Follow-up #1

Gary North

While you are digging yourself out from under your mountain of debt, you should begin to think about what your lifetime goals are. In the short run, your primary goal is to get out of debt. But, in the long run, staying out of debt is not sufficient. It would be like an alcoholic who stays away from alcohol. It is important that he stay away from alcohol, but that does not solve the problem of what to do with the rest of his life. It is not just staying sober; it is doing something useful while staying sober that is important. It is important for him to stay away from alcohol, and it is important for him to achieve something with the time that he has remaining.

The same attitude should govern your situation. You have to look at your deliverance from debt as a way to throw off shackles that were preventing you from achieving significant lifetime goals. Once you have thrown off this burden, you can begin to consider seriously what it is you want to do with the remainder of your life.

There are goal-setting sites and programs all over the Web. I have no particular one that I believe is an example of one-size-fits-all. Generally, it is a good idea to establish two or three major goals for your life, with the outer limit being age 70. Anything beyond age 70 is gravy. You may be able to live beyond 70, and anything you achieve between 70 and time of your death is what used to be called in grade school “extra credit.” You should assume that your physical productive capacity will decline after age 70.

It is not good enough to have lifetime goals. You have to have a plan which will enable you to achieve your lifetime goals. This mandates budgeting. It is more a matter of budgeting your time than budgeting your money. There are certain things that you have to do in sequence, and if you do not do them in sequence, you will have to scramble very rapidly to catch up with what would have been a systematic lifetime plan. Your debt has sidetracked you significantly. It may take another two or three years for you to get off the detour that debt imposed on you. But you will be able to get off this detour and back on the main highway soon enough.

At that point, and perhaps even now, you should begin to think about what it is that you would like to achieve with the rest of your life, once you become debt-free. That should be part of your goal of becoming debt-free. Becoming debt-free is simply one step in a series of steps on the way to whatever they were goals are for your life. These are really important goals. These achievements will constitute your legacy. It is the thing that you will leave behind that will be most significant. The only way for your memory to be preserved beyond one generation is for you to leave something behind it is still serving other people.

Maybe this would be a book posted on the Web. Maybe this would be a series of articles you wrote for WordPress.com. The reason I switched this site to WordPress.com is simple. I wanted to make certain that this material will be available to people indefinitely. I do not have to pay WordPress.com a monthly fee. It sits online, where Google searches will find it. Of course, the site will be rated very low, because I’m not actively adding new material to it. But, through word- of-mouth, and through word-of-mouse, people will come to this site. I want them to come to it in 100 years, or 200 years. When you post a site on WordPress.com, you have a real possibility of creating a legacy that can last long beyond your death. None of your heirs has to pay to keep the site online.

The same thing is true of YouTube videos. If you create a YouTube video, that YouTube video is probably going to be there in a century. If you create a YouTube channel, which is free of charge, the videos that you post on it will also remain in the century. Here is how to create one free of charge: http://www.garynorth.com/public/department137.cfm.

This has never happened before in history. Always before, a writer was dependent on a publisher to keep his books or materials in print. Most books go out of print after the first edition. But, with free PDF-posting sites such as Scribd, that document will be available in 100 years, or 1000 years.

I therefore recommend that you do whatever you can to identify what your legacy is likely to be, or what you would like it to be. You should begin developing a plan to achieve that legacy. The plan should involve a regular review process, at least annually, and perhaps four times a year . You can always revise a bad plan. It is better to have a bad plan than no plan.

Give a great deal of attention to this, because once you have made the decision, and once you have developed a long-term plan, the longer that you stick with that plan, the less time you will have to revise it, or abandon it, in order to achieve a new set of goals, with a different kind of plan. The earlier you get started on this, the earlier the compound growth effect will take place in your life.

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Conclusion

Gary North

You have now completed 11 lessons on how to reduce your personal debt. This should be regarded as the final lesson.

It is easy to begin a process, but it is difficult to complete it. With respect to debt, a process may take the rest of your life. You can get out of debt, but the difficulty of remaining out of debt for some people is almost overwhelming. It may not be so difficult as losing weight and keeping it off, but it is close. Some people really are addicted to debt, and the temptation of going back into debt remains with them all their lives.

I think most people who have read and applied the 11 lessons of this course are in a position to avoid returning to a life of debt. What I have presented is not simply a plan to get out of debt and stay out, but rather a lifestyle change that is more fundamental than the addiction to debt. The change that this program will effect in your life is your defense against debt. It is not simply a series of techniques that will enable you to get out of debt on a one-time basis. There are techniques, but far more important is the lifestyle change. You now have a new attitude toward debt, and you have begun to develop habits that will enable you to remain debt-free, assuming that you do not have some kind of unexpected disaster in your life that forces you to take on a great deal of debt.

