding to their “advice” can only spell a disaster for you. 

For example, I was recently involved in the search for a financial institution to refinance a home mortgage.  Due to the current recessionary climate and new financial regulations, even with my good credit rating, it wasn’t easy to find the appropriate deal.  However with a little perseverance I was able to settle on what appeared to be the right lending institution. 

After the mortgage broker forwarded the paperwork for my signature I let her know I wouldn’t be signing right away because I needed time to have a real estate attorney review the documents.  She assured me repeatedly that was unnecessary as the bank and I had the same interest and their attorney had assured her everything was routine.  Of course I ignored her advice and had my attorney review it.  He found some minor issues but he also found a small clause stating that in addition to the house as collateral ALL OF MY FINANCIAL ACCOUNTS could be seized to satisfy the debt. And then they would take the house also!  We told the broker there was an error in the document and requested that she bring it to the bank’s attention. She agreed that this must be an error. 

Well…. when she got back to me she told me the bank now puts that clause in all their documents and would not change it.  In addition as long I paid my mortgage everything would be ok so I should sign anyway!  After picking my jaw up off of the floor, I killed the deal and moved on without the broker. 

Lessons Learned and Rules to Use 

• Don’t rush important decisions, particularly large financial ones such as a home mortgage.  If the large financial decision is a consumer item such as a vehicle, take even longer to make the decision.  It will be available later and no doubt for less money. 
• In an environment where your job and financial savings could disappear overnight why would you put an institution in a position to drain you of all financial resource? Do your due diligence and make sure that you know exactly what you are signing!
• Ask for proper counsel.  If you have knowledgeable friends seek their advice or recommendations on the area you have under consideration.  Remember the key phrase here is knowledgeable friends. 
• Pray and meditate on it.  Why?  If the decision you are making is going to cost you substantial money it is certainly worth asking for divine guidance. 

Did you know that the average American family uses 40 percent or more of their income for a 30-year mortgage to buy a home?  This isn’t wrong in and of itself unless you want to be indebted for a generation!  Instead take out a 15 or 30 year mortgage and accelerate your payments to cut that time frame by half or two thirds. The longest term of debt God’s people were biblically instructed to take on was around seven years (see Deuteronomy 15:1-2). 

Do you need some assistance determing just how much you can actually afford to pay for a home mortgage each month? Yahoo Finance offers loan calculators and repayment schedule tools on their website.

Finally remember two things.  The first is chronic debt isn’t normal or a natural state of being unless you make it part of your life.  Yes, you do want to own a home, but you will pay that off in 15, 20 or 30 years. Yes, you do want a nice car that will carry you safely where you need to go. But you will pay this off in a matter of  a few years. Be careful what kind of debt you take on. Second, don’t accumulate long-term debt that you will find impossible to pay off in your lifetime.

Luke 12:15  “Then he said to them, “Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions.”

© 2010 Theodore Henderson