Lesson from Finances: Part II- the Spirtual Side

I’ve always been struck by Luke 11:24-26. An evil spirit leaves a person, searches around but can’t find any place to go so it decides to go back to the original person and finds him/her like a ‘house swept clean’- so the spirit grabs its buddies (seven of them) and make the person worse off than before. Not exactly a happy picture- especially if you’re trying to rid yourself of your personal demons.

But if you’re in the business of helping people rid themselves of their demons- what an opportunity! To wit: the $11 Billion Self-Help Industry. (Just think about it- based on the above parable you can help someone oust a demon...and expect your business to increase seven-fold!!)

I mean- it’s the American Way, right? We want to have a better, smarter, slimmer, more beautiful, less stressful, happy-happy-joy-joy life so we identify what’s in our way, name it, formulate an action plan designed to rid ourselves of it, execute our plan- and voila!- seven more demons! (with seven more names, seven more action plans,...)

I don’t think it’s working- and this saying by Jesus alerted me to it. And it got me thinking that maybe the issue isn’t getting rid of sin but something else...

So I like the financial approach that I alluded to in Part I of this little mental exercise. Again, I’ll turn to the example of Warren Buffett, a man who doesn’t like debt per se, but doesn’t focus all his efforts on getting debt out of the way- in fact it appears as one of his last resorts: “So our main capital allocation moves in 1986 were to pay off debt and stockpile funds. Neither is a fate worse than death, but they do not inspire us to do handsprings either. If Charlie [Munger- Vice Chairman of Berkshire Hathaway] and I were to draw blanks for a few years in our capital-allocation endeavors, Berkshire’s rate of growth would slow significantly.” In other words, only when he had no other ideas of what to do with is money to generate wealth did he turn to paying down debt. I’ve heard many financial advisors claim that the fastest way to wealth is to pay down debt. Though they include investing in their wealth building plans their holy grail seems to be the ‘get-rid-of-debt solution.’

The problem is- getting rid of debt doesn’t necessarily get rid of the ‘debt-accumulating’ tendencies that got someone in debt in the first place. Like the poor sap in Jesus’ parable, getting rid of the demon did nothing to prevent its return (in fact in seemed to make the return even more attractive!)

If, in financial terms, the trick is in buying assets rather than eliminating liabilities perhaps the spiritual trick is spending less time ousting demons and more time ‘investing’ in ‘spiritual assets.’ I figure that if I increase spiritual activities that produce positive, spiritual income, my liabilities will eventually erode, or at least have a diminished effect relative to my enlarged 'spiritual capital.'

As a general guide I’ve been taking the Spiritual Disciplines as the assets I’m targeting to acquire. I’ve been most successful with daily time in the Word, and am looking, in particular, to increase my ‘stakes’ in Prayer and Fasting. In effect I want a “Spiritual Statement” to read like so:



Instead of spending my time ousting my demons (or even trying to ‘work harder’ to be more loving, forgiving, self-controlled, etc- the spiritual equivalent to trying to get more income from your job), I’m wanting to focus more of my time on building up spiritual assets that will naturally make me more loving, forgiving, self-controlled, etc. In other words, the Fruits of the Spirit will be exactly that- the fruits/income from my time in the Spirit (via the spiritual assets).

So now I’ve thrown the gauntlet, publicly, to making this activity, which I’ve been kicking around in the back of my head for a couple of years now, a more intentional activity. And though I didn’t originally think of this as a New Year’s resolution- the timing fits. So here’s to your efforts to increase your spiritual investments.

Lesson from Finances: Part I- Money, Money, Money

So I’ve done a fair share of reading over the past three years on financial matters- economics, personal finance, investing and the like. And though I’m hoping such time and energy investment will pan out into some successful financial investments, I’m already beginning to see some corollary benefits in other areas of life- particularly our relationships to God and to each other.

So I hope to lay out a ‘plan’ of action that I’ve somewhat intuitively begun to follow, but hope to step up into a more disciplined and intentional endeavor. But first, the background knowledge.

Most of this basic knowledge I picked up from the book Rich Dad, Poor Dad by Robert Kiyosaki. I HIGHLY recommend it for the content (but stylistically, Kiyosaki is not a very good writer). In short, he essentially had ‘two Dads’- one who was his real, biological father (the ‘Poor Dad’) and his best friend’s father (who became phenomenally wealthy). In having these two powerful influences he was able to clearly see differences in thoughts and actions that are the true distinctions between the rich and the poor (that ultimately lead to the obvious distinctions of net worth.)

The biggest misconception is that wealth is a product of one’s income- “If only I could get a higher paying job, I could be rich!” And while that couldn’t hurt, income is not really the issue. Consider the “richest” man in the world- currently tagged as Warren Buffett. His annual income, from his job, is only $100,000 a year. And yet his net worth is far in excess than execs who ‘earn’ 10 times that amount.

But notice I qualified his income as being ‘from his job’ (his job, by the way, is Chairman and CEO of Berkshire-Hathaway). I’m sure he has other income- but it is income that comes from holding certain assets like stocks and such (although, even with that, his largest holding is in Berkshire-Hathaway stock, which he probably doesn’t actually receive money from as Berkshire doesn’t pay out dividends). You see, the secret to wealth is not in the income, but in the assets that one owns.

Rich people, essentially, operate like businesses. When you evaluate businesses you look at their financial statements which include an income statement (which includes expenses they pay) and a balance sheet that lists the company’s assets and liabilities.

Robert Kiyosaki breaks it down like this:

The Poor and Middle Class primarily have financial statements that look like this:

Money comes in as income from their job(s) and then gets filtered through a lengthy list of liabilities (auto loans, mortgages, school loans, credit card debt, etc.) and so gets sent out of their possessions through all the expenses that these liabilities generate.

Rich people, however, have financial statements that go more like this:



As much as their income as possible goes into purchasing assets- in particular for our case, earning assets. And this is an important distinction. Some things are considered assets because they are ‘worth’ a certain amount. That’s why many people include their cars and boats and homes in their asset column. However, to utilize those assets in a financial sense you would have to sell them, which then means you no longer have that asset. Plus, you can rarely sell them for the amount that you can list them in your ‘Asset’ column. Another, very unfortunate plus, is that the ownership of these ‘assets’ often comes with a substantial addition to the liabilities side: car payments and mortgages. Which is why middle-class folks have most of their money filtering through the liabilities side and out through the monthly expenses even though they may be ‘wealthy’ enough to own the big screen TV’s, Bimmers, Hummers, and large homes in the ‘right’ neighborhood.

True wealth (and healthy businesses) results from assets that earn income- adding to what the ‘job’ brings in rather than siphoning it all out.

Some debt may be unavoidable, and may even be advantageous- IF you receive more than you pay out. For example the return you get on a rental property- in terms of actual profit above the monthly debt payments, may make a mortgage more justifiable. As the income stream widens, the debt becomes less and less significant.

That’s the secret to wealth in a nutshell. But always the generalist- I like principles that have more than one application- and life isn’t all about money...

...to be continued.