Evangelpreneur. Josh Tolley

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СКАЧАТЬ up about 22 percent—a 28-point gap. Another way to look at it: In just four years’ time, a house went from costing 4.15 times the average household income to costing nearly 5.15 times. That is a practical financial backslide in only four years.

      But could I just be pulling out a rare anomaly from decades ago? Did this terrible pattern continue? Unfortunately it did! The average cost of a new home in America as of October 2014 (latest numbers available at the time of this printing) was $305,000.²³ Do not get excited and think, “Well, that is why it was smart to buy a house back then in 1985” because (1) the real estate bubble of 2008 shows otherwise, and (2) it is irrelevant, because this just further proves that income is not keeping up with increased costs.

      Now, where are these people today? Those who took out a thirty-year mortgage in 1985 may now be underwater on that home, because in many cases their income did not keep up with costs and they used the equity in their home as a borrowing tool. What happens when you borrow and your source of income doesn’t keep up with the rate at which the prices escalate? You go backward. In addition, when pensions and investments haven’t kept up with inflation, long-term income in many cases hasn’t kept up with long-term costs. Second mortgages to cover repairs, medical bills, or a number of other costs just add to this problem, not to mention rising property taxes. It has gotten so bad that according to a July 26, 2012, NBC News report, home prices fell 60 percent from 2006 to 2011 alone. In Arizona, 43 percent of home owners owed more on their mortgages than their homes were worth. In Florida that increased to 45 percent and in Nevada 61.2 percent of homes had loans on them for more than the home was worth.²⁴ We could get into a whole conversation about smart versus not-so-smart real estate investing, but the truth here is that we cannot count on employment and our cost-of-living increases to keep us from drowning financially.

      Through these examples we can see how household income has changed over the years and has not kept pace with rising expenses. Now, here is the real nail in the coffin: This is household income we are referring to! In 1985 a man could provide a home, a car, raise two kids, and have a stay-at-home wife all with the household income that he alone earned. Today the household income has two or three income earners and we still cannot make it. That means it is actually worse than I’m telling you!

      These are just some common examples. We can look at food, clothing, rent, phone service, or what have you, and we also would find that your job is not going to be able to keep up with inflation. PERIOD!

       Are You Counting on Your Retirement Plan?

      Let me give you an example of an increase that is destroying family financial fluidity. Around the corner from me is a couple; he is a retired cop, she is a housewife. He is eighty-nine years old, she eighty-seven. They purchased their home in 1953, when he was twenty-nine years old and on the police force. The home cost $17,400 when he built it brand new. They thought it was okay, though, because he was bringing in nearly $70 a week after taxes. He listened to his financial planner talk about saving 10 percent and the “Rule of 72” (a method of calculating how much an investment has to gain each year to double over a given time period), and when he retired in 1970 with twenty-three years under his service belt, they had paid off their home. They were feeling good about it, too, because it was valued at $26,000 in 1970. Let us not forget that because of the mortgage, they paid more than that— $31,740 over the thirty years. Like most people back then, they believed that “real estate was always a good investment because it goes up.”

      Now, in 2014 (just a few months ago) they had to move out of their home because they could no longer afford the property taxes of $250 per month—more than three times their house payment. Not to mention their retirement pension didn’t keep up with inflation. Inflation, in the form of increased property tax, has forced this couple who were “middle class” in 1953 to move from their home because they could no longer afford to pay for a house that has been paid off since Nixon was in office.

      So what does this mean? It means that if you do not get a 10 percent raise at work, you are actually going backward financially! After five years with no cost-of-living increase, you went backward 50 percent in real monetary value. If you get a 5 percent raise each year, you’ve still lost 25 percent of purchasing power in five years.

      This is why most people, five years after eliminating debt, find themselves yo-yo debting beyond where they were before. The first time they eliminated debt they found areas in their life to cut costs and found things to sell. Now, all the cuts have been made, the extras have been sold, and the limited money from employment is just not enough. There also has been a rise in people using credit cards, which were once used on needless spending, to purchase food and basic household needs.

      Keep in mind that as time marches on, the problem gets worse. A family will face more increases in costs and less potential from employment between 2010 and 2020 than a family did between 1970 and 1980. We went from one-income homes to two-income homes between 1970 and 1980. We cannot add a fourth or fifth income to homes in 2020. We are maxing out the income potential of employment.

      This is why getting rid of debt is never enough. Instead, we have to get ahead of the inflationary wave. The only way to do that is through entrepreneurship! If we try to get more jobs to pay off debt, we then teach our children to get jobs to pay off debt, or worse yet, to go into debt for an education to gain employment in order to pay off debt. What this all means is we are just delaying and amplifying the inevitable through this accepted system of debt, debt elimination, and employment.

EVANGELPRENEUR ACTION STEP

Getting out of debt should be a priority—a lesser priority than other things, but a priority nonetheless. First, take out a blank piece of paper and write down all of your debts. It is surprising how many people do not really know how much debt they have, as they are afraid to really sit down and add it up.

Your debt needs to be eliminated. Selling things you don’t need, cutting out expenses, and bringing in more money through entrepreneurship needs to happen. However, this next action step is for everyone, regardless of whether you have debt: Write down your income and, not accounting for the debt, write down your monthly expenses. Where are you? Now, be honest. Don’t just list expenses you can afford with what you have left. List expenses you know you have or need to have. For example, clothing, gifts, travel, entertainment, new siding for the home next year, new driveway in ten years, lawn care—I mean EVERYTHING! There is no way this should be under $70,000 (see “The Practical Poverty Level” in chapter seven) for the year.

With what you make, now do this: Write down a year fifteen years in the future. Under that year write “Expenses,” then take the list you have and increase the total by 50 percent. Then write “Income” and cut the total by 50 percent. And keep in mind that even these 50 percent adjustments don’t depict things as bad as they truly are. If the income does not cover the expenses, I don’t care how much debt you do not have—you need to change how you make money ASAP!

      Who Really Controls You

      and Your Church?

      If You Think It’s You, You Are Wrong

      

E’VE LOOKED AT DEBT, we’ve looked at money’s role, and we’ve looked at how, even when you get to zero after getting out of debt, you’re still treading water when it comes to finances. How do you get ahead? By becoming an Evangelpreneur, of course. But besides the practical СКАЧАТЬ