It is a good idea to continue to budget on a regular basis. I think budgeting is the key to retaining good habits regarding the use of money. Use the use software on this site, or use Quicken or perhaps some other software program. It is imperative that you continue to budget on a regular basis. This should also include budgeting money to be set aside on a permanent thrift program.

I have not emphasized building up a savings program, because the interest rates you are paying on credit cards is so great that no amount of saving is going to save you from consuming your capital. You must get out of debt, because the interest payments are eating into your capital and your future. Only when you are out of debt, or almost out of debt, when the interest rate charges are not eating you up, does a savings program make much sense.

The basic savings program is an emergency bank fund that will help you from going into debt if an emergency strikes you. The other aspect of the thrift plan is to build up capital for expenses that you know are going to come, such as automobile repairs, other kinds of maintenance, and purchasing replacement goods when long-term durable goods finally wear out.

I do not believe that most people can use a thrift program that will build up sufficient equity to enable them to retire in comfort. The only way that I know to do this is through systematic real estate investing, which involves the use of mortgage debt. US never take this approach unless the real estate itself serves as collateral for the mortgage loan. Never sign a real estate contract in which the creditor has recourse to any part of your income or existing capital. A nonrecourse loan is a loan in which the property is 100% of the collateral. This is the only kind of real estate debt that you should ever consider.

I cover these issues in detail on my website, http://www.GaryNorth.com. Until you are well on the way to being debt-free, you should not join that site. The monthly subscription fee is minimal, but when you are deeply in debt, you must be highly dedicated in avoiding all new expenditures. At some point, you probably will be ready to join the site, assuming that you want guidance on what to do with your money. But that time is not yet.

Your goal now should be to stick to the program that you have already begun. If there are any aspects of the program that I have outlined that you have not fully adopted, concentrate on those missing links. Get as much of my program implemented in your life as you possibly can, both financially and psychologically.

You have got to make a monthly review of your debt situation, which is why I recommend that you have a program online that will enable you to see the decline in what you owe, and which will also enable you to see where your money is going. You must become a fanatic in cutting expenses, and then using all of this save the money for debt reduction.

I believe that over the next three years, maximum, you will find yourself debt-free, except for your mortgage. If you have high student loans, this will not be possible. If you have a medical bill that is very high, you should probably try to negotiate with the hospital about what you owe. But, if you are a normal debtor, dealing with credit card debt for consumer items, you should be able to be out of debt within three years. You may even be able to get out of debt earlier. That should you be your primary goal until you are completely out of debt for consumer items.

On Fooling Around Rather Than Cutting to the Bone

Gary North

Here is an article on a mother of two, recently divorced, up to her ears in student debt.

http://seattletimes.nwsource.com/html/businesstechnology/2015267670_pfmakeover12.html

She was never taught to budget. But, at her age, she has no excuses. It’s the old blame game. “Someone else did this to me.” You know: “The woman that thou gavest to me, she made me eat the fruit.”

We are personally responsible for our actions. Alcoholics Anonymous begins its 12-step program with a self-inventory and taking personal responsibility.

She has no clue as to what she must do. She should be cutting costs. She should be working a second job in the summer. She should figure out that her teenage sons in Washington could be enrolled in a joint program of high school and community college, where they can graduate at 18 with an A.A. degree.

People don’t know how to handle money. They reach middle age up to their ears in debt.

These Articles Can Help You Get Out of Debt

Gary North

I publish personal testimonies. I also create links to articles on the Web that I think are practical. These are real-world articles written by people who have escaped the debt trap.

As you read these articles, jot down any tip that you think will help you get a grip on your spending. These minor adjustments add up, just as overlooking minor bad habits add up.

Try to find one tip per week that you actually deploy. That may not sound like enough tips, but it is if you actually deploy them. Deployment is the hard part.

50 Ways To Improve Your Finances in 2013 Gary North It’s a New Year. Work on developing new, and positive, money management patterns in your life. . . . keep reading

On Fooling Around Rather Than Cutting to the Bone Gary North Don’t diddle around. Start cutting expenses now, ruthlessly. Here is a woman who is just fooling around. . . . keep reading

Five Really Dumb Things Not to Do If You Are Up to Your Eyeballs in Debt Gary North These are simple things to do, which is why people do them. . . . keep reading

An Upper-Middle-Class British Couple Learn About Budgeting. Where Does It All Go? Gary North Without budgeting, money slips through your fingers. . . . keep reading

