J.D. Rockefeller, one of the wealthiest men that every lived, once said, “I believe that every right implies a responsibility; every opportunity, an obligation; every possession, a duty.”

This is how we need to look at money; with purpose, with possibility, and with function.  Money has three basic roles.  We should use it to save, invest, and everybody’s favorite, to spend.  Spending money is fun and there is nothing wrong with having fun spending money……..as long as it is healthy spending!  And a person that has healthy spending habits stays within their means and knows what they really can afford.  Do you know what you can afford?  What does it really mean when people say, “…I can afford it!”

A lot of times, when we say or hear the words, “I can afford it,” what they really mean is, “I can make the payments.”  But the two things are not the same!  In fact, they are in opposition.  First of all, when one chooses to make payments, they are creating an obligation for themselves.  Or in other words, a debt is created!  How can you become debt-free if you keep accumulating debt?  You can’t! Secondly, most of the time people choose to make payments because they can’t afford to make the purchase with cash.  Next time you’re faced with the option, test yourself and ask, “If I can really afford it, why do I need to make payments?  Why don’t I just pay cash for it and own it?”  The ugly truth is we have come to believe that if we can make the payments we can afford it (whatever “it” is) and the world of marketing does everything in its power to reinforce this false belief.  For example, have you ever been to a car dealership and regardless of what you tell the salesman about how much you intend to spend you were asked, “What kind of payments are you looking for?”  There is a reason for this.  It is because when you opt to make payments, you will pay for that “convenience”.  And how much you pay for the “convenience” of making payments, many times, shows up in the interest rates and the terms on the financing.  That is how finance companies make a profit; by conveniently selling you debt!  Isn’t that so nice of them?!

I know what some of you are thinking. “But what if I can make payments at 0% interest?”  I have two responses for you.  First, you are probably over paying for the item!  That is why you can buy a brand new car and get financing at a 0% interest rate.  It is because depreciation and obsolescence have not taken affect and eroded the value of the car (nor the profits for the seller).  The profit from selling a car reduces as the car ages.  That’s why you can’t buy a used car at 0% interest!  Since money is not made from initial pricing, it has to be made from the financing and fees.  Secondly, if your 0% interest rate is for a limited time, financiers know that the chances are the balance will not be cleared in time and the borrower will be charged interest.  Otherwise, it wouldn’t be profitable and they would be losing money.  And they are not in the business to lose money!

Biblically speaking, wealth is gained by working hard over time (Proverbs 10:4), and we work too hard for our money to spend it unwisely or frivolously.  And over paying for items and exercising poor spending habits work against our ability to build wealth.  We really can’t afford to be unwise with our money!  The wealthy and wise are careful not to overspend, and avoid payments even if it looks like they can “afford the payments.” Dave Ramsey once said, “If you exercise rich people habits long enough, you will eventually build wealth like rich people.”  So why don’t we start doing the same and watch our net worth accumulate?