Cold Turkey for One Year: A “Won’t Buy Anything Except Food and Make-Up” Family Spending Plan Gary North It can be done. This family did it. Not one new item for the parents; only replacement clothes for the growing children. . . . keep reading

You’re Not Alone, Says Survey. Six Out of Ten Workers Live Paycheck to Paycheck Gary North “Normal is broke.” — Dave Ramsey. A lot of families are one paycheck from broke. . . . keep reading

Watch Those Bank Fees Gary North Bank fees are a major source of bank revenue. Maje sure you don’t make mistakes that will trigger them. . . . keep reading

How the New Credit Card Law Makes It Tougher for You If You Owe Money Gary North The new law has backfired. Credit card companies are getting hard-nosed. . . . keep reading

Cutting Bread Costs from $45 to $15 Per Month J Peters This is part of a family’s plan to live on $900 a month. . . . keep reading

“Do As I Say, and as I Do!” Parents Rein in Their Spending and Their Children’s Spending Gary North “Do as I say, not as I do” has never worked well with teenagers. A few parents are finally catching on. . . . keep reading

Testimonies from Recovered Debt Junkies on How They Escaped Gary North It is nice to see a major women’s magazine devote space to this topic. . . . keep reading

Out of Work Family Hit by the Recession Finds Ways to Cut Costs: A Continuing Series on Coping Harriet Robbins Ost Things got tight for this family. The wife tells the story of how she and her husband cut costs. . . . keep reading

A 5-Part Series on Deliverance from Debt Miss M This lady has been there, done that, and escaped. . . . keep reading

Getting Out of $30,000 of Debt Gary North This woman escaped the debt trap. Here are her suggestions. . . . keep reading

The Story of the Frugal Mom: Escaping $100,000 of Debt
Gary North
She now helps others to escape. . . . keep reading

The creator of this site is Gary North. Why should you care?

Gary North is the author of about 50 volumes of books. Most of these books deal with biblical economics.

His series, An Economic Commentary on the Bible, includes commentaries on Genesis, Exodus (3 vols.), Leviticus (4 vols.), Numbers, Deuteronomy (4 vols.), Psalms, Proverbs, Ecclesiastes, the prophets, Matthew, Luke, Acts, Romans, I Corinthians, I Timothy, and the other epistles. The few chapters on Revelation appear in the volume on the epistles. These are posted in the section on Free Materials.

Most of his other books are also available in Free Materials.

He has written the financial newsletter, Remnant Review, since 1974.

He writes the twice-weekly eletter, Gary North’s Reality Check. It is available free of charge here: http://dailyreckoning.com/get-reality.

He edits the financial website, www.GaryNorth.com

He has written in dozens of magazines and newspapers, including The Wall Street Journal, The Commercial and Financial Chronicle, The Freeman, Coin Age, The Journal of Political Economy, National Review, The American Spectator, The New York Times. He has written over 700 articles for LewRockwell.com.

In 1976, he served as the research assistant for the newly elected Texas Congressman, Dr. Ron Paul. He was therefore “Dr. No’s” Dr. No.

He received his Ph.D. in history from the University of California, Riverside, in 1972.

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Gary North

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If You Are Joining To Become A Counselor, Please Read This

Gary North

I appreciate your decision to volunteer time in order to help people who are in real trouble financially.

For someone to get out of debt, there are only three reliable ways: increase income, cut costs, or both. (Debt forgiveness is a long shot.) This is simple. Doing it is difficult.

I recommend all three. Some people should take second jobs for a time. I don’t suggest this as a permanent solution. Everyone in debt should cut expenses. A few people must do both.

There are debates over which debts to pay off first. Some people say the debts with the highest interest rate. This is called the avalanche strategy.

Others say pay off the smallest debts first. This creates positive feedback: victory! It’s called the snowball strategy. This is Dave Ramsey’s recommended strategy.

I say pay off God first. Tithe 10% of your pre-tax income to your local church. This site is aimed at Christians. This is their minimal responsibility. I call this the pay God first strategy.

I have written a book on the tithe. It is at the typesetters. Here is the manuscript.

Tithing forces people to learn to budget. Those who tithe from an early age get used to the idea that they must not spend money that they do not own. They find it easier to adopt the mentality of thrift.

If a family is deep in debt, then the interest payments cut into their money available for tithing. The justification for paying off debt first is that they can start tithing sooner. But will people really do this? If they take a vow and fulfill it, fine. But it is easy to take a vow and then not keep it — a forbidden practice (Numbers 30). It is safer to pay the tithe first.

When a family is finally tithing, then it should pay off highest interest rate debt second. Choose the avalanche strategy.

Some counselors say that people should accumulate a savings account before they pay off debt. I don’t. Use post-tithe disposable income to pay off debt. No more luxuries. No more waste. Not even a savings program. Consumer interest rates are so high that almost nobody can earn more money after taxes and tithe to offset the effect of high interest payments.

I don’t want half-hearted measures. I am not interested in counseling people who are sort of interested in testing a debt-reduction program. I counsel people who are fanatically committed to getting out of debt.

Alcoholics Anonymous teaches that halfway measures don’t work. The alcoholic must give up booze 100%. That’s what I tell debt junkies: get out of debt. I want to deal with people at the end of their financial ropes. They are close to the end of their spiritual ropes. They do not need halfway measures. They need deliverance from debt.

If they want halfway measures, they can wait, get deeper in debt, get even more desperate, and return to this site.

This site is the end of the road. It is not a halfway house.

Your #1 goal should be to show them how to cut their spending. Help them budget. Help them shop more effectively. Help them stick with the program.

Keep them away from the scam artists. Here is  the FTC report on this.

Don’t offer advice on the details of declaring bankruptcy. Always refer them to a lawyer. Be sure to remind them of this verse: “The wicked borroweth, and payeth not again” (Psalm 37:21a).

1 Timothy

Gary North

We live in a series of covenantal hierarchies: family, church, and civil. We also face economic hierarchies. There are endless debates about who owes how much allegiance to whom.

Paul here sets forth a basic principle of law: men who break god’s civil laws are not covenant-keepers (1:9-10). Paul makes it clear that God’s Bible-revealed law is God’s standard for all civil governments.

As for church elders, they must run their homes well and be hospitable (3:1-6). What a man does in his home will be what he does in the church. If he performs poorly in his home, he is not to be allowed to become a church officer.

The church must be charitable, but the first institution of welfare is the family. Thus, no widow who has relatives to support her is to receive funds from the church (5:4).

Paul says nothing about the state as a source of charity. Neither does any other writer of a biblical text. Yet modern Christian socialists and welfare statists go on endlessly about the need for higher taxes on the rich and more money government spent to assist the poor. They take what they were taught in college by God-hating socialist professors and impose this worldview on the Bible.

I Timothy makes it clear that no poor person has a legal claim on anyone else’s money. If the church is not allowed to support a poor widow unless she is at least 60 years old, has been married only once, and has no relatives to support her, there is no way to make a New Testament case for the welfare state.

I Timothy

1 Corinthians

Gary North

Paul’s first letter to the Corinthian church deals with the necessity of rendering judgment. This epistle establishes the principle of ethical judgment as the foundation of social order.

This epistle rests on the doctrine of God’s final judgment (Ch. 15). Because God will judge all people retroactively, everyone must make judgments in history. They ought to assess their plans and the results of their actions in terms of God’s laws.

This epistle is all about government, which begins with self-government under God.

In chapter 6, Paul calls the church to avoid going into a Roman civil court. Instead, he insists, the local church should settle disputes among members. Christians should not trust pagan courts.

Paul’s hostility to Roman civil courts is obvious. Here is his message. The church is a separate jurisdiction. It should have primary authority over its members. Members should not sue other members in a Roman civil court, which is not under a covenant with God.

The doctrine of individual judgment is the foundation of the economic theory of value. Specifically, an individual imputes value to scarce resources. This is the economic application of judicial imputation, which imputes moral value to people’s specific actions.

Through competitive bidding in terms of each person’s subjective imputation of economic value, bidders establish objective prices.

Prices are objective. Economic value is subjective. Yet because God’s imputation of economic value (Genesis 1) is both subjective and objective, men’s imputations of value are both subjective and objective. Without objective value — a corporate scale of values that can be assessed by decision-makers — it would be impossible to assess the social value of any proposed corporate policy. No one could estimate whether a policy will benefit or harm groups or society as a whole.

This commentary discusses the theory of economic value.

I Corinthians

Romans

Gary North

Romans deals with a whole series of crucial issues: the rebellion of man and its effect on what he thinks about God (1:18-21), the common morality of humanity (2:14-15), the redemption of the curse of nature (8:19-23), the division of labor (12), the legitimacy of civil government (13:1-7), and the reason not to be in debt (13:8).

The section in Romans that deals with the division of labor in the church (12) is paralleled by I Corinthians 12. When Paul says something twice, we should pay attention.

The division of labor makes the church a better tool for the extension of God’s kingdom. What is true of the church is true of every other institution.

Adam Smith began The Wealth of Nations (1776) with a discussion of the pin-makers of his day: how specialized tools that were funded by private capital investment make men far more productive. In this sense, Adam Smith’s intellectual defense of capitalism was an extension of Paul’s observation regarding the church.

Romans